<PAGE>
As filed with the Securities and Exchange Commission on August 3, 1998
Registration No. 333-53735 and 333-53735-01
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COPELCO CAPITAL FUNDING CORP. XI
COPELCO CAPITAL FUNDING LLC 98-1
COPELCO CAPITAL FUNDING TRUST 1998-A
(Exact name of registrant as specified in its charter)
-------------------
Delaware 6799 pending
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
Copelco Capital Funding Corp. XI
East Gate Drive
Mount Laurel, New Jersey 08054-5404
(609) 231-9600
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
-------------------
Spencer N. Lempert, Esq.
Copelco Capital Funding Corp. XI Copelco Capital Funding Trust 1998-A
Copelco Capital Funding LLC 98-1 c/o Wilmington Trust Company
East Gate Drive 1100 North Market Street
Mount Laurel, New Jersey 08054-5404 Rodney Square North
(609) 231-9600 Wilmington, DE 19890
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Peter Humphreys, Esq.
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
(212) 259-6730
Approximate Date of Commencement of Proposed Sale to the
Public: As soon as practicable after the effective date of this registration
statement.
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. |_|
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
Proposed maximum Amount of
Title of each class of Amount to be Proposed maximum offering aggregate offering registration
securities to be registered registered price per unit(1) price(1) fee(2)
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Class A-1 Lease-Backed Notes............. $196,000,000 100% $196,000,000 $57,820.00
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
Class A-2 Lease-Backed Notes............. $ 91,000,000 100% $ 91,000,000 $26,845.00
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
Class A-3 Lease-Backed Notes............. $151,000,000 100% $151,000,000 $44,545.00
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
Class A-4 Lease-Backed Notes............. $164,000,000 100% $164,000,000 $48,380.00
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
Class B Lease-Backed Notes............... $ 18,000,000 100% $ 18,000,000 $ 5,310.00
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
Class C Lease-Backed Notes............... $ 14,000,000 100% $ 14,000,000 $ 4,130.00
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
Class D Lease-Backed Notes............... $ 21,000,000 100% $ 21,000,000 $ 6,195.00
- -------------------------------------------- ------------------ --------------------------- ------------------- -------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933, as amended, or until the
registration statement shall become effective on such date as the commission,
acting pursuant to said section 8(a), may determine.
- -------------------------------------------------------------------------------
<PAGE>
COPELCO CAPITAL FUNDING CORP. XI
CROSS REFERENCE SHEET
(Pursuant To Rule 404(A) And Item 501 Of Regulation S-K)
<TABLE>
<CAPTION>
Item
No. Name and Caption in Form S-1 Caption in Prospectus
--- ---------------------------- ---------------------
<S> <C> <C>
1. Forepart of the Registration Statement; Forepart of the Registration Statement; Front Cover Page of
Front Cover Page of Prospectus Prospectus; Cross Reference Sheet
2. Inside Front and Outside Back Cover Pages Inside Front Cover and Outside Back Cover Pages of
of the Prospectus Prospectus; Terms of the Notes; Available Information; Table
of Contents
3. Summary Information; Risk Factors and Prospectus Summary; Risk Factors; Certain Legal Aspects;
Ratio of Earnings to Fixed Charges Prepayment and Yield Considerations
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Underwriting
9. Description of Securities to be Registered Prospectus Summary; Description of the Notes;
10. Interest of Named Experts and Counsel *
11. Material Changes *
12. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
</TABLE>
* Not Applicable
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION DATED JULY 31, 1998
PRELIMINARY PROSPECTUS
- ------------------------------------------------------------------------------
$648,386,327
Copelco Capital Funding Trust 1998-A, Issuer
Copelco Capital, Inc., Servicer
$194,515,898 _____% Class A-1 Lease-Backed Notes, Series 1998-A
$ 90,432,830 _____% Class A-2 Lease-Backed Notes, Series 1998-A
$150,152,623 _____% Class A-3 Lease-Backed Notes, Series 1998-A
$162,096,582 _____% Class A-4 Lease-Backed Notes, Series 1998-A
$ 17,062,798 _____% Class B Lease-Backed Notes, Series 1998-A
$ 13,650,238 _____% Class C Lease-Backed Notes, Series 1998-A
$ 20,475,358 _____% Class D Lease-Backed Notes, Series 1998-A
The Copelco Lease-Backed Notes, Series 1998-A will consist of the
following classes (each, a "Class"): (i) the Class A-1 Notes (the "Class A-1
Notes"), the Class A-2 Notes (the "Class A-2 Notes"), the Class A-3 Notes (the
"Class A-3 Notes") and the Class A-4 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"), (ii) the Class B Notes (the "Class B Notes"), (iii) the Class C Notes
(the "Class C Notes"), (iv) the Class D Notes (the "Class D Notes") and (v)
the Class E Notes (the "Class E Notes", together with the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes, the
"Notes"). Only the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes (together, the "Offered Notes") will be offered hereby.
(cover continued overpage)
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
An investment in the Offered Notes involves certain risks. See "Risk
Factors" commencing on page 18 for a discussion of certain factors that
should be considered in connection with an investment in the securities
offered hereby.
THE OFFERED NOTES WILL NOT REPRESENT AN INTEREST IN OR
AN OBLIGATION OF COPELCO FINANCIAL SERVICES GROUP, INC., COPELCO
CAPITAL, INC., COPELCO CAPITAL FUNDING CORP.
XI OR ANY OF THEIR AFFILIATES, NOR WILL THE OFFERED NOTES
BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
<TABLE>
<CAPTION>
====================================================================================================================
Initial Public Underwriting(1) Proceeds to Issuer(2)
Offering Price
<S> <C> <C> <C>
Per Class A-1 Lease-Backed Note % % %
- ---------------------------------------------------------------------------------------------------------------------
Per Class A-2 Lease-Backed Note %(3) % %
- ---------------------------------------------------------------------------------------------------------------------
Per Class A-3 Lease-Backed Note %(3) % %
- ---------------------------------------------------------------------------------------------------------------------
Per Class A-4 Lease-Backed Note %(3) % %
- ---------------------------------------------------------------------------------------------------------------------
Per Class B Lease-Backed Note %(3) % %
- ---------------------------------------------------------------------------------------------------------------------
Per Class C Lease-Backed Note %(3) % %
- ---------------------------------------------------------------------------------------------------------------------
Per Class D Lease-Backed Note %(3) % %
- ---------------------------------------------------------------------------------------------------------------------
Total............................. $ $ $
=====================================================================================================================
</TABLE>
(1) Copelco Capital has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting expenses estimated to be $768,225.
(3) Plus accrued interest from July 15, 1998.
The Offered Notes are offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel, or modify any order without
notice. It is expected that delivery of the Offered Notes will be made in
book-entry form through the facilities of The Depository Trust Company, Cedel
Bank, S.A. or the Euroclear System on or about August 11, 1998.
Underwriters of the Class A Notes
First Union Capital Markets
Lehman Brothers
Prudential Securities Incorporated
Underwriter of the Class B Notes, Class C Notes and Class D Notes
First Union Capital Markets
The date of this Prospectus is August ___, 1998.
<PAGE>
(continuation of cover)
The Issuer will also issue one or more classes of residual
notes (the "Residual Notes") and one or more classes of certificates, all of
which certificates will be initially retained by Copelco Capital Funding LLC
98-1, a Delaware limited liability company, as sponsor ("Copelco Funding LLC"
or the "Sponsor"), Copelco Capital Funding Corp. XI, a limited-purpose
Delaware corporation ("Copelco Capital XI") and Copelco Capital, Inc. a
Delaware corporation ("Copelco Capital"), (the "Certificates", together with
the Notes and the Residual Notes, the "Securities"). Neither the Residual
Notes nor the Certificates are offered hereby.
The Notes will represent debt obligations of Copelco Capital
Funding Trust 1998-A, a Delaware business trust (the "Issuer"), formed
pursuant to a trust agreement, dated as of July 31, 1998 (the "Trust
Agreement"), by and among the Sponsor and Wilmington Trust Company, a Delaware
banking corporation (in its capacity as owner trustee of the Issuer, the
"Owner Trustee"). The assets of the Issuer securing the Notes will include a
pool of healthcare, manufacturing and business equipment leases, and all of
its interest in the equipment underlying the leases. The leases and the
related interests in the equipment were originated or acquired by Copelco
Capital, as described herein, sold or contributed by Copelco Capital to the
Sponsor and, in turn, contributed by the Sponsor to the Issuer pursuant to a
sale and servicing agreement, dated as of August 11, 1998 (the "Sale and
Servicing Agreement"), by and among the Issuer, Copelco Capital, as seller (in
such capacity, the "Seller") and servicer (in such capacity, the "Servicer"),
the Sponsor and Manufacturers and Traders Trust Company, a New York banking
corporation, as indenture trustee (the "Indenture Trustee") and pledged by the
Issuer to the Indenture Trustee pursuant to an indenture, dated as of August
1, 1998 (the "Indenture"), by and among the Issuer and the Indenture Trustee.
Payments of principal and interest to the holders of the
Class A Notes (the "Class A Noteholders") will have the benefit of limited
credit support consisting of the subordination of the Class B Notes, the Class
C Notes, the Class D Notes, the Class E Notes and the Certificates, funds on
deposit in the reserve account and amounts on deposit in certain other
accounts. The holders of the Class B Notes (the "Class B Noteholders") will
have the benefit of limited credit support in the form of the subordination of
the Class C Notes, the Class D Notes, the Class E Notes, and the Certificates,
funds on deposit in the Reserve Account (as defined herein) and amounts on
deposit in certain other accounts. The holders of the Class C Notes (the
"Class C Noteholders") will have the benefit of limited credit support in the
form of the subordination of the Class D Notes, the Class E Notes and the
Certificates, funds on deposit in the Reserve Account and amounts on deposit
in certain other accounts. The holders of the Class D Notes (the "Class D
Noteholders") will have the benefit of limited credit support in the form of
the subordination of the Class E Notes and the Certificates, funds on deposit
in the Reserve Account and amounts on deposit in certain other accounts. The
Class A Noteholders, the Class B Noteholders, the Class C Noteholders and the
Class D Noteholders are sometimes referred to herein as the "Offered
Noteholders". The Class E Notes and the Residual Notes are being offered in a
private placement and therefore are not being offered hereby. The holders of
the Class E Notes are sometimes referred to herein as the "Class E
Noteholders" (together with the Class A Noteholders, the Class B Noteholders,
the Class C Noteholders and the Class D Noteholders, the "Noteholders"), the
holders of the Residual Notes are sometimes referred to herein as the
"Residual Noteholders" and the holders of the Certificates are sometimes
referred to herein as the "Certificateholders". Capitalized terms used herein
will have the meanings ascribed to such terms herein. The pages on which terms
are defined are set forth on the Index of Terms contained herein.
Interest on the Offered Notes will be payable monthly in
arrears on the fifteenth day of the month (or the first business day
thereafter) beginning on August 17, 1998 (each, a "Payment Date") with respect
to the period from and including the immediately preceding Payment Date (or
with respect to the initial Payment Date and the Class A-1 Notes, the Issuance
Date, and with respect to the Initial Payment Date and all Offered Notes other
than the Class A-1 Notes, July 15, 1998) to the day prior to such current
Payment Date. Principal payments with respect to the Offered Notes will be
payable on each Payment Date beginning on August 17, 1998. The stated maturity
date with respect to the Class A-1 Notes is the Payment Date in August 1999
(the "Class A-1 Stated Maturity Date"), the stated maturity date with respect
to the Class A-2 Notes is the Payment Date in August 2000 (the "Class A-2
Stated Maturity Date"), the stated maturity date with respect to the Class A-3
Notes is the Payment Date in August 2001 (the "Class A-3 Stated Maturity
Date"), the stated maturity date with respect to the Class A-4 Notes is the
Payment Date in July 2003 (the "Class A-4 Stated Maturity Date"), the stated
maturity date with respect to the Class B Notes is the Payment Date in
February 2004 (the "Class B Stated Maturity Date"), the stated maturity date
with respect to the Class C Notes is the Payment Date in March 2004 (the
"Class C Stated Maturity Date") and the stated maturity date with respect to
the Class D Notes is the Payment Date in April 2004 (the "Class D Stated
Maturity Date", together with the Class A-1 Stated Maturity Date, the Class
A-2 Stated Maturity Date, the Class A-3 Stated Maturity Date, the Class A-4
Stated Maturity Date, the Class B Stated Maturity Date and the Class C Stated
Maturity Date, the "Stated Maturity Dates"). However, if all payments on the
Leases are made as scheduled, final payment with respect to the Offered Notes
would occur prior to stated maturity and it is expected that the Offered Notes
will mature prior to stated maturity. See "Prospectus Summary -- Expected
Maturity; Stated Maturity." In addition, should an Event of Default, an Early
Lease Termination or a Casualty (each, as described herein) occur, repayment
of principal on the Offered Notes may be earlier than would otherwise be the
case.
The Issuer will have the option, subject to certain
conditions, to redeem all, but not less than all, of the Offered Notes and
thereby cause early repayment of the Offered Notes as of any Payment Date on
which the Discounted Present Value of the Performing Leases is less than or
equal to 5% of the Discounted Present Value of the Leases as of the Cut-Off
Date (after giving effect to the payment of principal on such Payment Date).
The Issuer will give notice of such redemption to each Offered Noteholder and
the Indenture Trustee at least 30 days before the
2
<PAGE>
Payment Date fixed for such prepayment. Upon deposit of funds necessary to
effect such redemption, the Indenture Trustee shall pay the remaining unpaid
principal amount on the Offered Notes and all accrued and unpaid interest as
of the Payment Date fixed for redemption. See "Description of the Notes --
Redemption."
The Offered Notes offered hereby are being offered pursuant
to this Prospectus. Sales of the Offered Notes may not be consummated unless
the purchaser has received this Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET
PRICE OF THE OFFERED NOTES OFFERED HEREBY, INCLUDING PURCHASES OF OFFERED
NOTES TO STABILIZE THE MARKET PRICE AND THE IMPOSITION OF BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES SEE "UNDERWRITING" HEREIN.
AVAILABLE INFORMATION
The Issuer has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement (together with all
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Offered Notes offered pursuant to this Prospectus and described herein. For
further information, reference is made to the Registration Statement which may
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of the
Registration Statement may be obtained from the Public Reference Branch of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site at http://www.sec.gov pursuant to
Item 502(a) under Regulation S-K as recently amended in SEC Release No.
33-7289 (May 9, 1996). The Issuer will file with the Commission such periodic
reports with respect to the Trust as are required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations of the Commission thereunder.
REPORTS TO NOTEHOLDERS
During such time as the Offered Notes remain in book-entry
form, any quarterly and annual reports containing information concerning the
Issuer and the Offered Notes and required to be filed with the Commission will
be sent to Cede & Co. ("Cede"), as nominee of The Depository Trust Company
("DTC"), the Euroclear System ("Euroclear") or Cedel Bank, S.A. ("CEDEL") as
registered holders of the Offered Notes pursuant to the Indenture. Such
reports will be made available by DTC, Euroclear or CEDEL and its participants
to the Offered Noteholders in accordance with the rules, regulations and
procedures creating and affecting DTC, Euroclear and CEDEL, respectively. See
"Description of the Notes--Book Entry Registration Notes." However, such
reports will not be sent directly to each beneficial owner while the Notes are
in book-entry form. Upon the issuance of fully registered, certificated Notes,
such reports will be sent directly to each Noteholder.
3
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus. A listing of
pages on which some of such terms are defined can be found in the "Index of
Terms" herein.
Issuer........................ Copelco Capital Funding Trust 1998-A (the
"Issuer"), a Delaware business trust. The
Issuer has been formed pursuant to a trust
agreement, dated as of July 31, 1998 (the
"Trust Agreement"), by and among Copelco
Capital Funding LLC 98-1, a Delaware
limited liability company, as sponsor
("Copelco Funding LLC" or the "Sponsor")
and Wilmington Trust Company, a Delaware
banking corporation (in its capacity as
owner trustee of the Issuer, the "Owner
Trustee"). The Issuer will have no
significant assets other than the Trust
Fund (as described below). The Issuer's
offices are located at Rodney Square
North, 1100 North Market Street,
Wilmington, Delaware 19890-0001.
Securities Offered............ $194,515,898 aggregate principal amount of
____% Class A-1 Lease-Backed Notes, Series
1998-A, (the "Class A-1 Notes"),
$90,432,830 aggregate principal amount of
_____% Class A-2 Lease-Backed Notes,
Series 1998-A (the "Class A-2 Notes"),
$150,152,623 aggregate principal amount of
___% Class A-3 Lease-Backed Notes, Series
1998-A (the "Class A-3 Notes"), and
$162,096,582 aggregate principal amount of
___% Class A-4 Lease-Backed Notes, Series
1998-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"),
$17,062,798 aggregate principal amount of
___% Class B Leased-Backed Notes, Series
1998-A (the "Class B Notes"), $13,650,238
aggregate principal amount of ___% Class C
Leased-Backed Notes, Series 1998-A (the
"Class C Notes") and $20,475,358 aggregate
principal amount of ___% Class D
Lease-Backed Notes, Series 1998-A (the
"Class D Notes", together with the Class A
Notes, the Class B Notes and the Class C
Notes, the "Offered Notes"). The Class A-1
Notes will be an "eligible security"
within the meaning of Rule 2a-7
promulgated under the Investment Company
Act of 1940, as amended. In addition, the
Issuer will issue, through a private
placement, (i) $20,475,358 aggregate
principal amount of ___% Class E Notes
(the "Class E Notes", together with the
Offered Notes, the "Notes") (ii) one or
more classes of Residual Notes and (iii)
one or more classes of Certificates (all
of which Certificates will be initially
held by the Sponsor, Copelco Capital and
Copelco Capital XI).
The combined aggregate principal amount of
the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the
Class E Notes will comprise the initial
principal amount (the "Initial Principal
Amount") of the Notes. The aggregate
principal amounts of the Class A Notes, the
Class B Notes, the Class C Notes, the Class
D Notes and the Class E Notes set forth
herein are based upon the Discounted Present
Value of the Leases (as defined herein) as
of the close of business on June 30, 1998
(the "Cut-Off Date") calculated at the
Statistical Discount Rate (defined herein).
The Initial Principal Amount of the Notes
will be calculated using the actual Discount
Rate.
Issuance Date................. On or about August 11, 1998.
4
<PAGE>
Denominations................. The Offered Notes will be issued in
minimum denominations of $1,000 and
integral multiples of $1,000 in excess
thereof, except that one Class A Note,
Class B Note, Class C Notes and Class D
Note may be issued in another
denomination.
Interest Rate................. ___% per annum on the Class A-1 Notes (the
"Class A-1 Interest Rate") calculated on
the basis of a year of 360 days and the
actual number of days in such Interest
Accrual Period, ___% per annum on the
Class A-2 Notes (the "Class A-2 Interest
Rate"), ___% per annum on the Class A-3
Notes (the "Class A-3 Interest Rate"),
___% per annum on the Class A-4 Notes (the
"Class A-4 Interest Rate"), ___% per annum
on the Class B Notes (the "Class B
Interest Rate") , ___% per annum on the
Class C Notes (the "Class C Interest
Rate"), ___% per annum on the Class D
Notes (the "Class D Interest Rate") and
___% per annum on the Class E Notes (the
"Class E Interest Rate"), calculated on
the basis of a year of 360 days comprised
of twelve 30-day months. With respect to
any particular Class, the "Interest Rate"
refers to the applicable rate indicated in
the immediately preceding sentence.
Initial Principal Amount...... $194,515,898 for the Class A-1 Notes (the
"Class A-1 Initial Principal Amount"),
$90,432,830 for the Class A-2 Notes (the
"Class A-2 Initial Principal Amount"),
$150,152,623 for the Class A-3 Notes (the
"Class A-3 Initial Principal Amount"),
$162,096,582 for the Class A-4 Notes (the
"Class A-4 Initial Principal Amount",
together with the Class A-1 Initial
Principal Amount, Class A-2 Initial
Principal Amount, and the Class A-3
Initial Principal Amount, the "Class A
Initial Principal Amount"), $17,062,798
for the Class B Notes (the "Class B
Initial Principal Amount"), $13,650,238
for the Class C Notes (the "Class C
Initial Principal Amount"), $20,475,358
for the Class D Notes (the "Class D
Initial Principal Amount") and $20,475,358
for the Class E Notes (the "Class E
Initial Principal Amount"). See
"Description of the Notes."
Discounted Present Value of
the Leases................ The Discounted Present Value of the Leases
(the "Discounted Present Value of the
Leases"), at any given time, shall equal
the future remaining scheduled payments
(not including delinquent amounts, Excess
Copy Charges, Maintenance Charges and Fee
Per Scan Charges (defined below)) from the
Leases (including Non-Performing Leases),
discounted at a rate equal to ___% (the
"Discount Rate"), which rate is equal to
the sum of (a) the weighted average
Interest Rate of the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the
Class E Notes each weighted by (i) the
Class A-1 Initial Principal Amount, the
Class A-2 Initial Principal Amount, the
Class A-3 Initial Principal Amount, the
Class A-4 Initial Principal Amount, the
Class B Initial Principal Amount, the
Class C Initial Principal Amount, the
Class D Initial Principal Amount or the
Class E Initial Principal Amount, as
applicable, and (ii) the expected weighted
average life (under a zero prepayment, and
no loss scenario) of each Class of Notes,
as applicable and (b) the Servicing Fee
Rate of 0.75% per annum. The "Discounted
Present Value of the Performing Leases"
equals the Discounted Present Value of the
Leases, reduced by all future remaining
scheduled payments on the Non-Performing
Leases (not including delinquent amounts,
Excess Copy Charges, Maintenance Charges
or Fee Per Scan Charges), discounted at
the Discount Rate. See "Description of the
Notes--General." Each of the Indenture and
the Sales and Servicing Agreement will
provide that any calculation of future
remaining scheduled payments made on a
Determination Date or with respect to a
Payment Date will be calculated after
giving effect to any payments received
prior to such date of calculation to the
extent such payments relate to scheduled
payments due and payable by the
5
<PAGE>
Lessees with respect to the related Due
Period (defined herein) and all prior Due
Periods. "Statistical Discounted Present
Value of the Leases" means an amount equal
to the future remaining scheduled payments
(not including delinquent amounts, Excess
Copy Charges, Maintenance Charges and Fee
Per Scan Charges) from the Leases as of
the Cut-Off Date, discounted at a rate
equal to 6.75% (the "Statistical Discount
Rate"). The Statistical Discounted Present
Value of the Leases as of the Cut-Off Date
is $682,296,520.78 and will not vary
materially from the Discounted Present
Value of the Leases as of the Cut-Off
Date. See "The Series Pool--The
Equipment." The aggregate Discounted
Present Value of the Leases as of the
Cut-Off Date, calculated at the Discount
Rate is $_____________.
"Non-Performing Leases" are (a) Leases
that have become more than 123 days
delinquent or (b) Leases that have been
accelerated by the Servicer or Leases that
the Servicer has determined to be
uncollectible in accordance with its
customary practices. See "The Series
Pool--The Leases." The Seller will
represent in the Sales and Servicing
Agreement that at the time of transfer of
any Lease to the Issuer, such Lease was
not a Non-Performing Lease.
Expected Maturity; Stated
Maturity.................. The expected maturity dates with respect
to the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes are the
Payment Dates on July 1999, February 2000,
February 2001 and January 2003,
respectively. The expected maturity date
with respect to the Class B Notes, Class C
Notes and Class D Notes are the Payment
Dates on February 2003, March 2003 and
April 2003, respectively. The stated
maturity date with respect to the Class
A-1 Notes is the Payment Date in August
1999 (the "Class A-1 Stated Maturity
Date"), the stated maturity date with
respect to the Class A-2 Notes is the
Payment Date in August 2000 (the "Class
A-2 Stated Maturity Date"), the stated
maturity date with respect to the Class
A-3 Notes is the Payment Date in August
2001 (the "Class A-3 Stated Maturity
Date"), the stated maturity date with
respect to Class the A-4 Notes is the
Payment Date in July 2003 (the "Class A-4
Stated Maturity Date"), the stated
maturity date with respect to the Class B
Notes is the Payment Date in February 2004
(the "Class B Stated Maturity Date"), the
stated maturity date with respect to the
Class C Notes is the Payment Date in March
2004 (the "Class C Stated Maturity Date")
and the stated maturity date with respect
to the Class D Notes is the Payment Date
in April 2004 (the "Class D Stated
Maturity Date", together with the Class
A-1 Stated Maturity Date, the Class A-2
Stated Maturity Date, the Class A-3 Stated
Maturity Date, the Class A-4 Stated
Maturity Date, the Class B Stated Maturity
Date and the Class C Stated Maturity Date,
the "Stated Maturity Dates"). However, if
all payments on the Leases are made as
scheduled, final payment with respect to
the Notes would occur prior to stated
maturity.
The Notes..................... The Notes will represent obligations
solely of the Issuer and are secured by
the Trust Fund.
Seller and Servicer........... Copelco Capital, Inc., a Delaware
corporation ("Copelco Capital", in its
capacity as seller, the "Seller", and in
its capacity as servicer, the "Servicer").
Copelco Capital will enter into a sales
and servicing agreement (the "Sales and
Servicing Agreement") with the Issuer and
the Sponsor to service the Leases included
in the Series Pool (as defined herein) and
make Servicer Advances (as defined
herein). Pursuant to the Sale and
Servicing Agreement, Copelco Capital will
sell to the Sponsor all of its right,
title and interest in the Leases. In
addition, Copelco Capital will
concurrently transfer to the Sponsor all
of its right, title and interest in the
related Equipment (which is either an
ownership
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<PAGE>
interest or security interest) which shall
constitute a contribution of capital.
Contemporaneously with the sale, transfer
and conveyance by Copelco Capital to the
Sponsor of the Leases and related
Equipment, the Sponsor will transfer its
right, interest and title of the Leases
and related Equipment to the Issuer
pursuant to the Sale and Servicing
Agreement and the Issuer will thereby
pledge the Leases and related Equipment to
the Indenture Trustee pursuant to the
Indenture.
Trust Fund.................... The "Trust Fund" will consist of a pool
(the "Series Pool") of healthcare,
manufacturing and business equipment lease
contracts (the "Lease Contracts"),
including payments due thereunder (the
"Lease Receivables" together with the
Lease Contracts, the "Leases") and
interest in the related leased equipment
(the "Equipment") transferred by the
Sponsor to the Issuer. In addition, the
Trust Fund will include the funds on
deposit in the Reserve Account.
Indenture Trustee............. Manufacturers and Traders Trust Company
(the "Indenture Trustee"). The Indenture
Trustee's offices are located at One M&T
Plaza, 7th Floor, Buffalo, New York 14203.
Determination Date............ The fifth day prior to each Payment Date
(or the preceding business day, if such
day is not a business day). On such date
(each, a "Determination Date"), the
Servicer will determine the amount of
payments received on the Leases in respect
of the immediately preceding calendar
month (each such period, a "Due Period")
which will be available for distribution
on the Payment Date. See "Description of
the Notes--Distributions on Notes."
Payment Date.................. Payments on the Notes will be made on the
fifteenth day of each month (or if such
day is not a business day, the next
succeeding business day), commencing on
August 17, 1998 (each, a "Payment Date"),
to holders of record on the last day of
the immediately preceding calendar month
(each, a "Record Date"). See "Description
of the Notes--Distributions on Notes."
Interest Payments............. On each Payment Date, the interest due
(the "Interest Payments") with respect to
the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes,
the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes since
the last Payment Date will be the interest
that has accrued on such Notes since the
last Payment Date (or in the case of the
first Payment Date, with respect to the
Class A-1 Notes, since the Issuance Date,
and with respect to all other Notes, since
July 15, 1998) (the "Interest Accrual
Period") at the applicable Interest Rate
applied to the then unpaid principal
amounts (the "Outstanding Principal
Amounts") of the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, and the
Class E Notes, respectively, after giving
effect to payments of principal to the
Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders,
the Class A-4 Noteholders, the Class B
Noteholders, the Class C Noteholders, the
Class D Noteholders and the Class E
Noteholders, respectively, on the
preceding Payment Date. See "Description
of the Notes--General" and "Distributions
on Notes."
Principal Payments............ For each Payment Date, each of the Class A
Noteholders, the Class B Noteholders, the
Class C Noteholders, the Class D
Noteholders and the Class E Noteholders
will be entitled to receive payments of
principal ("Principal Payments"), to the
extent funds are available therefor, in
the priorities set forth in the Indenture
and described herein below and under
"Application of Payments" and "Description
of the Notes--Distributions on Notes." On
each Payment Date, to the extent funds are
available therefor, the Principal Payment
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<PAGE>
will be paid to the Noteholders in the
following priority: (a) (i) to the Class
A-1 Noteholders only, until the
Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the
Class A Principal Payment, then (ii) to
the Class A-2 Noteholders only, until the
Outstanding Principal Amount on the Class
A-2 Notes has been reduced to zero, the
Class A Principal Payment, then (iii) to
the Class A-3 Noteholders only, until the
Outstanding Principal Amount on the Class
A-3 Notes has been reduced to zero, the
Class A Principal Payment, and (iv) to the
Class A-4 Noteholders, until the
Outstanding Principal Amount on the Class
A-4 Notes has been reduced to zero, the
Class A Principal Payment, (b) to the
Class B Noteholders, the Class B Principal
Payment, (c) to the Class C Noteholders,
the Class C Principal Payment, (d) to the
Class D Noteholders, the Class D Principal
Payment, (e) to the Class E Noteholders,
the Class E Principal Payment and (f) to
the extent that the Class B Floor exceeds
the Class B Target Investor Principal
Amount, the Class C Floor exceeds the
Class C Target Investor Principal Amount,
the Class D Floor exceeds the Class D
Target Investor Principal Amount and/or
the Class E Floor exceeds the Class E
Target Investor Principal Amount,
Additional Principal (defined below) shall
be distributed, sequentially, as an
additional principal payment on the Class
A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes, the Class B Notes,
the Class C Notes, the Class D Notes and
the Class E Notes as applicable, until the
Outstanding Principal Amount of each Class
has been reduced to zero.
The "Class A Principal Payment" shall
equal (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates
prior to the August 1999 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 and after
the August 1999 Payment Date, 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 (as defined below).
The "Class B Principal Payment" shall
equal (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.
The "Class C Principal Payment" shall
equal (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.
The "Class D Principal Payment" shall
equal (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 D Notes to
the greater of the Class D Target Investor
Principal Amount and the Class D Floor.
The "Class E Principal Payment" shall
equal (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
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<PAGE>
Outstanding Principal Amount of the Class
E Notes to the greater of the Class E
Target Investor Principal Amount and the
Class E Floor.
The "Class A Target Investor Principal
Amount" with respect to each Payment Date
is 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.
The "Class B Target Investor Principal
Amount" with respect to each Payment Date
is an amount equal to the product of (a)
the Class B Percentage and (b) the
Discounted Present Value of the Performing
Leases as of the related Determination
Date.
The "Class C Target Investor Principal
Amount" with respect to each Payment Date
is 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
Date.
The "Class D Target Investor Principal
Amount" with respect to each Payment Date
is an amount equal to the product of (a)
the Class D Percentage and (b) the
Discounted Present Value of the Performing
Leases as of the related Determination
Date.
The "Class E Target Investor Principal
Amount" (the Class A Target Investor
Principal Amount, the Class B Target
Investor Principal Amount, the Class C
Target Investor Principal Amount, the
Class D Target Investor Principal Amount
and the Class E Target Investor Principal
Amount, collectively, the "Class Target
Investor Principal Amounts") with respect
to each Payment Date is an amount equal to
the product of (a) the Class E Percentage
and (b) the Discounted Present Value of
the Performing Leases as of the related
Determination Date.
The "Class A Percentage" will be equal
approximately to 82.5175%. The "Class B
Percentage" will be equal approximately to
3.4965%. The "Class C Percentage" will be
equal approximately to 2.7972%. The "Class
D Percentage" will be equal approximately
to 4.1958%. The "Class E Percentage" will
be equal approximately to 4.1958%.
The "Class B Floor" with respect to each
Payment Date means (a) 2.7% 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 of
the Outstanding Principal Amount of the
Class C Notes, the Outstanding Principal
Amount of the Class D Notes, the
Outstanding Principal Amount of the Class
E Notes, and the Overcollateralization
Balance as of the immediately preceding
Payment Date after giving effect to all
principal payments made on that day, minus
(d) the amount on deposit in the Reserve
Account after giving effect to withdrawals
to be made on such Payment Date.
The "Class C Floor" with respect to each
Payment Date means (a) 2.2% 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 of
the Outstanding Principal Amount of the
Class D Notes, the Outstanding Principal
Amount of the Class E Notes, and the
Overcollateralization Balance as of the
immediately preceding Payment Date after
giving effect to all principal payments
made on that day, minus (d) the amount on
deposit in the Reserve Account after
giving effect to withdrawals to
9
<PAGE>
be made on such Payment Date; provided,
however, that if the Outstanding Principal
Amount of the Class B Notes is less than
or equal to the Class B Floor on such
Payment Date, the Class C Floor will equal
the Outstanding Principal Amount of the
Class C Notes utilized in the calculation
of the Class B Floor for such Payment
Date.
The "Class D Floor" with respect to each
Payment Date means (a) 1.8% 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 of
the Outstanding Principal Amount of the
Class E Notes, and the Overcollateral-
ization Balance as of the immediately
preceding Payment Date after giving effect
to all principal payments made on that
day, minus (d) 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 Principal Amount of the Class
C Notes is less than or equal to the Class
C Floor on such Payment Date, the Class D
Floor will equal the Outstanding Principal
Amount of the Class D Notes utilized in
the calculation of the Class C Floor for
such Payment Date.
The "Class E Floor" (the Class B Floor,
the Class C Floor, the Class D Floor and
the Class E Floor, collectively, the
"Class Floors") with respect to each
Payment Date means (a) 1.2% 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
Overcollateralization Balance as of the
immediately preceding Payment Date after
giving effect to all principal payments
made on that day, minus (d) 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 Principal Amount of the
Class D Notes is less than or equal to the
Class D Floor on such Payment Date, the
Class E Floor will equal the Outstanding
Principal Amount of the Class E Notes
utilized in the calculation of the Class D
Floor for such Payment Date.
"Additional Principal" with respect to
each Payment Date equals (a) zero if each
of the Class Target Investor Principal
Amounts for Classes B, C, D and E exceed
their respective Class Floors on such
Payment Date and (b) in each other case
the excess, if any, of (i)(A) the
Outstanding Principal Balance of the Notes
plus the Overcollateralization Balance as
of the immediately preceding Payment Date
after giving effect to payments on such
Payment Date, minus (B) the Discounted
Present Value of the Performing Leases as
of the related Determination Date, over
(ii) the sum of the Class A Principal
Payment, the Class B Principal Payment,
the Class C Principal Payment, the Class D
Principal Payment and the Class E
Principal Payment to be paid on such
Payment Date.
The "Overcollateralization Balance" with
respect to each Payment Date is an amount
equal to the excess, if any, of (a) the
Discounted Present Value of Performing
Leases as of the related Determination
Date over (b) the sum of the Outstanding
Principal Amount of the Notes as of such
Payment Date after giving effect to all
principal payments made on that day.
The "Cumulative Loss Amount" with respect
to each Payment Date is 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
principal payments made on that day, plus
(ii) the
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<PAGE>
Overcollateralization Balance as of the
immediately preceding Payment Date, minus
(iii) 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
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 the Performing Leases as of the
related Determination Date.
The Series Pool............... The Series Pool will consist of the Leases
as of the Cut-Off Date, plus any
Substitute Leases (as defined herein) and
any Additional Leases (as defined herein)
excluding any Leases which have been
replaced by one or more Additional Leases
or Substitute Leases and, the interest of
the Issuer in the related Equipment. See
"The Series Pool" and "Certain Legal
Matters Affecting a Lessee's Rights and
Obligations."
Copelco Capital will represent and warrant
that, as of the Cut-Off Date, all Leases
were current or less than 63 days delinquent
and that, as of the initial Determination
Date, the Lessees have made at least one
lease payment.
Equipment..................... The Equipment is comprised primarily of
office products such as copiers and
facsimile machines, computer systems for
healthcare professionals, medical
diagnostic and examination equipment for
radiology, nuclear medicine, ultrasound
and laboratory analysis, industrial and
business equipment such as machine tools,
graphic arts equipment, electronics
testing equipment, and computers for
businesses. As of the Cut-Off Date, the
Series Pool had approximately 64 equipment
categories.
Lessees....................... Primarily hospitals, non-hospital medical
facilities, physicians, businesses and
individual business owners (each, a
"Lessee," and collectively, the
"Lessees"). As of the Cut-Off Date, the
Series Pool included 48,869 separate
Leases. As of the Cut-Off Date, Leases
relating to Lessees in any one state did
not account for more than 17.7% of the
Statistical Discounted Present Value of
the Leases. See "The Series Pool--The
Leases."
Certain Lease Terms........... The Leases are triple-net leases,
requiring the Lessee to pay all taxes,
maintenance and insurance associated with
the Equipment. The Leases are
non-cancelable by the Lessees. All
payments under the Leases are absolute,
unconditional obligations of the Lessees
without right of offset for any reason
Each Lessee entered into its Lease for
specified Equipment designated in
schedules incorporated into the Lease. The
schedules, among other things, establish
the payments and the term of the Lease
with respect to such Equipment. The Leases
have remaining terms to maturity,
calculated as of the Cut-Off Date, of
between approximately 2 and 82 months and
a weighted average remaining term to
maturity of 43.2 months. See "The Series
Pool--The Leases." The Leases had original
terms to maturity of between approximately
9 and 88 months and a weighted average
original term to maturity of 51.0 months.
Additions, Substitutions and
Adjustments............... Although the Leases will be non-cancelable
by the Lessees, Copelco Capital has, from
time to time, permitted early termination
by Lessees ("Early Lease Termination") or
other modifications of the lease terms in
certain circumstances more fully specified
in the Sales and Servicing Agreement,
including, without limitation, in
connection with a full or partial buy-out
or equipment upgrade.
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<PAGE>
In the event of an Early Lease Termination
which has been prepaid in full or in part,
the Issuer will have the option to
reinvest the proceeds of such Early
Termination Lease in one or more Leases
having similar characteristics to such
terminated Lease (each, an "Additional
Lease").
In addition, Copelco Capital will have the
option to substitute one or more leases
having similar characteristics (each, a
"Substitute Lease") for (a) Non-Performing
Leases, (b) Leases subject to repurchase
as a result of a breach of representation
and warranty (each a "Warranty Lease") and
(c) Leases following a modification or
adjustment to the terms of such Lease
(each, an "Adjusted Lease"). The aggregate
Discounted Present Value of the
Non-Performing Leases for which Copelco
Capital may substitute Substitute Leases
is limited to an amount not in excess of
10% of the aggregate Discounted Present
Value of the Leases as of the Cut-Off
Date. The aggregate Discounted Present
Value of Adjusted Leases and Warranty
Leases for which Copelco Capital may
substitute Substitute Leases is limited to
an amount not in excess of 10% of the
aggregate Discounted Present Value of the
Leases as of the Cut-Off Date.
The terms of a Lease may be modified or
adjusted for administrative reasons or at
the request of the lessee, vendor or
lessor due to a variety of circumstances,
including changes to the delivery date of
equipment, the cost of equipment, the
components of leased equipment or to
correct information when a Lease is
entered into Copelco Capital's servicing
system. Such modifications may result in
adjustments to the lease commencement
date, the monthly payment date, the amount
of the monthly payment or the equipment
subject to a Lease.
Additional Leases and Substitute Leases
will be originated using the same credit
criteria as the initial Leases. To the
extent material, information with respect
to such Additional or Substitute Leases
will be included in periodic reports filed
with the Commission as are required under
the Exchange Act.
In no event will the aggregate scheduled
payments of the Leases, after the
inclusion of the Substitute Leases and
Additional Leases be materially less than
the aggregate scheduled payments of the
Leases prior to such substitution or
reinvestment. Additionally, either the
final payment on such Substitute Lease or
Additional Lease will be on or prior to
May 2005.
In the event that an Early Lease
Termination is allowed by Copelco Capital
and an Additional Lease is not provided,
the amount prepaid will be equal to at
least the Discounted Present Value of the
terminated Lease, plus any delinquent
payments. See "The Series Pool--The
Leases."
Payments on Leases............ All payments on Leases will be made by the
Lessees to the address specified by the
Servicer. The Servicer will deposit the
proceeds of such payments to the
Collection Account (as defined herein)
within two Business Days of the receipt
thereof. See "Description of the
Notes--Collection Account."
Advances by Servicer.......... Prior to any Payment Date, the Servicer
may, but will not be required to, advance
(each, a "Servicer Advance") to the
Indenture Trustee, an amount sufficient to
cover delinquencies on Leases in the Trust
Fund with respect to the prior Due Period.
The Servicer will be reimbursed for
Servicer Advances not recovered from late
payments from Available Funds on the
Payment Date following the date on which
the Servicer determined such Lease to be a
Non-Performing Lease. See "Description of
the Notes--Advances by Servicer."
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<PAGE>
Servicing Fee................. A Servicing Fee (the "Servicing Fee"),
will be paid monthly to the Servicer on
each Payment Date with respect to the
Notes from amounts in the Collection
Account and will be calculated by
multiplying one-twelfth of 0.75% times the
Discounted Present Value of the Performing
Leases, as of the prior Payment Date. The
Servicing Fee will be paid to the Servicer
for servicing the Series Pool and to pay
certain administrative expenses in
connection with the Notes, including
Indenture Trustee fees, Owner Trustee fees
and expenses. See "Copelco Capital's
Underwriting and Servicing Practices."
Use of Proceeds............... The net proceeds from the sale of the
Offered Notes will be distributed to the
holders of Certificates and primarily used
to purchase the Leases from Copelco
Capital. In addition, the net proceeds
from the private placement of the Class E
Notes and the Residual Notes will be used
for the same purpose. Copelco Capital will
use such amounts to repay bank
indebtedness and for general corporate
purposes.
The Indenture................. The Notes and the Residual Notes are to be
issued pursuant to, and are to be in such
form, bear interest and be payable on such
terms as are prescribed in an indenture
(the "Indenture") to be executed between
the Issuer and the Indenture Trustee.
Available Funds............... On each Payment Date, the Indenture
Trustee will use such funds to make
required payments of principal and
interest to Noteholders.
Funds received on or prior to the related
Determination Date ("Available Funds")
will be available for distribution by the
Indenture Trustee on a Payment Date and
will include:
a) Lease Payments due during the prior
Due Period (net of any Excess Copy
Charges, Maintenance Charges and Fee Per
Scan Charges);
b) recoveries from Non-Performing Leases
to the extent Copelco Capital has not
substituted Substitute Leases for such
Non-Performing Leases (except to the
extent required to reimburse unreimbursed
Servicer Advances);
c) late charges received on delinquent
Lease payments not advanced by the
Servicer;
d) proceeds from repurchases by Copelco
Capital of Leases as a result of breaches
of representations and warranties to the
extent Copelco Capital has not substituted
Substitute Leases for such Leases other
than Residual Warranty Payments (as
defined herein).
e) proceeds from investment of funds in
the Collection Account and the Reserve
Account, if any;
f) Casualty Payments other than Residual
Casualty Payments (as defined herein);
g) Servicer Advances;
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<PAGE>
h) Termination Payments other than
Residual Prepayments (as defined herein)
to the extent the Issuer does not reinvest
such Termination Payments in Additional
Leases;
i) to the extent there occurs an
Available Funds Shortfall, funds, if any,
on deposit in the Reserve Account.
Available Funds will not include Residual
Realizations. "Residual Realizations"
means (a) cash flows realized from the
sale or release of the Equipment following
the expiration dates of the Leases, other
than Equipment subject to Non-Performing
Leases, (b) Residual Warranty Payments,
(c) Residual Casualty Payments and (d)
Residual Prepayments.
"Residual Casualty Payments" means, at any
date with respect to a Lease, the excess
of (a) the Casualty Payment related to the
Lease over (b) the Discounted Present
Value of the remaining Lease Payments
related to the Lease as of the immediately
following Payment Date (plus any amounts
previously due and unpaid).
"Residual Prepayments" means, at any date
with respect to a Terminated Lease, the
excess of (a) the payment related to the
Terminated Lease over (b) the Discounted
Present Value of the remaining Lease
Payments of the Terminated Lease as of the
immediately following Payment Date (plus
any amounts previously due and unpaid).
"Residual Warranty Payments" means, at any
date with respect to a Warranty Lease, the
excess of (a) the repurchase price related
to the Warranty Lease over (b) the
Discounted Present Value of the remaining
Lease Payments related to the Warranty
Lease as of the immediately following
Payment Date (plus any amounts previously
due and unpaid).
Application of Payments....... Monthly distributions will be made by the
Indenture Trustee from Available Funds in
the following priority:
a) to pay the Servicing Fee;
b) to reimburse unreimbursed Servicer
Advances in respect of a prior Payment
Date;
c) to make Interest Payments owing on
the Class A Notes concurrently to the
Class A-1 Noteholders, Class A-2
Noteholders, Class A-3 Noteholders and
Class A-4 Noteholders;
d) to make Interest Payments owing on
the Class B Notes;
e) to make Interest Payments owing on
the Class C Notes;
f) to make Interest Payments owing on the
Class D Notes;
g) to make Interest Payments owing on
the Class E Notes
h) 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,
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<PAGE>
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;
i) to make the Class B Principal Payment;
j) to make the Class C Principal Payment;
k) to make the Class D Principal Payment;
l) to make the Class E Principal Payment;
m) to pay the Additional Principal, if
any, to the Class A Noteholders then
receiving the Class A Principal Payment
as provided in clause (h) above until
the Outstanding Principal Amount on all
of the Class A Notes has been reduced
to zero, then to the Class B
Noteholders until the Outstanding
Principal Amount on the Class B Notes
has been reduced to zero, then to the
Class C Noteholders until the
Outstanding Principal Amount on the
Class C Notes has been reduced to zero,
then to the Class D Noteholders until
the Outstanding Principal Amount on the
Class D Notes has been reduced to zero,
thereafter to the Class E Noteholders
until the Outstanding Principal Amount
on the Class E Notes has been reduced
to zero;
n) to the Reserve Account, an amount
equal to the excess of the Required
Reserve Amount over the Available
Reserve Amount; and
o) to the Issuer, the balance, if any.
See "Description of the
Notes--Distribution on Notes."
Redemption.................... The Issuer will have the option, subject
to certain conditions, to redeem all, but
not less than all, of the Notes and
thereby cause early repayment of the Notes
as of any Payment Date on which the
Discounted Present Value of the Performing
Leases is less than or equal to 5% of the
Discounted Present Value of the Leases as
of the Cut-Off Date (after giving effect
to the payment of principal on such
Payment Date). The Issuer will give notice
of such redemption to each Noteholder and
the Indenture Trustee at least 30 days
before the Payment Date fixed for such
prepayment. Upon deposit of funds
necessary to effect such redemption, the
Indenture Trustee shall pay the remaining
unpaid principal amount on the Notes and
all accrued and unpaid interest as of the
Payment Date fixed for redemption. See
"Description of the Notes--Redemption."
Subordination................. The Class A Notes will be paid
sequentially in accordance with the
provisions of the Indenture and as
described in clause (h) under "Application
of Payments." The Class A Notes will be
senior in right of payment to the Class B
Notes, the Class B Notes will be senior in
right to the Class C Notes, the Class C
Notes will be senior in right to the Class
D Notes and the Class D Notes will be
senior in right to the Class E Notes to
the extent described herein. See
"Description of the Notes--Distributions
on Notes." Except following an Event of
Default, the Residual Notes are not
subordinated to the Notes and have senior
rights with respect to Residual
Realizations. The Notes will have no
rights with respect to Residual
Realizations.
15
<PAGE>
Reserve Account............... The Noteholders will have the benefit of
funds on deposit in an account (the
"Reserve Account") to the extent that
there is a shortfall in the amount
available to pay amounts owing the
Servicer and to make interest and
principal payments on the Notes, on any
Payment Date. The Reserve Account will be
funded by an initial deposit of 1.00% of
the Discounted Present Value of the Leases
as of the Cut-Off Date. Thereafter, to the
extent provided in the Indenture,
additional deposits will be made to the
Reserve Account to the extent that the
amount on deposit in the Reserve Account
(the "Available Reserve Amount") is less
than the Required Reserve Amount. The
"Required Reserve Amount" equals 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. Amounts on
deposit in the Reserve Account in excess
of the Required Reserve Amount will be
disbursed to the Issuer in accordance with
the provisions of the Indenture.
Residual Realizations......... On any Distribution Date, Residual
Realizations shall be directed by the
Indenture Trustee to the Residual
Noteholders in accordance with the
Indenture. The Noteholders will not have
any right to any Residual Realization
under any circumstance and neither the
Residual Notes nor the Residual
Realizations will provide credit
enhancement for the Class A Noteholders,
the Class B Noteholders, the Class C
Noteholders, the Class D Noteholders or
the Class E Noteholders.
Federal Income Tax
Considerations............ It is intended that the Class A Notes, the
Class B Notes, the Class C Notes and the
Class D Notes will be characterized as
indebtedness of the Issuer for federal
income tax purposes. If characterized as
indebtedness, interest on such Offered
Notes will be taxable as ordinary income
when received by an Offered Noteholder on
the cash method of accounting and when
accrued by Offered Noteholders on the
accrual method of accounting. See
"Material Federal Income Tax
Considerations."
ERISA Considerations.......... The Employee Retirement Income Security
Act of 1974, as amended ("ERISA") places
certain restrictions on those pension and
other employee benefits plans to which it
applies. Pursuant to regulations issued by
the United States Department of Labor
defining "plan assets," if the Offered
Notes are considered to be indebtedness
without substantial equity features under
local law, the assets of the Issuer will
not be considered assets of any ERISA plan
holding the Notes, thereby generally
avoiding potential application of ERISA's
prohibited transaction rules. However, in
certain circumstances, the prohibited
transaction rules may be applicable to the
purchase of the Offered Notes even if the
Offered Notes are not deemed to have
substantial equity features. Certain
exemptions from the prohibited transaction
rules could be applicable, however, with
respect to the acquisition and holding of
the Offered Notes. Accordingly, the
Offered Notes may be acquired by ERISA
plans, subject to certain restrictions.
Before purchasing any of the Offered
Notes, fiduciaries of such plans should
determine whether an investment in the
Offered Notes is appropriate under ERISA.
See "ERISA Considerations."
16
<PAGE>
Rating........................ It is a condition to the issuance of the
Offered Notes that the Class A-1 Notes be
rated at least "A-1+", "D-1+" and
"F1+/AAA" , that the Class A-2, A-3 and
A-4 Notes be rated at least "AAA", "AAA"
and "AAA", that the Class B Notes be rated
at least "AA", "AA+" and "AA", that the
Class C Notes be rated at least "A", "A+"
and "A+" and that the Class D Notes be
rated at least "BBB", "BBB+" and "BBB+" by
Standard & Poor's Ratings Group ("S&P"),
Duff & Phelps Credit Ratings Co. ("DCR")
and Fitch IBCA, Inc. ("Fitch"),
respectively (each a "Rating Agency"). The
ratings assess the likelihood of timely
payment of interest and the ultimate
payment of principal to the Offered
Noteholders by the Stated Maturity date.
There is no assurance that any rating ill
not be lowered or withdrawn if, in the
judgement of any Rating Agency,
circumstances in the future so warrant.
See "Rating of the Notes."
17
<PAGE>
RISK FACTORS
Limited Liquidity. There is currently no public market for
the Offered Notes and there is no assurance that one will develop. The
Underwriters expect, but are not obligated, to make a market in the Offered
Notes. There is no assurance that any such market will be created or, if so
created, will continue. If no public market develops, the Offered Noteholders
may not be able to liquidate their investment in the Offered Notes prior to
maturity.
Prepayments and Related Reinvestment Risk. Because the rate
of payment of principal on the Notes will depend, among other things, on the
rate of payment on the Leases, such rate of payments of principal on the Notes
cannot be predicted. Payments on the Leases will include scheduled payments as
well as prepayments permitted by Copelco Capital as the Servicer (to the
extent not replaced with Additional Leases), payments as a result of
Non-Performing Leases (to the extent not replaced by Substitute Leases),
Casualty Payments (as defined herein)(to the extent not replaced by Additional
Leases), and payments upon repurchases by Copelco Capital on account of a
breach of certain representations and warranties in the related Sales and
Servicing Agreement (to the extent not replaced by Substitute Leases)(any such
voluntary or involuntary prepayment, a "Prepayment"). The rate of early
terminations of Leases due to Prepayments and defaults may be influenced by a
variety of economic and other factors. For example, adverse economic
conditions and certain natural disasters such as floods, hurricanes,
earthquakes and tornadoes may affect Prepayments. The risk of reinvesting
unscheduled distributions resulting from Prepayments of the Notes will be
borne by the Noteholders. See "Prepayment and Yield Considerations."
Additional Leases and Substitute Leases. As described
herein, pursuant to the Sales and Servicing Agreement, Copelco Capital has the
option, but not the obligation, to designate one or more leases in its
portfolio to be an Additional Lease as a replacement for any partially or
fully prepaid lease or upgraded lease, in which event the scheduled payments
from such Additional Lease will replace (in whole or in part) the remaining
scheduled payments on a prepaid in full Lease. In the event (and only to the
extent) that Copelco Capital makes such a designation, the amount (or portion
thereof) received by the Issuer with respect to a Prepayment will be allocated
directly to Copelco Capital and the payments with respect to the related Notes
will be dependent upon the scheduled payments received on such Additional
Leases. In addition, pursuant to the Sales and Servicing Agreement, Copelco
Capital has the option, but not the obligation to substitute one or more
leases as Substitute Leases in exchange for Non-Performing Leases, Warranty
Leases and Adjusted Leases. Accordingly, payments of principal of and interest
on the Notes may be dependent, in part, upon payments received on such
Substitute Leases. In addition, to the extent that Copelco Capital does not
designate one or more leases as Additional Leases in connection with the full
or partial prepayment of a Lease or Substitute Leases in the case of
Non-Performing Leases, Warranty Leases or Adjusted Leases, the Discounted
Present Value of the Performing Leases will be decreased. See "Prepayment and
Yield Considerations."
Copelco Capital is not required to designate one or more
leases as an Additional Lease or to substitute Substitute Leases. Accordingly,
Noteholders should not expect that Additional Leases or Substitute Leases will
be available.
Security Interests in the Equipment; Certain Security
Interests Not Perfected. The Leases will consist of either finance Leases
(where substantially all of the value of the Equipment is financed by the
lease payments) or operating leases (where substantially less than all of the
value of the Equipment is recovered through the lease payments). See "The
Series Pool--The Leases." Finance leases include Leases ("Nominal Buy-Out
Leases") which contain a nominal purchase option upon expiration or other
terms which may be deemed effectively to vest equitable ownership of the
Equipment in the Lessee. Prior to the Cut-Off Date, Copelco Capital will have
filed Uniform Commercial Code ("UCC") financing statements in its favor
against Lessees in respect of Equipment, including Equipment subject to
Nominal-Buy-Out Leases, with an original Equipment cost in excess of $25,000.
Financing statements in favor of Copelco Capital with respect to approximately
53.6% of the Statistical Discounted Present Value of the Leases will be filed.
No action will be taken to perfect the interest of Copelco Capital in any
Equipment to the extent the original Equipment cost of the related Equipment
is less than $25,000. As a result, Copelco Capital does not have a perfected
security interest in Equipment with an original Equipment cost of less than or
equal to $25,000, which represents approximately 46.4% of the Statistical
Discounted Present Value of the Leases. In addition, the Indenture and the
Sales and Servicing Agreement will require (a) UCC financing statements for
all security interests in the Equipment owned by the Issuer which are pledged
to the Indenture Trustee to be filed
18
<PAGE>
(to the extent possible by central filing in a state) against the Issuer,
Copelco Capital and the Sponsor (the "Filing Locations"). To the extent UCC
financing statements evidencing Copelco Capital's security interest in the
Equipment have not been filed against the Lessee (i.e., with respect to those
Leases relating to Equipment with an original cost of less than $25,000) and
to the extent the Equipment is located in the states other than the Filing
Locations, any such security interests in the Equipment will not be perfected
in favor of Copelco Capital, the Issuer or the Indenture Trustee and another
party (such as other creditors of Copelco Capital) may acquire rights in
Copelco Capital's interest in the Equipment superior to those of the Issuer or
the Indenture Trustee. See "Certain Legal Matters Affecting a Lessee's Rights
and Obligations." The lack of a perfected security interest in certain
Equipment will result in claims against Lessees being unsecured and may
adversely affect the ability of the Issuer to realize on such Equipment.
Restrictions on Recoveries. State laws impose requirements
and restrictions relating to foreclosure sales and obtaining deficiency
judgments following such sales. In the event that the Issuer must rely on
repossession and disposition of Equipment to cover losses on Non-Performing
Leases, the Issuer may not realize the full amount due because of the
application of those requirements and restrictions. Other factors that may
affect the ability of the Issuer to realize the full amount due on a Lease
include the failure to file financing statements to perfect the Issuer's
security interest in the Equipment against a Lessee, depreciation,
obsolescence, damage or loss of any item of Equipment, and the application of
federal and state bankruptcy and insolvency laws. As a result, the Noteholders
may be subject to delays in receiving payments and losses. See "Certain Legal
Matters Affecting a Lessee's Rights and Obligations."
Insolvency of Copelco Capital. Copelco Capital believes that
each transfer of the Leases should be treated as an absolute and unconditional
sale or assignment. However, in the event of an insolvency of Copelco Capital,
a court could attempt to recharacterize the sale of the related Leases by
Copelco Capital to the Sponsor and the Sponsor to the Issuer as a loan to
Copelco Capital from the Issuer, secured by a pledge of such Leases or could
allow the trustee in bankruptcy to repudiate the Leases that are operating
leases and all obligations thereunder. Moreover, in the event of an insolvency
of Copelco Capital, a court could attempt to consolidate the assets of the
Issuer with those of Copelco Capital since Copelco Capital will indirectly own
all of the beneficial interest in the Issuer. Either attempt, even if
unsuccessful, could result in delays in payments of the related Notes. If such
attempts were successful, such Notes would be accelerated, and the Indenture
Trustee's recovery on behalf of the Noteholders could be limited to the then
current value of the Leases or the underlying Equipment. Thus, the Noteholders
could lose the right to future payments and might incur reinvestment losses on
amounts recovered. Although Copelco Capital believes that the transfers of the
Leases should be treated as an absolute and unconditional sale or assignment,
for accounting and tax purposes the Leases will be treated as assets of
Copelco Capital on its consolidated financial statements and on the tax return
for its consolidated group, which might increase the risk of
recharacterization of the transfer to the Issuer as a financing. See "Certain
Legal Matters Affecting a Lessee's Rights and Obligations."
Credit Enhancement. Credit enhancement with respect to the
Offered Notes will be provided by the subordination as follows: the Class A
Notes have the benefit of the subordination of the Class B Notes, Class C
Notes, Class D Notes, Class E Notes, funds on deposit, if any, in the Reserve
Account and any overcollateralization amounts; the Class B Notes have the
benefit of subordination of the Class C Notes, Class D Notes, Class E Notes,
funds on deposit, if any, in the Reserve Account and any overcollateralization
amounts; the Class C Notes have the benefit of subordination of the Class D
Notes, Class E Notes, funds on deposit, if any, in the Reserve Account and any
overcollateralization amounts; and the Class D Notes have the benefit of
subordination of the Class E Notes, funds on deposit, if any, in the Reserve
Account and any overcollateralization amounts. However, on any Payment Date
the amount available to Noteholders is limited to the extent of funds on
deposit in the Collection Account and the Reserve Account.
Non-Recourse Obligations. The Offered Notes represent debt
obligations of the Issuer secured by the Leases only and do not represent
interests in or recourse obligations of Copelco Capital or any of its
affiliates other than the Issuer. The Issuer is a special purpose trust with
limited assets. Consequently, the Noteholders must rely solely upon the
Leases, the Equipment and funds in the Reserve Account, if any, for payment of
principal of and interest on the Offered Notes. If no funds are on deposit in
the Reserve Account and the payments made on the Leases and the disposition
proceeds of the Equipment upon a default are insufficient to make payments on
the Offered Notes, no other assets will be available for the payment of the
deficiency.
19
<PAGE>
Book-Entry Registration. The Offered Notes offered hereby
initially will be represented by one or more notes registered in the name of
Cede & Co. and will not be registered in the names of the beneficial owners or
their nominees. As a result of this, unless and until Definitive Notes are
issued, beneficial owners will not be recognized by the Issuer or the
Indenture Trustee as Offered Noteholders, as that term is used in each
Indenture. Hence, until such time, beneficial owners will only be able to
exercise the rights of Offered Noteholders indirectly, through DTC, Euroclear
or CEDEL and their respective participating organizations, and will receive
reports and other information provided for under the Indenture only if, when
and to the extent provided by DTC, Euroclear or CEDEL, as the case may be, and
its participating organizations. See "Description of the Notes--Book-Entry
Registration."
Geographic Concentration of Leases. As of the Cut-Off Date,
approximately 17.7%, 15.9%, 7.8%, 6.0%, and 5.8% of the Leases (based on
statistical Discounted Present Value of the Leases) were located in
California, New York, Texas, New Jersey and Florida, respectively. No other
state accounts for more than 5% of the Leases. See "The Series Pool."
Accordingly, adverse economic conditions or other factors particularly
affecting any of these regions could adversely affect the performance on the
Leases.
Commingling of Funds. Under the Indenture, the Servicer is
required to deposit all Lease Payments, Casualty Payments and Termination
Payments received after the Cut-Off Date to the Collection Account within two
Business Days of receipt thereof. If bankruptcy or reorganization proceedings
were commenced with respect to the Servicer, those funds held by the Servicer
may be subject to an automatic stay resulting in a delay in the transfer of
such funds to the Trust Fund.
Insolvency of Lessees; Insolvency of Third Parties. To the
extent Lessees default on the Leases, including through insolvency, Lease
Payments deposited into the Collection Account will decrease and accordingly
Available Funds will be reduced.
Approximately 5% of the Leases were originated by a third
party who has sold the payment stream on the Leases to Copelco Capital but has
not sold its interest in the Equipment. In the event of a bankruptcy of such
third party, the trustee in bankruptcy may seek to repudiate the Leases and,
if successful, Lease Payments on such Leases will cease. Accordingly,
Available Funds could be reduced.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be
distributed to the owners of the Trust. The Sponsor will use such amounts to
purchase the Leases from Copelco Capital. Copelco Capital will utilize the
proceeds from the sale of the Leases to repay bank debt and for general
corporate purposes.
THE SERIES POOL
The Leases. As of the close of business on June 30, 1998
(the "Cut-Off Date"), the Notes will be secured by the Leases. The Lessees are
primarily hospitals, medical facilities, physicians and business owners
throughout the United States. The Leases were originated or acquired by the
Business Technology Division, the Healthcare Division and the Commercial &
Industrial Division of Copelco Capital (or their predecessors) (the
"Origination Divisions"). See "Risk Factors," "Security for the Notes" and
"Certain Legal Matters Affecting a Lessee's Rights and Obligations." The
statistical information included herein was computed using the Statistical
Discounted Present Value of the Leases as of the Cut-Off Date. The Statistical
Discounted Present Value of the Leases will not vary materially from the
Discounted Present Value of the Leases as of the Cut-Off Date.
Approximately 5% of the Leases were originated by a third
party who has sold the payment stream on the Leases to Copelco Capital but has
not sold its interest in the Equipment. In the event of a bankruptcy of such
third party, the trustee in bankruptcy may seek to repudiate the Leases and,
if successful, Lease Payments on such Leases will cease. Accordingly,
Available Funds could be reduced.
The Leases are triple-net leases which impose no affirmative
obligations on the Lessor, and are non-cancelable by the Lessees. Under
certain conditions, however, Copelco Capital may consent to prepayment of the
Leases. Generally, Copelco Capital will consent to a prepayment of a Lease
where the Lessee is upgrading the
20
<PAGE>
Equipment. All payments under the Leases are absolute, unconditional
obligations of the Lessees without right of offset for any reason. Such
payments will be made by the Lessees to the Servicer for the account of the
Issuer.
Each Lessee entered into its Lease for specified Equipment
which may be designated in schedules incorporated into the Lease. To the
extent not set forth in the Lease Contract, the schedules, among other things,
establish the periodic payments and the term of the Lease with respect to such
Equipment. The Leases follow one of several different forms of lease
agreement, with occasional modifications which do not materially affect the
basic terms of the Leases. The weighted average remaining term of the Series
Pool is 43.2 months. Copelco Capital will represent and warrant that, as of
Cut-Off Date, all Leases will be current or less than 63 days delinquent and,
as of the initial Determination Date, all Lessees will have made at least one
payment.
Lessees covenant to maintain the Equipment and install it at
a place of business agreed upon with Copelco Capital. Delivery,
transportation, repairs and maintenance are the obligation of the Lessees, and
all Lessees are required to carry, at their respective expense, liability and
replacement cost insurance under terms acceptable to Copelco Capital. Such
insurance proceeds will constitute Casualty Payments (as defined herein).
Subject to certain exceptions, if the Lessee does not provide evidence of
insurance coverage within 90 days of the commencement of the Lease, Copelco
Capital obtains such insurance and invoices the Lessee for the cost thereof.
Any defaults under a Lease (as such, a "Non-Performing Lease," as defined
herein) permit a declaration as immediately due and payable all remaining
Lease payments under the Lease and the immediate return of the Equipment.
Generally, any payments received six days after the scheduled payment date are
subject to late charges.
"Non-Performing Leases" are (a) Leases that have become more
than 123 days delinquent or (b) Leases that have been accelerated by the
Servicer or Leases that the Servicer has determined to be uncollectible in
accordance with its customary practices.
At the end of the Lease term, the Lessee must return the
Equipment with certification from the manufacturer that the Equipment is in
good working order, normal wear and tear excepted, unless the Lease is renewed
or the Equipment is purchased by the Lessee.
Historically, approximately 90% of the Equipment leased by
the Origination Divisions is purchased or re-leased by the original lessee at
the expiration of the lease term. "Nominal Buy-Out" Leases comprise 28.8% of
the Leases (by Statistical Discounted Present Value). Pursuant to the terms of
the Leases, the Lessee is generally required to advise Copelco Capital 90 to
120 days prior to the Lease termination of its intent to return the Equipment
at the expiration of the Lease. In most cases, the failure by a Lessee to so
advise Copelco Capital results in an automatic renewal of the Lease for a
specified period. For Equipment which is returned to Copelco Capital by the
lessees, Copelco Capital participates in an active secondary market for the
sale of used equipment.
The Equipment. The Equipment subject to the Leases is
purchased by Copelco Capital under direct specifications and instructions from
the Lessees. As of the Cut-Off Date, the Series Pool had approximately 64
equipment categories.
Certain Information with Respect to the Leases and the
Lessees. The following tables summarize certain information with respect to
the Leases and the Lessees as of the Cut-Off Date.
21
<PAGE>
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
Percentage of
Statistical
Statistical Discounted Percentage
Percentage Discounted Present Aggregate of Original
Number of of Number Present Value Value of Original Equipment
State Leases of Leases of Leases Leases Equipment Cost Cost
----- ---------- --------- ------------- ------------ ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Alabama 224 0.46% $ 5,227,597.44 0.77% $ 5,924,478.56 0.77%
Alaska 27 0.06% 268,758.74 0.04% 298,481.14 0.04%
Arizona 400 0.82% 7,243,063.78 1.06% 7,973,366.54 1.04%
Arkansas 59 0.12% 1,192,846.23 0.17% 1,329,653.95 0.17%
California 9,060 18.54% 120,988,494.38 17.73% 133,604,748.84 17.36%
Colorado 1,250 2.56% 12,491,936.28 1.83% 13,730,493.26 1.78%
Connecticut 1,008 2.06% 12,379,929.46 1.81% 13,815,455.23 1.80%
Delaware 96 0.20% 1,011,939.59 0.15% 1,128,470.44 0.15%
District of Columbia 395 0.81% 6,188,959.79 0.91% 7,028,512.60 0.91%
Florida 2,656 5.43% 39,302,559.06 5.76% 44,356,047.57 5.76%
Georgia 1,432 2.93% 20,368,799.18 2.99% 22,605,690.52 2.94%
Guam 3 0.01% 110,015.93 0.02% 116,629.22 0.02%
Hawaii 50 0.10% 843,232.76 0.12% 915,496.70 0.12%
Idaho 96 0.20% 1,259,538.07 0.18% 1,433,453.40 0.19%
Illinois 2,507 5.13% 30,481,612.27 4.47% 34,435,509.33 4.47%
Indiana 621 1.27% 7,637,222.94 1.12% 8,626,917.38 1.12%
Iowa 54 0.11% 2,235,135.18 0.33% 2,421,523.24 0.31%
Kansas 182 0.37% 2,636,334.76 0.39% 2,977,026.66 0.39%
Kentucky 304 0.62% 5,304,756.82 0.78% 6,619,589.45 0.86%
Louisiana 70 0.14% 2,517,103.32 0.37% 2,718,815.35 0.35%
Maine 413 0.85% 4,324,405.21 0.63% 4,742,246.51 0.62%
Maryland 598 1.22% 10,474,415.60 1.54% 11,799,132.66 1.53%
Massachusetts 1,506 3.08% 21,237,034.63 3.11% 23,946,468.80 3.11%
Michigan 420 0.86% 7,411,426.02 1.09% 8,146,207.91 1.06%
Minnesota 191 0.39% 6,225,248.71 0.91% 7,350,112.10 0.95%
Mississippi 225 0.46% 2,602,370.15 0.38% 2,901,088.17 0.38%
Missouri 472 0.97% 5,488,456.62 0.80% 6,197,702.47 0.81%
Montana 61 0.12% 648,873.34 0.10% 716,459.36 0.09%
Nebraska 44 0.09% 1,031,789.94 0.15% 1,124,432.25 0.15%
Nevada 341 0.70% 4,698,148.67 0.69% 5,074,787.47 0.66%
New Hampshire 427 0.87% 4,503,652.64 0.66% 5,144,872.50 0.67%
New Jersey 2,847 5.83% 40,603,043.89 5.95% 46,528,112.59 6.05%
New Mexico 202 0.41% 4,218,922.06 0.62% 4,433,359.81 0.58%
New York 7,875 16.11% 108,552,521.14 15.91% 124,969,885.27 16.24%
North Carolina 836 1.71% 13,985,008.83 2.05% 15,369,768.02 2.00%
North Dakota 5 0.01% 84,851.56 0.01% 94,007.26 0.01%
Ohio 1,494 3.06% 21,289,805.00 3.12% 23,481,206.51 3.05%
Oklahoma 254 0.52% 3,780,653.47 0.55% 4,100,455.32 0.53%
Oregon 458 0.94% 5,498,875.68 0.81% 6,180,874.42 0.80%
Pennsylvania 1,745 3.57% 25,053,412.85 3.67% 28,380,431.52 3.69%
Puerto Rico 1 0.00% 17,480.00 0.00% 24,760.30. 0.00%
Rhode Island 331 0.68% 3,501,220.23 0.51% 3,941,413.97 0.51%
South Carolina 312 0.64% 4,721,626.26 0.69% 5,105,146.31 0.66%
South Dakota 17 0.03% 92,540.56 0.01% 102,195.42 0.01%
Tennessee 332 0.68% 7,183,804.77 1.05% 7,866,126.45 1.02%
Texas 4,245 8.69% 53,444,629.91 7.83% 60,930,490.60 7.92%
Utah 238 0.49% 3,172,250.87 0.46% 3,391,519.73 0.44%
Vermont 36 0.07% 525,600.10 0.08% 604,977.70 0.08%
Virginia 1,072 2.19% 14,334,382.84 2.10% 16,523,057.11 2.15%
Washington 1,072 2.19% 16,274,612.50 2.39% 18,819,471.17 2.45%
West Virginia 111 0.23% 2,370,491.73 0.35% 2,489,301.77 0.32%
Wisconsin 184 0.38% 5,154,277.65 0.76% 7,007,702.84 0.91%
Wyoming 10 0.02% 100,851.37 0.01% 103,220.94 0.01%
- --------------------------------------------------------------------------------------------------------------------
Total 48,869 100.00% $682,296,520.78 100.00% $769,651,354.61 100.00%
====================================================================================================================
</TABLE>
22
<PAGE>
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Aggregate
Statistical Discounted Percentage Discounted Discounted Original Percentage of
Present Value Number of of Present Value Present Value Equipment Original
of the Leases Leases Numbers of Leases of Leases Cost Equipment Cost
------------- ------ ------- --------- --------- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
$0.01 - 5,000.00 18,490 37.84% $ 53,128,126.54 7.79% $ 63,678,841.92 8.27%
5,000.01 - 10,000.00 13,063 26.73% 93,787,477.38 13.75% 107,498,517.44 13.97%
10,000.01 - 15,000.00 6,204 12.70% 76,154,935.43 11.16% 85,627,608.66 11.13%
15,000.01 - 20,000.00 3,686 7.54% 63,616,257.17 9.32% 69,785,761.15 9.07%
20,000.01 - 25,000.00 2,079 4.25% 46,332,871.75 6.79% 50,864,156.91 6.61%
25,000.01 - 30,000.00 1,262 2.58% 34,485,374.14 5.05% 38,271,833.95 4.97%
30,000.01 - 35,000.00 852 1.74% 27,653,282.42 4.05% 30,490,287.50 3.96%
35,000.01 - 40,000.00 554 1.13% 20,730,904.94 3.04% 22,640,692.83 2.94%
40,000.01 - 45,000.00 446 0.91% 18,857,804.43 2.76% 20,957,994.73 2.72%
45,000.01 - 50,000.00 355 0.73% 16,819,398.58 2.47% 18,803,683.76 2.44%
50,000.01 - 60,000.00 457 0.94% 24,892,103.98 3.65% 27,862,535.27 3.62%
60,000.01 - 70,000.00 305 0.62% 19,709,007.49 2.89% 21,914,309.54 2.85%
70,000.01 - 80,000.00 192 0.39% 14,313,802.88 2.10% 16,242,362.57 2.11%
80,000.01 - 90,000.00 146 0.30% 12,377,306.22 1.81% 13,839,295.26 1.80%
90,000.01 - 100,000.00 122 0.25% 11,564,785.30 1.69% 12,993,287.88 1.69%
100,000.01 - 125,000.00 213 0.44% 23,813,673.76 3.49% 26,567,405.49 3.45%
125,000.01 - 150,000.00 117 0.24% 16,034,689.85 2.35% 17,746,025.37 2.31%
150,000.01 - 175,000.00 69 0.14% 11,090,767.47 1.63% 12,292,069.29 1.60%
175,000.01 - 200,000.00 44 0.09% 8,229,186.75 1.21% 9,052,717.28 1.18%
200,000.01 - 300,000.00 105 0.21% 25,116,542.33 3.68% 29,872,118.26 3.88%
300,000.01 - 400,000.00 45 0.09% 15,630,473.45 2.29% 17,639,871.80 2.29%
400,000.01 - 500,000.00 23 0.05% 10,141,164.69 1.49% 11,514,714.17 1.50%
500,000.01 - 600,000.00 12 0.02% 6,601,553.73 0.97% 7,925,979.93 1.03%
600,000.01 - 700,000.00 7 0.01% 4,362,322.45 0.64% 5,262,741.83 0.68%
700,000.01 - 800,000.00 2 0.00% 1,500,059.47 0.22% 1,586,523.08 0.21%
800,000.01 - 900,000.00 6 0.01% 5,195,234.11 0.76% 6,693,275.00 0.87%
900,000.01 - 1,000,000.00 3 0.01% 2,779,805.56 0.41% 3,613,174.00 0.47%
1,000,000.01 -1,500,000.00 5 0.01% 5,823,401.07 0.85% 6,348,940.18 0.82%
1,500,000.01 -2,000,000.00 2 0.00% 3,513,293.83 0.51% 3,708,818.00 0.48%
greater than $2,000,000.01 3 0.01% 8,040,913.61 1.18% 8,355,811.56 1.09%
- ----------------------------------------------------------------------------------------------------------------------------------
Total................. 48,869 100.00% $682,296,520.78 100.00% $769,651,354.61 100.00%
===================================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage of
Percentage Discounted Discounted Aggregate Original
Number of Number of Present Value Present Value Original Equipment
Remaining Term Leases Leases Leases of Leases Equipment Cost Cost
-------------- --------- ---------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 1,065 2.18% $5,435,324.03 0.80% $9,330,090.01 1.21%
13 - 24 4,861 9.95% 39,567,264.05 5.80% 57,151,704.90 7.43%
25 - 36 21,236 43.45% 195,462,989.46 28.65% 233,184,552.86 30.30%
37 - 48 9,059 18.54% 150,868,117.33 22.11% 169,224,181.20 21.99%
49 - 60 12,443 25.46% 278,201,080.99 40.77% 288,354,271.08 37.47%
61 - 72 174 0.36% 7,412,796.69 1.09% 7,157,236.42 0.93%
73 - 84 31 0.06% 5,348,948.23 0.78% 5,249,318.14 0.68%
- -------------------------------------------------------------------------------------------------------------------------------
Total................. 48,869 100.00% $682,296,520.78 100.00% $769,651,354.61 100.00%
===============================================================================================================================
</TABLE>
23
<PAGE>
DISTRIBUTION OF LEASES BY ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
<S>
Percentage
of Statistical
Percentage
Discounted of
Percentage Statistical Present Aggregate Original
Number of of Number Discounted Present Value of Original Equipment
Original Term Leases of Leases Value of Leases Leases Equipment Cost Cost
------------- -------- --------- --------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 200 0.41% $1,225,931.71 0.18% 1,568,774.56 0.20%
13 - 24 1,147 2.35% 9,467,584.61 1.39% 13,230,518.22 1.72%
25 - 36 3,895 7.97% 47,781,251.08 7.00% 60,987,361.65 7.92%
37 - 48 21,913 44.84% 195,855,401.06 28.71% 235,325,799.14 30.58%
49 - 60 9,408 19.25% 180,604,994.50 26.47% 198,279,452.07 25.76%
61 - 72 12,234 25.03% 237,644,310.65 34.83% 250,819,300.43 32.59%
73 - 84 57 0.12% 6,757,674.80 0.99% 6,528,694.94 0.85%
85 - 96 15 0.03% 2,959,372.37 0.43% 2,911,453.60 0.38%
- -------------------------------------------------------------------------------------------------------------------------
Total................. 48,869 100.00% $682,296,520.78 100.00% $769,651,354.61 100.00%
==========================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
<TABLE>
<CAPTION>
Percentage
of
Statistical
Statistical Discounted Percentage
Percentage Discounted Present Aggregate of Original
Number of of Number Present Value Value of Original Equipment
Lease Type Lease of Leases of Leases Leases Equipment Cost Cost
---------- --------- ----------- -------------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Finance Lease 48,756 99.77% $663,043,502.74 97.18% $740,239,790.25 96.18%
Operating Lease 113 0.23% 19,253,018.04 2.82% 29,411,564.36 3.82%
Total................. 48,869 100.00% $682,296,520.78 100.00% $769,651,354.61 100.00%
</TABLE>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
<TABLE>
<CAPTION>
Percentage
of
Statistical
Statistical Discounted Percentage
Percentage Discounted Present Aggregate of Original
Number of of Number Present Value Value of Original Equipment
Percentage Option Leases of Leases of Leases Leases Equipment Cost Cost
----------------- ---------- ----------- ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Nominal Buyout 9,841 20.18% $190,951,145.28 28.80% $205,021,761.85 27.70%
Fair Market Value 30,551 62.66% 320,636,748.94 48.36% 375,137,550.87 50.68%
Fixed Purchase Option 8,364 17.15% 151,455,608.52 22.84% 160,080,477.53 21.63%
- ------------------------------------------------------------------------------------------------------------------------
Total................. 48,756 100.00% $663,043,502.74 100.00% $740,239,790.25 100.00%
========================================================================================================================
</TABLE>
24
<PAGE>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percentage
of
Statistical
Statistical Discounted Percentage
Percentage Discounted Present Aggregate of Original
Number of of Number Present Value Value of Original Equipment
Equipment Type Leases of Leases of Leases Leases Equipment Cost Cost
-------------- -------- ---------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Anesthesia Equipment 21 0.04% 1,237,488.50 0.18% 1,522,497.88 0.20%
Automated Chemistry 234 0.48% 7,816,698.21 1.15% 8,464,872.74 1.10%
Systems
Automated Hematology 402 0.82% 9,139,193.26 1.34% 10,057,767.73 1.31%
Systems
Automated Test Equipment 3 0.01% 83,334.87 0.01% 94,005.81 0.01%
C.T. Systems 3 0.01% 1,232,328.89 0.18% 1,535,516.29 0.20%
C-Arm; IMG Intensifer 5 0.01% 234,387.77 0.03% 263,494.70 0.03%
Systems
Carts, Stretchers, Wheel 29 0.06% 326,369.45 0.05% 339,547.13 0.04%
Chairs
Cash Registers 13 0.03% 259,736.34 0.04% 263,340.23 0.03%
Cobalt and X-Ray Therapy 3 0.01% 307,614.51 0.05% 323,488.66 0.04%
Equipment
Communication Equipment 16 0.03% 654,308.53 0.10% 661,349.23 0.09%
Computer Systems-Doctors 573 1.17% 16,583,512.92 2.43% 17,451,901.19 2.27%
& Hospitals
Computers 1,504 3.08% 24,084,074.37 3.53% 27,087,073.49 3.52%
Construction Equipment 3 0.01% 244,423.79 0.04% 278,106.47 0.04%
Copiers 37,950 77.66% 411,777,725.00 60.35% 464,451,285.92 60.35%
Dental Operatory Equipment 719 1.47% 14,524,891.23 2.13% 14,940,015.35 1.94%
Document Imaging Equipment 139 0.28% 2,090,441.55 0.31% 2,212,978.58 0.29%
ECG (EKG) and 144 0.29% 2,903,789.51 0.43% 3,135,580.14 0.41%
Defibrillators
EEG 7 0.01% 178,494.69 0.03% 190,634.56 0.02%
Electronics Production 299 0.61% 46,957,189.39 6.88% 59,185,161.99 7.69%
Equipment
Facsimiles 2,562 5.24% 9,023,817.34 1.32% 10,543,464.22 1.37%
Furniture and Fixtures 8 0.02% 2,284,411.60 0.33% 2,727,830.43 0.35%
Gamma Cameras 55 0.11% 10,283,494.48 1.51% 11,711,009.18 1.52%
Holter Monitors 61 0.12% 1,027,572.41 0.15% 1,051,731.62 0.14%
Hosp Beds; Elec. Stryker 6 0.01% 116,966.71 0.02% 144,425.75 0.02%
FRMS, Burn Beds
Lasers 43 0.09% 3,729,391.14 0.55% 4,181,078.96 0.54%
Laundry, Kitchen, Food 1 0.00% 1,251,546.23 0.18% 1,083,936.00 0.14%
Srvc Eqp., Central
Supply
Linear Accelerators 1 0.00% 379,276.54 0.06% 432,000.00 0.06%
Lithotripters and 12 0.02% 1,164,680.57 0.17% 1,292,866.57 0.17%
Dialysis Equipment
Mailing Equipment 62 0.13% 477,160.75 0.07% 508,801.03 0.07%
Mammography 23 0.05% 1,704,842.37 0.25% 1,929,270.04 0.25%
Medical Equipment 3 0.01% 26,783.38 0.00% 25,689.66 0.00%
Microfilm Equipment 1 0.00% 3,364.28 0.00% 4,200.00 0.00%
Misc. Comm. & Indus. 49 0.10% 926,703.04 0.14% 1,189,150.42 0.15%
Equip.
Misc X-Ray Eqp(TNKS, 16 0.03% 573,544.20 0.08% 648,798.23 0.08%
Driers, TBLS)
Miscellaneous 226 0.46% 3,137,201.82 0.46% 3,461,697.18 0.45%
Misc Hospital Equipment 233 0.48% 18,339,445.13 2.69% 19,999,987.92 2.60%
Misc Lab Eqp (Pthlgy, 22 0.05% 485,737.12 0.07% 515,655.43 0.07%
Gas, Chrmts, Cntr, Spc)
Misc Vet Eqp; Cages, 4 0.01% 75,738.07 0.01% 70,296.98 0.01%
Scales, Tables
MRI Systems 7 0.01% 3,351,029.78 0.49% 4,472,582.81 0.58%
Office Furniture & 12 0.02% 317,994.72 0.05% 346,915.48 0.05%
Equipment
Operating Microscopes 11 0.02% 260,244.72 0.04% 289,487.27 0.04%
Opthlmc Diag Eqp (Slit 148 0.30% 3,245,907.30 0.48% 3,449,534.13 0.45%
Lamps, Tonometers)
Opt Eqp; Lens Grinding, 485 0.99% 6,753,312.90 0.99% 7,554,027.79 0.98%
Resurfacing
Patient Monitoring Systems 143 0.29% 2,278,515.47 0.33% 2,472,260.29 0.32%
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Percentage
of
Statistical
Statistical Discounted Percentage
Percentage Discounted Present Aggregate of Original
Number of of Number Present Value Value of Original Equipment
Equipment Type Leases of Leases of Leases Leases Equipment Cost Cost
-------------- -------- ---------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Patient Room Furnishing & 18 0.04% 491,186.04 0.07% 528,787.98 0.07%
Fixtures
Phone, TV, Comm Equipment 65 0.13% 919,520.56 0.13% 974,640.73 0.13%
Photo Equipment 4 0.01% 407,241.12 0.06% 476,954.21 0.06%
Phys Misc Medical Eqp & 631 1.29% 20,307,269.25 2.98% 21,479,946.22 2.79%
Exam Tables
Physician Office Furn, 16 0.03% 225,185.09 0.03% 228,520.14 0.03%
Fixtures and Phones
Plastic Machinery 1 0.00% 151,606.93 0.02% 195,000.00 0.03%
Podiatry Equipment 1 0.00% 11,390.59 0.00% 12,850.00 0.00%
Printing Equipment 127 0.26% 4,959,484.89 0.73% 5,084,449.61 0.66%
Pulse Oximetry Equipment 1 0.00% 4,304.83 0.00% 6,360.66 0.00%
Radiographic Fluoroscopic 9 0.02% 949,549.52 0.14% 1,083,783.99 0.14%
Systems
Respiratory Therapy 1488 3.04% 30,315,534.50 4.44% 33,975,589.77 4.41%
Equipment
Scanners 4 0.01% 77,126.46 0.01% 74,883.23 0.01%
Software 9 0.02% 131,598.43 0.02% 128,566.30 0.02%
Standard Printers 19 0.04% 201,001.34 0.03% 191,313.41 0.02%
Standard X-Ray Systems 32 0.07% 1,176,023.81 0.17% 1,304,735.89 0.17%
Surgical Equip. Scopes, 10 0.02% 329,691.33 0.05% 350,524.96 0.05%
Electrosurgical
Typewriters 1 0.00% 3,685.24 0.00% 4,575.50 0.00%
Ultrasound 169 0.35% 9,684,846.20 1.42% 10,889,463.95 1.41%
Wide Format Printers 1 0.00% 2,460.76 0.00% 2,315 0.00%
X-Ray Spec Systems; 2 0.00% 93,129.04 0.01% 92,777.58 0.01%
Angiography
- ----------------------------------------------------------------------------------------------------------------------
Total................. 48,869 100.00% 682,296,520.78 100.00% $769,651,354.61 100.00%
======================================================================================================================
</TABLE>
Historical Delinquency Information. Lease receivables are
generally evaluated by Copelco Capital for write-down when they become over 92
days delinquent. General delinquency information for equipment leases in the
Origination Divisions that are owned by Copelco Capital is set forth below.
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997 December 31, 1996
--------------------- ------------------------- ---------------------------
$ % $ % $ %
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance(1) $1,823,365,530 $1,732,009,721 $1,503,055,810
- -----------------------------------------------------------------------------------------------------------
No. of Delinquent
Days
30-59 Days 29,018,445 1.59% 38,613,963 2.23% 34,481,668 2.29%
60-89 Days 8,811,522 0.48% 11,747,380 0.68% 8,136,578 0.54%
90 Days + 9,931,071 0.54% 16,006,384 0.92% 7,587,972 0.50%
- -----------------------------------------------------------------------------------------------------------
Total Delinquency $47,761,038 2.62% $66,367,727 3.83% $50,206,218 3.34%
<CAPTION>
December 31, 1995 December 31, 1994 December 31, 1993
---------------------- -------------------- ----------------------
$ % $ % $ %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance(1) $1,238,424,241 $1,000,488,313 $736,373,700
- ------------------------------------------------------------------------------------------------------------
No. of Delinquent
Days
30-59 Days 26,255,335 2.12% 14,846,559 1.48% 9,184,216 1.25%
60-89 Days 4,976,920 0.40% 3,971,389 0.40% 1,886,765 0.26%
90 Days + 6,703,063 0.54% 6,748,827 0.67% 5,099,200 0.69%
- ------------------------------------------------------------------------------------------------------------
Total Delinquency $37,935,318 3.06% $25,566,775 2.56% $ 16,170,181 2.20%
</TABLE>
- ---------------------------
(1) The Total Receivables Balance is equal to the aggregate future rent
owing on the leases.
26
<PAGE>
Historical Default Experience. All accounts assessed over 92
days past due automatically become non-accruing accounts. Any subsequent
recoveries offset net losses. General charge-off information for leases in the
Origination Divisions that are owned and serviced by Copelco Capital for the
period January 1, 1993 to March 31, 1998 is set forth below.
HISTORICAL CHARGE-OFF EXPERIENCE
<TABLE>
<CAPTION>
Three Months Ended Year Ended December 31
----------------------------------------------------------------
March 31, 1998 1997 1996 1995 1994 1993
---------------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables $1,777,688 $1,617,532 $1,370,740 $1,119,456 $868,431 $649,278
Outstanding(1)........
Net Losses.............. $6,017 $22,137 $15,713 $11,457 $10,328 $8,842
Net Losses as a Percentage
of Average Receivables 1.35%(2) 1.37% 1.15% 1.02% 1.19% 1.36%
</TABLE>
- ---------------------------
(1) Equals the arithmetic average of the beginning of the period
Receivable Balance and the end of the period Receivable Balance. The
Receivables Balance is equal to the aggregate future rent owing on
the leases.
(2) Annualized
There can be no assurance that the levels of delinquency and
loss reflected in the above tables are or will be indicative of the
performance of the Leases in the future.
COPELCO CAPITAL'S UNDERWRITING AND SERVICING PRACTICES
General. Copelco Capital, a Delaware corporation, was
incorporated in October 1986. Copelco Capital is a wholly-owned subsidiary of
Copelco Financial Services Group, Inc. ("Copelco Financial") Copelco Capital's
primary business consists of originating and servicing leases to healthcare
providers, businesses, business owners and individuals in the United States
and Canada. Copelco Capital has multiple locations and is headquartered at 700
East Gate Drive, Mount Laurel, New Jersey 08054-5400 (as is Copelco Financial)
and its phone number is (609) 231-9600.
In May 1993, Copelco Financial (which was incorporated in
July 1982) reorganized its two primary operating subsidiaries, Copelco Credit
Corporation ("Copelco Credit") and Copelco Leasing Corporation ("Copelco
Leasing"), into six strategic business units (each, an "SBU"). Then, effective
July 1994, Copelco Leasing was merged into Copelco Credit with Copelco Credit
as the surviving legal entity; Copelco Credit then changed its name to Copelco
Capital, Inc. merging all of the Copelco Leasing and Copelco Capital leasing
operations.
Copelco Capital currently consists of three separate
operating divisions (each, a "Division"): the Business Technology Division,
the Healthcare Division and the Commercial & Industrial Division. The Business
Technology Division, the Healthcare Division and the Commercial & Industrial
Division originated 66.7%, 25.8% and 7.5%, respectively, of the Leases to be
included in the subject transaction (based upon the Statistical Discounted
Present Value of the Leases.)
The Business Technology Division leases small-ticket office
equipment, primarily photocopiers and computers, to businesses and business
owners throughout the United States and Canada through multiple manufacturer,
vendor and dealer programs. The Business Technology Division is the successor
division to Copelco Capital's Document Imaging, Major Accounts, Computer and
Canadian SBUs. Copelco Capital merged these four units in January 1997 in
order to achieve greater operating and marketing efficiencies.
The Healthcare Division provides a diversified range of
leasing services for the financing of healthcare equipment through multiple
manufacturer, vendor and dealer programs, with particular emphasis upon the
acquisition, leasing and remarketing of high-technology medical equipment to
hospitals, other healthcare facilities, healthcare providers and physicians.
The Healthcare Division is the successor of the Hospital and Healthcare SBU
and the Healthcare Vendor SBU which were consolidated in June, 1995 and the
Ambulatory Care SBU which was merged into the Healthcare Division in November,
1996. The rationale for the consolidation of the
27
<PAGE>
Healthcare Division was to achieve greater operating efficiencies and
eliminate certain operating and marketing redundancies.
The Commercial & Industrial Division is segmented into three
distinct business units: the Electronics Manufacturing Group, the Financial
Intermediary Group and the Material Handling Group. The Electronics
Manufacturing Group provides equipment leasing services through multiple
manufacturer, vendor and dealer programs, primarily to mid-sized companies.
The equipment financed through this group includes high technology equipment
for the electronics manufacturing service industry, such as printed circuit
board assembly and test equipment. The Financial Intermediary Group purchases
equipment lease transactions from third parties involved in the electronics
and other industrial equipment industries. The Material Handling Group,
established in 1998, provides retail equipment leasing and financing
specifically for vendors and manufacturers in the material handling industry.
As of December 31, 1997, Copelco Capital had total assets of
$2,083,256,000 compared with $1,722,212,000 as of December 31, 1996, total
liabilities of $1,927,558,000 compared with $1,588,614,000 as of December 31,
1996, shareholder's equity of $155,698,000 compared with $133,598,000 as of
December 31, 1996 and total revenues and net income of $253,787,000 and
$32,137,000, respectively, for the year ended December 31, 1997, compared with
$210,461,000 and $29,655,000, respectively, for the year ended December 31,
1996.
Since 1986, Copelco Capital and its predecessors have
participated in 35 equipment lease securitizations involving the issuance of
in excess of $2.7 billion in securities. Copelco Capital and its predecessors
performed all servicing functions in each of these prior transactions, 16 of
which remain outstanding.
Originations. The Business Technology Division leases
small-ticket office equipment, primarily photocopiers and computers, to
businesses and business owners throughout the United States, Canada and
western Europe. The Business Technology Division originates substantially all
of its leases through marketing programs which are directed at major
manufacturers and various distributors of copier equipment (each, a "Vendor")
with the balance obtained through new leases with existing lessees and
referrals. The Business Technology Division establishes both formal and
informal relationships with Vendors, several of which provide Copelco Capital
with a right of first refusal on all equipment leases with the Vendor's
customers. This arrangement provides the division with a steady flow of lease
referrals from Vendors which frequently use lease financing as a marketing
tool. In the majority of these vendor programs, Copelco Capital generally owns
the equipment subject to each lease and bills and collects lease payments in
its own name. For some select private label vendor programs, Copelco Capital
will bill and collect in the vendor's name.
The Business Technology Division also offers a cost per copy
program ("Cost per Copy"), introduced in late 1990, pursuant to which lessees
pay a fixed monthly payment (the "Fixed Payment") for which they are allowed a
certain minimum monthly copy usage. The monthly Fixed Payment represents
equipment financing (the "Equipment Financing Portion") and a monthly
maintenance charge (the "Maintenance Charge"). Copelco Capital funds the
Vendors on the basis of the Equipment Financing Portion of the Fixed Payment
and remits the Maintenance Charge to the Vendors as it is collected every
month. Copelco Capital calculates usage monthly using automated dialed-in
copier meter readings. To the extent that the usage has exceeded the monthly
copy allowance, Copelco Capital bills the lessee incremental charges for the
excess copy usage ("Excess Copy Charge"). This Excess Copy Charge is remitted
to the Vendors upon collection by Copelco Capital. Only the Equipment
Financing Portion will be included in the Discounted Present Value of the
Leases.
Vendors may choose to use a Copelco Capital lease form or
they may use their own lease agreement. In either case, the credit approval
remains with Copelco Capital. Lease documents for all leasing programs are
either identical to Copelco Capital's standard lease documents or are reviewed
by Copelco Capital to ensure substantial compliance with its standard terms.
Terms of Copelco Capital's lease documents are standard for virtually all
leases, as is documentation for virtually all private label programs.
The Healthcare Division provides a range of leasing services
for the financing of healthcare equipment with emphasis on the acquisition,
leasing and remarketing of high-technology medical equipment to hospitals,
other healthcare facilities, healthcare providers and physicians. The
Healthcare Division originates leases through five sales groups: National
Accounts, Medical Business, Vendor Services, Home Care, and Ambulatory Care.
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The National Accounts sales group solicits contractual
arrangements with major medical equipment manufacturers and distributors
throughout the United States. These contracts usually give Copelco exclusive
rights to handle the financing needs of the manufacturers' customers. Most
manufacturers are publicly-held or subsidiaries of international medical
conglomerates.
The Medical Business sales group provides leasing services
directly to hospitals and to physician group practices rather than through
vendors or manufacturers. The Medical Business marketing unit operates Copelco
Capital's Hospital Instant Lease Line ("HILL") program which grants hospitals
a pre-approved line of credit for the leasing of medium-ticket medical
equipment such as computed tomography scanners, radiographic and other imaging
equipment, laboratory and patient monitoring systems.
The Vendor Services sales group solicits exclusive
contractual arrangements and informal non-exclusive arrangements with local
and regional vendors. Such vendors sell medical equipment to physician group
medical practices and to individual physicians who finance the acquisition of
the equipment by leasing it from Copelco Capital. The Vendor Services
marketing unit operates Copelco Capital's Physician's Instant Lease Line
("PILL") program, which grants individual physicians and physician group
practices a pre-approved line of credit for use in leasing small- and
medium-ticket medical equipment.
The Home Care Sales group leases durable medical equipment
such as respiratory care equipment, patient monitoring devices and medication
delivery systems for use by people who are being treated on an out-patient or
in-home basis for either temporary or chronic health problems. Lessees are
typically wholesalers, distributors and service providers that rent the
equipment to patients who are reimbursed for the rental payments by their
health care insurers.
The Ambulatory Care sales group provides equipment leasing
to out-patient sites providing healthcare services such as diagnostic imaging,
surgical procedures and radiation therapy. Customers range from start-up
centers (typically managed by established organizations) to publicly-held
companies. Transactions may involve new equipment or refinancing of existing
equipment, often in conjunction with expansion or upgrading.
In addition to making fixed payments with respect to certain
health care equipment leases, lessees may pay incremental monthly charges to
the extent the scan usage exceeds the monthly scan allowance ("Fee Per Scan
Charges"). Fee Per Scan Charges will not be included in the Discounted Present
Value of the Leases. The Fee Per Scan Charges are remitted to the Vendors upon
collection by Copelco Capital.
The Commercial & Industrial Division: The Electronics
Manufacturing Group and the Financial Intermediary Group provide equipment
leasing services primarily to mid-sized companies. Since early 1993, the
division has focused on marketing through manufacturers and distributors in
the electronics manufacturing service industry. Currently, approximately 90%
of the leases originated by this division relate to the electronics
manufacturing service industry and approximately 10% represents machine tools
and other production equipment. The Material Handling Group originates a
majority of its business through its relationship with distributors of
material handling equipment. The Material Handling Group establishes both
formal and informal relationships with vendors, manufacturers, and
distributors of material handling equipment and provides retail leasing and
financing for the end-user customers.
Credit Review. Copelco Capital, in conjunction with the
parent holding company, provides organizational oversight for investment/risk
management policy, compliance, credit underwriting and due diligence
standards, and coordinates portfolio concentration guidelines and credit
personnel training for each of its Divisions. Within the parameters
established by Copelco Capital, each Division tailors its underwriting
policies to reflect their unique customers and markets.
Certain credit requests are evaluated under credit scoring
models utilized by Copelco Capital. All credit requests not subject to
automated credit scoring must be underwritten by a credit officer. Applicants
declined by credit scoring may be reviewed by a credit officer. Each credit
officer has a specific assigned lending limit based upon experience and
seniority. Credit approval limits, applicable to single transaction size and
individual lessee exposure, are also assigned to assistant credit managers,
group credit officers, the president of Copelco Capital, and the chief credit
officer of Copelco Capital. In general, transactions in excess of $2,000,000
must be approved by the senior management of Copelco Financial.
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Business Technology Division: Prior to a lease being
approved by the Business Technology Division, the vendor's sales personnel are
required to obtain from the prospective lessee historical financial data
and/or bank and trade references. New and repeat applicants must either
complete a comprehensive credit application or provide bank and trade
references.
Credit data are submitted for credit review in Mahwah, New
Jersey and Moberley, Missouri for copiers and Mahwah, New Jersey for
computers. Credit review is performed and lease approvals are given at these
locations, utilizing a computer system designed to handle applications which
are telephoned or telecopied from vendors. Using the computer system, the
applicant's credit is investigated and a credit decision is made.
Lessee evaluation includes an analysis of credit payment
history, business structure, banking history and relationships, and economic
conditions as they relate to the prospective lessee. In the case of a credit
request for equipment having a cost greater than approximately $50,000, the
information collected includes the prospect's most recent financial
statements. If individual guarantors are involved, a consumer credit bureau
report is generally obtained for the guarantors. Potential lessees should
generally have been in business for at least two years and a minimum of two
trade references are required.
The Business Technology Division has also implemented an
automated credit scoring system. The system, designed by Dun & Bradstreet
specifically for the Business Technology Division, was in development over a
two-year period and was formally implemented on January 4, 1994. The system
utilizes various filters for adapting "approve" and "decline" threshold scores
based upon criteria such as credit exposure, payment history (by SIC code),
Vendor and state. The model is consistent with the Business Technology
Division's traditional credit decision-making criteria (i.e., Dun & Bradstreet
data, consumer credit bureau information, and bank and trade references).
Healthcare Division: For leases originated by the Medical
Business sales group, full financial statements are required for credit
review, and a thorough history of past payment patterns is examined. Other
items such as a hospital's location, utility to its community and ownership
(public or private) are also considered. Certain of these transactions are
credit scored under HILL credit scoring parameters. The HILL credit scoring
parameters include, without limitation, the number of beds of the potential
lessee, its occupancy rate and Dun & Bradstreet Information Services ("Dun &
Bradstreet") financial highlight information.
Certain of the leases originated by the Vendor Services
group are credit scored under PILL credit scoring parameters. The PILL credit
scoring parameters include, without limitation, the length of time in practice
of the potential lessee, the potential lessee's medical specialty and a
consumer bankruptcy predictor model acquired by Copelco Capital. The credit
review process for physicians is similar to that of personal lending because
the lessees are predominantly individual physicians (or groups of physicians).
Many of the leases to physicians have personal guarantees associated with them
and spousal guarantees as well. Lessees are not required, however, to give
Copelco Capital liens on property. The predominant reason for delinquencies in
such leases is cash flow deficiencies and, to a lesser extent, death of the
lessee, in which case settlement with the lessee's estate can take several
months. Such leases are typically processed under the PILL program. For
inexpensive equipment, credit review of physician lessees involves analysis of
credit bureau reports, bank references, duration of practice and medical
specialty. For more expensive equipment, the credit review involves analysis
of personal income tax returns and financial statements of the practice in
addition to credit bureau reports and bank references. There is also a focus
on the length of time that the physician has maintained his or her private
practice.
The PILL and the HILL programs afford Copelco Capital the
ability to analyze physician, physician group practice and hospital credit
quality in advance of the lease decision, thus providing a means by which
physicians in certain medical specialties and certain hospitals may be
pre-approved for a leasing line of credit. They also provide rapid turnaround
of a specific application when it is submitted
National Accounts, Home Health and Ambulatory Care generally
utilize a combination of transactional credit analysis and credit scoring.
Transactions not eligible for credit scoring are reviewed by the Healthcare
Division's credit staff under the supervision of a senior credit officer.
Commercial & Industrial Division: In the Electronic
Manufacturing Group and Financial Intermediary Group, all credit decisions are
made by credit analysts. Credit scoring is not used. In general,
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transactions in excess of $50,000 require financial statement disclosure
consisting of at least the three most recent fiscal year-end financial
statements and interim financial statements. Additionally, Dun & Bradstreet
reports, bank and other credit references, trade references, and other
information may be evaluated. Transactions involving small, privately held
companies exhibiting limited financial resources require the financial
disclosure and personal guaranty of the principals. Consideration will also be
given to the value of the equipment securing the transaction, based upon a
review by the Group's Asset Management department. An approval might contain
restrictive conditions, including, but not limited to, a reduced term,
guaranties, security deposits, down payments, or a letter of credit.
The Material Handling Group utilizes a credit review system
similar to and based upon that of the Business Technology Division. The
majority of business originates through dealer/vendor networks, with retail
and wholesale credit applications submitted via fax. The assessment of
creditworthiness is determined through both automated systems and credit
officer analysis with emphasis on the following factors: time in business,
financial strength, payment/credit history, transaction structure, collateral
and industry outlook.
The evaluation of creditworthiness for retail end-user
customers will be accomplished through a modified version of the Business
Technology Division's credit scoring model, in which the filters and scoring
thresholds are adapted to the needs of the Material Handling Group. Retail
lease applicants will generally have been in business for at least two years
with evidence of satisfactory bank and/or comparable secured lender
references. Consumer credit bureau reports will be obtained if individual
guarantors or sole proprietors are considered in the transaction.
The terms of the Leases originated by each of the Divisions
require the lessees to maintain the equipment and install it at a place of
business approved by Copelco Capital. Delivery, transportation, repairs and
maintenance are obligations of lessees, and lessees are required to carry, at
their own expense, liability and replacement cost insurance under terms
acceptable to Copelco Capital. Any lease payment defaults permit Copelco
Capital to declare immediately due and payable all remaining lease payments.
At the end of a lease term, lessees must return the leased equipment to
Copelco Capital in good working order unless the lease is renewed or the
leased equipment is purchased by the lessee.
Collections. Collection procedures have been instituted by
Copelco Capital and are uniformally utilized throughout Copelco Capital's
Divisions. A late charge is generally assessed to lessees 6 days after the
payment due date. Telephone contact is normally initiated when an account is
15 days past due, but may be initiated more quickly. All collection activity
is entered into the computerized collection system. Activity notes are input
directly into the collection system in order to facilitate routine collection
activity. Collectors have available at their computer terminals the latest
status and collection history on each account.
Generally, on the day on which a Lease becomes 10 days
delinquent, Copelco Capital's credit and collection review system
automatically generates a computerized late notice which is sent directly to
the lessee. When an account becomes 30 days past due, a default letter is
generally sent out to the lessee and to anyone providing personal guarantees
on the Leases. An acceleration letter is sent to all lessees and guarantors
when a Lease becomes 45 days past due, as circumstances warrant. Telephone
contact will be continued throughout the delinquency period. Accounts which
become over 90 days past due are subject to repossession of Equipment and
action by collection agencies and attorneys. Prior to being written down
(which is generally prior to the lease being 123 days delinquent), each lease
is evaluated on the merits of the individual situation, with equipment value
being considered as well as the current financial strength of the lessee.
Sales and Servicing Agreement. Copelco Capital will enter
into an agreement (the "Sales and Servicing Agreement") with the Issuer and
the Sponsor, pursuant to which Copelco Capital will, among other things,
service the Leases, make Servicer Advances and forward Excess Copy Charges,
Maintenance Charges and Fee Per Scan Charges to Vendors. In the Sales and
Servicing Agreement, Copelco Capital will make certain representations and
warranties regarding the Leases and the Equipment. In the event that (a) any
of such representations and warranties made by Copelco Capital proves at any
time to have been inaccurate in any material respect as of the Issuance Date
or (b) 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 Copelco Capital (other than any such
action or inaction of Copelco Capital, when acting as Servicer, in connection
with the enforcement of any Lease (other than an Early Lease Termination) in a
manner consistent with the provisions of the Sales and Servicing
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Agreement) or any claim by any Lessee against Copelco Capital 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 Copelco Capital is given notice thereof
by the Issuer or the Indenture Trustee or the date on which Copelco Capital
otherwise first has notice thereof, Copelco Capital will repurchase such Lease
(a "Warranty Lease") and the Equipment subject thereto by paying to the
Indenture Trustee for deposit into the Collection Account, not later than the
Determination Date next following the expiration of such 30-day period, an
amount at least equal to the Discounted Present Value of such Lease plus any
amounts previously due and unpaid thereon. In the alternative, subject to the
satisfaction of certain requirements set forth in the Sales and Servicing
Agreement, Copelco Capital will have the option to substitute one or more
Substitute Leases for such Warranty Lease. 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, Termination Payments or
Booked Residual Value under any Lease shall be deemed to be material. "Booked
Residual Value" means the amount booked by Copelco Capital as expected to be
realized upon scheduled termination of a Lease through sale or other
disposition of the related Equipment.
Servicing Fee. The Servicing Fee with respect to the Notes
will be paid monthly on the Payment Date from amounts in the Collection
Account and will be calculated by multiplying one-twelfth of 0.75% times the
Discounted Present Value of the Performing Leases, as of the prior Payment
Date.
The Servicing Fee will be paid to the Servicer for servicing
the Series Pool and for certain administrative expenses in connection with the
Notes, including Indenture Trustee Fees and Owner Trustee fees.
FORMATION OF THE ISSUER
General
The Issuer, Copelco Capital Funding Trust 1998-A, is a
business trust formed in accordance with the laws of the State of Delaware,
pursuant to the Trust Agreement, solely for the purpose of effectuating the
transactions described herein. Prior to formation, the Issuer will have had no
assets or obligations and no operating history. Upon formation, the Issuer
will not engage in any business activity other than (i) acquiring, holding and
pledging the Leases and related interests and property related thereto, (ii)
issuing the Securities and (iii) distributing payments thereon.
The Owner Trustee
Wilmington Trust Company, which will serve as the Owner
Trustee under the Trust Agreement, is a Delaware banking corporation and its
principal offices are located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001. The Owner Trustee will perform
limited administrative functions under the Trust Agreement. The Owner
Trustee's duties in connection with the issuance and sale of the Securities is
limited solely to the express obligations of the Owner Trustee as set forth in
the Trust Agreement.
Indenture Trustee
Manufacturers and Traders Trust Company, the Indenture
Trustee under the Indenture, is a New York banking corporation and its
principal offices are located at One M&T Plaza, Buffalo, New York 14203.
Trust Funds
The Trust Funds will consist of a pool (the "Series Pool")
of healthcare, manufacturing and business equipment lease contracts (the
"Lease Contracts"), including payments due thereunder (the "Lease
Receivables", together with the Lease Contracts, the "Leases") and certain
interest in the related leased equipment (the "Equipment") acquired or
originated by Copelco Capital and transferred to the Sponsor, then in turn to
the Issuer. The Trust Funds will, in addition, include the funds on deposit in
Collection Account and the Reserve Account.
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DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture (the
"Indenture") between the Issuer and Manufacturers and Traders Trust Company,
as indenture trustee (the "Indenture Trustee"). The following statements with
respect to the Notes are subject to the detailed provisions of the Indenture,
the form of which is filed as an exhibit to the registration statement of
which this Prospectus forms a part. Whenever any particular section of the
Indenture or any term used therein is referred to, the statement in connection
with which such reference is made is qualified in its entirety by such
reference.
General. The Offered Notes represent secured debt
obligations of the Issuer secured by the Trust Fund, and the privately placed
Class E Notes represent subordinated debt obligations of the Issuer only
secured by the Trust Fund as provided in the related Indenture. Neither
represents an interest in or recourse obligation of Copelco Capital or any of
its other affiliates other than the Issuer. The Issuer is a Delaware business
trust with limited assets. Consequently, Noteholders must rely solely upon the
Leases, the interests in the Equipment, funds on deposit in the Collection
Account and the Reserve Account, for payment of principal of and interest on
the Offered Notes.
The Initial Principal Amount of the Notes shall be equal to
the Discounted Present Value of the Leases as of the Cut-Off Date. Such
Discounted Present Value of the Leases, at any given time, shall equal the
future remaining scheduled payments from the related Leases (including
Non-Performing Leases), discounted at the Discount Rate, as set forth in the
Indenture.
Each Note will bear interest from the Issuance Date at the
applicable Interest Rate, calculated on the basis of a year of 360 days
comprised of twelve 30-day months, except in the case of the Class A-1 Notes,
which interest will be calculated on the basis of a year of 360 days and the
actual number of days in such Interest Accrual Period, payable on the
fifteenth day of each month (or if such day is not a business day the next
succeeding business day), to the person in whose name the Note was registered
at the close of business on the preceding Record Date. Principal will be
payable as set forth under "Distributions on Notes." Notes may be presented to
the corporate trust office of the Indenture Trustee for registration of
transfer or exchange (Section 2.03). Notes may be exchanged without a service
charge, but the Issuer may require payment to cover taxes or other
governmental charges (Section 2.03).
Book-Entry Registration. Class A Noteholders, Class B
Noteholders, Class C Noteholders and Class D Noteholders may hold their notes
through DTC (in the United States) or Cedel or Euroclear (in Europe) if they
are participants of such systems, or indirectly through organizations which
are participants in such systems.
Cede, as nominee for DTC, will hold the global Class A Note
or Notes, global Class B Note or Notes, global Class C Note or Notes and the
global Class D Note or Notes. Cedel and Euroclear will hold omnibus positions
on behalf of their participants through customers' securities accounts in
Cedel's and Euroclear's names on the books of their respective Depositaries
(as defined herein) which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC. Citibank
will act as depositary for Cedel, and Morgan Guaranty Trust will act as
depositary for Euroclear (in such capacities, the "Depositaries").
DTC is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the UCC and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations
("Participants") and facilitate the settlement of securities transactions
between Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of notes.
Participants include the Underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Transfers between Participants will occur in accordance with
DTC rules. Transfers between Cedel Participants (as defined herein) and
Euroclear Participants (as defined herein) will occur in accordance with their
respective rules and operating procedures.
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Cross-market transfers between persons holding or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected through
DTC in accordance with DTC rules on behalf of the relevant European
international clearing systems by its Depositary. Cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedel Participants
and Euroclear Participants may not deliver instructions directly to the
Depositaries.
Because of time-zone differences, credits of securities
received in Cedel or Euroclear as a result of a transaction with a Participant
will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be
reported to the relevant Euroclear or Cedel Participants on such business day.
Cash received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel Participant or a Euroclear Participant to a Participant will
be received with value on the DTC settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the business day following
settlement in DTC. For information with respect to tax documentation
procedures relating to the Offered Notes, see "Material Federal Income Tax
Considerations."
Offered Noteholders that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of,
or other interests in, Offered Notes may do so only through Participants and
Indirect Participants. In addition, Offered Noteholders will receive all
distributions of principal and interest on the Offered Notes from the
Indenture Trustee through DTC and its Participants. Under a book-entry format,
Offered Noteholders will receive payments after the related Distribution Date,
as the case may be, because, while payments are required to be forwarded to
Cede, as nominee for DTC, on each such date, DTC will forward such payments to
its Participants which thereafter will be required to forward them to Indirect
Participants or holders of beneficial interests in the Offered Notes. It is
anticipated that the only Noteholder of the Offered Notes will be Cede, as
nominee of DTC, and that holders of beneficial interests in the Offered Notes,
under the Indenture will only be permitted to exercise rights under the
Indenture indirectly through DTC and its Participants who in turn will
exercise their rights through DTC.
Under the rules, regulations and procedures creating and
affecting DTC and its operations, DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Offered Notes
and is required to receive and transmit distributions of principal of and
interest on the Offered Notes. Participants and Indirect Participants with
which holders of beneficial interests in the Offered Notes have accounts
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of these respective holders.
Because DTC can only act on behalf of Participants, who in
turn act on behalf of Indirect Participants and certain banks, the ability of
holders of beneficial interests in the Offered Notes to pledge Offered Notes
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such Offered Notes, may be limited due to the lack
of a Definitive Note for such Offered Notes.
DTC has advised the Issuer that it will take any action
permitted to be taken by a Class A Noteholder, Class B Noteholder, Class C
Noteholder or Class D Noteholder under the Indenture only at the direction of
one or more Participants to whose account with DTC the Class A Notes, Class B
Notes, Class C Notes or Class D Notes are credited. Additionally, DTC has
advised the Issuer that it may take actions with respect to the applicable
Offered Notes that conflict with other of its actions with respect thereto.
Cedel is incorporated under the laws of Luxembourg as a
professional depository. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may
be settled in Cedel in any of 28 currencies, including United States dollars.
Cedel provides to Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Cedel interfaces with
domestic markets in several countries. As a professional depository, Cedel is
subject to regulation by the Luxembourg Monetary Institute. Cedel Participants
are recognized
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financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters. Indirect access to Cedel
is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 29 currencies,
including United States dollars. Euroclear includes various other services,
including securities lending and borrowing and interfaces with domestic
markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on
behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other
professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear
through or maintain a custodial relationship with a Euroclear Participant,
either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York
banking corporation which is a member bank of the Federal Reserve System. As
such, it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "Terms and Conditions"). The Terms
and Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to Offered Notes held through
Cedel or Euroclear will be credited to the cash accounts of Cedel Participants
or Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Material Federal Income Tax Considerations." Cedel or
the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by an Offered Noteholder under the Indenture on behalf
of a Cedel Participant or Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to
effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Offered Notes among
participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
Definitive Notes. The Offered Notes will be issued in fully
registered, authenticated form to Beneficial Owners or their nominees (the
"Definitive Notes"), rather than to DTC or its nominee, only if (a) the Issuer
advises the Indenture Trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as Depository with respect to such
Notes, and the Indenture Trustee or the Issuer is unable to locate a qualified
successor or (b) the Issuer at its option elects to terminate the book-entry
system through DTC (Section 2.06).
Upon the occurrence of any of the events described in the
immediately preceding paragraph, the Indenture Trustee is required to notify
all Beneficial Owners through DTC of the availability of Definitive Notes for
such Class. Upon surrender by DTC of the Definitive Note representing the
Notes and instructions for
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reregistration, the Indenture Trustee will issue such Definitive Notes, and
thereafter the Indenture Trustee will recognize the holders of such Definitive
Notes as Offered Noteholders under the related Indenture (the "Holders")
(Section 2.07). The Indenture Trustee will also notify the Holders of any
adjustment to the Record Date with respect to the Notes necessary to enable
the Indenture Trustee to make distributions to Holders of the Definitive Notes
for such Class of record as of each Payment Date.
Additionally, upon the occurrence of any such event
described above, distribution of principal of and interest on the Offered
Notes will be made by the Indenture Trustee directly to Holders in accordance
with the procedures set forth herein and in the Indenture. Distributions will
be made by check, mailed to the address of such Holder as it appears on the
Note register Upon at least 10 days' notice to Noteholders for such Class;
however, the final payment on any Note (whether the Definitive Notes or the
Note for such Class registered in the name of Cede representing the Notes of
such Class) will be made only upon presentation and surrender of such Note at
the office or agency specified in the notice of final distribution to
Noteholders.
Definitive Notes of each Class will be transferable and
exchangeable at the offices of the Indenture Trustee or its agent in New York,
New York, which the Indenture Trustee shall designate on or prior to the
issuance of any Definitive Notes with respect to such Class. No service charge
will be imposed for any registration of transfer or exchange, but the
Indenture Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith (Section 2.03(e)).
Collection Account. The Indenture Trustee will establish and
maintain an Eligible Account (the "Collection Account") into which the
Servicer will deposit all Lease Payments, Casualty Payments, Termination
Payments and recoveries from Non-Performing Leases to the extent Copelco
Capital has not substituted a Substitute Lease for such Non-Performing Lease
(except to the extent required to reimburse unreimbursed Servicer Advances)
(each as defined herein) on or in respect of each Lease included in the Series
Pool within two Business Days of receipt thereof; provided that Residual
Realizations will not be deposited in the Collection Account. All Lease
Payments, Casualty Payments, Termination Payments and other payments relating
to a Lease received and so deposited in the Collection Account shall
constitute property of the Issuer, securing payments on the related Notes
(Section 3.02(a)).
An "Eligible Account" means either (a) an account maintained
with a depository institution or trust company acceptable to the Rating
Agency, or (b) a trust account or similar account maintained with a federal or
state chartered depository institution, which may be an account maintained
with the Indenture Trustee.
A "Casualty Payment" is any payment pursuant to a Lease on
account of the loss, theft, condemnation, governmental taking, destruction, or
damage beyond repair (each, a "Casualty") 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.
A "Lease Payment" is 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 before the applicable 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, (including, without
limitation, any Excess Copy Charges and Fee Per Scan Charges), shall not be
Lease Payments hereunder.
A "Termination Payment" is 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 of the Issuer, and the Lessee.
The Indenture Trustee shall deposit the following funds into
the Collection Account (Section 3.03(a)), which funds received on or prior to
the related Determination Date with respect to the related Due Period,
including any funds deposited into the Collection Account from the Reserve
Account, shall be available for distribution ("Available Funds"), pursuant to
the Indenture, on the next succeeding Payment Date:
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<PAGE>
a) Lease Payments due during the prior Due Period (net
of any Excess Copy Charges, Maintenance Charges and
Fee Per Scan Charges);
b) recoveries from Non-Performing Leases to the extent
Copelco Capital has not substituted Substitute Leases
for such Non-Performing Leases (except to the extent
required to reimburse unreimbursed Servicer
Advances);
c) late charges received on delinquent Lease payments
not advanced by the Servicer;
d) proceeds from repurchases by Copelco Capital of
Leases as a result of breaches of representations and
warranties to the extent Copelco Capital has not
substituted Substitute Leases for such Leases other
than Residual Warranty Payments;
e) proceeds from investment of funds in the Collection
Account and the Reserve Account, if any;
f) Casualty Payments other than Residual Casualty
Payments;
g) Servicer Advances;
h) Termination Payments to the extent the Issuer does
not reinvest such Termination Payments in Additional
Leases other than Residual Prepayments; and
i) to the extent there occurs an Available Funds
Shortfall, funds, if any, on deposit in the Reserve
Account.
Available Funds will not include Residual Realizations.
Reserve Account. The Indenture Trustee will establish and
maintain an Eligible Account (the "Reserve Account"). On the Closing Date, the
Issuer will make an initial deposit in an amount equal to 1% of the Discounted
Present Value of the Leases as of the Cut-Off Date into the Reserve Account.
In the event that Available Funds (exclusive of amounts on deposit in the
Reserve Account) are insufficient to pay the amounts owing the Servicer,
Interest Payments on the Notes and the Class A Principal Payment, the Class B
Principal Payment, the Class C Principal Payment, the Class D Principal
Payments and the Class E Principal Payments (such payments, the "Required
Payments" and such shortfall, an "Available Funds Shortfall"), the Indenture
Trustee will withdraw from the Reserve Account an amount equal to the lesser
of the funds on deposit in the Reserve Account (the "Available Reserve
Amount") and such deficiency. In addition, on each Payment Date, Available
Funds remaining after the payment of the Required Payments will be deposited
into the Reserve Account to the extent that the Required Reserve Amount
exceeds the Available Reserve Amount. The "Required Reserve Amount" equals 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. Any
amounts on deposit in the Reserve Account in excess of the Required Reserve
Amount will be released to the Issuer (Section 3.05(c)).
Distributions on Notes. Payments on the Notes will commence
on August 17, 1998. On or before the fifth day prior to each Payment Date (or
the preceding business day, if such day is not a business day) (each, a
"Determination Date"), the Servicer will determine the Available Funds and the
Required Payments.
For each Payment Date, the interest due with respect to the
Notes will be the interest that has accrued on such Notes since the last
Payment Date, or, in the case of the first Payment Date, since the Issuance
Date, at the applicable Interest Rates applied to the Outstanding Principal
Amount of each Class, after giving effect to payments of principal to
Noteholders on the preceding Payment Date, plus all previously accrued and
unpaid interest on the Notes (the "Interest Payments") (Section 2.01(c)).
Funds in the Collection Account, together with reinvestment earnings thereon,
will be used by the Indenture Trustee to make required payments of principal
and interest on the related Notes (Section 3.03(b)).
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<PAGE>
For each Payment Date, Principal Payments due with respect
to the Class A Notes, the Class B Notes, Class C Notes, Class D Notes and the
Class E Notes will be the Class A Principal Payment, the Class B Principal
Payment, the Class C Principal Payment, the Class D Principal Payment and the
Class E Principal Payment, respectively. In addition, to the extent that the
Class B Floor exceeds the Class B Target Investor Principal Amount, the Class
C Floor exceeds the Class C Target Investor Principal Amount, the Class D
Floor exceeds the Class D Target Investor Principal Amount and/or the Class E
Floor exceeds the Class E Target Investor Principal Amount, Additional
Principal shall be distributed, sequentially, as an additional principal
payment on the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes until the Outstanding Principal Amount of each Class has been reduced to
zero (Section 3.03(b)).
Unless an Event of Default and acceleration of the Notes has
occurred, on or before each Payment Date, the Servicer will instruct the
Indenture Trustee to apply or cause to be applied the Available Funds to make
the following payments in the following priority (Section 3.03(b)):
(a) to pay the Servicing Fee;
(b) to reimburse unreimbursed Servicer Advances in
respect of a prior Payment Date;
(c) to make Interest Payments, owing on the Class A Notes
concurrently to the Class A-1 Noteholders, Class A-2
Noteholders, Class A-3 Noteholders and Class A-4
Noteholders;
(d) to make Interest Payments on the Class B Notes;
(e) to make Interest Payments on the Class C Notes;
(f) to make Interest Payments on the Class D Notes;
(g) to make Interest Payments on the Class E Notes;
(h) to make the Class A Principal Payment to (i) 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;
(i) to make the Class B Principal Payment to the Class B
Noteholders;
(j) to make the Class C Principal Payment to the Class C
Noteholders;
(k) to make the Class D Principal Payment to the Class D
Principal Noteholders;
(l) to make the Class E Principal Payment to the Class E
Principal Noteholders;
(m) to pay the Additional Principal, if any, as an
additional reduction of principal, to the Class A
Noteholders then receiving the Class A Principal
Payment, until the Outstanding Principal Amount as
provided in Clause (h) above on all of the Class A
Notes has been reduced to zero, then to Class B
Noteholders until the Outstanding Principal Amount on
the Class B Notes has been reduced to zero, then to
the Class C Noteholders until the Outstanding
Principal Amount on the Class C Notes has been
reduced to zero, then to the Class D Noteholders
until the Outstanding Principal Amount on the Class D
Notes has been reduced to zero, and finally to the
Class E Noteholders, until the Outstanding Principal
Amounts on the Class E Notes has been reduced to
zero;
38
<PAGE>
(n) 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; and
(o) to the Issuer, the balance, if any.
Advances by the Servicer. Prior to any Payment Date, the
Servicer may, but will not be required to, advance (each, a "Servicer
Advance") to the Indenture Trustee an amount sufficient to cover delinquencies
on all Leases with respect to the prior Due Period. The Servicer will be
reimbursed for Servicer Advances from Available Funds on the second following
Payment Date. See "Distribution on Notes" above.
Redemption. The Issuer may, at its option, redeem the Notes,
as a whole, at their principal amount, without premium, together with interest
accrued to the date fixed for redemption if on any payment date the Discounted
Present Value of the Performing Leases is less than or equal to 5% of the
Discounted Present Value of the Leases as of the Cut-Off Date (Sections 2.01 and
1.06.). The Issuer will give notice of such redemption to each Noteholder and
the Indenture Trustee at least 30 days before the Payment Date fixed for such
prepayment Upon deposit of funds necessary to effect such redemption, the
Indenture Trustee shall pay the remaining unpaid principal amount on the Notes
and all accrued and unpaid interest as of the Payment Date fixed for redemption.
See "Description of the Notes--Redemption."
Events of Default and Notice Thereof. The following events
will be defined in the Indenture as "Events of Default" with respect to the
Notes:
(a) default in making Interest Payments when such become
due and payable;
(b) default in making Principal Payments at Stated
Maturity; or
(c) insolvency or bankruptcy events relating to the
Issuer. (Section 6.01)
The Indenture will provide that the Indenture Trustee shall
give the Noteholders notice of all uncured defaults known to it (the term
"default" to include the events specified above without grace periods)
(Sections 6.03 and 7.02).
If an Event of Default occurs, the unpaid principal amount
of the related Notes shall automatically become due and payable together with
all accrued and unpaid interest thereon. The Indenture Trustee may, however,
if the Event of Default involves other than non-payment of principal or
interest on the Notes, not sell the related Leases and Equipment unless such
sale is for an amount greater than or equal to the Outstanding Principal
Amount of the Notes unless directed to do so by the holders of 66 2/3% of the
then Outstanding Principal Amount of the Notes and the Residual Notes (Section
6.03).
Subsequent to an Event of Default and following any
acceleration of the Notes pursuant to the Indenture, any moneys that may then
be held or thereafter received by the Indenture Trustee shall be applied in
the following order of priority, at the date or dates fixed by the Indenture
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 Indenture Trustee and the Noteholders (including the
reasonable fees and expenses of any counsel to the Indenture 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, to the payment of all accrued and unpaid
interest on the Outstanding Principal Amount of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes pro-rata 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 Interest Rate, Class A-2 Interest Rate,
Class A-3 Interest Rate
39
<PAGE>
and Class A-4 Interest Rate, respectively, second to the payment of all
accrued and unpaid interest on the Outstanding Principal Amount of the
Class B Notes 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 Interest
Rate, third, to the payment of all accrued and unpaid interest on the
Outstanding Principal Amount of the Class C Notes 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 Interest Rate, fourth, to the payment of all accrued
and unpaid interest on the Outstanding Principal Amount of the Class D
Notes 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 D Interest Rate, fifth
to the payment of all accrued and unpaid interest on the Outstanding
Principal Amount of the Class E Notes 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 E Interest Rate, sixth to the payment of the Outstanding
Principal Amount of the Class A-1 Notes, seventh, to the payment of the
Outstanding Principal Amount of the Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes pro-rata to the date of payment thereof, eighth, to the
payment of the Outstanding Principal Amount of the Class B Notes to the
date of payment thereof, ninth, to the payment of the Outstanding
Principal Amount of the Class C Notes, tenth, to the payment of the
Outstanding Principal Amount of the Class D Notes, eleventh, to the
payment of the Outstanding Principal Amount of the Class E Note;
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 due under the Residual
Notes;
Fifth to the payment of amounts then due the Indenture
Trustee under the Indenture; and
Sixth to the payment of the remainder, if any, to the Issuer
or any other Person legally entitled thereto (Section 6.06).
The Issuer will be required to furnish annually to the
Indenture Trustee, a statement of certain officers of the Issuer to the effect
that to the best of their knowledge the Issuer is not in default in the
performance and observance of the terms of the Indenture or, if the Issuer is
in default, specifying such default (Section 8.09).
The Indenture will provide that the holders of 66-2/3% in
aggregate principal amount of the Notes and the Residual Notes then
outstanding will have the right to waive certain defaults and, subject to
certain limitations, to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee or exercising any
trust or power conferred on the Indenture Trustee (Sections 6.12 and 6.13).
The Indenture will provide that in case an Event of Default shall occur (which
shall not have been cured or waived), the Indenture Trustee will be required
to exercise such of its rights and powers under such Indenture and to use the
degree of care and skill in their exercise that a prudent man would exercise
or use in the conduct of his own affairs (Section 7.01(b)). Subject to such
provisions, the Indenture Trustee will be under no obligation to exercise any
of its rights or powers under such Indenture at the request of any of the
Noteholders unless they shall have offered to the Indenture Trustee reasonable
security or indemnity(Section 6.12). Upon request of a Noteholder, the
Indenture Trustee will provide information as to the outstanding principal
amount of each Class of Notes and the Residual Notes.
Modification of the Indenture. With certain exceptions,
under the Indenture, the rights and obligations of the Issuer and the rights
of the Noteholders may be modified by the Issuer with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of the Notes
and the Residual Notes then outstanding under the Indenture; but no such
modification may be made which would (a) extend the fixed maturity of any
Note, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of principal or interest thereon, without the consent of the
holder of each Note so affected or (b) reduce the above-stated percentage of
Notes, without the consent of the holders of all Notes then outstanding under
such Indenture (Section 9.02).
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Servicer Events of Default. The following events and
conditions shall be defined in the Sales and Servicing Agreement as "Servicer
Events of Default":
(a) failure on the part of the Servicer to remit to the
Indenture Trustee within three Business Days following the
receipt thereof any monies received by the Servicer
required to be remitted to the Indenture Trustee under the
Sales and Servicing Agreement;
(b) so long as Copelco Capital is the Servicer, failure on the
part of Copelco Capital to pay to the Indenture Trustee on
the date when due, any payment required to be made by
Copelco Capital pursuant to the Sales and Servicing
Agreement;
(c) default on the part of either the Servicer or (so long as
Copelco Capital is the Servicer) Copelco Capital in its
observance or performance in any material respect of
certain covenants or agreements in the Sales and Servicing
Agreement;
(d) if any representation or warranty of Copelco Capital made in
the Sales and Servicing Agreement shall prove to be
incorrect in any material respect as of the time made;
provided, however, that the breach of any representation or
warranty made by Copelco Capital in such 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 such material breach
of any representation or warranty made by Copelco Capital in
such 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 Copelco Capital
repurchases such Lease and Equipment in accordance with the
Sales and Servicing Agreement to the extent provided
therein;
(e) certain insolvency or bankruptcy events relating to the
Servicer;
(f) the failure of the Servicer to make one or more payments
due with respect to aggregate recourse debt or other
obligations exceeding $5,000,000, 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
more persons to cause) more than $5,000,000 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;
(g) a final judgment or judgments (or decrees or orders) for
the payment of money aggregating in excess of $5,000,000
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.
Servicer Termination. So long as a Servicer Event of Default
under the Sales and Servicing Agreement is continuing, the Indenture Trustee
shall, upon the instructions of the holders of 66-2/3% in principal amount of
the Notes and the Residual Notes, by notice in writing to the Servicer
terminate all of the rights and obligations of the Servicer (but not Copelco
Capital's obligations which shall survive any such termination) under the
Sales and Servicing Agreement (Section 5.01). On the receipt by the Servicer
of such written notice, all authority and power of the Servicer under the
Sales and Servicing Agreement to take any action with respect to any Lease or
Equipment will cease and the same will pass to and be vested in the Indenture
Trustee pursuant to and under the Sales and Servicing Agreement and the
Indenture.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes, the aggregate
amount of each interest payment on such Notes and the yield to maturity of
such Notes are directly related to the rate of payments on the underlying
Leases. The payments on such Leases may be in the form of scheduled payments,
Prepayments or liquidations due to default, casualty and other events, which
cannot be specified at present. Any such payments may result in
41
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distributions to Noteholders of amounts which would otherwise have been
distributed over the remaining term of the Leases. In general, the rate of
such payments may be influenced by a number of other factors, including
general economic conditions. The rate of Principal Payments with respect to
any Class may also be affected by any repurchase of the underlying Leases by
Copelco Capital pursuant to the Sales and Servicing Agreement. In such event,
the repurchase price will decrease the Discounted Present Value of the
Performing Leases, causing the corresponding weighted average life of the
Notes to decrease See "Risk Factors--Prepayments."
In the event a Lease becomes a Non-Performing Lease, a
Warranty Lease or an Adjusted Lease, Copelco Capital will have the option to
substitute for the terminated lease another of similar characteristics (a
"Substitute Lease") in an aggregate amount not to exceed 10% of the Discounted
Present Value of the Leases as of the Cut-Off Date with respect to
Non-Performing Leases and in an aggregate amount not to exceed 10% of the
Discounted Present Value of the Leases as of the Cut-Off Date with respect to
Adjusted Leases and Warranty Leases In addition, in the event of an Early
Lease Termination which has been prepaid in full, Copelco Capital will have
the option to transfer an additional lease of similar characteristics (an
"Additional Lease"). The Substitute Leases and Additional Leases will have a
Discounted Present Value of the Leases equal to or greater than that of the
Leases being modified and replaced and the monthly payments on the Substitute
Leases or Additional Leases will be at least equal to those of the terminated
Leases through the term of such terminated Leases. In the event that an Early
Lease Termination is allowed by Copelco Capital and a Substitute Lease is not
provided, the amount prepaid will be equal to at least the Discounted Present
Value of the terminated Lease, plus any delinquent payments.
The effective yield to holders of the Notes will depend
upon, among other things, the amount of and rate at which principal is paid to
such Noteholders. The after-tax yield to Noteholders may be affected by lags
between the time interest income accrues to Noteholders and the time the
related interest income is received by the Noteholders.
The following chart sets forth the percentage of the Initial
Principal Amount of the Class A, Class B, Class C, Class D, and Class E Notes
which would be outstanding on the Payment Dates set forth below assuming a CPR
of 0% and 12%, respectively and were calculated using the Statistical Discount
Rate. Such information is hypothetical and is set forth for illustrative
purposes only. The CPR ("Conditional Payment Rate") assumes that a fraction of
the outstanding Series Pool is prepaid on each Distribution Date, which
implies that each Lease in the Series Pool is equally likely to prepay. This
fraction, expressed as a percentage, is annualized to arrive at the
Conditional Payment Rate for the Contract Pool. The CPR measures prepayments
based on the outstanding Discounted Present Value of the Leases, after the
payment of all Scheduled Payments on the Leases during such Due Period. The
CPR further assumes that all Leases are the same size and amortize at the same
rate and that each Lease will be either paid as scheduled or prepaid in full.
The amounts set forth below are based upon the timely receipt of scheduled
monthly Lease payments as of the Cut-Off Date, assume that the Issuer
exercises its option to redeem the Notes and assume the Issuance Date is
August 10, 1998 and the first Payment Date is August 17, 1998.
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<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE RESPECTIVE CPR SET FORTH BELOW
=====================================================================================================================
0% CPR
----------------------------------------------------------------------------------------------------------
Payment Class A-1 Class A-2 Class A-3 Class A-4 Class B Class C Class D Class E
Date
----------------------------------------------------------------------------------------------------------
% % % % % % % %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August, 1998 91.87% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September, 1998 83.67% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
October, 1998 75.34% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November, 1998 67.02% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
December, 1998 58.69% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
January, 1999 50.25% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
February, 1999 41.82% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
March, 1999 33.39% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April, 1999 24.93% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
May, 1999 16.48% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June, 1999 8.06% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July, 1999 0.00% 99.28% 100.00% 100.00% 99.84% 99.84% 99.84% 99.84%
August, 1999 0.00% 84.35% 100.00% 100.00% 96.49% 96.49% 96.49% 96.49%
September, 1999 0.00% 69.40% 100.00% 100.00% 93.13% 93.13% 93.13% 93.13%
October, 1999 0.00% 54.33% 100.00% 100.00% 89.74% 89.74% 89.74% 89.74%
November, 1999 0.00% 39.33% 100.00% 100.00% 86.37% 86.37% 86.37% 86.37%
December, 1999 0.00% 24.37% 100.00% 100.00% 83.02% 83.02% 83.02% 83.02%
January, 2000 0.00% 9.29% 100.00% 100.00% 79.63% 79.63% 79.63% 79.63%
February, 2000 0.00% 0.00% 96.55% 100.00% 76.26% 76.26% 76.26% 76.26%
March, 2000 0.00% 0.00% 87.53% 100.00% 72.89% 72.89% 72.89% 72.89%
April, 2000 0.00% 0.00% 78.46% 100.00% 69.51% 69.51% 69.51% 69.51%
May, 2000 0.00% 0.00% 69.45% 100.00% 66.15% 66.15% 66.15% 66.15%
June, 2000 0.00% 0.00% 60.57% 100.00% 62.84% 62.84% 62.84% 62.84%
July, 2000 0.00% 0.00% 51.81% 100.00% 59.57% 59.57% 59.57% 59.57%
August, 2000 0.00% 0.00% 43.32% 100.00% 56.41% 56.41% 56.41% 56.41%
September, 2000 0.00% 0.00% 35.01% 100.00% 53.31% 53.31% 53.31% 53.31%
October, 2000 0.00% 0.00% 26.91% 100.00% 50.29% 50.29% 50.29% 50.29%
November, 2000 0.00% 0.00% 19.08% 100.00% 47.37% 47.37% 47.37% 47.37%
December, 2000 0.00% 0.00% 11.54% 100.00% 44.56% 44.56% 44.56% 44.56%
January, 2001 0.00% 0.00% 4.20% 100.00% 41.82% 41.82% 41.82% 41.82%
February, 2001 0.00% 0.00% 0.00% 97.38% 39.20% 39.20% 39.20% 39.20%
March, 2001 0.00% 0.00% 0.00% 91.18% 36.70% 36.70% 36.70% 36.70%
April, 2001 0.00% 0.00% 0.00% 85.27% 34.32% 34.32% 34.32% 34.32%
May, 2001 0.00% 0.00% 0.00% 79.70% 32.08% 32.08% 32.08% 32.08%
June, 2001 0.00% 0.00% 0.00% 74.45% 29.97% 29.97% 29.97% 29.97%
July, 2001 0.00% 0.00% 0.00% 69.46% 27.96% 27.96% 27.96% 27.96%
August, 2001 0.00% 0.00% 0.00% 64.69% 26.04% 26.04% 26.04% 26.04%
September, 2001 0.00% 0.00% 0.00% 60.03% 24.16% 24.16% 24.16% 24.16%
October, 2001 0.00% 0.00% 0.00% 55.47% 22.33% 22.33% 22.33% 22.33%
November, 2001 0.00% 0.00% 0.00% 51.08% 20.56% 20.56% 20.56% 20.56%
December, 2001 0.00% 0.00% 0.00% 46.79% 18.83% 18.83% 18.83% 18.83%
January, 2002 0.00% 0.00% 0.00% 42.55% 17.13% 17.13% 17.13% 17.13%
February, 2002 0.00% 0.00% 0.00% 38.49% 15.49% 15.49% 15.49% 15.49%
March, 2002 0.00% 0.00% 0.00% 34.54% 13.90% 13.90% 13.90% 13.90%
April, 2002 0.00% 0.00% 0.00% 30.06% 12.39% 13.90% 13.90% 13.90%
May, 2002 0.00% 0.00% 0.00% 25.59% 12.39% 13.90% 13.90% 13.90%
June, 2002 0.00% 0.00% 0.00% 21.32% 12.39% 13.90% 13.90% 13.90%
July, 2002 0.00% 0.00% 0.00% 17.37% 12.39% 13.90% 13.90% 13.90%
August, 2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
WEIGHTED
AVERAGE
LIFE(1)(YEARS)
To Call: 0.47 1.25 2.00 3.34 2.38 2.38 2.38 2.38
To Maturity: 0.47 1.25 2.00 3.37 2.44 2.46 2.47 2.49
</TABLE>
(1) The weighted average life of a Class A Note, Class B Note, Class C Note,
Class D Note, and Class E Note is determined by (a) multiplying the
amount of cash distributions in reduction of the Outstanding Principal
Amount of the respective Offered Note by the number of years from the
Issuance Date to such Payment Date, (b) adding the results, and (c)
dividing the sum by the respective Initial Principal Amount.
43
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE RESPECTIVE CPR SET FORTH BELOW
========================================================================================================================
12% CPR
---------------------------------------------------------------------------------------------------------
Payment Date Class A-1 Class A-2 Class A-3 Class A-4 Class B Class C Class D Class E
---------------------------------------------------------------------------------------------------------
% % % % % % % %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August, 1998 88.24% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September, 1998 76.61% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
October, 1998 65.08% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November, 1998 53.76% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
December, 1998 42.63% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
January, 1999 31.61% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
February, 1999 20.79% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
March, 1999 10.17% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April, 1999 0.00% 99.49% 100.00% 100.00% 99.88% 99.88% 99.88% 99.88%
May, 1999 0.00% 81.30% 100.00% 100.00% 95.80% 95.80% 95.80% 95.80%
June, 1999 0.00% 63.48% 100.00% 100.00% 91.80% 91.80% 91.80% 91.80%
July, 1999 0.00% 45.93% 100.00% 100.00% 87.86% 87.86% 87.86% 87.86%
August, 1999 0.00% 28.79% 100.00% 100.00% 84.01% 84.01% 84.01% 84.01%
September, 1999 0.00% 11.95% 100.00% 100.00% 80.23% 80.23% 80.23% 80.23%
October, 1999 0.00% 0.00% 97.18% 100.00% 76.49% 76.49% 76.49% 76.49%
November, 1999 0.00% 0.00% 87.39% 100.00% 72.84% 72.84% 72.84% 72.84%
December, 1999 0.00% 0.00% 77.80% 100.00% 69.26% 69.26% 69.26% 69.26%
January, 2000 0.00% 0.00% 68.34% 100.00% 65.74% 65.74% 65.74% 65.74%
February, 2000 0.00% 0.00% 59.08% 100.00% 62.28% 62.28% 62.28% 62.28%
March, 2000 0.00% 0.00% 50.02% 100.00% 58.90% 58.90% 58.90% 58.90%
April, 2000 0.00% 0.00% 41.09% 100.00% 55.58% 55.58% 55.58% 55.58%
May, 2000 0.00% 0.00% 32.39% 100.00% 52.33% 52.33% 52.33% 52.33%
June, 2000 0.00% 0.00% 23.95% 100.00% 49.18% 49.18% 49.18% 49.18%
July, 2000 0.00% 0.00% 15.77% 100.00% 46.13% 46.13% 46.13% 46.13%
August, 2000 0.00% 0.00% 7.95% 100.00% 43.22% 43.22% 43.22% 43.22%
September, 2000 0.00% 0.00% 0.43% 100.00% 40.41% 40.41% 40.41% 40.41%
October, 2000 0.00% 0.00% 0.00% 93.70% 37.72% 37.72% 37.72% 37.72%
November, 2000 0.00% 0.00% 0.00% 87.32% 35.15% 35.15% 35.15% 35.15%
December, 2000 0.00% 0.00% 0.00% 81.27% 32.71% 32.71% 32.71% 32.71%
January, 2001 0.00% 0.00% 0.00% 75.47% 30.38% 30.38% 30.38% 30.38%
February, 2001 0.00% 0.00% 0.00% 69.99% 28.18% 28.18% 28.18% 28.18%
March, 2001 0.00% 0.00% 0.00% 64.84% 26.10% 26.10% 26.10% 26.10%
April, 2001 0.00% 0.00% 0.00% 60.00% 24.15% 24.15% 24.15% 24.15%
May, 2001 0.00% 0.00% 0.00% 55.48% 22.33% 22.33% 22.33% 22.33%
June, 2001 0.00% 0.00% 0.00% 51.28% 20.64% 20.64% 20.64% 20.64%
July, 2001 0.00% 0.00% 0.00% 47.33% 19.05% 19.05% 19.05% 19.05%
August, 2001 0.00% 0.00% 0.00% 43.62% 17.56% 17.56% 17.56% 17.56%
September, 2001 0.00% 0.00% 0.00% 40.05% 16.12% 16.12% 16.12% 16.12%
October, 2001 0.00% 0.00% 0.00% 36.61% 14.74% 14.74% 14.74% 14.74%
November, 2001 0.00% 0.00% 0.00% 33.36% 13.43% 13.43% 13.43% 13.43%
December, 2001 0.00% 0.00% 0.00% 29.57% 13.43% 13.43% 13.43% 13.43%
January, 2002 0.00% 0.00% 0.00% 25.90% 13.43% 13.43% 13.43% 13.43%
February, 2002 0.00% 0.00% 0.00% 22.44% 13.43% 13.43% 13.43% 13.43%
March, 2002 0.00% 0.00% 0.00% 19.13% 13.43% 13.43% 13.43% 13.43%
April, 2002 0.00% 0.00% 0.00% 15.98% 13.43% 13.43% 13.43% 13.43%
May, 2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
June, 2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
July, 2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
August, 2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
WEIGHTED
AVERAGE
LIFE(1)(YEARS)
To Call: 0.34 0.96 1.65 2.97 2.05 2.05 2.05 2.05
To Maturity: 0.34 0.96 1.65 3.01 2.12 2.13 2.14 2.16
</TABLE>
(1) The weighted average life of a Class A Note, Class B Note, Class C Note,
Class D Note, and Class E Note is determined by (a) multiplying the
amount of cash distributions in reduction of the Outstanding Principal
Amount of the respective Offered Note by the number of years from the
Issuance Date to such Payment Date, (b) adding the results, and (c)
dividing the sum by the respective Initial Principal Amount.
44
<PAGE>
SECURITY FOR THE NOTES
General. Repayment of the Notes will be secured by (a) a
first priority security interest in the underlying Leases perfected both by
filing UCC financing statements against the Issuer and Copelco Capital and by
taking possession of the respective Lease documents, (b) a security interest
in the related Equipment owned by the Issuer and an assignment of the Issuer's
security interest in such Equipment subject to Nominal Buy-Out Leases, which
security interest was originally perfected by Copelco Capital (for Equipment
with an original cost in excess of $25,000 which assignment will be recorded
in the manner described below) and (c) all funds in the Collection Account and
the Reserve Account.
THE INDENTURE TRUSTEE
Manufacturers and Traders Trust Company will be the
Indenture Trustee under the Indenture. Copelco Capital, as Seller or Servicer,
and its affiliates may from time to time enter into normal banking and
Indenture Trustee relationships with the Indenture Trustee and its affiliates.
The Indenture Trustee, the Servicer and any of their respective affiliates may
hold Notes in their own names. In addition, for purposes of meeting the legal
requirements of certain local jurisdictions, the Indenture Trustee shall have
the power to appoint a co-Indenture Trustee or a separate Indenture Trustee
under the Indenture. In the event of such appointment, all rights, powers,
duties and obligations conferred or imposed upon the Indenture Trustee by the
Indenture will be conferred or imposed upon the Indenture Trustee and such
separate Indenture Trustee or co-Indenture Trustee jointly, or in any
jurisdiction in which the Indenture Trustee shall be incompetent or
unqualified to perform certain acts, singly upon such separate Indenture
Trustee or co-Indenture Trustee, who shall exercise and perform such rights,
powers, duties and obligations solely at the direction of the Indenture
Trustee.
The Indenture Trustee may resign at any time, in which event
the Issuer will be obligated to appoint a successor Indenture Trustee. The
Issuer may also remove each Indenture Trustee if such Indenture Trustee ceases
to be eligible to continue as such under the Indenture, fails to perform in
any material respect its obligations under such Indenture, or becomes
insolvent. In such circumstances, the Issuer will be obligated to appoint a
successor Indenture Trustee. Any resignation or removal of a Indenture Trustee
and appointment of a successor Indenture Trustee will not become effective
until acceptance of the appointment by the successor Indenture Trustee.
THE OWNER TRUSTEE
Wilmington Trust Company, which will serve as the Owner Trustee under the
Trust Agreement, is a Delaware banking corporation and its principal offices
are located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001.
CERTAIN LEGAL MATTERS AFFECTING A LESSEE'S
RIGHTS AND OBLIGATIONS
General. The Leases are triple-net leases, requiring the
Lessees to pay all taxes, maintenance and insurance associated with the
Equipment, and are primarily non-cancelable by the Lessees.
The Leases are "hell or high water" leases, under which the
obligations of the Lessee are absolute and unconditional, regardless of any
defense, setoff or abatement which the Lessee may have against Copelco
Capital, as Seller or Servicer, the Issuer, or any other person or entity
whatsoever.
Defaults under the Leases are generally the result of
failure to pay amounts when due, failure to observe other covenants in the
Lease, misrepresentations by, or the insolvency, bankruptcy or appointment of
a trustee or receiver for the Lessee under a Lease. The remedies of the lessor
(and the Issuer as assignee) following a notice and cure period are generally
to seek to enforce the performance by the Lessee of the terms and covenants of
the Lease (including the Lessee's obligation to make scheduled payments) or
recover damages for the breach thereof, to accelerate the balance of the
remaining scheduled payments paid to terminate the rights of the Lessee under
such Lease. Although the Leases permit the lessor to repossess and dispose of
the related Equipment in the
45
<PAGE>
event of a lease default, and to credit such proceeds against the Lessee's
liabilities thereunder, such remedies may be limited where the Lessee
thereunder is subject to bankruptcy, or other insolvency proceedings.
UCC and Bankruptcy Considerations. Pursuant to the Sales and
Servicing Agreement, Copelco Capital will sell the Leases to the Sponsor, make
a capital contribution to the Sponsor of Equipment owned by Copelco Capital
and subject to the Leases, and assign its security interests in the Equipment
subject to Nominal Buy-Out Leases. The Sponsor will in turn transfer its
interests in the Leases and Equipment to the Issuer. Copelco Capital will
warrant that each of the transfer of the Leases from Copelco Capital to the
Sponsor and from the Sponsor to the Issuer is an absolute assignment, that the
contributions of its rights in the Equipment is a valid transfer of Copelco
Capital's title to the Equipment and that Copelco Capital is either the owner
of the Equipment or has a valid perfected first priority security interest in
the Equipment (for Leases with leased Equipment having an original equipment
cost in excess of $25,000), including Equipment, subject to Nominal Buy-Out
Leases, and accordingly, Copelco Capital has filed UCC financing statements in
its favor against Lessees in respect of all Equipment in the Series Pool with
an original Equipment cost in excess of $25,000. No action will be taken to
perfect the interest of Copelco Capital in any Equipment in the Series Pool
with an original Equipment cost of less than $25,000. In addition, UCC
financing statements identifying security interests in the Equipment as
transferred to, or obtained by, the Issuer or the Indenture Trustee and UCC
Financing Statements identifying equipment owned by Copelco Capital,
transferred to the Issuer and pledged to the Indenture Trustee will be filed
in favor of the Issuer or the Indenture Trustee in the Filing Locations. In
the event of the repossession and resale of Equipment subject to a superior
lien, the senior lienholder would be entitled to be paid the full amount of
the indebtedness owed to it out of the sale proceeds before such proceeds
could be applied to the payment of claims by the Servicer on behalf of the
Issuer. Certain statutory provisions, including federal and state bankruptcy
and insolvency laws, may limit the ability of the Servicer to repossess and
resell collateral or obtain a deficiency judgment in the event of a Lessee
default. In the event of the bankruptcy or reorganization of a Lessee, or
Copelco Capital, as Seller or Servicer, various provisions of the Bankruptcy
Code of 1978, 11 U.S.Css.ss. 101-1330 (the "Bankruptcy Code"), and related
laws may interfere with, delay or eliminate the ability of Copelco Capital or
the Issuer to enforce its rights under the Leases.
In the case of operating leases, the Bankruptcy Code grants
to the bankruptcy trustee or the debtor-in-possession a right to elect to
assume or reject any executory contract or unexpired lease. Any rejection of
such a lease or contract constitutes a breach of such lease or contract,
entitling the nonbreaching party to a claim for damages for breach of
contract. The net proceeds from any resulting judgment would be deposited by
the Servicer into the Collection Account and allocated to the Noteholders as
more fully described herein. Upon the bankruptcy of a Lessee, if the
bankruptcy trustee or debtor-in-possession elected to reject a Lease, the flow
of scheduled payments to Noteholders would cease. In the event that, as a
result of the bankruptcy of a Lessee, the Servicer is prevented from
collecting scheduled payments with respect to Leases and such Leases become
Non-Performing Leases, no recourse would be available against Copelco Capital
(except for misrepresentation or breach of warranty) and the Noteholders could
suffer a loss with respect to the Notes. Similarly, upon the bankruptcy of the
Issuer, if the bankruptcy trustee or debtor-in-possession elected to reject a
Lease, the flow of Lease payments to the Issuer and the Noteholders would
cease. As noted above, however, the Issuer has been structured so that the
filing of a bankruptcy petition with respect to it is unlikely. See "The
Issuer."
These UCC and bankruptcy provisions, in addition to the
possible decrease in value of a repossessed item of Equipment, may limit the
amount realized on the sale of Equipment to less than the amount due on the
related Lease.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of material federal
income tax consequences to the original purchasers of the Offered Notes of the
purchase, ownership and disposition of the Offered Notes. It does not purport
to discuss all federal income tax consequences that may be applicable to
investment in the Offered Notes or to particular categories of investors, some
of which may be subject to special rules. In particular, this discussion
applies only to institutional investors that purchase Offered Notes directly
from the Issuer and hold the Offered Notes as capital assets.
46
<PAGE>
The discussion that follows, and the opinion set forth below
of Dewey Ballantine LLP, special tax counsel to the Issuer ("Tax Counsel"),
are based on the provisions of the Internal Revenue Code of 1986, as amended
(the "Code") and treasury regulations promulgated thereunder as in effect on
the date hereof and on existing judicial and administrative interpretations
thereof. These authorities are subject to change and to differing
interpretations, which could apply retroactively. The opinion of Tax Counsel
is not binding on the courts or the Internal Revenue Service (the "IRS").
Potential investors should consult their own tax advisors in determining the
federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of the Offered Notes.
Tax Counsel has prepared the following discussion and is of
the opinion that such discussion is correct in all material respects.
Characterization of the Offered Notes as Indebtedness. In
the opinion of Tax Counsel, although no transaction closely comparable to that
contemplated herein has been the subject of any treasury regulation, revenue
ruling or judicial decision, based on the application of existing law to the
facts as set forth in the applicable agreements, the proper treatment of the
Offered Notes is as indebtedness for federal income tax purposes.
Although it is the opinion of Tax Counsel that the Offered
Notes are properly characterized as indebtedness for federal income tax
purposes, no assurance can be given that such characterization of the Offered
Notes will prevail. If the Offered Notes were treated as an ownership interest
in the Leases, all income on such Leases would be income to the holders of the
Offered Notes, and related fees and expenses would generally be deductible
(subject to certain limitations on the deductibility of miscellaneous itemized
deductions by individuals) and certain market discount and premium provisions
of the Code might apply to a purchase of the Offered Notes.
If, alternatively, the Offered Notes were treated as an
equity interest in the Issuer, distributions on the Offered Notes probably
would not be deductible in computing the taxable income of the Issuer and all
or a part of distributions to the holders of the Offered Notes probably would
be treated as dividend income to those holders. Such an Issuer-level tax could
result in a reduced amount of cash available for distributions to the holders
of the Offered Notes.
Taxation of Interest Income of Noteholders. If characterized
as indebtedness, interest on the Offered Notes will be taxable as ordinary
income for federal income tax purposes when received by Noteholders using the
cash method of accounting and when accrued by Noteholders using the accrual
method of accounting. Interest received on the Offered Notes also may
constitute "investment income" for purposes of certain limitations of the Code
concerning the deductibility of investment interest expense.
Original Issue Discount. It is not anticipated that the
Offered Notes will have any original issue discount ("OID") other than
possibly OID within a de minimis exception and that accordingly the provisions
of sections 1271 through 1273 and 1275 of the Code generally will not apply to
the Offered Notes. OID will be considered de minimis if it is less than 0.25%
of the principal amount of Note multiplied by its expected weighted average
life.
Market Discount. A subsequent purchaser who buys a Note for
less than its principal amount may be subject to the "market discount" rules
of Sections 1276 through 1278 of the Code. If a subsequent purchaser of a Note
disposes of such Note (including certain nontaxable dispositions such as a
gift), or receives a principal payment, any gain upon such sale or other
disposition will be recognized, or the amount of such principal payment will
be treated, as ordinary income to the extent of any "market discount" accrued
for the period that such purchaser holds the Note. Such holder may instead
elect to include market discount in income as it accrues with respect to all
debt instruments acquired in the year of acquisition of the Offered Notes and
thereafter. Market discount generally will equal the excess, if any, of the
then-current unpaid principal balance of the Note over the purchaser's basis
in the Note immediately after such purchaser acquired the Note. In general,
market discount on a Note will be treated as accruing over the term of such
Note in the ratio of interest for the current period over the sum of such
current interest and the expected amount of all remaining interest payments,
or at the election of the holder, under a constant yield method. At the
request of a holder of a Note, information will be made available that will
allow the holder to compute the accrual of market discount under the first
method described in the preceding sentence.
47
<PAGE>
The market discount rules also provide that a holder who
incurs or continues indebtedness to acquire a Note at a market discount may be
required to defer the deduction of all or a portion of the interest on such
indebtedness until the corresponding amount of market discount is included in
income.
Notwithstanding the above rules, market discount on a Note
will be considered to be zero if it is less than a de minimis amount, which is
0.25% of the remaining principal balance of the Note multiplied by its
expected weighted average remaining life. If OID or market discount is de
minimis, the actual amount of discount must be allocated to the remaining
principal distributions on the Note and, when each such distribution is
received, capital gain equal to the discount allocated to such distribution
will be recognized.
Market Premium. A subsequent purchaser who buys a Note for
more than its principal amount generally will be considered to have purchased
the Note at a premium. Such holder may amortize such premium, using a constant
yield method, over the remaining term of the Note and, except as future
regulations may otherwise provide, may apply such amortized amounts to reduce
the amount of interest income reportable with respect to such Note over the
period from the purchase date to the date of maturity of the Note. Legislative
history of the Tax Reform Act of 1986 indicates that the amortization of such
premium on an obligation that provides for partial principal payments prior to
maturity should be governed by the methods for accrual of market discount on
such an obligation (described above). A holder that elects to amortize such
premium must reduce tax basis in the related obligation by the amount of the
aggregate deductions (or interest offsets) allowable for amortizable premium.
If a debt instrument purchased at a premium is redeemed in full prior to its
maturity, a purchaser who has elected to amortize premium should be entitled
to a deduction for any remaining unamortized premium in the taxable year of
redemption.
Sale or Exchange of Offered Notes. If a Note is sold or
exchanged, the seller of the Note will recognize gain or loss equal to the
difference between the amount realized on the sale or exchange and the
adjusted basis of the Note. The adjusted basis of a Note will generally equal
its cost, increased by any OID or market discount includible in income with
respect to the Note through the date of sale and reduced by any principal
payments previously received with respect to the Note, any payments allocable
to previously accrued OID or market discount and any amortized market premium.
Subject to the market discount rules, gain or loss will generally be capital
gain or loss if the Note was held as a capital asset. Capital losses generally
may be used only to offset capital gains.
Backup Withholding with Respect to Offered Notes. Payments
of interest and principal, together with payments of proceeds from the sale of
Offered Notes, may be subject to the "backup withholding tax" under Section
3406 of the Code at a rate of 31% if recipients of such payments fail to
furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from such
tax. Any amounts deducted and withheld from a payment to a recipient would be
allowed as a credit against such recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
Foreign Investors in Offered Notes Certain U.S. Federal
Income Tax Documentation Requirements. A beneficial owner of Offered Notes
holding securities through CEDEL of Euroclear (or through DTC if the holder
has an address outside the U.S.) will be subject to the 30% U.S. withholding
tax that generally applies to payments of interest (including original issue
discount) on registered debt issued by U.S. Persons (as defined below), unless
(i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements
and (ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners
of Offered Notes that are Non-U.S. Persons (as defined below) can obtain a
complete exemption from the withholding tax by filing a signed Form W-8
(Certificates of Foreign Status). If the information shown on Form W-8
changes, a new Form W-8 must be filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected
income (Form 4224). A Non-U.S. Person (as defined below), including a non-U.S.
corporation or bank with a U.S. branch, for which the interest income is
effectively connected with its conduct of a trade or business in the United
States, can obtain an exemption
48
<PAGE>
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. Persons resident in
treaty countries (Form 1001). Non-U.S. Persons residing in a country that has
a tax treaty with the United States can obtain an exemption or reduced tax
rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption
or Reduced Rate Certificates). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8 Form 1001 may be filed by Certificate Owners or their agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can
obtain a complete exemption from the withholding tax by filing Form W-9
(Payer's Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Owner of a
Note or, in the case of a Form 1001 or a Form 4224 filer, his agent, files by
submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
On April 22, 1996 the IRS issued proposed regulations
relating to withholding, backup withholding and information reporting that, if
adopted in their current form would, among other things, unify current
certification procedures and forms and clarify certain reliance standards. The
regulations are proposed to be effective for payments made after December 31,
1997 but provide that certificates issued on or before the date that is 60
days after the proposed regulations are made final will continue to be valid
until they expire. Proposed regulations, however, are subject to change prior
to their adoption in final form.
The term "U.S. Person" means (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision
thereof, (iii) an estate that is subject to U.S. federal income tax regardless
of the source of its income. The term "Non-U.S. Person" means any person who
is not a U.S. Person or (iv) a trust if a court within the United States can
exercise primary supervision over its administration and at least one United
States fiduciary has the authority to control all substantial decisions of the
trust. This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of the Offered Notes.
Investors are advised to consult their own tax advisors for specific tax
advice concerning their holding and disposing of the Offered Notes.
State, Local and Other Taxes. Investors should consult their
own tax advisors regarding whether the purchase of the Offered Notes, either
alone or in conjunction with an investor's other activities, may subject an
investor to any state or local taxes based on an assertion that the investor
is either "doing business" in, or deriving income from a source located in,
any state or local jurisdiction. Additionally, potential investors should
consider the state, local and other tax consequences of purchasing, owning or
disposing of a Note. State and local tax laws may differ substantially from
the corresponding federal tax law, and the foregoing discussion does not
purport to describe any aspect of the tax laws of any state or other
jurisdiction. Accordingly, potential investors should consult their own tax
advisors with regard to such matters.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE
ARE INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING
UPON A NOTEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE OFFERED NOTES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS OR IN THE INTERPRETATIONS
THEREOF.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), imposes certain requirements and restrictions on those
pension and other employee benefits plans to which it applies and on those
persons who are fiduciaries with respect to such plans. In accordance with
ERISA's fiduciary standards, before purchasing the Offered Notes, a fiduciary
should determine whether such an investment is permitted under the
49
<PAGE>
documents and instruments governing the plan and is appropriate for the plan
in view of its overall investment policy and the composition of its portfolio.
Section 406 of ERISA and Section 4975 of the Code prohibit
certain transactions involving the assets of certain plans subject thereto
(each "Benefit Plan") and persons who are "parties in interest," within the
meaning of ERISA, or "disqualified persons," within the meaning of the Code.
Certain transactions involving the purchase, holding or transfer of the
Offered Notes might be deemed to constitute prohibited transactions under
ERISA and the Code if assets of the Issuer were deemed to be assets of a
Benefit Plan. Under regulations issued by the United States Department of
Labor set forth in 29 C.F.R. ss. 2510.3101 (the "Plan Asset Regulations"), the
assets of the Issuer would be treated as plan assets of a Benefit Plan for the
purposes of ERISA and the Code only if the Benefit Plan acquires an "Equity
Interest" in the Issuer and none of the exceptions contained in the Plan Asset
Regulations is applicable. An Equity Interest is defined under the Plan Asset
Regulations as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. It is anticipated that the Offered Notes should be treated as
indebtedness without substantial equity features for purposes of the Plan
Asset Regulations. However, even if the Offered Notes are treated as
indebtedness for such purposes, the acquisition or holding of Offered Notes by
or on behalf of a Benefit Plan could be considered to give rise to a
prohibited transaction if the Issuer or any of its respective affiliates is or
becomes a party in interest or disqualified person with respect to such
Benefit Plan. In this event, certain exemptions from the prohibited
transaction rules could be applicable depending on the type and circumstances
of the plan fiduciary making the decision to acquire a Note. Included among
these exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1,
regarding investments by insurance company pooled separate accounts; PTCE
91-38 regarding investments by bank collective investment funds; PTCE 84-14,
regarding transactions effected by "qualified professional asset managers,"
PTCE 95-60, regarding investments by insurance company general accounts and
PTCE 96-23 regarding transactions effected by In-House Asset Managers. Each
investor using assets of a Benefit Plan which acquires the Offered Notes, or
to whom the Offered Notes are transferred, will be deemed to have represented
that the acquisition and continued holding of the Offered Notes will be
covered by one of the exemptions listed above or another Department of Labor
class exemption.
Insurance companies considering the purchase of the Offered
Notes should also consult their own counsel as to the application of the
recent decision by the United States Supreme Court in John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank (114 S. Ct. 517 (1993)) to such
a purchase. Under that decision, assets held in an insurance company's general
account may be deemed assets of ERISA plans under certain circumstances.
Due to the complexity of these rules and the penalties
imposed upon persons involved in prohibited transactions, it is particularly
important that a fiduciary investing assets of an ERISA plan consult with
counsel regarding the consequences under ERISA of the acquisition and holding
of Offered Notes, including the availability of any administrative exemptions
from the prohibited transaction rules.
UNDERWRITING
Under the terms and subject to the conditions set forth in
the underwriting agreement (the "Underwriting Agreement") for the sale of the
Offered Notes, the Issuer has agreed to sell and First Union Capital Markets,
a division of Wheat Securities Inc. ("First Union Capital Markets"), Lehman
Brothers and Prudential Securities Incorporated (the "Underwriters") have
agreed to purchase the principal amount of the Offered Notes set forth below:
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount
Underwriters of the Class A Notes of Class A-1 Notes of Class A-2 Notes of Class A-3 Notes of Class A-4 Notes
--------------------------- ----- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
First Union Capital Markets 97,257,950 45,216,416 75,076,313 81,048,292
Lehman Brothers 48,628,974 22,608,207 37,538,155 40,524,145
Prudential Securities Incorporated 48,628,974 22,608,207 37,538,155 40,524,145
</TABLE>
First Union Capital Markets will be the sole underwriter in
connection with the Class B, Class C and Class D Notes.
50
<PAGE>
In the Underwriting Agreement, the Underwriters have agreed
to purchase the Offered Notes in the amounts set forth above, subject to the
terms and conditions set forth therein. The Issuer has been advised by First
Union Capital Markets, as the representative of the Underwriters, that the
Underwriters propose initially to offer the Notes to the public at the
respective public offering prices set forth on the cover page of this
Prospectus, and to certain dealers at such price, less a concession not in
excess of .06% per Class A-1 Note, .09% per Class A-2 Note, .12% per Class A-3
Note, .15% per Class A-4 Note, .15% per Class B Note, .18% per Class C Note
and .24% per Class D Note. The Underwriters may allow and such dealers may
reallow to other dealers a discount not in excess of .03% per Class A-1 Note,
.045% per Class A-2 Note, .06% per Class A-3 Note, .075% per Class A-4 Note,
.075% per Class B Note, .09% per Class C Note and .12% per Class D Note. After
the initial public offering, the public offering price may be changed.
The Underwriters will each represent and agree that:
(a) it has not offered or sold, and, prior to the expiry
of six months from the Closing Date, will not offer or
sell, any Offered Notes to persons in the United
Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for
purposes of their business, or otherwise in
circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities
Regulations 1995;
(b) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the
Offered Notes in, from or otherwise involving the
United Kingdom; and
(c) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by
it in connection with the issue of the Offered Notes
to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or persons to
whom such document may otherwise lawfully be issued,
distributed or passed on.
The Issuer has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
The Issuer has been advised by the Underwriters that the
Underwriters presently intend to make a market in the Offered Notes, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the Offered Notes and any such market
making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Offered Notes.
In connection with the offering of the Offered Notes,
certain Underwriters and selling group members and their respective affiliates
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the Offered Notes. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M, pursuant to
which such person may bid for or purchase the Offered Notes for the purpose of
stabilizing its market price. In addition, First Union, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with
the Underwriters whereby it may reclaim from an Underwriter (or dealer
participating in the offering) for the account of the other Underwriters, the
selling concession with respect to the Offered Notes that it distributed in
the offering but subsequently purchased for the account of the Underwriters in
the open market. Any of the transactions described in this paragraph may
result in the maintenance of the price of the Offered Notes at a level above
that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are taken,
may be discontinued at any time without notice.
First Union Capital Markets is serving as the placement
agent for the Class E Notes and the Residual Notes.
51
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the Notes will be passed
upon for Copelco Capital, Inc., the Sponsor and the Issuer by Spencer N.
Lempert, General Counsel of Capital Financial Services Group, Inc., and for
Copelco Capital, the Sponsor, the Issuer and the Underwriter by Dewey
Ballantine LLP, New York, New York.
RATING OF THE OFFERED NOTES
It is a condition to the issuance of the Offered Notes that
the Class A-1 Notes be rated at least "A-1+", "D-1+" and "F1+/AAA" , that the
Class A-2, A-3 and A-4 Notes be rated at least "AAA", "AAA" and "AAA", that
the Class B Notes be rated at least "AA", "AA+" and "AA", that the Class C
Notes be rated at least "A", "A+" and "A+" and that the Class D Notes be rated
at least "BBB", "BBB+" and "BBB+" by Standard & Poor's Ratings Group ("S&P"),
Duff & Phelps Credit Ratings Co. ("DCR") and Fitch IBCA, Inc. ("Fitch"),
respectively (each a "Rating Agency").
Such rating will reflect only the views of the Rating Agency
and will be based primarily on the amount of subordination, the availability
of funds on deposit in the Reserve Account and the value of the Leases and
Equipment. The ratings are not a recommendation to purchase, hold or sell the
related Offered Notes, inasmuch as such ratings do not comment as to market
price or suitability for a particular investor. There is no assurance that any
such rating will continue for any period of time or that it will not be
lowered or withdrawn entirely by the Rating Agency if, in its judgment,
circumstances so warrant. A revision or withdrawal of such rating may have an
adverse affect on the market price of the Offered Notes. The rating of the
Offered Notes addresses the likelihood of the timely payment of interest and
the ultimate payment of principal on the Offered Notes by the Stated Maturity
Date. The rating does not address the rate of Prepayments that may be
experienced on the Leases and, therefore, does not address the effect of the
rate of Lease Prepayments on the return of principal to the Offered
Noteholders.
52
<PAGE>
INDEX OF TERMS
Term(s) Page(s)
Additional Lease................................................12, 42
Adjusted Lease......................................................12
Available Funds.................................................13, 36
Available Funds Shortfall...........................................37
Available Reserve Amount........................................16, 37
Bankruptcy Code.....................................................46
Benefit Plan........................................................50
Booked Residual Value...............................................32
Casualty............................................................36
Casualty Payment....................................................36
Cede.................................................................3
CEDEL................................................................3
Cedel Participants..................................................34
Certificates.........................................................2
Class................................................................1
Class A Initial Principal Amount.....................................5
Class A Noteholders..................................................2
Class A Notes.....................................................1, 4
Class A Percentage...................................................9
Class A Principal Payment............................................8
Class A Target Investor Principal Amount.............................9
Class A-1 Initial Principal Amount...................................5
Class A-1 Interest Rate..............................................5
Class A-1 Notes...................................................1, 4
Class A-1 Stated Maturity Date....................................2, 6
Class A-2 Initial Principal Amount...................................5
Class A-2 Interest Rate..............................................5
Class A-2 Notes...................................................1, 4
Class A-2 Stated Maturity Date....................................2, 6
Class A-3 Initial Principal Amount...................................5
Class A-3 Interest Rate..............................................5
Class A-3 Notes...................................................1, 4
Class A-3 Stated Maturity Date....................................2, 6
Class A-4 Initial Principal Amount...................................5
Class A-4 Interest Rate..............................................5
Class A-4 Notes...................................................1, 4
Class A-4 Stated Maturity Date....................................2, 6
Class B Floor........................................................9
Class B Initial Principal Amount.....................................5
Class B Interest Rate................................................5
Class B Noteholders..................................................2
Class B Notes.....................................................1, 4
Class B Percentage...................................................9
Class B Principal Payment............................................8
Class B Stated Maturity Date......................................2, 6
Class B Target Investor Principal Amount.............................9
Class C Floor........................................................9
Class C Initial Principal Amount.....................................5
Class C Interest Rate................................................5
Class C Notes.....................................................1, 4
Class C Percentage...................................................9
Class C Principal Payment............................................8
A-1
<PAGE>
Class C Stated Maturity Date......................................2, 6
Class C Target Investor Principal Amount.............................9
Class D Floor.......................................................10
Class D Initial Principal Amount.....................................5
Class D Interest Rate................................................5
Class D Percentage...................................................9
Class D Stated Maturity Date......................................2, 6
Class D Target Investor Principal Amount.............................9
Class E Floor.......................................................10
Class E Initial Principal Amount.....................................5
Class E Interest Rate................................................5
Class E Percentage...................................................9
Class Floors........................................................10
clearing agency.....................................................33
clearing corporation................................................33
Code................................................................47
Collection Account..................................................36
Commission...........................................................3
Conditional Payment Rate............................................42
Cooperative.........................................................35
Copelco Capital......................................................6
Copelco Credit......................................................27
Copelco Financial...................................................27
Copelco Funding LLC...............................................2, 4
Copelco Leasing.....................................................27
Cost per Copy.......................................................28
Cumulative Loss Amount..............................................10
Cut-Off Date.....................................................4, 20
DCR.............................................................17, 52
Definitive Notes....................................................35
Depositaries........................................................33
Determination Date...............................................7, 37
Discount Rate........................................................5
Discounted Present Value of the Leases...............................5
Discounted Present Value of the Performing Leases....................5
Division............................................................27
DTC..................................................................3
Due Period...........................................................7
Dun & Bradstreet....................................................30
Early Lease Termination.............................................11
Eligible Account....................................................36
Equipment............................................................7
Equipment Financing Portion.........................................28
ERISA...........................................................16, 49
Euroclear............................................................3
Euroclear Operator..................................................35
Euroclear Participants..............................................35
Events of Default...................................................39
Excess Copy Charge..................................................28
Exchange Act.........................................................3
Fee Per Scan Charges................................................29
Filing Locations....................................................19
First Union Capital Markets.........................................50
Fitch...........................................................17, 52
Fixed Payment.......................................................28
HILL................................................................29
A-2
<PAGE>
Holders.............................................................36
Indenture....................................................2, 13, 33
Indenture Trustee....................................................2
Indirect Participants...............................................33
Initial Principal Amount.............................................4
Interest Accrual Period..............................................7
Interest Payments................................................7, 37
Interest Rate........................................................5
IRS.................................................................47
Issuer............................................................2, 4
Lease Contracts......................................................7
Lease Payment.......................................................36
Lease Receivables....................................................7
Leases...............................................................7
Lessee..............................................................11
Lessees.............................................................11
Maintenance Charge..................................................28
Nominal Buy-Out.....................................................21
Nominal Buy-Out Leases..............................................18
Non-Performing Leases............................................6, 21
Non-U.S. Person.....................................................49
Notes.............................................................1, 4
Offered Noteholders..................................................3
Offered Notes.....................................................1, 4
OID.................................................................47
Original Divisions..................................................20
Outstanding Principal Amounts........................................7
Overcollateralization Balance.......................................10
Owner Trustee........................................................4
Participants........................................................33
Payment Date......................................................2, 7
PILL................................................................29
Plan Asset Regulations..............................................50
Prepayment..........................................................18
Principal Payments...................................................7
PTCE................................................................50
Rating Agency...................................................17, 52
Record Date..........................................................7
Registration Statement...............................................3
Required Payments...................................................37
Required Reserve Amount.........................................16, 37
Reserve Account.................................................16, 37
Residual Casualty Payments..........................................14
Residual Prepayments................................................14
Residual Warranty Payments..........................................14
S&P.............................................................17, 52
Sale and Servicing Agreement.........................................2
Sales and Servicing Agreement....................................6, 31
SBU.................................................................27
Securities...........................................................2
Seller............................................................2, 6
Series Pool..........................................................7
Service Advance.................................................12, 39
Servicer..........................................................2, 6
Servicer Events of Default..........................................41
Servicing Fee.......................................................13
A-3
<PAGE>
Sponsor...........................................................2, 4
Stated Maturity Dates.............................................2, 6
Statistical Discount Rate............................................5
Statistical Discounted Present Value of the Leases...................5
Substitute Lease................................................12, 42
Tax Counsel.........................................................47
Termination Payment.................................................36
Terms and Conditions................................................35
Trust Agreement...................................................2, 4
Trust Fund...........................................................7
Trustee..........................................................7, 33
U.S. Person.........................................................49
UCC.................................................................18
Underwriters........................................................50
Underwriting Agreement..............................................50
Vendor..............................................................28
Warranty Lease..................................................12, 32
A-4
<PAGE>
=============================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given
or made, such information or representations must not be relied upon. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the
affairs of the Seller or the Issuer or any affiliate thereof or the Leases
since the date hereof. This Prospectus does not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
$194,515,898 _____% Class A-1 qualified to do so to anyone to whom it is
unlawful to make Lease-Backed Notes, Series 1998-A such offer or solicitation.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION.................................. 3
REPORTS TO NOTEHOLDERS................................. 3
PROSPECTUS SUMMARY..................................... 4
RISK FACTORS........................................... 18
USE OF PROCEEDS........................................ 20
THE SERIES POOL........................................ 20
COPELCO CAPITAL'S UNDERWRITING AND
SERVICING PRACTICES................................. 27
FORMATION OF THE ISSUER................................ 32
DESCRIPTION OF THE NOTES............................... 33
PREPAYMENT AND YIELD
CONSIDERATIONS...................................... 41
SECURITY FOR THE NOTES................................. 45
THE INDENTURE TRUSTEE.................................. 45
THE OWNER TRUSTEE...................................... 45
CERTAIN LEGAL MATTERS AFFECTING A
LESSEE'S RIGHTS AND OBLIGATIONS..................... 45
MATERIAL FEDERAL INCOME TAX
CONSIDERATIONS...................................... 46
ERISA CONSIDERATIONS................................... 49
UNDERWRITING........................................... 50
LEGAL MATTERS.......................................... 52
RATING OF THE OFFERED NOTES............................ 52
INDEX OF TERMS......................................... A-1
Until ____________, 1998 (90 days after the date of this
Prospectus), all dealers effecting transactions in the
Notes, whether or not participating in this distribution,
may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
=============================================================================
=============================================================================
$648,386,327
Copelco Capital
Funding Trust 1998-A
$194,515,898 _____% Class A-1
Lease-Backed Notes, Series 1998-A
$90,432,830 _____% Class A-2
Lease-Backed Notes, Series 1998-A
$150,152,623 _____% Class A-3
Lease-Backed Notes, Series 1998-A
$162,096,582 _____% Class A-4
Lease-Backed Notes, Series 1998-A
$17,062,798 _____% Class B
Lease-Backed Notes, Series 1998-A
$13,650,238 _____% Class C
Lease-Backed Notes, Series 1998-A
$20,475,358 _____% Class D
Lease-Backed Notes, Series 1998-A
___________________
P R O S P E C T U S
___________________
FIRST UNION CAPITAL MARKETS
LEHMAN BROTHERS
PRUDENTIAL SECURITIES INCORPORATED
Dated August ___, 1998
=============================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses
to be incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee................................ $ 193,225.00
Printing and Engraving Expenses................. 60,000.00
Trustee's Fees.................................. 30,000.00
Legal Fees and Expenses......................... $ 175,000.00
Blue Sky Fees and Expenses...................... $ 15,000.00
Accountants' Fees and Expenses.................. 35,000.00
Rating Agency Fees.............................. 230,000.00
Miscellaneous Fees.............................. $ 30,000.00
................................................ =============
Total. $ 768,225.00
Item 14. Indemnification of Directors and Officers
The General Corporation Law of Delaware (Section 145) gives
Delaware corporations broad powers to indemnify their present and former
directors and officers and those affiliated corporations against expenses
incurred in the defense of any lawsuit to which they are made parties by
reason of being or having been such directors or officers, subject to
specified conditions and exclusions; gives a director or officer who
successfully defends an action the right to be so indemnified; and authorizes
said corporation to buy director's and officers' liability insurance. The
Issuer will indemnify its directors and officers to the fullest extent
permitted by such law. Such indemnification is not exclusive of any other
right to which those indemnified may be entitled under any bylaw, agreement,
vote of stockholders or otherwise.
The Delaware Limited Liability Company Act (Section 18-108)
gives Delaware limited liability companies broad powers to indemnify and hold
harmless any member or manager or other person from and against any and all
claims and demands whatsoever. The Company shall, to the fullest extent
permitted by the Act, indemnify and hold harmless, and advance expenses to,
each member or manager against any losses, claims, damages or liabilities to
which the Indemnified party may become subject in connection with any matter
arising from, related to, or in connection with, the Company's business or
affairs.
Copelco Financial Services Group, Inc. has also purchased
liability policies which indemnify the Registrant's officers and directors
against loss arising from claims by reason of their legal liability for acts
as officers and directors, subject to limitations and conditions as set forth
in the policies.
II-1
<PAGE>
Pursuant to agreements which the Registrant may enter into
with underwriters or agents (forms of which will be included as exhibits to
this Registration Statement), officers and directors of the Registrant, and
affiliates thereof, may be entitled to indemnification by such underwriters or
agents against certain liabilities, including liabilities under the Securities
Act of 1933, arising from information which has been or will be furnished to
the Registrant by such underwriters or agents that appears in the Registration
Statement or any Prospectus.
Item 16. Exhibits and Financial Statements
(a) Exhibits
1.1 -- Form of Underwriting Agreement for the
Offered Notes.
3.1 -- Certificate of Incorporation of the Issuer.
3.2 -- By-laws of the Issuer.
3.3 -- Trust Certificate of Copelco Capital
Funding Trust 1998-A
3.4 -- Form of Trust Agreement
3.5 -- Certificate of Formation of Copelco Capital
Funding LLC 98-1
3.6 -- Limited Liability Company Agreement of
Copelco Capital Funding LLC 98-1
4.1 -- Form of Indenture, including forms of the
Notes and certain other related agreements
as Exhibits thereto.
5.1 -- Opinion of Dewey Ballantine regarding the
securities being registered.
8.1 -- Opinion of Dewey Ballantine regarding the
tax treatment of the Notes.
10.1 -- Form of Sales and Servicing Agreement.
10.2 -- Form of Placement Agent Agreement.
23.1 -- Consent of Dewey Ballantine is included in
the opinion filed as Exhibit 5.1 hereto.
24.1 -- Power of Attorney (Included on Page II-4
hereof).
25.1 -- Statement of Eligibility and Qualification
of Trustee (Form T-1).
(b) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
Item 17. Undertakings
The undersigned Registrants hereby undertake:
(a) That insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 14 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or
II-2
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the act
and will be governed by the final adjudication of such issue.
(b) That, for purposes of determining any liability under
the Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this Registration Statement as of the time it was
declared effective.
(c) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Mount
Laurel, State of New Jersey, on July 31, 1998.
COPELCO CAPITAL FUNDING CORP. XI,
Registrant
By /s/ Ian J. Berg
----------------------------------------
Name: Ian J. Berg
Title: Chief Executive Officer and Acting
Chief Financial Officer
Each person whose signature appears below constitutes and
appoints Stephen W. Shippie as his/her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him/her in
his/her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Form S-1 and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he/she might or could do in person, hereby ratifying
and confirming all that such attorney-in-fact and agent or his substitute may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form S-1 has been signed by the following
persons in the capacities indicated on the dates indicated below.
Signature Title Date
--------- ----- ----
/s/ Ian J. Berg Chairman of the Board July 31, 1998
- -------------------------------- Director
Ian J. Berg
/s/ John Hakemian Director July 31, 1998
- -------------------------------
John Hakemian
/s/ Tadayuki Seki Director July 31, 1998
- -------------------------------
Tadayuki Seki
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Mount
Laurel, State of New Jersey, on July 31, 1998.
COPELCO CAPITAL FUNDING LLC 98-1,
Registrant
By: COPELCO CAPITAL FUNDING CORP. XI,
as Manager of the Registrant
By /s/ Ian J. Berg
-----------------------------------------
Name: Ian J. Berg
Title: Chief Executive Officer and Acting
Chief Financial Officer
Each person whose signature appears below constitutes and
appoints Stephen W. Shippie as his/her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him/her in
his/her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Form S-1 and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he/she might or could do in person, hereby ratifying
and confirming all that such attorney-in-fact and agent or his substitute may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form S-1 has been signed by the following
persons in the capacities indicated on the dates indicated below.
Signature Title Date
--------- ----- ----
/s/ Ian J. Berg Chairman of the Board July 31, 1998
- -------------------------------- Director
Ian J. Berg
/s/ John Hakemian Director July 31, 1998
- --------------------------------
John Hakemian
/s/ Tadayuki Seki Director July 31, 1998
- --------------------------------
Tadayuki Seki
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Wilmington, State of Delaware, on July 31, 1998.
COPELCO CAPITAL FUNDING TRUST 1998-A,
Registrant
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By /s/
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement for the Offered Notes.
3.1 Certificate of Incorporation of the Issuer.
3.2 By-laws of the Issuer.
3.3 Trust Certificate of Copelco Capital Funding Trust 1998-A
3.4 Form of Trust Agreement
3.5 Certificate of Formation of Copelco Capital Funding LLC 98-1
3.6 Limited Liability Company Agreement of Copelco Capital Funding
LLC 98-1
4.1 Form of Indenture, including forms of the Notes and certain
other related agreements as Exhibits thereto.
5.1 Opinion of Dewey Ballantine regarding the securities being
registered.
8.1 Opinion of Dewey Ballantine regarding the tax treatment of the
Notes.
10.1 Form of Sales and Servicing Agreement.
10.2 Form of Placement Agent Agreement.
23.1 Consent of Dewey Ballantine is included in the opinion filed
as Exhibit 5.1 hereto.
24.1 Power of Attorney (Included on Page II-4 hereof).
25.1 Statement of Eligibility and Qualification of Trustee (Form T-1).
<PAGE>
Exhibit 1.1
COPELCO CAPITAL FUNDING TRUST 1998-A
$[194,515,818] _____% Class A-1 Lease-Backed Notes, Series 1998-A
$[ 90,432,830] _____% Class A-2 Lease-Backed Notes, Series 1998-A
$[150,152,623] _____% Class A-3 Lease-Backed Notes, Series 1998-A
$[162,096,582] _____% Class A-4 Lease-Backed Notes, Series 1998-A
$[ 17,062,798] _____% Class B Lease-Backed Notes, Series 1998-A
$[ 13,650,238] _____% Class C Lease-Backed Notes, Series 1998-A
$[ 20,475,358] _____% Class D Lease-Backed Notes, Series 1998-A
UNDERWRITING AGREEMENT
----------------------
August __, 1998
FIRST UNION CAPITAL MARKETS CORP.
301 S. College Street
One First Union Center, TW-6
Charlotte, NC 28288
LEHMAN BROTHERS
Three World Financial Center
New York, New York 10285
PRUDENTIAL SECURITIES INCORPORATED
One Seaport Plaza
New York, New York 10292
Ladies and Gentlemen:
Copelco Capital Funding Trust 1998-A, a business trust
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 $194,515,898 (the "Class A-1 Initial Principal
Amount") of ____% Class A-1 Lease-Backed Notes, Series 1998-A (the "Class A-1
Notes"); $90,432,830 (the "Class A-2 Initial Principal Amount") of ____% Class
A-2 Lease-Backed Notes, Series 1998-A
<PAGE>
(the "Class A-2 Notes"); $150,152,623 (the "Class A-3 Initial Principal
Amount") of ____% Class A-3 Lease-Backed Notes, Series 1998-A (the "Class A-3
Notes"); $162,096,582 (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
____% Class A-4 Lease-Backed Notes, Series 1998-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"); $17,062,798 (the "Class B Initial Principal Amount") of
____% Class B Lease-Backed Notes, Series 1998-A (the "Class B Notes");
$13,650,238 (the "Class C Initial Principal Amount") of ____% Class C
Lease-Backed Notes, Series 1998-A (the "Class C Notes"); $20,475,358 (the
"Class D Initial Principal Amount") of ____% Class D Lease-Backed Notes,
Series 1998-A (the "Class D Notes"; together with the Class A Notes, the Class
B Notes and the Class C Notes, the "Offered Notes"); $[_________] (the "Class
E Initial Principal Amount") of ___% Class E Lease-Backed Notes (the "Class E
Notes"); $[__________] (the "Class R-1 Initial Principal Amount") of ___%
Class R-1 Lease Residual-Backed Notes (the "Class R-1 Notes"); and
$[___________] (the "Class R-2 Initial Principal Amount"; together with the
Class A Initial Principal Amount, the Class B Initial Principal Amount, the
Class C Initial Principal Amount, the Class D Initial Principal Amount, the
Class E Initial Principal Amount and the Class R-1 Initial Principal Amount,
the "Initial Principal Amount") ___% Class R-2 Lease Residual-Backed Notes
(the "Class R-2 Notes"; together with the Class E Notes, the Class R-1 Notes
and the Offered Notes, the "Notes"). The Notes will be issued pursuant to an
Indenture, dated as of August __, 1998 (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 in the amounts set forth on Schedule I hereto. Class B Notes,
Class C Notes and Class D Notes will be sold by the Issuer to First Union
Capital Markets only.
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.
2
<PAGE>
"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" refer to such rules
under the Securities Act.
"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 First Union Capital Markets,
Lehman Brothers and Prudential Securities 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 Other Class Underwriters agree to purchase
from the Issuer the Class B Initial Principal Amount, Class C Initial
Principal Amount and Class D Initial Principal Amount of the Class B Notes,
Class C Notes and Class D 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.
3
<PAGE>
(a) Delivery of and payment for the Offered Notes to be
purchased by the Underwriters shall be made at the offices of Dewey Ballantine
LLP, 1301 Avenue of the Americas, New York, New York, at 10:00 A.M., New York
time, on August __, 1998 (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.
(i) 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. _________), 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 430A 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
4
<PAGE>
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 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 has 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
5
<PAGE>
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 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.
6
<PAGE>
(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, 1997. 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, 1997.
(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 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
7
<PAGE>
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 their 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 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
8
<PAGE>
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;
(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
9
<PAGE>
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
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.
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<PAGE>
(c) The Underwriters shall have received from Dewey
Ballantine LLP, 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", and "F1+/AAA", that the Class A-2, A-3 and A-4 notes be rated
at least "AAA", "AAA", and "AAA", that the Class B Notes be rated at least
"AA", "AA", and "AA", that the Class C Notes be rated at least "A", "A", and
"A+", and that the Class D Notes be rated at least "BBB", "BBB", and "BBB+" by
Standard & Poor's Ratings Group ("S&P"), Duff & Phelps Credit Ratings Co.
("DCR"), and Fitch Investors Service, L.P. ("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.
(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))
11
<PAGE>
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 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
(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
Sections 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.
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<PAGE>
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 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
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<PAGE>
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 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
14
<PAGE>
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 remain in full force and
effect, notwithstanding any investigation heretofore or hereafter made by or
on behalf of the Issuer, Copelco or the Underwriters,
15
<PAGE>
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 Sections 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, 1997, 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.
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<PAGE>
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.
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,
Class B Notes, Class C Notes or Class D 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
17
<PAGE>
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 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.
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Very truly yours,
COPELCO CAPITAL, INC.
By:
-------------------------------------
Name:
Title:
COPELCO CAPITAL FUNDING TRUST 1998-A
By: WILMINGTON TRUST COMPANY
By:
------------------------------------
Name:
Title:
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
FIRST UNION CAPITAL MARKETS
By:
---------------------------------------
Name:
Title:
LEHMAN BROTHERS
By:
---------------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:
---------------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
Purchase Price
<TABLE>
<CAPTION>
Principal Principal
Underwriters of the Class A Amount of Principal Amount of Principal Amount of Amount of
Notes Class A-1 Notes Class A-2 Notes Class A-3 Notes Class A-4 Notes
- --------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
First Union Capital Markets $ $ $ $
Lehman Brothers $ $ $ $
Prudential Securities $ $ $ $
Incorporated
</TABLE>
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
COPELCO CAPITAL FUNDING CORP. XI
ARTICLE ONE: The name of the corporation is COPELCO CAPITAL
FUNDING CORP. XI (the "Corporation").
ARTICLE TWO: The address of the Corporation's initial
registered office is 1013 Centre Road, Wilmington, Delaware 19805, and the
name of the Corporation's initial registered agent at such address is
Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805.
ARTICLE THREE: The purposes for which the Corporation is
organized are to engage exclusively in the following business and financial
activities:
(a) To acquire equipment described in certain equipment
leases and to purchase equipment leases and lease receivables from Copelco
Capital, Inc. ("Copelco") and any of its affiliates;
(b) To issue and sell notes collateralized by any or all of
its assets pursuant to one or more indentures (the "Indentures") between the
Corporation and an Indenture trustee (the "Trustee"); and
(c) To engage in any lawful act or activity and to exercise
any power that is incidental and is necessary or convenient to the foregoing
and permitted under Delaware law.
ARTICLE FOUR: The aggregate number of shares which the
Corporation shall have authority to issue is 1,000 shares of common stock of
the par value of One Dollar ($1.00) each ("Common Stock").
(a) Except as otherwise expressly provided by law, all
voting rights shall be vested in the holders of the Common Stock, and at each
meeting of stockholders of the Corporation each holder of Common Stock shall
be entitled to one vote for each such share on each matter to come before the
meeting;
(b) Dividends may be declared upon and paid to the holders
of the Common Stock as the board of directors of the Corporation (the "Board
of Directors") shall determine; and
(c) In the event of voluntary or involuntary liquidation or
dissolution of the Corporation, the holders of the Common Stock shall be
entitled to share ratably in all assets of the Corporation.
<PAGE>
ARTICLE FIVE: The number of directors constituting the
initial board of directors shall be five.
ARTICLE SIX: The name and address of the incorporator is as
follows: Esther Kim, Dewey Ballantine LLP, 1301 Avenue of the Americas, New
York, New York 10019-9062.
ARTICLE SEVEN:
(a) Notwithstanding any other provisions of this Certificate
of Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without the prior written consent of
(i) each Trustee under any Indenture and (ii) each nationally recognized
statistical rating agency requested by the Corporation to rate any of the
Corporation's issued and outstanding notes (to the extent provided in the
related Indenture), do any of the following: (A) dissolve or liquidate, in
whole or in part; (B) merge or consolidate with or into any other entity, or
convey or transfer all or substantially all of its properties and assets to
any other entity, except in compliance with the provisions of the Indentures;
(C) incur, assume or guarantee any indebtedness for borrowed money or for the
deferred purchase price of goods or services except under or in compliance
with the provisions of the Indentures; or (D) amend this Certificate of
Incorporation to alter in any manner or delete ARTICLE THREE or this ARTICLE
SEVEN.
(b) The Corporation shall conduct its affairs in accordance
with the following provisions: (i) it shall not engage in any business or
activity other than as permitted by ARTICLE THREE hereof; (ii) it shall
maintain separate corporate records and books of account from those of its
parent institution or any of its affiliates; (iii) at least two (2) directors
of the Corporation (the "Independent Directors") shall not be, and for the
twelve months prior to such individual's election as director shall not have
been, a director, officer, employee or owner of ten percent (10%) or more of
the outstanding stock of its parent institution or any of its affiliates;
provided, however, that no individual (s) shall be excluded from qualifying as
an "Independent Director" by virtue of serving as a director or manager of one
or more other affiliates of the Corporation that are special purpose,
bankruptcy remote entities; (iv) any financial transaction between the
Corporation and its parent institution or any of its affiliates shall be
governed by policies and procedures established from time to time by a
majority of the members of the Board of Directors including the Independent
Directors; (v) its funds shall not be commingled with those of its parent
institution or any of its affiliates, except that the Corporation may
establish one or more lock box facilities with the Trustees under the
Indentures for the receipt of payments due to the Corporation and due to any
such affiliates, provided that such payments are segregated by each Trustee
promptly after receipt and deposited into separate accounts; (vi) its Board of
Directors shall hold meetings, as appropriate to authorize corporate actions,
and shall maintain minutes of each such meeting; (vii) it shall not become
involved in the day to day management of any other Person; (viii) it shall
operate so as not to be substantively consolidated with any other Person; (ix)
it shall maintain its assets separate from those of its parent or any of its
affiliates or any other Person; (x) it shall conduct correspondence in its own
name on its own stationary; (xi) it
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shall not act as the agent of any other entity or Person; and (xii) it shall
pay its own expenses. For purposes hereof, Person shall mean any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government entity or any agency or
potential subdivision thereof.
(c) The Corporation shall not, without the affirmative vote
of all of the members of the Board of Directors of the Corporation (including,
without limitation, each Independent Director), institute any proceedings to
adjudicate the Corporation a bankrupt or insolvent, consent to the institution
of bankruptcy or insolvency proceedings against the Corporation, file a
petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to bankruptcy or insolvency, consent
to the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Corporation or a substantial part of its
property, or admit its inability to pay its debts generally as they become due
or authorize any of the foregoing to be done or taken on behalf of the
Corporation. The Corporation shall not, without the affirmative vote of all
members of the Board of Directors of the Corporation (including, without
limitation, each Independent Director) amend the Certificate of Incorporation;
(d) In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors of the Corporation is expressly
authorized to make loans to its parent institution, subject to clause (iv) of
paragraph (b) of this ARTICLE SEVEN;
(e) Each individual person who was or is, or in the future
may be, a director or officer of the Corporation shall be indemnified by the
Corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, including punitive damages, actually and
reasonably incurred by him or her in connection with the defense or settlement
of any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the Corporation), in which he or she was or is threatened to
be made a party, by reason of his or her being, or having been, a director,
officer, employee, agent or fiduciary of the Corporation or of another
corporation, partnership, joint venture, trust or other enterprise or entity
for which he or she served as a director, officer, employee, agent or
fiduciary at the request of the Corporation (whether or not he or she
continues to be such a director, officer, employee, agent or fiduciary at the
time of incurring such expenses) if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, such indemnification limited to the maximum
extent now or hereafter permitted by Delaware law; such right of
indemnification shall be subordinate and junior in right of payment to the
payment of other debts of the Corporation and shall not be deemed exclusive of
any other rights to which he or she, or any employee, agent or fiduciary of
the Corporation may be entitled under any bylaw, agreement, vote of
stockholders or otherwise. The Corporation shall have the right to defend, and
to incur reasonable expenses in the defense of, any such actions, suits or
proceedings brought against any individual person who was or is, or in the
future may be, a director or officer of the Corporation to the maximum extent
now or hereafter permitted by Delaware law. Wherever in this ARTICLE SEVEN a
director or officer is referred to, such reference shall be inclusive of his
or her heirs, executors and administrators.
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ARTICLE EIGHT: No director or officer shall be personally
liable to the Corporation or its stockholders for monetary damages for any
breach of fiduciary duty by such person as a director or officer.
Notwithstanding the foregoing sentence, directors and officers of the
Corporation shall be liable to the extent provided by applicable law (a) for
breach of such director or officer's duty of loyalty to the Corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) for the liability of
a director with respect to unlawful payment of dividends or unlawful stock
purchase or redemption under Section 174 of the General Corporation Law of the
State of Delaware or (d) for any transaction from which such director or
officer derived an improper personal benefit. This ARTICLE EIGHT shall not
eliminate or limit the liability of a director for any act or omission
occurring prior to the date this Article EIGHT, its amendment or repeal
becomes effective.
I, THE UNDERSIGNED, being the incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the laws of the
State of Delaware, as amended, do make this certificate, hereby declaring and
certifying that this is my act and deed and that the facts herein stated are
true and that I have accordingly hereunto affixed my signature this ___ day of
May, 1998.
---------------------------------
Esther Kim
Incorporator
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Exhibit 3.2
COPELCO CAPITAL FUNDING CORP. XI
BY-LAWS
DATED MAY 4, 1998
ARTICLE I - OFFICES
Section 1. The registered office of the corporation in the State of
Delaware shall be at 1013 Centre Road, in the City of Wilmington, County of
New Castle.
The registered agent in charge thereof shall be The Corporation
Service Company.
Section 2. The corporation may also have offices at such other places
as the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - SEAL
Section 1. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate
Seal, Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stockholders shall be held at the registered
office of the corporation in this state or at such place, either within or
without this state, as may be selected from time to time by the Board of
Directors.
Section 2. ANNUAL MEETINGS: The annual meeting of the stockholders
shall be held on the third day of January in each year if not a legal holiday,
and if a legal holiday, then on the next secular day following at 10:00
o'clock A.M., when they shall elect a Board of Directors and transact such
other business as may properly be brought before the meeting. If the annual
meeting for election of directors is not held on the date designated therefor,
the directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. ELECTION OF DIRECTORS: Elections of the directors of the
corporation shall be by written ballot.
Section 4. SPECIAL MEETINGS: Special meetings of the stockholders may
be called at any time by the President, or the Board of Directors, or
stockholders entitled to cast at least one-fifth of the votes which all
stockholders are entitled to cast at the particular meeting. At any time, upon
written request of any person or persons who have duly called a special
meeting, it shall be the duty of the Secretary to fix the date of the
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meeting, to be held not more than sixty days-after receipt of the request, and
to give due notice thereof. If the Secretary shall neglect or refuse to fix
the date of the meeting and give notice thereof, the person or persons calling
the meeting may do so.
Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all
stockholders entitled to vote are present and consent.
Written notice of a special meeting of stockholders stating the time
and place and object thereof, shall be given to each stockholder entitled to
vote thereat at least ten (10) days before such meeting, unless a greater
period of notice is required by statute in a particular case.
Section 5. QUORUM: A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of
the outstanding shares entitled to vote is represented at a meeting, a
majority of the shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed. The stockholders present
at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.
Section 6. PROXIES: Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally. All
proxies shall be filed with the Secretary of the meeting before being voted
upon.
Section 7. NOTICE OF MEETINGS: Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the
meeting is called.
Unless otherwise provided by law, written notice of any meeting shall
be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
Section 8. CONSENT IN LIEU OF MEETINGS: Any action required to be
taken at any annual or special meeting of stockholders of a corporation, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken
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without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in
writing.
Section 9. LIST OF STOCKHOLDERS: The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder. No share of stock upon which any installment is due
and unpaid shall be voted at any meeting. The list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation shall be
managed by its Board of Directors, five (5) in number. The directors need not
be residents of this state or stockholders in the corporation. They shall be
elected by the stockholders at the annual meeting of stockholders of the
corporation, and each director shall be elected for the term of one year, and
until his successor shall be elected and shall qualify or until his earlier
resignation or removal.
Section 2. REGULAR MEETINGS: Regular meetings of the Board shall be
held without notice at the registered office of the corporation, or at such
other time and place as shall be determined by the Board.
Section 3. SPECIAL MEETINGS: Special Meetings of the Board may be
called by the President on one (1) day's notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
President or Secretary in like manner and on like notice on the written
request of a majority of the directors in office.
Section 4. QUORUM: A majority of the total number of directors shall
constitute a quorum for the transaction of business.
Section 5. CONSENT IN LIEU OF MEETING: Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the
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minutes of proceedings of the Board or committee. The Board of Directors may
hold its meetings, and have an office or offices, outside of this state.
Section 6. CONFERENCE TELEPHONE: One or more directors may
participate in a meeting of the Board, of a committee of the Board or of the
stockholders, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other; participation in this manner shall constitute presence in person
at such meeting.
Section 7. COMPENSATION: Directors as such, shall not receive any
stated salary for their services, but by resolution of the Board, a fixed sum
and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board PROVIDED, that nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 8. REMOVAL: Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors, except that when cumulative
voting is permitted, if less than the entire Board is to be removed, no
director may be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an election of
the entire Board of Directors, or, if there be classes of directors, at an
election of the class of directors of which he is a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall be chosen
by the directors and shall be a President, Secretary and Treasurer. The Board
of Directors may also choose a Chairman, one or more Vice Presidents and such
other officers as it shall deem necessary. Any number of offices may be held
by the same person.
Section 2. SALARIES: Salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 3. TERM OF OFFICE: The officers of the corporation shall hold
office for one year and until their successors are chosen and have qualified.
Any officer or agent elected or appointed by the Board may be removed by the
Board of Directors whenever in its judgment the best interest of the
corporation will be served thereby.
Section 4. PRESIDENT: The President shall be the chief executive
officer of the corporation; he shall preside at all meetings of the
stockholders and directors; he shall have general and active management of the
business of the corporation, shall see that all orders and resolutions of the
Board are carried into effect, subject, however, to the right of the directors
to delegate any specific powers, except such as may be by statute exclusively
conferred on the President, to any other officer or officers of the
corporation. He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation. He shall be EX-OFFICIO a member of
all committees, and shall have
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the general power and duties of supervision and management usually vested in
the office of President of a corporation.
Section 5. SECRETARY: The Secretary shall attend all sessions of the
Board and all meetings of the stockholders and act as clerk thereof, and
record all the votes of the corporation and the minutes of all its
transactions in a book to be kept for that purpose, and shall perform like
duties for all committees of the Board of Directors when required. He shall
give, or cause to be given, notice of all meetings of the stockholders and of
the Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, and under whose supervision
he shall be. He shall keep in safe custody the corporate seal of the
corporation, and when authorized by the Board, affix the same to any
instrument requiring it.
Section 6. TREASURER: The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation, and shall
keep the moneys of the corporation in a separate account to the credit of the
corporation. He shall disburse the funds of the corporation as may be ordered
by the Board, taking proper vouchers for such disbursements, and shall render
to the President and directors, at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the corporation by
death, resignation, removal or otherwise, shall be filled by the Board of
Directors. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director. If at any time, by reason of death or resignation or other
cause, the corporation should have no directors in office, then any officer or
any stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders
in accordance with the provisions of these By-Laws.
Section 2. RESIGNATIONS EFFECTIVE AT FUTURE DATE: When one or more
directors shall resign from the Board, effective at a future date, a majority
of the directors then in office, including those who have so resigned, shall
have power to fill such vacancy or vacancies, the vote thereon to take effect
when such resignation or resignations shall become effective.
ARTICLE VII - CORPORATE RECORDS
Section 1. Any stockholder of record, in person or by attorney or
other agent, shall, upon written demand under oath stating the purpose
thereof, have the right during the usual hours for business to inspect for any
proper purpose the corporation's stock ledger, a list of its stockholders, and
its other books and records, and to make copies or
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extracts therefrom. A proper purpose shall mean a purpose reasonably related
to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such
other writing which authorizes the attorney or other agent to so act on behalf
of the stockholder. The demand under oath shall be directed to the corporation
at its registered office in this state or at its principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
Section 1. The stock certificates of the corporation shall be
numbered and registered in the share ledger and transfer books of the
corporation as they are issued. They shall bear the corporate seal and shall
be signed by the President or any Vice President and the Secretary or
Assistant Secretary of the corporation.
Section 2. TRANSFERS: Transfers of shares shall be made on the books
of the corporation upon surrender of the certificates therefor, endorsed by
the person named in the certificate or by attorney, lawfully constituted in
writing. No transfer shall be made which is inconsistent with law.
Section 3. LOST CERTIFICATE: The corporation may issue a new
certificate of stock in the place of any certificate theretofore signed by it,
alleged to have been lost, stolen or destroyed, and the corporation may
require the owner of the lost, stolen or destroyed certificate, or his legal
representative to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
Section 4. RECORD DATE: In order that the corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty days prior to
any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which
the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent
is expressed.
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(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
Section 5. DIVIDENDS: The Board of Directors may declare and pay
dividends upon the outstanding shares of the corporation, from time to time
and to such extent as they deem advisable, in the manner and upon the terms
and conditions provided by statute and the Certificate of Incorporation.
Section 6. RESERVES: Before payment of any dividend there may be set
aside out of the net profits of the corporation such sum or sums as the
directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the manner in
which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. CHECKS: All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate.
Section 2. FISCAL YEAR: The fiscal year shall begin on the first day
of January.
Section 3. NOTICE: Whenever written notice is required to be given
to any person, it may be given to such person, either personally or by sending
a copy thereof through the mail, or by telegram, charges prepaid, to his
address appearing on the books of the corporation, or supplied by him to the
corporation for the purpose of notice. If the notice is sent by mail or by
telegraph, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a telegraph office
for transmission to such person. Such notice shall specify the place, day and
hour of the meeting and, in the case of a special meeting of stockholders, the
general nature of the business to be transacted.
Section 4. WAIVER OF NOTICE: Whenever any written notice is required
by statute, or by the Certificate or the By-Laws of this corporation a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Except in the case of a special meeting of
stockholders, neither the business to be transacted at nor the purpose of the
meeting need be specified in the waiver of notice of such meeting. Attendance
of a person either in person or by proxy, at any meeting shall constitute a
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waiver of notice of such meeting, except where a person attends a meeting for
the express purpose of objecting to the transaction of any business because
the meeting was not lawfully called or convened.
Section 5. DISALLOWED COMPENSATION: Any payments made to an officer
or employee of the corporation such as a salary, commission, bonus, interest,
rent, travel or entertainment expense incurred by him, which shall be
disallowed in whole or in part as a deductible expense by the Internal Revenue
Service, shall be reimbursed by such officer or employee to the corporation to
the full extent of such disallowance. It shall be the duty of the directors,
as a Board, to enforce payment of each such amount disallowed. In lieu of
payment by the officer or employee, subject to the determination of the
directors, proportionate amounts may be withheld from his future compensation
payments until the amount owed to the corporation has been recovered.
Section 6. RESIGNATIONS: Any director or other officer may resign at
any time, such resignation to be in writing and to take effect from the time
of its receipt by the corporation, unless some time be fixed in the
resignation and then from that date. The acceptance of a resignation shall not
be required to make it effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The President and the Board of Directors shall present at
each annual meeting a full and complete statement of the business and affairs
of the corporation for the preceding year. Such statement shall be prepared
and presented in whatever manner the Board of Directors shall deem advisable
and need not be verified by a Certified Public Accountant.
ARTICLE XI - INDEMNIFICATION AND INSURANCE
Section 1. (a) RIGHT TO INDEMNIFICATION. Each person who was or is
made a party or is threatened to be made a party or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director or
officer, of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
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officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred
in this Section shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition: provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not
in any other capacity in which service was or is rendered by such person while
a director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be
made only upon delivery to the corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under this Section or otherwise. The Corporation may, by action of
its Board of Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days
after a written claim has been received by the Corporation, the claimant may
at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the Delaware General
Corporation law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard or conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard or
conduct.
(c) Notwithstanding any limitation to the contrary contained in
sub-paragraphs (a) and 8 (b) of this section, the corporation shall, to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities or other matters referred
to in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to
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which those indemnified may be entitled under any by-law, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(d) INSURANCE:
The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
ARTICLE XII - AMENDMENTS
Section 1. These By-Laws may be amended or repealed by the vote of
stockholders entitled to cast at least a majority of the votes which all
stockholders are entitled to cast thereon, at any regular or special meeting
of the stockholders, duly convened after notice to the stockholders of that
purpose.
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EXHIBIT 3.3
CERTIFICATE OF TRUST
OF
COPELCO CAPITAL FUNDING TRUST 1998-A
THIS CERTIFICATE OF TRUST OF COPELCO CAPITAL FUNDING TRUST 1998-A (the
"Trust") is being duly executed and filed by the undersigned to form a
business trust under the Delaware Business Trust Act (12 Del. Code ss.3801 et
seq.).
1. Name. The name of the business trust being formed hereby is
Copelco Capital Funding Trust 1998-A
2. Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of
Delaware is as follows:
Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust as of the date hereof, has executed this Certificate of Trust.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By: S/E - Harmon
-------------------------------------
Name: Emmett R. Harmon
Title: Vice President
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Exhibit 3.4
TRUST AGREEMENT, dated as of July 1, 1998, among, COPELCO
CAPITAL INC. ("CCI," or "Servicer") and COPELCO CAPITAL FUNDING LLC 1998-1,
each as Certificateholder (the "Certificateholders"), and COPELCO CAPITAL
FUNDING CORP. XI, as the Designated Certificateholder (the "Designated
Certificate Holder") and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as owner trustee (the "Owner Trustee").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Capitalized Terms. For all purposes of this Trust
Agreement, except as otherwise expressly provided herein capitalized terms
shall have the meanings set forth below:
Administration Services Agreement shall mean the
Administration Services Agreement, dated as of July 1, 1998, between the
Issuer and Copelco Capital Funding Corp. XI, as Administrator, as the same may
be amended or supplemented from time to time.
Administrator shall mean Copelco Capital Funding Corp XI in
its capacity as Administrator under the Administration Services Agreement, or
any successor Administrator appointed pursuant to the terms of the
Administration Services Agreement.
Authorized Officer shall mean any person who is authorized
to act for such Person in matters relating to this Agreement, and whose action
is binding upon such Person and, with respect to the Issuer, Indenture
Trustee, the Owner Trustee and the Transferor, initially including those
individuals whose names appear on the respective lists of Authorized Officers
delivered on the Closing Date.
Basic Documents shall mean this Agreement, the Indenture,
and the Sale and Servicing Agreement, the Certificate of Trust, the Notes, and
other documents and certificates, determined in connection therewith.
Business Trust Law shall mean Chapter 38, Treatment of
Delaware Business Trusts of Title 12 of the Delaware Code, as amended.
Certificates shall mean any one of the certificates
designated as a certificate substantially in the form of truth in Exhibit A
hereto and executed and authenticated by the Owner Trustee.
Certificate of Trust shall mean the Certificate of Trust
filed for the Issuer pursuant to Section 3810(a) of the Business Trust Law.
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Certificate Paying Agent shall mean Copelco Capital Funding
Corp. XI in its capacity as certificate paying agent, or any successor
Certificate Paying Agent.
Certificate Register shall mean the register maintained by
the Certificate Registrar in which the Certificate Registrar shall provide for
the registration of Certificates and of transfers and exchanges of
Certificates.
Certificate Registrar or Certificate Registrar and Transfer
Agent shall mean, initially, Copelco Capital Funding Corp. XI, in its capacity
as Certificate Registrar, or any successor in such capacity.
Certificateholders shall mean, initially, Copelco Capital
Inc., Copelco Capital Funding LLC 98-1, and Copelco Capital Funding Corp. XI.
Code shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time, any successor statute thereto, and any
applicable U.S. Department of the Treasury temporary or final regulations
promulgated thereunder.
Closing Date shall be August ___, 1998
Designated Certificate Holder shall mean Copelco Capital
Funding Corp. XI, a special purpose Delaware corporation.
Designated Certificate shall mean the Certificate
representing at least 1% of the Initial Aggregate Certificate Balance of the
Certificates issued to the Designated Certificate Holder.
Expenses shall have the meaning assigned to such term in
Section 8.2(a) hereof.
Fiscal Year shall mean, with respect to the Issuer, the
calendar year from each January 1 to the following December 31.
Indemnified Party shall have the meaning accorded to such
term in Section 8.2(a) hereof.
Indenture shall mean the Indenture, dated as of July 1, 1998
among the Issuer, Manufacturers and Traders Trust Company, as Trustee and
Copelco Capital, Inc. as Servicer.
Initial Aggregate Certificate Principal Balance shall mean
the aggregate outstanding principal balances for all of the Certificates.
Insolvency Event shall have the meaning accorded to such
term in "Description of the Trust Agreement" in the Offering Circular.
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Issuer shall mean Copelco Capital Funding Trust 1998-A, a
special purpose business trust organized under the laws of the State of
Delaware, and its successors and assigns.
Majority of Affected Securityholders shall mean, with
respect to a proposed action in respect of the Certificates, a
Majority-in-Interest and/or Majority Certificateholders of each Class of
Certificates affected by such proposed action.
Majority Certificateholders shall have the meaning accorded
to such term in Section 4.2 hereof.
Majority-in-Interest shall mean Holders of Certificates
representing in excess of fifty percent (50%) of the aggregate Percentage
Interests of all Certificates.
Offering Circular shall mean the Offering Circular, dated as
of ___, 1998.
Opinion of Counsel shall be a written opinion of counsel,
who may be counsel for the Transferor, the Adviser or the Owner Trustee.
Owner Trustee shall mean Wilmington Trust Company, a
Delaware banking corporation, acting not in its individual capacity but solely
as trustee with respect to the Issuer, or such successor person as shall
become trustee pursuant to the applicable provisions of the Trust Agreement.
Owner Trustee Lien shall have the meaning assigned to such
term in Section 8.3 hereof.
Percentage Interest shall mean with respect to a
Certificate, a fraction, expressed as a percentage, the numerator of which is
the initial principal balance of such Certificate, and the denominator of
which is the Initial Aggregate Certificate Balance of all Certificates.
Periodic Filings shall mean any filings or submissions that
the Issuer is required to make with any state or federal regulatory agency or
under the Code.
Person shall mean any individual, partnership, limited
liability company, limited liability partnership, national banking
association, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Record Date shall mean, with respect to each Distribution
Date, the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which such Distribution Date
occurs.
Sales and Servicing Agreement shall have the meaning
assigned to such term in the Indenture.
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Seller shall mean Copelco Capital Funding LLC 98-1, a
[Delaware] limited liability company.
Transfer shall have the meaning accorded to such term in
Section 3.3 hereof.
Trust Assets shall be as defined in Section 2.3 hereof.
Trustee shall have the meaning as defined in the Indenture.
1.2. Other Definitional Provisions.
(a) All terms not defined herein shall have the meaning
assigned to such term in the Indenture. All terms defined in this Trust
Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Trust Agreement and in any certificate
or other document made or delivered pursuant hereto or thereto, accounting
terms not defined in this Trust Agreement or in any such certificate or other
document, and accounting terms partly defined in this Trust Agreement or in
any such certificate or other document to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Trust Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Trust Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Trust Agreement shall refer to this Trust
Agreement as a whole and not to any particular provision of this Trust
Agreement; Section and Exhibit references contained in this Trust Agreement
are references to Sections and Exhibits in or to this Trust Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(d) The definitions contained in this Trust Agreement are
applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
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ARTICLE II
ORGANIZATION
2.1. Name. The trust created hereby ("Issuer" or "Trust")
shall be known as "Copelco Capital Funding Trust 1998-A" in which name each of
the Trust, and the Owner Trustee, in the name and on behalf of the Trust,
shall have power and authority and is hereby authorized and empowered, subject
to the limitations described herein, to acquire, hold, maintain, protect,
preserve and dispose of the Trust Assets, execute contracts and other
instruments on behalf of the Issuer and sue and be sued.
2.2. Office. The office of the Issuer shall be in care of
the Owner Trustee, addressed to Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration, or at
such other address as the Owner Trustee may designate by notice to the
Certificateholders.
2.3. Limited Special Purposes and Powers. The sole purpose
of the Issuer is, and the Issuer shall have power and authority and is hereby
authorized and empowered, without the need for further action on the part of
the Issuer, and the Owner Trustee, in the name and on behalf of the Issuer,
shall have power and authority, and is hereby authorized and empowered, to do
or cause to be done all acts and things necessary, appropriate, or convenient
to cause the Issuer to engage in the following activities: (i) to execute,
issue, and deliver the Notes pursuant to the Indenture, (ii) to execute,
issue, and deliver the Certificates pursuant to this Trust Agreement, (iii) to
execute, issue, and deliver the Certificates to the Seller, the Designated
Certificateholder and CCI in consideration of the contribution of the Lease
Contracts to the Issuer by the Seller and the contribution of cash to the
Issuer by the Designated Certificateholder, (iv) to distribute to the
Certificateholders pursuant to Article V hereof any portion of the Trust
Estate remitted to the Issuer pursuant to the Sales and Servicing Agreement,
(v) to enter into, execute, deliver, and perform its obligations under the
Basic Documents and to enter into and consummate the transactions contemplated
thereby, and to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, and (vi) to engage
in such other activities as may be required in connection with conservation of
the Trust Assets and the making of distributions to the Certificateholders.
The Issuer shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Trust
Agreement or the Basic Documents.
2.4. Appointment of the Owner Trustee. The
Certificateholders and the Designated Certificate Holder hereby appoints
Wilmington Trust Company as Trustee with respect to the Issuer effective as of
the date hereof, to have all the rights, powers and duties set forth herein
and Wilmington Trust Company hereby accepts such appointment and agrees to act
as Owner Trustee hereunder.
2.5. Initial Capital Contribution of Trust Assets. The Owner
Trustee hereby acknowledges on behalf of the Issuer, receipt in trust from the
Seller as of the date hereof, of the Lease Contracts, and of the other
property now or hereafter transferred and
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assigned to the Issuer pursuant to the Sales and Servicing Agreement, which
shall constitute the Trust Assets (the "Trust Assets") of the Issuer. The
Owner Trustee also acknowledges on behalf of the Issuer receipt of the Initial
Deposit in cash from the Seller and $____________ in cash from the Designated
Certificate Holder. The capital contributed by the Designated Certificate
Holder shall be deposited in the Reserve Account in accordance with the
Indenture. The Designated Certificate Holder shall pay or cause to be paid
organizational expenses of the Issuer as they may arise or shall, upon the
request of the Owner Trustee (as such or in its individual capacity), promptly
reimburse the Owner Trustee (as such or in its individual capacity) for any
such expenses paid by the Owner Trustee (as such or in its individual
capacity).
2.6. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Assets in trust upon and subject to the terms and
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents. It is the
intention of the parties hereto that the Issuer constitute a business trust
under Chapter 38 of Title 12 of the Delaware Code and that this Trust
Agreement constitutes the governing instrument of the Issuer. It is the
intention of the parties hereto that, for income and franchise tax purposes,
the Issuer shall be treated as a partnership, with the partners of the
partnership being the Certificateholders and the Notes being debt of the
Partnership. The Issuer will not elect, for income and franchise tax purposes,
to be treated as an entity other than a partnership. Except as otherwise
provided in this Trust Agreement, the rights of the Certificateholders (other
than the Designated Certificate Holder) will be those of limited partners and
the rights of the Designated Certificate Holder, subject to Sections 2.10 and
6.6 hereof, will be those of a general partner in a partnership formed under
the Delaware Revised Uniform Limited Partnership Act. The parties agree that,
unless otherwise required by appropriate tax authorities, the Issuer will file
or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Issuer as a partnership for
such tax purposes.
2.7. Situs of Issuer. The Issuer will be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Issuer shall be located in the State of
Delaware. The Issuer shall not have any employees. Payments received by the
Owner Trustee on behalf of the Issuer will be received only in the State of
Delaware and payments will be made by the Owner Trustee on behalf of the
Issuer only from the State of Delaware. The Issuer's only office is and will
be at the office of the Owner Trustee as set forth herein.
2.8. Title to Property. Legal title to all the Trust Assets
shall be vested at all times in the Issuer as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the
Trust Assets to be vested in the Owner Trustee in which case title shall be
deemed to be vested in the Owner Trustee, or a co-trustee or separate trustee,
as the case may be. The Certificateholders shall not have legal title to any
part of the Trust Assets. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their
ownership interest in the Trust Assets shall operate to terminate this Trust
Agreement or the trusts hereunder or entitle
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any transferee to an accounting or to the transfer to it of legal title to any
part of the Trust Assets.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
3.1. Series and Class of Beneficial Interests: Issuance of
Certificates.
(a) The Certificates shall be issued in a single class and
series, which shall be designated as "Copelco Capital Funding Trust
Certificates, Series 1998-A". The Certificates shall be issued in minimum
denominations of $1,000,000 and in integral multiples of $100,000 in excess
thereof; provided, however, that the Designated Certificate shall be issued
pursuant to Section 3.9 in a single Certificate, the Certificate issued to the
initial Certificateholders may be issued in a different denomination, and one
other Certificate of each class of Certificates may be issued in different
denominations. There shall at all times be at least two Holders of
Certificates.
(b) Each Certificate shall be in substantially the form of
EXHIBIT A hereto and shall be executed by manual signature in the name and on
behalf of the Trust by one of the Owner Trustee's Authorized Officers or by an
Authorized Officer of the Administrator on behalf of the Issuer. Certificates
bearing the manual signature of an individual who was, at the time when such
signature was affixed, authorized to sign on behalf of the Owner Trustee or
the Administrator shall bind the Issuer, notwithstanding that such individual
has ceased to be so authorized prior to the delivery of such Certificate or
does not hold such office at the date of such Certificate. Each Certificate
shall be dated the date of its issuance.
3.2. Registration and Transfer of Certificates.
(a) The Certificate Registrar shall maintain at its chief
executive office a register ("Certificate Register") for the registration and
Transfer of Certificates. Each Certificate shall be transferable only upon the
Certificate Register. No transferee of a Transfer shall have any right or
power to consent or vote as provided hereunder, unless and until such time as
such Transfer is registered.
(b) Subject to Section 3.3 hereof, the registered
Certificateholder (in person or by his attorney duly authorized in writing) of
any Certificate may Transfer all or any portion of the beneficial interest in
the Issuer evidenced by such Certificate only upon surrender thereof
(accompanied by a written instrument of Transfer and with such signature
guarantees and evidence of authority of the Persons signing the instrument of
Transfer as the Certificate Registrar may reasonably require) to the
Certificate Registrar accompanied by any other documents required hereunder.
Promptly upon the receipt of such documents and receipt by the Certificate
Registrar of the transferor's Certificate, the Certificate Registrar shall
record in the Certificate Register the name of the transferee as a
Certificateholder. Subject to satisfaction of such conditions and to the
provisions of Section 3.9 below with respect to the Designated Certificate,
upon surrender for
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registration of transfer of any Certificate at the office or agency maintained
by the Certificate Registrar, the Owner Trustee pursuant to written
instructions of the Certificate Registrar or Administrator on behalf of the
Issuer shall execute and deliver in the name of the designated transferee or
transferees one or more new Certificates in authorized denominations of a like
aggregate amount dated the date of the issuance by the Issuer. Subsequent to a
Transfer and upon the issuance of the new Certificate or Certificates, the
Certificate Registrar shall cancel and destroy the Certificate surrendered to
it in connection with such Transfer.
3.3. Limitation On Transfer of Certificates.
(a) The Certificates will only be sold and transferable to
United States persons. Transferees (including nominees of beneficial owners)
of the Certificates must represent that they are individuals or entities that
are U.S. Persons (generally, citizens or residents of the U.S. and
corporations or partnerships organized under the laws of the United States),
and each must provide a certificate of non-foreign status under penalties of
perjury.
(b) No sale, assignment, pledge, hypothecation, transfer or
other disposition ("Transfer") of a Certificate or any beneficial interest in
the Issuer shall be made to any Person unless such Transfer is exempt from the
registration requirements of the 1933 Act and any applicable state securities
laws or is made in accordance with said 1933 Act and state laws. In the event
of any such Transfer, the Certificate Registrar shall require the transferee
to execute (i) an investment letter (in substantially the form attached hereto
as EXHIBIT B) in the form and substance reasonably satisfactory to the
Certificate Registrar, certifying to the Issuer, the Owner Trustee and the
Certificate Registrar that such transferee is a "qualified institutional
buyer" under Rule 144A under the 1933 Act, which investment letter shall not
be an expense of the Issuer, the Owner Trustee, the Certificate Registrar, the
Servicer, the Administrator, the Seller or the Designated Certificate Holder
and (ii) the Certificate of Non-Foreign Status and ERISA (in substantially the
form attached hereto as EXHIBIT C acceptable to and in form and substance
reasonably satisfactory to the Certificate Registrar, which certificate shall
not be an expense of the Issuer, the Owner Trustee, the Certificate Registrar,
the Servicer, the Administrator, the Seller or the Designated Certificate
Holder. The Holder of a Certificate desiring to effect such Transfer shall,
and does hereby agree to, indemnify the Issuer, the Owner Trustee in its
individual capacity, the Certificate Registrar, the Servicer, the
Administrator, the Seller and the Designated Certificate Holder against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws or otherwise is not made in
accordance with this Agreement.
(c) No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
(d) Each Certificate shall bear the following legend:
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THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (" 1933 ACT") OR THE SECURITIES LAWS OR "BLUE SKY"
LAWS OF ANY STATE AND HAS BEEN SOLD IN RELIANCE UPON AN EXEMPTION
PROVIDED IN THE 1933 ACT AND APPLICABLE STATE SECURITIES AND BLUE SKY
LAWS. THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
DISPOSED OF (EACH A "TRANSFER") UNLESS SUBSEQUENTLY REGISTERED UNDER
THE 1933 ACT AND APPLICABLE STATE SECURITIES AND BLUE SKY LAWS OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE (AND EITHER
THE CERTIFICATE REGISTRAR, THE ISSUER OR THE OWNER TRUSTEE MAY
REQUIRE AN OPINION OF COUNSEL TO SUCH EFFECT PRIOR TO EFFECTING ANY
SUCH TRANSFER). EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED
THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE 1933 ACT PROVIDED BY RULE 144A
THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE 1933 ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT TO THE ISSUER'S
AND THE CERTIFICATE REGISTRAR'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (A) PURSUANT TO THIS CLAUSE (II) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM AND (B) IN EACH OF THE FOREGOING CASES,
TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
EACH SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
CERTIFICATE REGISTRAR, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE. TRANSFER OF THIS CERTIFICATE IS SUBJECT TO
COMPLIANCE WITH ADDITIONAL REQUIREMENTS SET FORTH IN SECTION 3.3 OF
THE TRUST AGREEMENT (DEFINED BELOW).
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(e) No Certificate (or any interest therein) may be
Transferred (including, without limitation, by pledge or hypothecation),
directly or indirectly, to any Person:
(a) (1) unless such transferee certifies in an Officer's
Certificate to the Certificate Registrar, the Issuer and the Owner
Trustee (and in a form reasonably acceptable to the Certificate
Registrar, the Issuer and Owner Trustee) that such Person is either
(x) a qualified institutional buyer as defined in Rule 144A under
the 1933 Act, or (y) a Person (other than the Rating Agency)
involved in the organization and operation of the Issuer or an
affiliate, as defined in Rule 405 under the 1933 Act, of such Person
within the meaning of Rule 3a-7 under the 1940 Act (collectively,
the "Section 3.3(e)(A) Restriction"); and (2) if requested by the
Certificate Registrar, the Issuer or the Owner Trustee, the
transferee delivers an Opinion of Counsel to the effect of the
foregoing; or
(b) unless prior to such Transfer the Owner Trustee has both
(x) received an Opinion of Counsel that the Issuer is not, and after
giving effect to such Transfer, will not be an "investment company"
as defined in the 1940 Act, and (y) waived, at the written direction
of the Administrator, the Section 3.3(e)(A) Restriction.
(f) No Certificate (or any interest therein) may be
Transferred (including, without limitation, by pledge or hypothecation),
directly or indirectly, to any Person in reliance upon the exemption from
registration under the 1933 Act contained in Rule 144A unless an Officer's
Certificate of the transferor is delivered to the Certificate Registrar, the
Issuer and the Owner Trustee, as follows: (i) the transferor reasonably
believes that the transferee is a qualified institutional buyer as defined in
Rule 144A; (ii) the registration of the Transfer to the transferee is to be
made in reliance upon the exemption from registration under the 1933 Act
contained in Rule 144A; and (iii) the transferor understands that none of the
Issuer, the Certificate Registrar or the Owner Trustee is obligated to
register the Certificates under the 1933 Act or any other securities law and
that any Transfer in violation of the provisions of this Section 3.3 shall be
void ab initio; and
(g) No Transfer of a Certificate shall be made unless the
Certificate Registrar shall have received a representation letter from the
proposed purchaser or transferee of such Certificate to the effect that such
proposed purchaser or transferee is not an employee benefit plan subject to
the fiduciary responsibility provisions of ERISA, or Section 4975 of the Code,
or a Person acting on behalf of any such plan or using the assets of any such
plan.
(h) None of the Issuer, the Certificate Registrar or the
Owner Trustee is obligated to register the Certificates under the 1933 Act or
any other securities law. Any Transfer in violation of the provisions of this
Section 3.3 shall be void ab initio.
3.4. Lost, Stolen, Mutilated or Destroyed Certificates. If
(i) any mutilated Certificate is surrendered to the Owner Trustee, or (ii) the
Owner Trustee
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receives evidence to its satisfaction that any Certificate has been destroyed,
lost or stolen, and upon proof of ownership satisfactory to the Owner Trustee,
together with such security or indemnity as may be requested by the Owner
Trustee (as such and in its individual capacity) to save it harmless, and
provided that the Owner Trustee has no notice that the Certificate has been
acquired by a protected purchaser, the Owner Trustee, in the name and on
behalf of the Trust, shall execute and deliver in exchange for the Certificate
so mutilated, destroyed, lost or stolen, a new Certificate of like tenor and
denomination and bearing a different issue number, with such notations, if
any, as the Owner Trustee shall determine.
3.5. Persons Deemed Certificateholders. Prior to due
presentation of a Certificate for registration of Transfer, the Owner Trustee,
the Certificate Registrar or any Certificate Paying Agent may treat the Person
in whose name any Certificate is registered in the Certificate Register as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 5.2 and for all other purposes whatsoever, and none of the Issuer,
the Owner Trustee, the Certificate Registrar or any Certificate Paying Agent
shall be bound by any notice to the contrary.
3.6. Access to List of Certificateholders' Names and
Addresses. The Certificate Registrar shall furnish or cause to be furnished to
the Designated Certificate Holder or the Owner Trustee, within 15 days after
receipt by the Certificate Registrar of a written request therefor from the
Designated Certificate Holder or the Owner Trustee, a list, in such form as
the Designated Certificate Holder or the Owner Trustee, as the case may be,
may reasonably require, of the names and addresses of the Certificateholders
as of the most recent Record Date. If three or more Certificateholders or one
or more Holders of Certificates representing not less than 25% of the
Certificate Principal Balance of the outstanding Certificates apply in writing
to the Certificate Registrar, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their
rights under the Basic Documents or under the Certificates and such
application is accompanied by a copy of the communication that such applicants
propose to transmit, then the Certificate Registrar shall, within five
Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Holder, by receiving and holding a Certificate, shall be deemed to have
agreed not to hold any of the Issuer, the Designated Certificate Holder, the
Certificate Registrar or the Owner Trustee, in its individual capacity,
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
3.7. Maintenance of Office or Agency. The Certificate
Registrar shall maintain in the City of Mt. Laurel, an office or offices or
agency or agencies where Certificates may be surrendered for registration of
Transfer or exchange and where notices and demands to or upon the Owner
Trustee in respect of the Certificates and the Basic Documents may be served.
The Issuer initially designates the Office of the Administrator as its office
for such purposes. The Certificate Registrar shall give prompt written notice
to the Owner Trustee, the Designated Certificate Holder and the
Certificateholders of any change in the location of the Certificate Register
or any such office or agency. The Certificate Registrar shall immediately
furnish to the Owner
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Trustee any notices or demands to the Owner Trustee received by the
Certificate Registrar at the office maintained by it pursuant to this Section.
3.8. Certificate Paying Agent. The Certificate Paying Agent
shall make distributions to Certificateholders from amounts received by the
Certificate Paying Agent from the Collection Account pursuant to the
Indenture. The Issuer may revoke such power and remove the Certificate Paying
Agent if the Owner Trustee determines in its sole discretion that the
Certificate Paying Agent shall have failed to perform its obligations under
this Trust Agreement or the Indenture. ____________________ shall be permitted
to resign as Certificate Paying Agent upon 30 days' written notice to the
Owner Trustee. In the event that ________ shall no longer be the Certificate
Paying Agent, the Designated Certificate Holder shall appoint a successor to
act as Certificate Paying Agent (which shall be a bank or trust company). The
Certificate Paying Agent shall return all unclaimed funds to the Issuer and
upon the removal of a Certificate Paying Agent such Certificate Paying Agent
shall also return all funds in its possession to the Issuer. Any reference in
this Agreement to the Certificate Paying Agent shall include any co-paying
agent unless the context requires otherwise.
3.9. Ownership by Designated Certificate Holder.
(a) The Designated Certificate Holder shall receive on the
Closing Date in consideration for the contribution to the Issuer of cash and
for undertaking the indemnities and other duties and obligations of the
Designated Certificate Holder hereunder and under the Basic Documents, a
Certificate representing at least 1% of the Initial Certificate Balance of the
Certificates (the "Designated Certificate"). The Trust shall cause the
Designated Certificate and any Successor Designated Certificate created
pursuant to Section 3.9 to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE EXCEPT UPON SATISFACTION OF THE CONDITIONS IN SECTION 3.9 OF THE
TRUST AGREEMENT. " For purposes of the Business Trust Law, the Designated
Certificate and any Successor Designated Certificate shall be deemed to be a
separate class of Certificates from all other Certificates issued by the
Issuer; provided that the rights and obligations evidenced by all
Certificates, regardless of class, shall, except as provided in this Section
and Sections 2.7 and 9.1 (c) and the last sentence of Section 2.5 hereof, be
identical.
(b) The Designated Certificate shall, for income and
franchise tax purposes, be treated as the general partnership interest of the
Issuer. The Designated Certificate shall at all times represent an interest in
the Issuer of not less than 1.00% of the Initial Certificate Balance
represented by all Certificates. The Designated Certificate is not divisible.
The Designated Certificate Holder may transfer the Designated Certificate if
(a) the applicable provisions of Section 3.3 are satisfied; (b) the
Certificate Registrar receives an Opinion of Counsel to the effect that the
transfer of the Designated Certificate shall not cause the Issuer to be
subject to an entity level tax; (c) a Majority-in-Interest by Certificate
Principal Balance of the outstanding Certificates (exclusive of the Designated
Certificate) approves such transfer, which will not be unreasonably withheld;
(d) the Rating Agency shall confirm in a writing delivered to the Certificate
Registrar that such Transfer shall not result in a withdrawal or downgrading
of any ratings assigned to
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the Certificates by the Rating Agency; (e) the transferee or assignee shall
assume, pursuant to an assignment and assumption agreement executed and
delivered to the Owner Trustee, all of the obligations of the Designated
Certificate Holder hereunder; (f) the transferee or assignee shall have a
currently effective charter restricting its operations and activities, and
shall make covenants substantially similar to those set forth in the
organizational documents of the Designated Certificate Holder; and (g) the
Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel
to the effect that the conditions precedent to such transfer in this Trust
Agreement have been satisfied.
ARTICLE IV
CONCERNING THE CERTIFICATEHOLDERS
4.1. Action by Certificateholders with Respect to Certain
Matters. Without limiting the rights of Certificateholders under Section 4.2
hereof, the Certificateholders shall have no right, power and authority to
call meetings of Certificateholders or to direct the Owner Trustee in the
management of the affairs of the Issuer except as expressly provided herein
and then only to the extent consistent with the limited purposes of the Issuer
as set forth in Section 2.3 hereof. Without limiting the generality of the
foregoing, and except for the acts described in clauses (iv) and (v) below,
the Owner Trustee shall not have the power without the prior consent of the
Certificateholders to (i) terminate the Issuer, except in accordance with
Section 9.1 hereof; (ii) execute on behalf of the Issuer any agreement,
instrument or document that would obligate the Issuer to make a payment or
payments in excess of $2,500, whether in consideration of services rendered to
the Issuer or property acquired by the Issuer or otherwise, except pursuant to
the specific authority granted to the Owner Trustee by Section 6.3 hereof;
(iii) pledge, bargain, sell, warrant, alienate, remise, convey, assign,
transfer, or create or grant a lien upon or security interest in or a right of
set-off against, Trust Property (except in connection with the transactions
contemplated by the Indenture); (iv) do any act in contravention of this Trust
Agreement or any applicable law or regulation; (v) do any act which would make
it impossible to carry on the ordinary administration of the Issuer; (vi)
confess a judgment against the Issuer; (vii) possess Trust Assets, or assign
the Issuer's right in specific property, for other than a Trust purpose;
(viii) admit a Person as an additional or successor trustee of the Issuer,
except in accordance with Sections 10.1 and 10.2 hereof; (ix) admit a Person
as an additional or successor Certificateholder of the Issuer, except in
accordance with Article III hereof; (x) cause the Issuer to lend any funds to
any Person; (xi) change the Issuer's purposes and powers from those set forth
in Section 2.3 hereof; (xii) initiate any claim or lawsuit by the Issuer
(except claims or lawsuits brought in connection with the collection of the
Lease Contracts) or compromise any action, claim or lawsuit brought by or
against the Issuer (except with respect to the aforementioned claims or
lawsuits or collection of the Lease Contracts); (xiii) elect to file an
amendment to the Certificate of Trust (unless such amendment is required to be
filed under Chapter 38 of Title 12 of the Delaware Code); (xiv) amend, change
or modify any Basic Document, except to cure any ambiguity or to amend or
supplement any provision in a manner or add any provision that would not
materially adversely affect the interests of the Certificateholders; (xv)
consent to the
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calling or waiver of any default or event of default under any Basic Document;
or (xvi) consent to the assignment by the Trustee, or the Servicer of their
respective obligations under any Basic Document.
Additionally, the Issuer shall: (i) not commingle its assets
with those of any other entity; (ii) maintain its financial and accounting
books and records separate from those of any other entity; (iii) except as
expressly set forth herein, pay its indebtedness and operating expenses from
its own funds; (iv) not pay the indebtedness, operating expenses and
liabilities of any other entity; (v) maintain appropriate minutes or other
records of all appropriate actions; (vi) maintain its office separate from the
offices of the Designated Certificate Holder or any Affiliate of the
Designated Certificate Holder; (vii) not become involved in the day-to-day
management of another Person; (viii) conduct all business correspondence in
its own name; and (ix) not act as agent for any other person except pursuant
to contractual documents indicating such capacity.
4.2. Majority Control. Unless unanimous action of the
Certificateholders is expressly required by the terms of this Trust Agreement,
any action which may be taken, or any consent or instructions which may be
given by the Certificateholders under this Trust Agreement may be taken or
given by the registered Certificateholders holding Certificates representing
in the aggregate more than fifty percent (50%) of the Certificate Principal
Balance of all outstanding Certificates at the time of such action (in each
such case, the "Majority Certificateholders"). Any written notice of the
Certificateholders delivered pursuant to this Trust Agreement shall be
effective if signed by the Majority Certificateholders at the time of the
delivery of such notice. The Owner Trustee shall not be required to give
notice to the other Certificateholders of any action pursuant to the direction
of the Majority Certificateholders as a condition to the effectiveness of such
action, but shall promptly, upon its receipt thereof, deliver copies of all
such notices to all Certificateholders.
4.3. Representations, Warranties and Covenants.
(a) The Designated Certificate Holder hereby represents and
warrants to the Owner Trustee (as such and in its individual capacity) as
follows:
(i) The Issuer is not, and will not be upon conveyance of the
Trust Assets to the Owner Trustee, an "Investment Company" or under
the "control" of an "Investment Company," as such terms are defined
in the Investment Company Act of 1940, as amended.
(ii) This Trust Agreement has been duly and validly
authorized, executed and delivered by, and constitutes a legal,
valid and binding agreement of the Designated Certificate Holder,
enforceable in accordance with its terms.
(b) Each Certificateholder, prior to the acceptance of a
Certificate whether from the Issuer or pursuant to a transfer shall (i) comply
with the provisions of Section 3.3(f) hereof, (ii) establish its non-foreign
status by submitting to the Issuer and the Owner Trustee an IRS Form W-9 and a
completed Certificate of Non-Foreign Status
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and ERISA in substantially the form set forth as EXHIBIT C hereto and (iii) to
the extent such Certificateholder is (x) an Affiliate of the Seller (other
than the Designated Certificateholder, the Seller, or CCI), (y) the Holder of
Certificates representing more than 49% of the beneficial ownership interests
of the Issuer, and (z) acting as Servicer or Administrator, make the
representations, warranties, covenants and agreements set forth in Schedule A
hereto.
ARTICLE V
APPLICATION OF TRUST FUNDS
5.1. Distributions.
(a) On each Payment Date, the Certificate Paying Agent shall
distribute to each Certificateholder its pro rata share of payments received
by the Issuer as provided in the Indenture. All distributions shall be made on
a pro rata basis based upon Percentage Interests.
(b) In the event that any withholding tax is imposed on the
distributions (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with the Indenture. The Certificate Paying Agent is hereby
authorized and directed to retain or cause to be retained from amounts
otherwise distributable to the Certificateholders sufficient funds for the
payment of any tax that is legally owed by the Issuer (but such authorization
shall not prevent the Issuer or the effected Certificateholder with the
consent of the Designated Certificate Holder), from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding
tax imposed with respect to a Certificateholder shall be treated as cash
distributed to such Certificateholder at the time it is withheld by the
Certificate Paying Agent and remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Certificateholder), the
Certificate Paying Agent may in its sole discretion withhold such amounts in
accordance with this paragraph (b).
5.2. Method of Payment. Distributions required to be made to
Certificateholders on any Payment Date as provided in the Indenture shall be
made to each Certificateholder of record on the preceding Record Date either
by, in the case of any Certificateholder owning Certificates, other than the
Designated Certificate, having denominations aggregating at least $500,000,
wire transfer, in immediately available funds, to the account of such Holder
at a bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Payment Date
or, if not, by check mailed to such Certificateholder at the address of such
Holder appearing in the Certificate Register. All distributions in respect of
the initial Designated Certificate shall be made to the Designated Certificate
Holder or its permitted transferee,
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as the case may be, by wire transfer, in immediately available funds, to the
account of such entity at a bank or other entity having appropriate facilities
therefor, as specified in written instructions to the Certificate Paying Agent
on the fifth Business Day prior to the first Payment Date.
5.3. Statements to Certificateholders. On each Payment Date,
the Certificate Paying Agent shall send to each Certificateholder the
statement or statements provided to the Owner Trustee, the Certificate Paying
Agent and the Trustee by the Servicer pursuant to the Indenture with respect
to such Payment Date.
ARTICLE VI
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
6.1. General Authority. The Owner Trustee, in the name and
on behalf of the Trust, shall have power and authority, and hereby is
authorized and empowered to execute and deliver the Basic Documents to which
the Issuer is or is to be a party and each certificate or other document
attached as an exhibit to or contemplated by the Basic Documents to which the
Issuer is or is to be a party and any amendment or other agreement or
instrument described herein, in each case, in such form as the Administrator
shall approve, as evidenced conclusively by the Owner Trustee's execution
thereof. In addition to the foregoing, the Owner Trustee, in the name and on
behalf of the Trust, shall have power and authority, and hereby is authorized
and empowered, but shall not be obligated, to take all actions required of the
Issuer pursuant to the Basic Documents. The Owner Trustee, in the name and on
behalf of the Trust, shall have power and authority, and hereby is further
authorized and empowered from time to time to take such action as the
Administrator directs in writing with respect to the Basic Documents.
6.2. General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Trust Agreement and the Basic Documents to which
the Issuer is a party and to administer the Issuer in the interest of the
Certificateholders, subject to the Basic Documents and in accordance with the
provisions of this Trust Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Basic Documents to the extent the Administrator has
agreed in the Administration Agreement to perform such acts or to discharge
such duties of the Owner Trustee or the Issuer hereunder or under any Basic
Document, and the Owner Trustee shall not be held liable in its individual
capacity for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement. The Designated Certificate
Holder may delegate its duties hereunder; provided, however, that such
delegation of duties shall not relieve the Designated Certificate Holder of
its obligations hereunder.
6.3. Specific Authority. The Owner Trustee, in the name and
on behalf of the Trust, shall have power and authority, and is hereby
authorized and empowered to take the following action:
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(a) execute and cause to be delivered for filing with the
office of the Secretary of State of the State of Delaware a Certificate of
Trust of the Issuer pursuant to Section 3810 of Title 12 of the Delaware Code;
(b) take all action and make all Periodic Filings in all
appropriate government offices necessary or desirable to maintain the valid
existence of the Issuer under Chapter 38 of Title 12 of the Delaware Code;
(c) acquire the Lease Contracts pursuant to the Sales and
Servicing Agreement;
(d) on the Closing Date, execute, issue and deliver the
Certificates [and distribute the proceeds thereof ] to the Seller, the
Designated Certificateholder and CCI; and
(e) on the Closing Date, pledge and assign to the Indenture
Trustee under the Indenture for the benefit of the holders of the Notes all
right, title, interest in and to the agreements, instruments, powers, rights,
authority or property constituting the Trust Assets.
[Upon execution, issuance, and delivery of a Certificate in accordance with
this Section, such Certificate shall be duly authorized, validly issued and
outstanding, fully paid and nonassessable, and entitled to the benefits of
this Agreement.]
6.4. Administration Services Agreement; Accounting and
Reports to the Certificateholders, the Internal Revenue Service and Others;
Available Information; Servicing Agreement.
(a) The Trust shall enter into an Administration Services
Agreement with Copelco Capital Funding Corp. XI, as the Administrator, which
Administration Services Agreement shall obligate the Administrator (i) to
maintain or cause to be maintained the books and records of the Issuer on a
calendar year basis on the accrual method of accounting, (ii) to deliver or
cause to be delivered to each Certificateholder, within 60 days of the end of
each Fiscal Year, a copy of the annual financial statement, if any, of the
Issuer for such Fiscal Year, (iii) to file or cause to be filed such tax
returns relating to the Issuer (including information returns), and make such
elections as may from time to time be permitted or required under any
applicable state or federal statute or rule or regulation thereunder, (iv) to
cause such tax returns to be signed in the manner required by law, and (v) to
collect or cause to be collected or withhold or cause to be withheld any
withholding tax required by the Code to be withheld by the Owner Trustee with
respect to distributions to Certificateholders who are nonresident aliens or
foreign corporations. The Trust also shall enter into the Sales and Servicing
Agreement, which Sales and Servicing Agreement shall obligate the Servicer to
provide certain administrative, servicing and collection supervision services
in connection with the Lease Contracts.
(b) The Designated Certificate Holder shall cause the Issuer
to file federal and state income tax returns and information statements as a
partnership for each
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of its taxable years. Within 90 days after the end of each calendar year, the
holder of the Designated Certificate shall cause the Issuer to provide to each
Certificateholder an Internal Revenue Service Form " K- 1" or any successor
schedule and supplemental information, if required by law, to enable each
Certificateholder to file its federal and state income tax returns. The
Designated Certificate Holder shall serve as tax matters partner for the
Issuer.
(c) Separate capital accounts shall be maintained for each
Certificateholder in accordance with tax accounting principles. Each such
account shall initially equal the amount of money and the fair market value of
property contributed to the Issuer by the Certificateholder for its interest
in the Issuer and shall be (i) increased by the distributive share of profits
and capital gains of such Certificateholder, and (ii) decreased by the amount
of any cash and the fair market value of any non-cash assets distributed to
such Certificateholder by the Issuer pursuant to this Trust Agreement, and by
such Certificateholder's distributive share of losses.
The fiscal year of the Issuer shall end on the 31st day of
December in each year, unless otherwise required by the Code. For each fiscal
year of the Issuer, net profits shall be allocated among the
Certificateholders (including the Designated Certificate Holder), in such
manner as to cause their ending capital accounts (prior to any reduction for
distributions for such year and to the extent possible) to reflect their
respective rights to current and future distributions with respect to income
and the return of their investment. The intent of such allocation is to cause
each Certificateholder, other than the Designated Certificate Holder, to be
allocated an amount of net profits equal to the amount accrued in favor of
such Certificateholder pursuant to Sections ___ and ___ of the Indenture, and
for any remaining amount of net profits to be allocated to the Designated
Certificate Holder. For each fiscal year of the Issuer, net losses shall be
allocated among the Certificateholders in such manner as to reflect the order
and amount in which they would respectively bear the economic burden of such
losses, and then in accordance with their relative Percentage Interest.
The partnership tax returns of the Issuer shall be prepared
in such a manner as to fairly reflect the respective interest in the Issuer of
each Certificateholder in accordance with the principles of the regulations
under Code Section 704(b) and the preceding paragraph. Any unexpected
adjustments, allocations or distributions shall be offset by allocations of
items of income and gain as quickly as possible in accordance with the
qualified income offset provisions of the Code Section 704(b) regulations.
If during any fiscal year of the Issuer there is a change in
any Certificateholder's interest as a result of the issuance, transfer or
redemption of any Certificates, profits and losses shall be allocated among
the Certificateholders so as to reflect their varying interest in the Issuer
during the period. The allocation shall be made using the "interim closing of
the books" method or any other method permissible under Code Section 706
selected by the Administrator. The Administrator shall determine when any
transferee of a Certificate shall be deemed admitted to the "partnership" for
federal income tax purposes. Any transferee shall succeed to that portion of
the assignor's capital account attributable to the interest so transferred.
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The maintenance of capital accounts by the Issuer is solely
for the preparation of its income tax returns, and is not intended to confer
rights upon any third parties. No Certificateholder shall have, by reason of
its capital account, any right to demand or receive any property or cash from
the Issuer or any obligation to contribute such items to the Issuer. No
creditor of the Issuer shall be deemed a third party beneficiary of any
obligation of any Certificateholder by reason of its capital account to
contribute capital or make Lease Contracts or advances to the Issuer.
6.5. Signature of Returns. The Owner Trustee shall sign on
behalf of the Issuer the tax returns and other Periodic Filings of the Issuer
as the same may be presented to it, and shall be entitled to rely and fully
protect (both as such and in its individual capacity) in so relying thereupon,
unless applicable law requires an owner to sign such documents, in which case
the Designated Certificate Holder and not the Owner Trustee shall be presented
with and shall sign such document.
6.6. Right to Receive Instructions. In the event that the
Owner Trustee is unable to decide between alternative courses of action, or is
unsure as to the application of any provision of this Trust Agreement or any
Basic Document, or such provision is ambiguous as to its application, or is,
or appears to be, in conflict with any other applicable provision, or in the
event that this Trust Agreement or any Basic Document permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action which the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the registered
Certificateholders requesting instructions in accordance with Section 4.2
hereof and, to the extent that the Owner Trustee shall have acted, or
refrained from acting, in good faith in accordance with any such instructions
received from the registered Certificateholders, the Owner Trustee shall not
be liable, in its individual capacity, on account of such action or inaction
to any Person. If the Owner Trustee shall not have received appropriate
instructions within ten days of such notice (or within such shorter period of
time as may be specified in such notice) the Owner Trustee may, but shall be
under no duty to, take or refrain from taking such action, as the Owner
Trustee shall deem to be in the best interests of the Certificateholders, and
the Owner Trustee shall have no liability, in its individual capacity, to any
Person for such action or inaction.
6.7. No Duties Except as Specified in this Trust Agreement
or in Instructions. Notwithstanding any other provision herein or elsewhere,
the Owner Trustee shall not have any duty or obligation to manage, make any
payment in respect of, register, record, sell, reinvest, administer, dispose
of, create, perfect or maintain title or any security interest in, or
otherwise deal with the Trust Assets or the Trust, to prepare or file any
report or other document, or to otherwise take or refrain from taking any
action under, or in connection with, this Agreement, any Basic Document, or
any document contemplated hereby to which the Owner Trustee is a party, except
as expressly provided by the terms of this Trust Agreement and no implied
duties or obligations shall be read into this Trust Agreement against the
Owner Trustee. The Owner Trustee, in its individual capacity, nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any valid liens on any part of the Trust
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Assets which result from valid claims against the Owner Trustee personally
that are not related to the ownership or the administration of the Trust
Assets or the transactions contemplated by the Basic Documents.
6.8. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell,
reinvest, dispose of or otherwise deal with any part of the Trust Assets
except (i) in accordance with the powers granted to and the authority
conferred upon the Owner Trustee pursuant to this Trust Agreement, or (ii) in
accordance with instructions delivered to the Owner Trustee pursuant to
Section 4.2 or Section 6.6 hereof.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
7.1. Acceptance of Trusts and Duties.
(a) The Owner Trustee accepts the trust hereby created and
agrees to perform its duties hereunder with respect to the same but only upon
the terms of this Trust Agreement. Except (1) for the Owner Trustee's own
willful misconduct or gross negligence, (2) for liabilities arising from the
failure by the Owner Trustee, in its individual capacity, to perform
obligations expressly undertaken by it in the last sentence of Section 6.7
hereof, or (3) for taxes, fees or other charges on, based on or measured by
any fees, commissions or compensation received by the Owner Trustee, in its
individual capacity, in connection with any of the transactions contemplated
by this Trust Agreement or the Basic Documents, the Owner Trustee shall not be
personally liable under any circumstances, including, without limitation:
(i) for any error of judgment made in good faith by the Owner
Trustee;
(ii) for any action taken or omitted to be taken by the Owner
Trustee in good faith in accordance with the instructions of the
Certificateholders made in accordance with Section 4.2 hereof;
(iii) for any representation, warranty, covenant, agreement or
indebtedness of the Issuer under any Basic Document;
(iv) for or in respect of the validity or sufficiency of this
Trust Agreement or for the due execution hereof by any party hereto
other than the Owner Trustee, or for the form, character,
genuineness, sufficiency, value or validity of any Trust Assets, or
for or in respect of the validity or sufficiency of the Basic
Documents; and
(v) for any action or inaction of the Administrator, the
Designated Certificateholder, or the Servicer, and the Owner Trustee
shall not be responsible for performing or supervising the
performance of any obligation under this Trust
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Agreement or any Basic Document that is required to be performed by
the Administrator under the Administration Services Agreement or by
the Servicer under the Servicing Agreement.
(b) No provision of this Trust Agreement (other than Section
6.7 hereof) shall require the Owner Trustee to expend or risk its personal
funds or otherwise incur, in its individual capacity, any financial liability
in the performance of any of its rights or powers hereunder, if the Owner
Trustee shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured or provided to it in its individual capacity.
(c) Notwithstanding anything to the contrary contained
herein or in the Lease Contracts or any other Basic Document, the Owner
Trustee shall not be required to take any action in any jurisdiction other
than the State of Delaware if the taking of such action would (1) require the
consent or approval or authorization or order of or the giving of notice to,
or the registration with or taking of any action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the
State of Delaware; (2) result in any fee, tax or other governmental charge
under the laws of any jurisdiction or any political subdivisions thereof in
existence on the date hereof other than the State of Delaware becoming payable
by the Owner Trustee; or (3) subject the Owner Trustee to personal
jurisdiction in any jurisdiction other than the State of Delaware for causes
of action arising from acts unrelated to the consummation of the transactions
by the Owner Trustee contemplated hereby or by any Basic Document.
7.2. Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders, promptly upon receipt thereof, duplicates
or copies of all material reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
hereunder (other than documents originated by or otherwise furnished to such
Certificateholders).
7.3. Reliance; Advice of Counsel.
(a) The Owner Trustee conclusively may rely on and shall be
protected, in its individual capacity, in acting or refraining from acting
when doing so, in each case in accordance with any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion,
bond or other document or paper believed by it to be genuine and believed by
it to be signed by the proper party or parties. The Owner Trustee may accept a
certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and effect.
As to any fact or matter the manner or ascertainment of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by the
treasurer or any assistant treasurer or the secretary or any assistant
secretary of the relevant Person, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee, in its
individual capacity, for any action taken or omitted to be taken by it in good
faith in reliance thereon.
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(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and obligations hereunder or
under any of the Basic Documents, the Owner Trustee (i) may act directly or,
at the expense of the Issuer (subject to Section 4.1 (ii) hereof), through
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be liable, in its individual capacity, for the
default or misconduct of such agents or attorneys if such agents or attorneys
shall have been selected by the Owner Trustee with reasonable care; and (ii)
may, at the expense of the Issuer (subject to Section 4.1 (ii) hereof),
consult with counsel, accountants and other skilled persons to be selected
with reasonable care and employed by it, and the Owner Trustee shall not be
liable, in its individual capacity, for anything done, suffered or omitted in
good faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons. The Owner Trustee shall have no duty to
monitor or supervise the Administrator, the Designated Certificateholder, any
co-trustee or separate trustee, the Certificate Registrar, the Certificate
Paying Agent, the Servicer, the Trustee, any agent or independent contractor
of the Trust, any delegate of any trustee, or any other Person.
7.4. Not Acting in Individual Capacity. Except as expressly
provided in this Article VII, in accepting the trusts hereby created the Owner
Trustee acts solely as trustee hereunder and not in its individual capacity,
and all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Trust Agreement or the Basic Documents shall
look only to the Trust Assets for payment or satisfaction thereof.
7.5. Covenant Not to File a Bankruptcy Petition. The Owner
Trustee hereby agrees that until one year and one day after such time as the
Notes are indefeasably paid in full, it shall not (i) institute the filing of
a bankruptcy petition against the Issuer based upon any claim in its favor
arising hereunder or under the Basic Documents; (ii) file a petition or
consent to a petition seeking relief on behalf of the Issuer under the
Bankruptcy Code; (iii) consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or similar official) of the Issuer or a
substantial portion of the property of the Issuer; (iv) make any assignment
for the benefit of the Issuer's creditors; or (v) cause the Issuer to admit
its inability to pay its debts generally as they become due.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
8.1. Owner Trustee's Fees and Expenses. The Owner Trustee
shall be entitled to such compensation and expense reimbursements as shall be
set forth in a separate agreement between the Owner Trustee and the Seller.
8.2. Indemnification. The Designated Certificate Holder
shall be liable for, and hereby agrees to indemnify the Owner Trustee, in its
individual capacity, and any co-trustee or separate trustee appointed pursuant
to Section 10.2 hereof and their
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respective successors, assigns, directors, officers, employees, agents and
servants (each an "Indemnified Party"), from and against, any and all
liabilities, obligations, losses, damages, taxes (other than taxes incurred by
such Indemnified Party as the result of the payment of fees and expenses
pursuant to Section 8.1 hereof), claims, actions, suits, costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever (collectively, "Expenses") which may be imposed on, incurred
by or asserted at any time against an Indemnified Party (whether or not
indemnified against by other parties) in any way relating to or arising out of
this Trust Agreement, any Basic Document, the administration of the Trust
Assets or the action or inaction of the Owner Trustee hereunder. It is
understood and agreed that, notwithstanding the preceding sentence, the
Designated Certificate Holder shall not be required to indemnify any
Indemnified Party for Expenses arising or resulting from any of the matters
described in Section 7. l(a)(1)-(3) hereof. Without limiting the foregoing,
the Designated Certificate Holder shall indemnify the Issuer and the Owner
Trustee, in its individual capacity, against (i) any tax, interest or penalty
arising as a result of the failure to withhold taxes, and (ii) any indemnity
obligations provided for in the Sales and Servicing Agreement. The indemnities
contained in this Section 8.2 shall survive the termination of this Trust
Agreement and the resignation or removal of the Owner Trustee. The indemnities
of the Owner Trustee contained in this Section 8.2 extend only to the Owner
Trustee in its individual capacity and shall not be construed as indemnities
of the Trust Assets.
8.3. Lien on Trust Assets. Subject to the limitations
provided in Section 8.2(a), the Owner Trustee, in its individual capacity,
shall have a lien ("Owner Trustee Lien") on the Trust Assets for any indemnity
due hereunder which lien shall be prior to all other liens other than the lien
under the Indenture to secure the Notes (the "Indenture Lien"). The Issuer
Trust Lien is subordinate to the Indenture Lien.
8.4. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee, in its individual capacity, from the Trust Assets pursuant to
this Article VIII shall be deemed not to be part of the Trust Assets
immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST
9.1. Termination of Trust.
(a) The trust created hereby shall dissolve and the Trust
Assets shall be (i) if other than money, sold by the Servicer or at the
written direction of the Servicer in a commercially reasonable manner and on
commercially reasonable terms and (ii) the proceeds thereof and all money
constituting Trust Assets distributed to the Certificateholders in accordance
with their respective Percentage Interests, and this Trust Agreement (other
than Section 8.2) shall be of no further force or effect, the Trust shall
terminate, and the Owner Trustee at the written direction of the
[Administrator] shall
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execute and file a certificate of cancellation, upon the earlier of (A) after
payment or satisfaction of the Notes and all other amounts due under the
Indenture the payment in full of the Certificates, the sale or other final
disposition of the Trust Assets and the final distribution of all moneys or
other property or proceeds of the Trust Assets in accordance with the terms of
this Trust Agreement and the Basic Documents, and (B) twenty-one (21) years
after the date of this Trust Agreement.
(b) The bankruptcy, dissolution, death or incapacity of any
Certificateholder, Administrator or Servicer shall not operate to terminate
this Trust Agreement, nor entitle such Certificateholder's, Administrator's or
Servicer's legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court for a partition or winding up of the
Trust Assets, nor otherwise affect the rights, obligations and liabilities of
the parties hereto.
9.2. No Termination by Certificateholders. Except as
provided in Section 9.1 hereof, no Certificateholder, individually or acting
jointly with any other Certificateholder or Certificateholders, shall be
entitled to terminate or revoke the trust established hereunder.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
10.1. Resignation of Owner Trustee; Appointment of Successor.
(a) The Owner Trustee may resign at any time without cause
by giving at least 90 days' prior written notice to the Certificateholders,
such resignation to be effective upon the acceptance of appointment by a
successor Owner Trustee under Section 10.1 (b) below. In case of the
resignation or removal of the Owner Trustee, the Administrator shall appoint a
successor Owner Trustee. If a successor Owner Trustee shall not have been
appointed within 30 days after the giving of written notice of such
resignation or the delivery of the written instrument with respect to such
removal, the Owner Trustee or the Administrator may apply to any court of
competent jurisdiction, at the expense of the Issuer, to appoint a successor
Owner Trustee to act until such time, if any, as a successor Owner Trustee
shall have been appointed as provided above. Any successor Owner Trustee so
appointed by such court shall immediately and without further act be
superseded by any successor Owner Trustee appointed as above provided within
one year from the date of the appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall
execute and deliver to the predecessor Owner Trustee an instrument accepting
such appointment, and thereupon such successor Owner Trustee, without further
act, shall become vested with all the estates, properties, rights, powers,
duties and trust of the predecessor Owner Trustee in the trusts hereunder with
like effect as if originally named the Owner Trustee herein; but nevertheless,
upon the written request of such successor Owner Trustee, such predecessor
Owner Trustee, upon payment of all amounts payable to it in its individual
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capacity, shall execute and deliver an instrument transferring to such
successor Owner Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, duties and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer,
deliver and pay over to such successor Owner Trustee all moneys or other
property then held or subsequently received by such predecessor Owner Trustee
upon the trusts herein expressed.
(c) Any successor Owner Trustee, however appointed, shall be
a bank or trust company incorporated and doing business within the United
States of America and having a combined capital and surplus of at least
$50,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Owner Trustee hereunder upon reasonable
or customary terms.
(d) Any corporation or other entity into which the Owner
Trustee may be merged or converted or with which it may be consolidated, or
any corporation or other entity resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
or other entity to which substantially all the corporate trust business of the
Owner Trustee may be transferred, shall, subject to the terms of Section 10.
1(c) hereof, be the Owner Trustee under this Trust Agreement without further
act.
10.2. Appointment of Additional Owner Trustees.
(a) At any time or times, for the purpose of meeting any
legal requirements of any jurisdiction in which any of the Trust Assets may at
the time be located or if the Owner Trustee deems it necessary or advisable
for its own protection, the Administrator and the Owner Trustee each shall
have the power to appoint one or more individuals or corporations either to
act as co-trustee, or co-trustees, jointly with the Owner Trustee of all or
any part of the Trust Assets or to act as separate trustee or separate
trustees of all or any part of the Trust Assets and to vest in such person or
persons, in such capacity, such title to the Trust Assets or any part thereof,
and such rights, powers, duties, trusts or obligations as the Owner Trustee
may consider necessary or desirable, subject to the remaining provisions of
this Section 10.2.
(b) Every co-trustee or separate trustee shall, to the
extent permitted by law, be appointed pursuant to a supplemental trust
agreement substantially in the form of EXHIBIT D hereto and subject to the
following terms, namely:
(i) The Basic Documents shall be executed and delivered,
and all rights, powers, trusts, duties and obligations by this Trust
Agreement conferred upon the Owner Trustee in respect of the
custody, control of management of moneys, papers, securities and
other personal property, shall be exercised, solely by the Owner
Trustee;
(ii) All rights, powers, trusts, duties and obligations
conferred or imposed upon the trustees shall be conferred or imposed
upon and exercised or performed by the Owner Trustee, or by the
Owner Trustee and such co-trustee or
25
<PAGE>
co-trustees, or separate trustee or separate trustees jointly, as
shall be provided in the instrument appointing such co-trustee or
co-trustees or separate trustee or separate trustees, except to the
extent that, under the law of any jurisdiction in which any
particular act or acts are to be performed, the Owner Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such act or acts shall be performed by such co-trustee or
co-trustees or separate trustee or separate trustees;
(iii) Any request in writing by the Owner Trustee to any
co-trustee or separate trustee to take or to refrain from taking any
action hereunder shall be sufficient warrant for the taking, or the
refraining from taking, of such action by such co-trustee or
separate trustee;
(iv) Any co-trustee or separate trustee to the extent
permitted by law may delegate to the Owner Trustee the exercise of
any right, power, trust, duty or obligation, discretionary or
otherwise;
(v) The Owner Trustee at any time, and from time to time,
by an instrument in writing, with the concurrence of the
Administrator, may accept the resignation of, or remove, any
co-trustee or separate trustee appointed under this Section 10.2. A
successor to any co-trustee or separate trustee so resigned or removed
may be appointed in the manner provided in this Section 10.2;
(vi) No Trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
(vii) Any demand, request, direction, appointment, removal,
notice, consent, waiver or other action in writing executed by the
Administrator and delivered to the Owner Trustee shall be deemed to
have been delivered to each such co-trustee or separate trustee; and
(viii) Any moneys, papers, securities or other items of personal
property received by any such co-trustee or separate trustee
hereunder shall forthwith, so far as may be permitted by law, be
turned over to the Owner Trustee to be held pursuant to the terms
hereof.
(viii) Any moneys, papers, securities or other items of
personal property received by any such co-trustee or separate trustee
hereunder shall forthwith, so far as may be permitted by law, be
turned over to the Owner Trustee to be held pursuant to the terms
hereof.
(c) Upon the acceptance in writing of such appointment by
any such co-trustee or separate trustee, it or he shall be vested with the
estate, right, title and interest in the Trust Assets, or portion thereof, and
with such rights, powers, duties, trusts or obligations, jointly with the
Owner Trustee (except insofar as local law makes it necessary for any such
co-trustee or separate trustee to act alone), all as shall be specified in the
instrument of appointment, subject to all the terms hereof. Every such
acceptance shall be filed with the Owner Trustee.
(d) In case any co-trustee or separate trustee shall die,
become incapable of acting, resign or be removed, the estate, right, title and
interest in the Trust Assets and all rights, powers, trusts, duties and
obligations of said co-trustee or separate trustee shall,
26
<PAGE>
so far as permitted by law, vest in and be exercised by the Owner Trustee
unless and until a successor co-trustee or separate trustee shall be appointed
pursuant to this Section 10.2.
ARTICLE XI
MISCELLANEOUS
11.1. Supplements and Amendments.
(a) This Trust Agreement may be amended from time to time by
the parties hereto by a written instrument signed by each of them, without the
consent of any of the Certificateholders, provided that an Opinion of Counsel
for the Designated Certificate Holder (which Opinion of Counsel may, as to
factual matters, rely upon Officer's Certificates of the Designated
Certificate Holder) is addressed and delivered to the Owner Trustee, dated the
date of any such amendment, to the effect that the conditions precedent to any
such amendment have been satisfied and the Designated Certificate Holder shall
have delivered to the Owner Trustee an Officer's Certificate, dated the date
of any such Amendment, stating that the Designated Certificate Holder
reasonably believes that such amendment will not have a material adverse
effect on the Certificateholders or the Noteholders.
(b) This Agreement may also be amended from time to time
with the consent of the Majority Certificateholders if the Designated
Certificate Holder has delivered an Officer's Certificate stating that there
is no material adverse effect, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments received that are required to be distributed
on any Certificate without the consent of the related Certificateholder, or
(ii) reduce the aforesaid percentage of Certificates the Holders of which are
required to consent to any such amendment or (iii) cause any material adverse
tax consequences to any Certificateholders or the Noteholders, without the
consent of the Holders of all such Certificates or Notes then outstanding.
(c) For so long as any of the Notes are outstanding, no
amendment of this Trust Agreement shall be effective without the written
consent thereto of the Indenture Trustee.
11.2. No Legal Title to Trust Assets in Certificateholders.
The Certificateholders shall not have legal title to any part of the Trust
Assets and shall only have an undivided beneficial interest therein. No
transfer, by operation of law or otherwise, of any right, title and interest
of the Certificateholders in and to their undivided beneficial interest in the
Trust Assets hereunder shall operate to terminate this Trust Agreement or the
trusts hereunder or entitle any successor transferee to an accounting or to
the transfer to it of legal title to any part of the Trust Assets.
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11.3. Pledge of Collateral by Trust is Binding. The pledge
of any Trust Assets to any Person by the Issuer made under any Basic Document
and pursuant to the terms of this Trust Agreement shall bind the
Certificateholders and shall be effective to transfer or convey the rights of
the Trust, the Owner Trustee and the Certificateholders in and to such Trust
Assets to the extent set forth in such Basic Document. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such pledge or as to the application of any
proceeds with respect thereto by the Owner Trustee.
11.4. Limitations on Rights of Others. Nothing in this Trust
Agreement, whether express or implied, shall be construed to give to any
Person other than the Owner Trustee, the Indemnified Parties, and the
Certificateholders any legal or equitable right, remedy or claim in the Trust
Assets or under or in respect of this Trust Agreement or any covenants,
conditions or provisions contained herein.
11.5. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices and other communications shall be
in writing and delivered by hand or mailed by certified mail, postage prepaid,
if to the Owner Trustee, addressed to: Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Administration, or to such other address as the Owner Trustee
may have set forth in a written notice to the registered Certificateholders;
and if to a Certificateholder, addressed to it at the address set forth for
such Certificateholder in the Certificate Register maintained by the
Certificate Registrar and, in each such case, with a copy to the Trustee at
its address set forth in the Sales and Servicing Agreement. Whenever any
notice in writing is required to be given by any party hereunder, such notice
shall be effective upon receipt by the party to whom such notice is to be
delivered.
11.6. Severability. Any provision of this Trust Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
11.7. Separate Counterparts. This Trust Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
11.8. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns and each Certificateholder and its
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
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11.9. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
11.10. Governing Law. This Trust Agreement shall in all
respects be governed by, and construed in accordance with, the laws of the
State of Delaware (excluding conflict of law rules), including all matters of
construction, validity and performance.
[Signature page follows]
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Trust Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WILMINGTON TRUST COMPANY
By:
----------------------------------------
Name:
Title:
COPELCO CAPITAL FUNDING CORP. XI
By:
----------------------------------------
Name:
Title:
COPELCO CAPITAL INC.
By:
----------------------------------------
Name:
Title:
COPELCO CAPITAL FUNDING LLC 1998-1
By COPELCO CAPITAL FUNDING CORP. XI,
as Manager
By:
----------------------------------------
Name:
Title
<PAGE>
COPELCO CAPITAL FUNDING TRUST 1998-A
TRUST AGREEMENT
Among
WILMINGTON TRUST COMPANY,
as Owner Trustee,
COPELCO CAPITAL INC.,
as Certificate Holder
COPELCO CAPITAL FUNDING LLC 98-1
as Certificate Holder
and
COPELCO CAPITAL FUNDING CORP. XI,
as Designated Certificate Holder
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS
1.1. Capitalized Terms.................................................................................1
1.2. Other Definitional Provisions.....................................................................4
ARTICLE II ORGANIZATION
2.1. Name .......................................................................................5
2.2. Office .......................................................................................5
2.3. Limited Special Purposes and Powers...............................................................5
2.4. Appointment of the Owner Trustee..................................................................5
2.5. Initial Capital Contribution of Trust Assets......................................................5
2.6. Declaration of Trust..............................................................................6
2.7. Situs of Issuer...................................................................................6
2.8. Title to Property.................................................................................6
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS
3.1. Series and Class of Beneficial Interests: Issuance of Certificates................................7
3.2. Registration and Transfer of Certificates.........................................................7
3.3. Limitation On Transfer of Certificates............................................................8
3.4. Lost, Stolen, Mutilated or Destroyed Certificates................................................10
3.5. Persons Deemed Certificateholders................................................................11
3.6. Access to List of Certificateholders' Names and Addresses........................................11
3.7. Maintenance of Office or Agency..................................................................11
3.8. Certificate Paying Agent.........................................................................12
3.9. Ownership by Designated Certificate Holder.......................................................12
ARTICLE IV CONCERNING THE CERTIFICATEHOLDERS
4.1. Action by Certificateholders with Respect to Certain Matters.....................................13
4.2. Majority Control.................................................................................14
4.3. Representations, Warranties and Covenants........................................................14
ARTICLE V APPLICATION OF TRUST FUNDS
5.1. Distributions....................................................................................15
5.2. Method of Payment................................................................................15
5.3. Statements to Certificateholders.................................................................16
ARTICLE VI AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
6.1. General Authority................................................................................16
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6.2. General Duties...................................................................................16
6.3. Specific Authority...............................................................................16
6.4. Administration Services Agreement; Accounting and Reports to the Certificateholders,
the Internal Revenue Service and Others; Available Information;
Servicing Agreement.....................................................................17
6.5. Signature of Returns.............................................................................19
6.6. Right to Receive Instructions....................................................................19
6.7. No Duties Except as Specified in this Trust Agreement or in Instructions.........................19
6.8. No Action Except Under Specified Documents or Instructions.......................................20
ARTICLE VII CONCERNING THE OWNER TRUSTEE
7.1. Acceptance of Trusts and Duties..................................................................20
7.2. Furnishing of Documents..........................................................................21
7.3. Reliance; Advice of Counsel......................................................................21
7.4. Not Acting in Individual Capacity................................................................22
7.5. Covenant Not to File a Bankruptcy Petition.......................................................22
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE
8.1. Owner Trustee's Fees and Expenses................................................................22
8.2. Indemnification..................................................................................22
8.3. Lien on Trust Assets.............................................................................23
8.4. Payments to the Owner Trustee....................................................................23
ARTICLE IX TERMINATION OF TRUST
9.1. Termination of Trust.............................................................................23
9.2. No Termination by Certificateholders.............................................................24
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
10.1. Resignation of Owner Trustee; Appointment of Successor..........................................24
10.2. Appointment of Additional Owner Trustees........................................................25
ARTICLE XI MISCELLANEOUS
11.1. Supplements and Amendments......................................................................27
11.2. No Legal Title to Trust Assets in Certificateholders............................................27
11.3. Pledge of Collateral by Trust is Binding........................................................28
11.4. Limitations on Rights of Others.................................................................28
11.5. Notices ......................................................................................28
11.6. Severability....................................................................................28
11.7. Separate Counterparts...........................................................................28
11.8. Successors and Assigns..........................................................................28
11.9. Headings 29
11.10. Governing Law..................................................................................29
</TABLE>
-ii-
<PAGE>
EXHIBIT A Form of Certificate
EXHIBIT B Form of Investor Representation Letter (144A)
EXHIBIT C Form of Certificate of Non-Foreign Status and ERISA
-iii-
<PAGE>
Exhibit 3.5
CERTIFICATE OF FORMATION
OF
COPELCO CAPITAL FUNDING LLC 98-1
1. The name of the limited liability company is Copelco Capital
Funding LLC 98-1.
2. The address of its registered office in the State of Delaware is
Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805. The
name of its registered agent at such address is The Corporation Service
Company.
3. This Certificate of Formation shall be effective on June 29, 1998.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Formation of Copelco Capital Funding LLC 98-1 this 28th day of June, 1998.
-------------------------
Authorized Person
<PAGE>
Exhibit 3.6
LIMITED LIABILITY COMPANY AGREEMENT
OF
COPELCO CAPITAL FUNDING LLC 98-1
This Limited Liability Company Agreement, dated as of July 31, 1998,
is adopted by Copelco Capital, Inc., a Delaware corporation ("COPELCO"), as
Sole Member (the "Sole Member"), and Copelco Capital Funding Corp. XI, a
Delaware corporation (the "Manager"), acting as the initial Manager.
WHEREAS, the Sole Member and the Manager desire to form a limited
liability company pursuant to the terms hereof;
NOW, THEREFORE, the Sole Member and the Manager in consideration of
the mutual covenants set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms.
"Act" means the Delaware Limited Liability Company Act, Delaware Code
Title 6, Sections 18-101 et seq., as amended from time to time.
"Affiliate" when used with respect to a Person shall mean any other
Person controlling, controlled by, or under common control with, such Person.
"Agreement" shall mean this Limited Liability Company Agreement, as
the same may be amended, supplemented or otherwise modified from time to time.
"Associate" shall mean, with respect to the definition of Independent
Person, (1) a corporation or organization of which such Independent Person is
an officer, director, member or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (2)
any trust or other estate in which an Independent Person serves as trustee or
in a similar capacity, or (3) any relative or spouse of an Independent Person,
or any relative of such spouse, who has the same home as an Independent
Person.
"Capital Contributions" shall mean the amount of cash and the fair
market value of property (as determined by the Manager and net of any
liabilities to which such property is subject or which is deemed assumed by
the Company) contributed to the Company by a Member (or the predecessor holder
of the Interest of such Member).
<PAGE>
"Company" shall mean the limited liability company formed hereby.
"COPELCO" shall have the meaning set forth in the preamble to this
Agreement.
"Dissolution and Termination" shall be deemed to have occurred upon
the earlier of the adoption of a plan of liquidation by the Manager and the
Sole Member in accordance with this Agreement or the effective date of
dissolution in accordance with the Act.
"Indemnified Party" means the Sole Member, the Manager, any officer,
agent, shareholder, director, employee or incorporator of the Sole Member or
the Manager, or any officer, manager, employee, organizer or agent of the
Company.
"Indenture" shall mean that certain Indenture dated as of even date
herewith between the Company and the Trustee.
"Independent Person" shall mean a Person who is not, and never was,
(1) a member, stockholder, director, officer, employee, Affiliate, Associate,
customer or supplier of, or a Person that has received any benefit in any form
whatever from, the Company or any of its Affiliates or Associates, (2) a
Person owning beneficially, directly or indirectly, any interest in the
Company, or a stockholder, director, officer, employee, Affiliate, Associate,
customer or supplier thereof, or a Person that has received any direct
economic benefit in any form whatever from, or a Person that has provided any
service in any form whatever to, such beneficial owner or any of such
beneficial owner's Affiliates or Associates; provided, however, that no Person
shall be excluded from qualifying as an Independent Person solely by reason of
serving as a director or manager of one or more other Affiliates of COPELCO
that are special purpose, bankruptcy remote entities.
"Insolvency Event" shall mean with respect to a Member: (i) the entry
of a decree or order by a court or agency for a receiver or liquidator for
such Member, in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
such Member's affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days; (ii) the consent
by such Member to the appointment of a conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to such Member or of or relating to
substantially all of such Member's property; or (iii) such Member shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations.
"Interest" shall mean the Sole Member's ownership interest in the
Company.
2
<PAGE>
"Manager" shall initially have the meaning set forth in the preamble
to this Agreement, and thereafter, as applicable, shall mean the Person or
Persons selected by the Sole Member pursuant to Section 5.1 as the manager(s)
of the Company.
"Member" shall mean a Person admitted as a member of the Company as
provided under ss. 18-301 of the Act.
"Net Cash Flow" shall mean, as of any date, any and all amounts
received by the Company on or before such date (other than Capital
Contributions), less (i) amounts previously distributed under Section 4.1,
(ii) unpaid costs and accrued expenses pursuant to Section 4.2 and (iii) all
other cash expenditures made by or on behalf of the Company.
"Person" shall mean any individual, partnership, corporation, trust,
limited liability company, association, joint venture, estate, governmental
entity or other legal person.
"Sales and Servicing Agreement" shall mean that certain Sales and
Servicing Agreement dated as of even date herewith between COPELCO, the
Company and Copelco Capital Funding Trust 98-A.
"Secretary" means the Secretary of State of Delaware.
"Sole Member" shall have the meaning set forth in the preamble to
this Agreement.
"Trustee" shall mean Manufacturers and Traders Trust Company, as
Trustee under the Indenture.
ARTICLE II
DEFINITIONS
Section 2.1. Formation of Limited Liability Company. The Sole Member
has resolved to form a limited liability company (the "Company") pursuant to
the Act and for that purpose has caused a Certificate of Formation to be
executed and filed with the Secretary by an "authorized person" as defined
below. Each Person from time to time serving as a Manager or as an agent of
the Manager shall be, and hereby is, designated as an "authorized person"
within the meaning of Section 18-204 of the Act, and is authorized and
empowered to execute certificates to be filed with the Secretary under the
Act. The Manager may assign in writing titles (including, without limitation,
President, Vice President, Secretary and Treasurer) to any such person. Unless
the Manager withholds the same in such written assignment of title or the
delegation is otherwise precluded by this Agreement, if the title is commonly
used for officers of a business corporation formed under the Delaware General
Corporation Law, the assignment of such title shall constitute the delegation
to such person of the power, authority and duties that are normally associated
with that office. The Sole Member shall be, and hereby is,
3
<PAGE>
admitted as a member of the Company, and the Sole Member's Interest in the
Company (initially consisting of 100 Membership Interests) shall be, and
hereby is, authorized and issued. The Company is authorized to issue 1000
Membership Interests of which 100 such units have been issued to the Sole
Member. All Membership Interests in the Company may be evidenced by a
certificate of limited liability company interest issued by the Company.
Nothing contained herein shall preclude the Sole Member from pledging its
Membership Interests to the Trustee.
Section 2.2. Company Name and Principal Office. The name of the
Company shall be "COPELCO CAPITAL Funding LLC 98-1". The Manager shall have
the power and authority and is hereby authorized and empowered, at any time to
change the name of the Company. The principal business and chief executive
office of the Company shall be 700 East Gate Drive, Mount Laurel, New Jersey
08054. The business of the Company may also be conducted at such additional
place or places as the Sole Member may determine.
Section 2.3. Office of and Agent for Service of Process. The
registered office of the Company in Delaware shall be maintained at
Corporation Service Company, 1013 Centre Road, Wilmington, Delaware
19805-1297. The Company's agent for service of process at such address shall
be Corporation Service Company. The Manager shall have the power and the
authority, and is hereby authorized and empowered to change, at any time and
from time to time, the location of such registered office and/or such
registered agent upon compliance with the Act.
Section 2.4. Term. The Company has been formed and shall commence on
the date the Certificate of Formation was filed with the Secretary, namely
June 29, 1998. The Company shall have a perpetual existence until cancellation
of the Company's Certificate of Formation.
Section 2.5. Purpose of Company. The purpose to be conducted or
promoted by the Company is to engage in the following activities:
(a) to acquire and own lease contracts of healthcare,
manufacturing and business equipment (together with all
accessories, additions, repairs and parts constituting a part
thereof and all accessions thereto, the "Equipment"), the
monies due thereunder, the Equipment and interests therein,
insurance policies related thereto or rights to receive the
proceeds thereof, and other related rights and assets, and
beneficial interests in any or all of the foregoing
(collectively, "Assets");
(b) to acquire, own, hold, service, lease, re-lease,
transfer, sell, assign, pledge, invest, lend and otherwise deal
with Assets and interests in Assets, cash, marketable
securities, deposit or investment accounts, demand notes and
any proceeds or further rights associated with any of the
foregoing;
(c) to transfer Assets to trusts ("Trusts");
4
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(d) to purchase and sell any series or class of
certificates, notes or other securities issued by any Trust
(collectively, the "Securities");
(e) to hold and enjoy all of the rights and privileges as
the owner or otherwise
(f) to enter into, execute, deliver and perform its
obligations under any sale and servicing agreement or other
agreement related to the Assets or any Trust (the
"Securitization Agreements");
(g) to enter into and perform obligations under any
intercompany services agreement or management agreement with
the Sole Member, the Manager or any affiliate of either
thereof; and
(h) to engage in any activity and to exercise any powers
permitted to limited liability companies under the laws of the
State of Delaware that are related or incidental to the
foregoing and necessary, convenient or advisable to accomplish
the foregoing.
The Company shall have the power and authority, and is hereby
authorized and empowered, to engage in the activities set forth in this
Section 2.5, and activities that are required or convenient for the
performance of any of its obligations pursuant to any of the agreements to
which it is a party referred to in this Section 2.5 and other activities
approved in accordance with Section 5.5.
Section 2.6. Addresses of the Sole Member and the Manager. The
addresses of the Sole Member and the Manager are set forth in Exhibit A.
Section 2.7. Exclusivity. No Person may be admitted to the Company as
an additional or substitute member, except as expressly set forth in this
Agreement.
ARTICLE III
CAPITAL CONTRIBUTIONS
Section 3.1. Contributions. The Sole Member shall contribute
concurrently with the execution of this Agreement or has already contributed
such amount as is represented by the property described in Exhibit B as its
Capital Contribution to the Company. Such contribution is an absolute transfer
and assignment of such property to the Company, without recourse or warranty.
The Manager has not made and shall not make any Capital Contributions to the
Company.
Section 3.2. Additional Contributions. The Sole Member shall have no
obligation to make additional contributions after the date hereof, but may
elect to do so from time to time.
5
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ARTICLE IV
DISTRIBUTIONS
Section 4.1. Distributions of Net Cash Flow. Distributions of Net
Cash Flow shall be made to the Sole Member by the Manager at such times and in
such amounts as determined by the Manager, provided such distributions are not
prohibited by any agreement to which the Company is a party or the Act.
Section 4.2. Expenses of the Company. The Company shall pay all costs
and expenses incurred in connection with the Company's affairs (or shall
reimburse the Manager for having incurred any such out-of-pocket expenses),
including, without limitation, all expenses of conducting the business of the
Company. The obligation to pay such costs and expenses shall be limited to the
assets of the Company.
ARTICLE V
MANAGEMENT
Section 5.1. Manager. (a) No Manager shall be a Member of the
Company, nor shall any Manager own any Membership Interest or any portion
thereof, or any other ownership interest in the Company, and, as such, no
Manager shall share in the distributions of Net Cash Flow, or the profits or
losses of the Company. There shall be at least one (1) Manager of the Company,
one (1) of whom may be the Manager. The Manager(s) shall be selected by the
Sole Member from time to time or at such time as a vacancy for any reason
shall occur and each shall serve until such Manager's successor is selected
and qualified.
(b) The Manager, without the approval or authorization of any Member,
shall have full and exclusive management and control of the business and
affairs of the Company, including, without limitation, the power and authority
to appoint Persons to act on behalf of the Company, to hire employees and
agents and appoint officers to perform such functions as from time to time
shall be delegated to such employees, agents, and officers by the Manager and
to determine the compensation of any employees, agents and officers of the
Company or to delegate some or all compensation decisions to officers or
employees of the Company. Except as otherwise expressly provided in this
Agreement, in the event that more than one (1) Manager is appointed and acting
in such capacity at any time, the Manager shall in all cases act as a group,
with a majority vote or majority consent of the Managers then in office
required to take any action. The Manager(s) may adopt such rules and
regulations for the conduct of their meetings and the management of the
Company not inconsistent with this Agreement and the Act.
Section 5.2. Resignation. Any Manager may resign at any time by
giving written notice to the Sole Member, provided that in the event that the
last remaining Manager shall so provide notice to the Member at any time, any
such resignation shall become effective only upon the acceptance of the
appointment by a successor Manager meeting the requirements set forth in
Section 5.1.
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Section 5.3. Removal. Any Manager may be removed with or without
cause by the Sole Member by written notice to the Manager being removed (with
a copy to the other Manager(s), if any), provided that in the event that the
last remaining Manager shall so have received notice from the Sole Member at
any time, such removal shall become effective only upon acceptance of
appointment by a successor Manager meeting the requirements set forth in
Section 5.1.
Section 5.4. Compensation. The Manager shall receive such
compensation as shall from time to time be determined by the Sole Member and
shall be reimbursed by the Company for any reasonable out-of-pocket expenses
incurred by the Manager on behalf of the Company.
Section 5.5. Limitation on Actions. Notwithstanding any other
provision of this Agreement and, to the fullest extent permitted by law, any
provision of law that otherwise so empowers the Manager, the Manager(s) shall
not have the power or authority, and shall not be authorized or empowered,
without the prior written unanimous consent of all of the Manager(s) and the
prior written consent of the Sole Member, and any consent of any third party
required under any agreement(s) referred to in Section 2.5, to cause the
Company to do any of the following:
(a) engage in any business or activity, including, without
limitation, the incurrence of any indebtedness, other than
described in Section 2.5 or amend, alter, change or repeal
Section 2.5 of this Agreement hereto or this Section 5.5;
(b) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, other than (i) indebtedness
incurred or guaranteed pursuant to transactions set forth in
Section 2.5 in connection with the issuance and sale of the
notes referred to in Section 2.5(c) and the performance of its
obligations under the agreements referred to in Section 2.5;
and (ii) indebtedness incurred in the ordinary course of the
business of the Company;
(c) consolidate, convert or merge with or into any other
Person or convey or transfer all or substantially all of its
properties and assets to any other Person except as permitted
by or in compliance with the provisions of the agreement(s)
referred to in Section 2.5; or
(d) dissolve or liquidate, in whole or in part, except as
set forth in Article IX, file a voluntary petition that
commences a case under Title 11 of the United States Code (or
any successor statutes) with respect to the Company, or consent
to the institution of bankruptcy or insolvency proceedings
against the Company or file a petition seeking, or consent to,
relief under any applicable Federal or state law relating to
bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or a substantial part of the property
of the
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Company, or make any assignment for the benefit of creditors,
or admit in writing its inability to pay the debts of the
Company generally as they become due, or take action in
furtherance of any of the foregoing.
Section 5.6. Binding Authority. Only the Manager (and any officers
appointed pursuant to Section 2.1 hereof) shall have the power and authority
(subject to the terms and conditions of this Agreement) to bind the Company.
ARTICLE VI
OBLIGATIONS AND/OR RIGHTS OF THE SOLE MEMBER AND THE MANAGER
Section 6.1. Liability of the Sole Member and the Manager. Neither
the Sole Member nor the Manager(s) shall be personally liable for any of the
debts, liabilities, contracts or other obligations of the Company solely by
reason of being a Member or a Manager of the Company.
Section 6.2. No Management Responsibility. The Sole Member shall not
take part in the management of the business or the affairs, or transact any
business for, the Company, except to the extent that its approval or consent
is expressly required under this Agreement for the taking of any actions by or
on behalf of the Company.
Section 6.3. No Authority to Act. The Sole Member shall not have the
authority to act on behalf of or bind the Company.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Exculpation and Indemnification of the Sole Member and
the Manager(s). (a) No Indemnified Party shall be liable to the Company for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Party in connection with any matter arising
from, or related to, or in connection with this Agreement or the Company's
business or affairs; provided, however, that the foregoing shall not eliminate
or limit the liability of any Indemnified Party if a judgment or other final
adjudication adverse to the Indemnified Party establishes that the Indemnified
Party's acts or omissions were in bad faith or involved intentional misconduct
or a knowing violation of law or that the Indemnified Party personally gained
a financial profit or other advantage to which the Indemnified Party was not
legally entitled.
(b) The Company shall, to the fullest extent permitted by
the Act, indemnify and hold harmless, and advance expenses to, each
Indemnified Party against any losses, claims, damages or liabilities to which
the Indemnified Party may become subject in connection with any matter arising
from, related to, or in connection with, this Agreement or the Company's
business or affairs; provided, however, that no indemnification may be made to
or on behalf of any Indemnified Party if a judgment or other final
adjudication adverse to the Indemnified Party establishes (i) that the
8
<PAGE>
Indemnified Party's acts or omissions giving rise to such losses, claims,
damages or liabilities were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
adjudicated or (ii) that the Indemnified Party personally gained a financial
profit or other advantage to which the Indemnified Party was not legally
entitled ; provided, further that such indemnification shall be subject to the
terms of, and shall be subordinate to the obligations (if any) payable under,
the agreements referred to in Section 2.5 to which the Company is a party.
(c) Notwithstanding anything else contained in this Agreement, the
indemnity obligations of the Company under paragraph (b) above shall:
(i) be in addition to any liability that the Company may
otherwise have;
(ii) inure to the benefit of the successors, assigns, heirs and
personal representatives of each Indemnified Party; and
(iii) be limited to the assets of the Company.
(d) This Article VII shall survive any termination of this Agreement
and the dissolution of the Company.
ARTICLE VIII
TRANSFERABILITY OF MEMBER'S INTERESTS
Section 8.1 Restriction on Transfer. The Sole Member may not sell or
otherwise transfer its Interest unless such transfer is: (i) involuntary, (ii)
by operation of law, (iii) is not prohibited by any agreement referred to in
Section 2.5 hereof or (iv) is expressly permitted pursuant to Section 2.1
hereof.
Section 8.2. Transfer for Security. Except (i) as otherwise permitted
pursuant to Section 2.1 hereof, or (ii) as permitted by or in compliance with
the provisions of the agreements referred to in Section 2.5, no Member may
pledge, mortgage or otherwise hypothecate all or any part of its right, title
and interest in distributions to be received from the Company.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
Section 9.1. Dissolution. The Company shall be dissolved and its
affairs shall be wound up solely upon the occurrence of any of the following
events:
(a) the happening of any event that makes it unlawful to carry
on the business of the Company;
(b) judicial dissolution pursuant to the Act; or
9
<PAGE>
(c) subject to the requirements of each agreement referred to
in Section 2.5 to which the Company is a party, the Company is dissolved by
the unanimous written consent of the Manager(s) and the Sole Member as
provided in Section 5.5. Neither the Sole Member acting alone or the Sole
Member acting with less than all of the Manager (if more than one (1) is
appointed pursuant to Section 5.1 of this Agreement) shall have the power or
authority, to dissolve the Company and wind up its affairs; or
(d) there is no Member.
Section 9.2. Continuation of Company. In the event of the
dissolution, bankruptcy or Insolvency Event of the Sole Member, the Company
shall continue and shall not dissolve, but Copelco Financial Services Group,
Inc., or any other entity designated by Copelco Financial Services Group,
Inc., shall, effective immediately prior to the happening of such event, be
admitted as a Member of the Company, but shall not have any Membership
Interest or any portion thereof. The Manager shall not have the power or
authority to dissolve the Company pursuant to Section 18-801(b) of the Act.
Section 9.3. Winding Up and Liquidation of the Company. Upon
dissolution, the Company shall continue solely for the purpose of winding up
its affairs in an orderly manner, liquidating its assets and satisfying the
claims of creditors and the Sole Member. In so doing, a full accounting of the
assets and liabilities of the Company shall be taken and the Company's assets
shall be distributed as promptly as possible as hereinafter provided:
(a) to the payment (or the making of reasonable provision for
the payment) of such debts and liabilities of the Company (or
reserves therefor), including any necessary expenses of liquidation,
except any debts, liabilities and loans that may be due to the Sole
Member, in the order of priority as provided by law; and
(b) to the payment (or the making of reasonable provision for
the payment) of any debts and liabilities that may be due to the
Sole Member and to the payment (or the making of reasonable
provision for the payment) of the unpaid principal balance and the
interest accrued thereon on loans, if any, made by the Sole Member
to the Company.
All of the assets of the Company shall be distributed on dissolution.
ARTICLE X
POWER OF ATTORNEY
Section 10.1. Manager as Attorney-In-Fact. Subject, at all times and
in all cases to the provisions of Section 5.5, the Sole Member hereby makes,
constitutes, and appoints the Manager, with full power of substitution and
resubstitution, its true and lawful attorneys-in-fact for it and in its name,
place, and stead and for its use and benefit,
10
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to sign, execute, certify, acknowledge, swear to, file, and record (a) all
limited liability company certificates, assumed name or similar certificates,
and other certificates and instruments (including counterparts of this
Agreement) which the Manager deems necessary in its reasonable discretion to
be filed by the Company under the laws of the State of Delaware or any other
state or jurisdiction in which the Company is doing or intends to do business;
(b) any and all amendments or changes to the instruments described in clause
(a), as now or hereafter amended, which the Manager may deem necessary in its
reasonable discretion to effect a change or modification of the Company in
accordance with the terms of this Agreement, including, without limitation,
amendments or changes to reflect any amendments adopted by the Sole Member in
accordance with the terms of this Agreement; (c) all certificates of
cancellation and other instruments which the Manager deems necessary in its
reasonable discretion to effect the dissolution and termination of the Company
pursuant to the terms of this Agreement; and (d) any other instrument which is
now or may hereafter be required by law to be filed on behalf of the Company
or is deemed necessary by the Manager in its reasonable discretion to carry
out fully the provisions of this Agreement in accordance with its terms. The
Sole Member authorizes such attorney-in-fact to take any further action which
such attorney-in-fact shall reasonably consider necessary in connection with
any of the foregoing, hereby giving such attorney-in-fact full power and
authority to do and perform each and every act or thing whatsoever requisite
or advisable to be done in connection with the foregoing as fully as the
Member might or could do personally, and hereby ratifying and confirming all
that any such attorneys-in-fact shall lawfully do or cause to be done by
virtue thereof or hereof.
Section 10.2. Nature of Special Power. The power of attorney granted
pursuant to this Article X:
(a) is a special power of attorney coupled with an interest and
is irrevocable;
(b) may be exercised by all such attorney-in-fact by
identifying the Sole Member executing any agreement, certificate,
instrument or other document with the signature of a duly authorized
officer of such attorneys-in-fact for such Member; and
(c) shall not be affected by and shall survive the bankruptcy,
insolvency, dissolution, disability, incapacity or cessation of
existence of the Sole Member and shall survive the delivery of an
assignment by the Sole Member of its interest in the Company, except
that where an assignee of the Sole Member is admitted as a
substituted Member, the power of attorney shall survive the delivery
of such assignment for the sole purpose of enabling all such
attorney-in-fact to effect such substitution.
11
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1. Notices. Any notices or communications hereunder shall
be in writing, and may be either delivered personally (which shall include
deliveries by courier), by facsimile transmission or mailed, postage prepaid,
by certified or registered mail, return receipt requested, directed to the
parties at their respective addresses or fax numbers set forth in Exhibit A.
Any party hereto may designate a different address to which notices and
demands shall thereafter be directed by written notice given in the same
manner and directed to the Company at its office hereinabove set forth.
Section 11.2. Amendments. Subject to the specific provisions of
Section 5.5 providing for unanimous consent of the Manager(s), this Agreement
shall be amended by the written consent of the Sole Member and a majority of
the Manager(s) (if more than one (1) is appointed pursuant to Section 5.1 of
this Agreement).
Section 11.3. Headings. The headings of the various Articles and
Sections herein are for the convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
Section 11.4. Severability. If any one or more of the provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such provisions or terms shall be deemed severable from the remaining
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 11.5. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.6. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
Section 11.7. Effect of Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and their respective
successors and assigns.
Section 11.8. Integration. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandingsand contemporaneous
agreements and understandings pertaining thereto.
12
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IN WITNESS WHEREOF, this Limited Liability Company Agreement has been
executed as of the date first above written.
COPELCO CAPITAL, INC., as Sole Member
By:
---------------------------------------
Name:
-------------------------------------
COPELCO CAPITAL FUNDING CORP. XI,
as Manager
By:
---------------------------------------
Name:
-------------------------------------
EXHIBIT A
ADDRESSES OF THE SOLE MEMBER AND THE MANAGER
--------------------------------------------
Sole Member
- -----------
Copelco Capital, Inc.
One International Boulevard
Mahwah, New Jersey 07430
Manager:
- --------
Copelco Capital Funding Corp XI.
700 East Gate Drive
Mt. Laurel, New Jersey 08054
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EXHIBIT "B"
CAPITAL CONTRIBUTION OF SOLE MEMBER
-----------------------------------
.........
<PAGE>
Exhibit 4.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
COPELCO CAPITAL FUNDING TRUST 98-A,
Issuer
MANUFACTURERS AND TRADERS TRUST COMPANY,
Trustee
and
COPELCO CAPITAL, INC.,
Servicer
----------------------
INDENTURE
Dated as of July 1, 1998
----------------------
$___________ in aggregate principal amount of
Lease-Backed Notes, Series 1998-A,
consisting of:
$____________ of _____% Class A-1 Lease-Backed Notes
$____________ of _____% Class A-2 Lease-Backed Notes
$____________ of _____% Class A-3 Lease-Backed Notes
$____________ of _____% Class A-4 Lease-Backed Notes
$____________ of _____% Class B Lease-Backed Notes
$____________ of _____% Class C Lease-Backed Notes
$____________ of _____% Class D Lease-Backed Notes
$____________ of _____% Class E Lease-Backed Notes
$____________ of _____% Class R-1 Lease Residual-Backed Notes
$____________ of _____% Class R-2 Lease Residual-Backed Notes
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION...................................................4
SECTION 1.01. General Definitions.........................................4
SECTION 1.02. Compliance Certificates and Opinions........................23
SECTION 1.03. Form of Documents Delivered to Trustee......................24
SECTION 1.04. Acts of Noteholders, etc....................................25
SECTION 1.05. Notices, etc., to Trustee, Servicer, Trust and
Rating Agencies.............................................26
SECTION 1.06. Notice to Noteholders; Waiver...............................27
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 II THE NOTES.......................................................29
SECTION 2.01. General Provisions..........................................29
SECTION 2.02. Execution, Authentication, Delivery, and Dating.............32
SECTION 2.03. Transfer and Exchange.......................................32
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes.................33
SECTION 2.05. Book-Entry Registration of Class A Notes, Class B
Notes, Class C Notes and Class D Notes......................34
SECTION 2.06. Notice to Clearing Agency...................................35
SECTION 2.07. Definitive Class A Notes, Class B Notes, Class C
Notes and Class D Notes.....................................36
SECTION 2.08. Payment of Interest and Principal; Rights Preserved.........37
SECTION 2.09. Persons Deemed Owners.......................................37
SECTION 2.10. Cancellation................................................37
SECTION 2.11. Noteholder Lists............................................37
SECTION 2.12. Treasury Securities.........................................38
ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION AND APPLICATION
OF MONEYS; REPORTS....................................................38
SECTION 3.01. Trust Accounts; Investments by Trustee......................38
SECTION 3.02. Collection of Moneys........................................40
SECTION 3.03. Collection Account; Payments................................41
SECTION 3.04. The Residual Account; Payments..............................43
SECTION 3.05. The Reserve Account.........................................44
SECTION 3.06. The Liquidity Reserve Account...............................45
SECTION 3.07. Reports by Trustee; Notices of Certain Payments.............45
<PAGE>
SECTION 3.08. Trustee May Rely on Certain Information from Copelco
and Servicer................................................47
ARTICLE IV RELEASE OF LEASES AND EQUIPMENT.................................47
SECTION 4.01. Release of Equipment........................................47
SECTION 4.02. Release of Leases Upon Final Lease Payment..................47
SECTION 4.03. Execution of Documents......................................48
ARTICLE V SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER..................48
SECTION 5.01. Servicer Events of Default..................................48
SECTION 5.02. Substitute Servicer.........................................48
ARTICLE VI EVENTS OF DEFAULT; REMEDIES.....................................49
SECTION 6.01. Events of Default...........................................49
SECTION 6.02. Acceleration of Maturity; Rescission and Annulment..........50
SECTION 6.03. Remedies....................................................50
SECTION 6.04. Trustee Shall File Proofs of Claim..........................51
SECTION 6.05. Trustee May Enforce Claims Without Possession of Notes......52
SECTION 6.06. Application of Money Collected..............................52
SECTION 6.07. Limitation on Suits.........................................53
SECTION 6.08. Unconditional Right of Noteholders to Receive Principal
and Interest................................................54
SECTION 6.09. Restoration of Rights and Remedies..........................54
SECTION 6.10. Rights and Remedies Cumulative..............................55
SECTION 6.11. Delay or Omission Not Waiver................................55
SECTION 6.12. Control by Noteholders......................................55
SECTION 6.13. [Reserved]..................................................55
SECTION 6.14. Undertaking for Costs.......................................56
SECTION 6.15. Waiver of Stay or Extension Laws............................56
SECTION 6.16. Sale of Trust Estate........................................56
ARTICLE VII THE TRUSTEE....................................................58
SECTION 7.01. Certain Duties and Responsibilities.........................58
SECTION 7.02. Notice of Defaults or Events of Default.....................59
SECTION 7.03. Certain Rights of Trustee...................................59
SECTION 7.04. Not Responsible for Recitals or Issuance of Notes...........60
SECTION 7.05. May Hold Notes..............................................60
SECTION 7.06. Money Held in Trust.........................................60
SECTION 7.07. Compensation, Reimbursement, etc............................60
SECTION 7.08. Corporate Trustee Required; Eligibility.....................61
SECTION 7.09. Resignation and Removal; Appointment of Successor...........61
SECTION 7.10. Acceptance of Appointment by Successor......................62
SECTION 7.11. Merger, Conversion, Consolidation or Succession
to Business.................................................62
SECTION 7.12. Co-trustees and Separate Trustees...........................63
SECTION 7.13. Acceptance by Trustee.......................................64
SECTION 7.14. Preferential Collection of Claims Against the Trust.........64
SECTION 7.15. Reports by Trustee to Noteholders...........................64
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SECTION 7.16. No Proceedings..............................................65
ARTICLE VIII COVENANTS.....................................................65
SECTION 8.01. Payment of Principal and Interest...........................65
SECTION 8.02. Maintenance of Office or Agency; Chief Executive Office.....65
SECTION 8.03. Money for Payments to Noteholders to be Held in Trust.......65
SECTION 8.04. Corporate Existence; Merger; Consolidation, etc.............67
SECTION 8.05. Protection of Trust Estate; Further Assurances..............67
SECTION 8.06. [Reserved]..................................................68
SECTION 8.07. Performance of Obligations; Sales and Servicing Agreement...68
SECTION 8.08. Negative Covenants..........................................68
SECTION 8.09. Information as to Trust.....................................69
SECTION 8.10. Taxes.......................................................69
SECTION 8.11. Indemnification.............................................70
SECTION 8.12. Commission Reports; Reports to Trustee; Reports to
Noteholders.................................................70
ARTICLE IX SUPPLEMENTAL INDENTURES.........................................71
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders......71
SECTION 9.02. Supplemental Indentures with Consent of Noteholders.........71
SECTION 9.03. Execution of Supplemental Indentures........................72
SECTION 9.04. Effect of Supplemental Indentures...........................72
SECTION 9.05. Reference in Notes to Supplemental Indentures...............73
SECTION 9.06. Compliance with Trust Indenture Act.........................73
ARTICLE X SATISFACTION AND DISCHARGE.......................................73
SECTION 10.01. Satisfaction and Discharge of Indenture....................73
SECTION 10.02. Application of Trust Money.................................74
ARTICLE XI MISCELLANEOUS...................................................74
SECTION 11.01. Trust Indenture Act Controls...............................74
SECTION 11.02. Communication by Noteholders with Other Noteholders........74
SECTION 11.03. Officers' Certificate and Opinion of Counsel as to
Conditions Precedent.......................................75
SECTION 11.04. Statements Required in Certificate or Opinion..............75
SECTION 11.05. Nonpetition................................................75
iii
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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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COPELCO CAPITAL FUNDING TRUST 98-A
Reconciliation and Tie between the Indenture
dated as of July __, 1998 and the
Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section
ss. 310 (a)(1)........................ss. 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
2
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INDENTURE
This INDENTURE dated as of July __, 1998, is between COPELCO
CAPITAL FUNDING TRUST 98-A, a Delaware business trust (herein called the
"Trust"), MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking
corporation, as trustee (herein called the "Trustee"), and COPELCO CAPITAL,
INC., as servicer (herein called the "Servicer").
RECITALS
The Trust has duly authorized the issuance of $____________
in aggregate principal amount of its Lease-Backed Notes, Series 1998-A,
consisting of $____________ aggregate principal amount of _____% Class A-1
Lease-Backed Notes (the "Class A-1 Notes"), $__________ aggregate principal
amount of ____% Class A-2 Lease-Backed Notes (the "Class A-2 Notes"),
$___________ aggregate principal amount of _____% Class A-3 Lease-Backed Notes
(the "Class A-3 Notes"), $______________ aggregate principal amount of _____%
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"),
$____________ aggregate principal amount of _____% Class B Lease-Backed Notes
(the "Class B Notes"), $_____________ aggregate principal amount of _____%
Class C Lease-Backed Notes (the "Class C Notes"), $___________ aggregate
principal amount of ____% Class D Lease-Backed Notes (the "Class D Notes"),
$_________ aggregate principal amount of ____% Class E Lease-Backed Notes (the
"Class E Notes", together with the Class A Notes, the Class B Notes, the Class
C Notes and the Class D Notes are referred to collectively as the "Receivable
Notes"), $____________ aggregate principal amount of _____%, Class R-1
Residual Notes (the "Class R-1 Notes"), and $____________ aggregate principal
amount of ____% Class R-2 Residual Notes (the "Class R-2 Notes"; together with
the Class R-1 Notes, the Class R Notes; the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes and the Class R Notes
are referred to collectively as the "Notes"), of substantially the tenor
hereinafter set forth, and to provide therefor the Trust has duly authorized
the execution and delivery of this Indenture. The Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class R
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
Trust and authenticated and delivered hereunder, the valid obligations of the
Trust, and to make this Indenture a valid agreement of the Trust, 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:
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GRANTING CLAUSE
The Trust hereby Grants to the Trustee on the Issuance Date,
for the benefit and security of the Noteholders, all of the Trust's right,
title and interest in and to (a) the Leases and all Lease Payments, Casualty
Payments, Warranty 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, Warranty 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 Trust to or under any guarantees of or
collateral (including all rights of the Trust in any security deposits and the
Trust'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 Trust 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 Trust 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 Notes, in accordance with their terms,
equally and ratably without prejudice, priority, or distinction among any of
the 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.
ARTICLE I
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
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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
equals (a) zero if each of the Class Target Investor Principal Amounts for
Classes B, C, D, and E exceed their respective Class Floors on such Payment
Date and (b) in each other case the excess, if any, of (i)(A) the Outstanding
Principal Balance of the Notes plus the Overcollateralization Balance as of
the immediately preceding Payment Date after giving effect to payments on such
Payment Date minus (B) the Discounted Present Value of the Performing Leases
as of the related Determination Date, over (ii) the sum of the Class A
Principal Payment, the Class B Principal Payment, the Class C Principal
Payment, the Class D Principal Payment and the Class E 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 Trust, Copelco or the Servicer, as the
case may be, who is authorized to act for the Trust, 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,
Maintenance Charges and Fee Per Scan Charges), (b) recoveries from
Non-Performing Leases to the extent the Seller has not substituted Substitute
Leases for such Non-Performing Leases (except to the extent required to
reimburse unreimbursed Servicer Advances pursuant to Section 5 of the Sales
and Servicing Agreement); (c) 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; (d)
proceeds from the investment of funds in the Collection Account and the
Reserve Account; (e) Casualty Payments; (f) Servicer Advances; (g) Termination
Payments; (h) late charges on delinquent Lease Payments not advanced by the
Servicer and (i) to the extent there occurs an Available Funds Shortfall,
funds, if any, on deposit in the Reserve Account; provided that Available
Funds shall not include Residual Realizations.
Available Reserve Amount: the amount on deposit in the
Reserve Account.
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Available Funds Shortfall: as defined in Section 3.05(b).
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.
Book-Entry Class C Notes: beneficial interests in the Class
C 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 D Notes: beneficial interests in the Class
D 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.
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.
Cede & Co.: the initial registered holder of the Class A
Notes and the Class B Notes, acting as nominee of The Depository Trust.
Class A Notes: as defined in the Recitals hereto.
Class A Percentage: _____%
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Class A Principal Payment: (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates prior to the August 1999 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 August 1999
Payment Date, 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 _____%.
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 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 _____%.
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 _____%.
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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 ____%.
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) 2.70% 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 of the Outstanding Principal
Amount of the Class C Notes, the Outstanding Principal Amount of the Class D
Notes, the Outstanding Principal Amount of the Class E Notes and the
Overcollateralization Balance as of the immediately preceding Payment Date
after giving effect to all principal payments made on that day, minus (d) the
amount on deposit in the Reserve Account after giving effect to 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 _____% 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.
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Class B Percentage: _____%.
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 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, the amount
equal to the total of (a) 2.20% 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 of the Outstanding Principal
Amount of the Class D Notes, the Outstanding Principal Amount of the Class E
Notes, and the Overcollateralization Balance as of the immediately preceding
Payment Date after giving effect to all principal payments made on that day,
minus (d) 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 Principal Amount of the Class B Notes is less than or equal to the
Class B Floor on such Payment Date, the Class C Floor will equal the
Outstanding Principal Amount of the Class C Notes utilized in the calculation
of the Class B Floor for such Payment Date.
Class C Note Interest Rate: the rate at which interest
accrues on the Class C Notes, which rate shall be _____% per annum.
Class C Note Owner: with respect to a Book-Entry Class C
Note, the Person who is the beneficial owner of such Book-Entry Class C 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 C Noteholder: Cede & Co. or a holder of a Definitive
Class C Note.
Class C Notes: as defined in the Recitals hereto.
Class C Percentage: ______%.
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.
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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.
Class D Floor: with respect to each Payment Date, an amount
equal to the total of (a) 1.80% 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 of the Outstanding Principal
Amount of the Class E Notes, and the Overcollateralization Balance as of the
immediately preceding Payment Date after giving effect to all principal
payments made on that day minus (d) 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 C Principal Amount is less
than or equal to the Class C Floor on such Payment Date, the Class D Floor
will equal the Outstanding Class D Principal Amount utilized in the
calculation of the Class C Floor Amount for such Payment Date.
Class D Note Interest Rate: the rate at which interest
accrues on the Class D Notes, which rate shall be _____% per annum.
Class D Note Owner: with respect to a Book-Entry Class D
Note, the Person who is the beneficial owner of such Book-Entry Class D 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 D Noteholder: Cede & Co. or a holder of a Class D
Note.
Class D Notes: as defined in the Recitals hereto.
Class D Percentage: ______%.
Class D 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 D Notes to the greater of the Class
D Target Investor Principal Amount and the Class D Floor.
Class D Target Investor Principal Amount: with respect to
each Payment Date, an amount equal to the product of (a) the Class D
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Payment Date.
Class E Floor: With respect to each Payment Date, an amount
equal to the total of (a) 1.20% 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 Overcollateralization Balance as
of the immediately preceding Payment Date after giving effect to all principal
payments made on that day, minus (d) the amount on deposit
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in the Reserve Account after giving effect to withdrawals to be made on such
Payment Date; provided, however, that if the Outstanding Principal Amount of
the Class D Notes is less than or equal to the Class D Floor on such Payment
Date, the Class E Floor will equal the Outstanding Principal Amount of the
Class E Notes utilized in the calculation of the Class D Floor for such
Payment Date.
Class E Note Interest Rate: the rate at which interest
accrues on the Class E Notes, which rate shall be _____% per annum.
Class E Noteholder: a holder of a Class E Note.
Class E Notes: as defined in the Recitals hereto.
Class E Percentage: ______%.
Class E 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 E Notes to the greater of the Class
E Target Investor Principal Amount and the Class E Floor.
Class E Target Investor Principal Amount: with respect to
each Payment Date, an amount equal to the product of (a) the Class E
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Payment Date.
Class R Notes: as defined in the Recitals hereto.
Class R-1 Notes: as defined in the Recitals hereto.
Class R-1 Note Interest Rate. the rate of which interest
accrues on the Class R-1 Notes, which rate shall be ____% per annum.
Class R-1 Noteholder. a holder of a Class R-1 Note.
Class R-2 Notes: as defined in the Recitals hereto.
Class R-2 Note Interest Rate. the rate of which interest
accrues on the Class R-2 Notes, which rate shall be ____% per annum.
Class R-2 Noteholder. a holder of a Class R-2 Note.
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.
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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.
Copelco: Copelco Capital, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its successors.
Copelco Funding: Copelco Capital Funding LLC 98-1, a limited
liability company 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 Trust 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 principal payments made on that day, plus (ii) the
Overcollateralization Balance as of the immediately preceding Payment Date,
minus (iii) 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
remaining after the payment of amounts owing the Servicer and in respect of
interest on the Receivable 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 June 30, 1998.
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 Note: a definitive, fully registered 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 Trust and the Depository Trust, as Clearing Agency.
Determination Date: with respect to any Payment Date, the
fifth Business Day immediately preceding such Payment Date.
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Discount Rate: with respect to any Determination Date,
_____%, which equals the sum of (a) the weighted-average interest rate of the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes on the Issuance Date weighted by the expected weighted average
life of each Class of Notes and (b) the Servicing Fee rate of ____% 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 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 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:
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(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 (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 obligations of such depository
institution or trust (or, in the case of a depository institution that is
the principal subsidiary of a holding Trust, the commercial paper or
other short-term debt obligations of such holding Trust) 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 (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;
(f) demand notes payable on demand having the highest short
term credit ratings from S&P, and to the extent rated by DCR and Fitch,
DCR and Fitch at the time of such investment;
(g) funding agreements or guaranteed investment contracts
payable on demand having the highest short term credit ratings from S&P,
and to the extent rated by DCR and Fitch, DCR and Fitch at the time of
such investment; and
(h) such other investments as may be approved by S&P, DCR
and Fitch.
Equipment: each item of personal property, together with any
replacement parts, additions, and repairs thereto, any replacements thereof,
and any
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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.
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 14 of the Sales
and Servicing Agreement.
Fitch: Fitch IBCA Inc.
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 Trust 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 Trust or
otherwise, and generally to do and receive anything that the Trust 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 Note.
Indenture: this instrument as originally executed and as
from time to time supplemented or amended pursuant to the applicable
provisions hereof.
Initial ADRB: Initial Aggregate Discounted Residual Balance
of the Leases (the "Initial ADRB") equals [$92,962,853]. Initial ADRB means
the sum of the discounted present value of ___% of the Booked Residual Values
of all Leases, as of the Cut-Off Date, discounted monthly at one twelfth the
Residual Discount Rate.
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Initial Booked Residual Value: $___________.
Initial Payment Date: August 17, 1998.
Inter-Company Loans: as defined in Section 15.01 of the
Sales and Servicing Agreement.
Interest Payments: as defined in Section 2.01(c).
Issuance Date: August __, 1998.
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 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 Trust 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.
"Liquidity Reserve Account": the account by that name
established and maintained by the Trustee pursuant to Section 3.01.
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.
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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.
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.
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, the Class C Note Interest Rate,
the Class D Note Interest Rate or the Class E Note Interest Rate, as the case
may be.
Note Owner: the owner of a Note issued hereunder.
Note Register: as defined in Section 2.03.
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
Trust, and by another Vice President, the Treasurer, and Assistant Treasurer,
the Secretary, or an Assistant Secretary of the Trust 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 Trust 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.
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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 Trust or any Affiliate of the Trust 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.
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 Class D Principal Amount: the aggregate
principal amount of the Class D Notes Outstanding at any time.
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Outstanding Class E Principal Amount: the aggregate
principal amount of the Class E Notes Outstanding at any time.
Outstanding Class R-1 Principal Amount: the aggregate
principal amount of the Class R-1 Notes Outstanding at any time.
Outstanding Class R-2 Principal Amount: the aggregate
principal amount of the Class R-2 Notes Outstanding at any time.
Outstanding Principal Amount: the aggregate unpaid principal
amount of the Notes Outstanding at any time.
Overcollateralization Balance: with respect to each Payment
Date is an amount equal to the excess, if any, of (a) the Discounted Present
Value of Performing Leases as of the related Determination Date over (b) the
sum of the Outstanding Principal Amount of the Receivable Notes as of such
Payment Date after giving effect to all principal payments made on that day.
Paying Agent: each agent of the Trust appointed for the
purpose of making payments on the Notes, including the Trustee.
Payment Date: the 15th day of each month (or the next
Business Day thereafter if such day is not a Business Day), commencing on the
Initial Payment Date, and ending on the latest Stated Maturity.
Person: any individual, corporation, partnership, joint
venture, association, limited liability Trust, joint stock Trust, 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 Trust, Copelco, and First Union Capital Markets, a division of Wheat
First Securities, Inc.
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, 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, Fitch and S&P.
Receivable Noteholder: at any time, any Person in whose name
a Receivable Note is registered in the Note Register.
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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 Liquidity Reserve: during the first 40 months from
the Cut-Off Date, $________ and thereafter, $________.
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 Receivable 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 Casualty Payments: at any date with respect to a
Lease, means the excess of (a) the Casualty Payment related to the Lease over
(b) the Discounted Present Value of the remaining Lease Payments related to
the lease as of the immediately following Payment Date (plus any amounts
previously due and unpaid).
Residual Discount Rate: Residual Discount Rate equals ___%.
The Residual Discount Rate is equal to the sum of (a) the weighted average
Coupon Rate of the Class R-1 and the Class R-2 Notes, each weighted by (i) the
initial principal balances of each Class of Class R Notes, and (ii) the
weighted average life of each Class of Notes under a zero prepayment and no
loss scenario, as applicable, and (b) the Residual Servicing Fee.
Residual Prepayments: at any date with respect to a
Terminated Lease, means the excess of (a) the payment related to the
Terminated Lease over (b) the Discounted Present Value of the remaining Lease
Payments of the Terminated Lease as of the immediately following Payment Date
(plus any amounts previously due and unpaid).
Residual Realizations: the sum of (a) 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 other than Equipment subject to Non-Performing Leases; (b) Residual
Warranty Payments; (c) Residual Casualty Payments and (d) Residual
Prepayments.
Residual Servicer Advances: as defined in Section 5.01(b) of
the Sales and Servicing Agreement.
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Residual Servicing Fee: With respect to any Payment Date,
the Residual Servicing Fee payable pursuant to the Sales and Servicing
Agreement.
Residual Servicing Fee: 0.75% per annum. On any Payment
Date, the Residual Servicing Fee payable will be calculated on the basis of
the remaining amount of the aggregate Booked Residual Value of Performing
Leases measured as of the Determination Date related to the immediately
preceding Payment Date.
Residual Warranty Payments: at any date with respect to a
Warranty Lease, means the excess of (a) the Warranty Repurchase Amount related
to the Warranty Lease over (b) the Discounted Present Value of the remaining
Lease Payments related to the Warranty Lease as of the immediately following
Payment Date (plus any amounts previously due and unpaid).
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 Trust, Copelco Funding 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: as defined in Section 5.01(a) of the Sales
and Servicing Agreement.
Servicer Event of Default: as defined in Section 10.01 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.
Servicing Fee: with respect to any Payment Date, the
Servicing Fee payable pursuant to the Sales and Servicing Agreement.
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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 Trust, 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 ___________ Payment Date with respect to the Class A-1 Notes
and the _________ Payment Date for the Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes,
respectively.
Substitute Lease: as defined in Section 12 of the Sales and
Servicing Agreement.
Terminated Lease: a lease that is terminated prior to its
original stated maturity (but not on account of casualty or a Lease default).
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 of the Trust, and the Lessee in accordance with the provisions of
Section 3.02 of the Sales and Servicing Agreement.
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 6.01(c) of the Sales
and Servicing Agreement.
Trust: the Person named as the "Trust" in the first
paragraph of this instrument.
Trust Accounts: the Collection Account, the Reserve Account
and the Residual Account and the Liquidity Reserve Account.
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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.
Trust Order or Trust Request: a written order or request
delivered to the Trustee and signed in the name of the Trust by an Authorized
Officer.
Underwriting Agreement: the Underwriting Agreement, among
the Trust, Copelco, First Union Capital Markets, Lehman Brothers and
Prudential Securities 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.
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.
Warranty Repurchase Agreement: at any date with respect to a
Warranty Lease, means an amount equal to the sum of (a) the Discounted Present
Value of the Warranty Lease as of the immediately following Payment Date (plus
any amounts previously due and unpaid) and (b) the product of (i) the Initial
ADRB (defined below) and (ii) the ratio, as of the Cut-Off Date, that the
Booked Residual Value (defined below) of the Warranty Lease bears to the
aggregate Booked Residual Value of all Leases.
SECTION 1.02. Compliance Certificates and Opinions.
Upon any written application or request (or oral application
with prompt written or telecopied confirmation) by the Trust 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 Trust hereunder to the Trust's assignee specified in such
request, the Trustee shall require the Trust 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
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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 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 Trust
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 Trust 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
Trust 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 opinions stated in such document shall in such case be
conditions precedent to the right of the Trust 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).
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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 Trust, then, notwithstanding
that the satisfaction of such condition is a condition precedent to the
Trust'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 Trust, 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 Trust. 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 Trust, 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 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 Trust in reliance thereon, whether or not notation of such action is made
upon such Note.
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(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, Trust 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 Trust 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 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
Trust and the Servicer by the Trustee; or
(b) if to the Trust, at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, with a copy to the Servicer,
or at any other address previously furnished in writing to the Trustee and the
Servicer by the Trust; or
(c) if to the Servicer, at East Gate Center, 700 East Gate
Drive, Mount Laurel, New Jersey 08054-5400, Attention: Stephen W. Shippie
(Number for telecopy: 609-273-9288), or at any other address previously
furnished in writing to the Trustee and the Trust by the Servicer.
(d) if to the Rating Agencies: to Standard & Poor's Ratings
Group, 25 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-Cohn. Servicing Reports should also be sent to Fitch
Information Services, Inc. 1201 East Seventh Street, Powell, WY 82435.
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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
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 Trust
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
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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 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 Trust 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 Trust's normal business hours, to
examine all of the books of account, records, reports and other papers of the
Trust, to make copies thereof and extracts therefrom, to cause such books to
be audited by independent accountants selected by the Trust 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 Trust 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 Trust or the performance of and compliance with the
covenants and undertakings of the Trust 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 Trust.
SECTION 1.13. Survival of Representations and Warranties.
The representations, warranties and certifications of the
Trust made in this Indenture or in any certificate or other writing delivered
by the Trust pursuant hereto shall survive the authentication and delivery of
the Notes hereunder.
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ARTICLE II
THE NOTES
SECTION 2.01. General Provisions.
(a) The Notes shall consist of $____________ principal
amount of Class A-1 Notes, $___________ principal amount of Class A-2 Notes,
$_____________ principal amount of Class A-3 Notes, $___________ principal
amount of Class A-4 Notes, $_____________ principal amount of Class B Notes,
$____________ principal amount of Class C Notes, $___________ principal amount
of Class D Notes, $_____________ principal amount of Class E Notes,
$_____________ principal amount of Class R-1 Notes, and $___________ principal
amount of Class R-2 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 $____________,
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 $______ with respect to the Class A Notes,
the Class B Notes, the Class C Notes and the Class D Notes and $_________ with
respect to the Class E Notes and Class R 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 $______, or the issuance of a single Note of each Class,
with a denomination less than $______.
(b) For each Payment Date, payments of principal (the
"Principal Payments") on the Notes will be made in accordance with Sections
3.03(b), 3.04(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 Trust 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
five percent (5%) 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 Trust 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 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
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A-4 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class
E Notes, the Class R-1, and the Class R-2 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, Class C Interest Rate, Class D Interest Rate,
Class E Interest Rate, Class R-1 Interest Rate and Class R-2 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,
the Class C Notes, Class R-1 Notes, and Class R-2 Notes respectively, on the
preceding Payment Date. Interest Payments will be made in accordance with
Sections 3.03(b), 3.04(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 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
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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.
(k) The Class D Notes shall be subordinated to the Class A
Notes, the Class B Notes and Class C Notes to the extent set forth herein. All
Class D 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 D Notes shall be made pro rata
among all Outstanding Class D Notes, without preference or priority of any
kind.
(l) The Class E Notes shall be subordinated to the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes to the
extent set forth herein. All Class E 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 E Notes
shall be made pro rata among all Outstanding Class E Notes, without preference
or priority of any kind.
(m) Except as provided in Section 6.06, the Class R Notes
shall not be subordinated to the Class A Notes, Class B Notes, Class C Notes,
Class D Notes or Class E Notes, but shall have priority with respect to any
Residual Realization s received hereunder. The Class R-2 Notes shall be
subordinated to the Class R-1 Notes to the extent set forth herein.
(n) All Class R-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 R-1 Notes
shall be made pro rata among all Outstanding Class R-1 Notes, without
preference or priority of any kind.
(o) All Class R-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
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accordance with the terms and provisions of this Indenture. Payments of
principal and interest on the Class R-2 Notes shall be made pro rata among all
Outstanding Class R-2 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
Trust 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 Trust shall bind the
Trust, 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 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 Trust
and delivered to the Trustee for authentication together with a Trust 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 Trust Request.
SECTION 2.03. Transfer and Exchange.
(a) The Trust 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 Trust 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 E Note or Class R 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
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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 such laws, that the Class E Noteholder's or Class R
Noteholder's prospective transferee referred to in the preceding clauses (iii)
or (iv) deliver an investment letter certifying to the Trust 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 E Notes or Class R 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 Trust). None of the Trust, the Servicer or the
Trustee is obligated to register or qualify the Class E Notes or the Class R
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 E Note or Class R Note without registration.
(b) Subject to Section 2.03(a), upon surrender for
registration of transfer of any Note at the office of the Trust designated
pursuant to Section 8.02 for such purpose, the Trust 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 Trust, 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 Trust or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Trust 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 Trust 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.
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Trustee, the
Trust 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.
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(b) If there shall be delivered to the Trust 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 Trust or the Trustee that such Note has been acquired by
a bona fide purchaser, the Trust 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 Trust 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 Trust 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 Trust, 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,
Class B Notes, Class C Notes and Class D Notes.
Each of the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes, the Class B Notes, the Class C Notes and Class D
Notes, upon original issuance, shall be issued in the form attached as Exhibit
A and delivered to The Depository Trust, the initial Clearing Agency, by, or
on behalf of, the Trust. Each of the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes and Class D Notes
shall initially be registered on the Note Register in the name of Cede & Co.,
the nominee of The Depository Trust, 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, Class B Note Owner, Class C Note Owner or Class D Note Owner will
receive a definitive note representing such Note Owner's interest, 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, Definitive Class B Notes, Definitive Class C Notes and/or Definitive
Class D Notes ("Definitive Notes") have been issued to the applicable Note
Owners pursuant to Section 2.07:
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(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, Class C Notes or Class D
Notes, as the case may be;
(b) the Trust, 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, Class B Notes, Class C Notes or Class D 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, Class B Notes, Class C Notes and
Class D 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 Notes, 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, Class B Notes, Class C Notes and Class D 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, Class B
Notes, Class C Notes or Class D 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, the Class B Notes,
Class C Notes or Class D 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, Class B Notes, Class C Notes or Class D 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, Class B Noteholders, Class C Noteholders or Class D Noteholders
is required under this Agreement, unless and until Definitive 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
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A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class A-4 Note
Owners, Class B Note Owners, Class C Note Owners and Class D Noteholders in
accordance with its applicable rules, regulations and procedures.
SECTION 2.07. Definitive Class A Notes, Class B Notes, Class
C Notes and Class D Notes.
If (a) (i) the Trust 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, the Class B Notes,
Class C Notes and/or Class D Notes and (ii) the Trustee or the Trust is unable
to locate a qualified successor, (b) the Trust, 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, the Class B Notes, Class C Notes and/or Class D Notes through the
Clearing Agency or (c) after the occurrence of a Servicer Event of Default,
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, Class B Notes, Class C
Notes and Class D 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, Class B Notes, Class C Notes and Class D 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, Class B Notes, Class C Notes or Class D 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, Class B Note Owners, Class C Note Owners or Class D 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, Class B Notes, Class C Notes and Class D Notes, respectively,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Notes, to Class A-1 Note Owners, Class A-2 Note
Owners, Class A-3 Note Owners, Class A-4 Note Owners, Class B Note Owners,
Class C Note Owners or Class D 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. Class B Notes, Class C Notes or Class D Notes, as
the case may be, by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Trust shall
execute and the Trustee shall authenticate and deliver the relevant Definitive
Notes. Neither the Trust 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
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 Notes, and the Trustee shall recognize
the holders of the relevant Definitive Notes as Noteholders, hereunder.
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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 Trust 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.
SECTION 2.09. Persons Deemed Owners.
Prior to due presentment of a Note for registration of
transfer, the Trust, the Trustee, and any agent of the Trust 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 Trust, the Trustee, nor any agent of the Trust 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 Trust may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Trust 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 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
Trust 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 Trust (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
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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 Trust 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 Trust, any other obligor upon the Notes
or an Affiliate of the Trust 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 III
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 Trust 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:
(i) Collection Account;
(ii) Reserve Account;
(iii) Residual Account; and
(iv) Liquidity Reserve 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
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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, the Residual Account or the Liquidity
Reserve 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 Trust Accounts, shall be
invested and reinvested by the Trustee pursuant to a Trust 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), each such Trust 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
Trust or the Servicer, as the case may be, identified therein, in each case in
such amounts as such Trust Order or Servicer Order shall specify. The Trust
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 Trust 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 Trust Accounts are not
invested, directly or indirectly, pursuant to a Trust 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 Trust 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, the Residual Account or the Liquidity Reserve
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.
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(f) Unless payable on demand, no investment of any amount
held in the Trust Accounts 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 Trust Accounts shall be
deposited by the Trustee in such account immediately upon receipt.
(g) Any investment of any funds in the Trust Accounts and
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
Trust Accounts and sufficient uninvested funds are not collected and available
therein to make such disbursement, in the absence of a Trust 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 Trust Accounts 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 Lease Payments may be sent). The Servicer shall, within two
Business Days of receipt of any payment at such designated
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address, deposit such payment (excluding Residual Realizations) 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 (excluding Residual Realizations) 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 Trust 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 Trust, 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) 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);
(iii) late charges on delinquent Lease payments not
advanced by the Servicer;
(iv) proceeds (other than Residual Warranty Payments) 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;
(v) proceeds from investment of funds in the Collection
Account and the Reserve Account;
(vi) Casualty Payments (other than Residual Casualty
Payments);
(vii) Servicer Advances;
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(viii) Termination Payments (other than Residual
Prepayments) to the extent the Trust does not reinvest such
Termination Payments in Additional Leases; and
(ix) payments from the Seller to effect a redemption of
the Receivables Notes 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 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;
(vi) to make Interest Payments on the Class D Notes;
(vii) to make Interest Payments on the Class E Notes;
(viii) 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;
(ix) to pay the Class B Principal Payment to the Class B
Noteholders;
(x) to pay the Class C Principal Payment to the Class C
Noteholders;
(xi) to pay the Class D Principal Payment to the Class D
Noteholders;
(xii) to pay the Class E Principal Payment to the Class E
Noteholders;
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(xiii) 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,
thereafter to the Class C Noteholders until the Outstanding
Class C Principal Amount has been reduced to zero;
thereafter to the Class D Noteholders until the Outstanding
Class D Principal Amount has been reduced to zero; and
thereafter to the Class E Noteholders until the Outstanding
Class E Principal Amount has been reduced to zero.
(xiv) 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; and
(xv) to the Trust, the balance, if any.
(c) 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 (excluding Residual Realizations) received by the Trustee after the
Determination Date for 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 Trust 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.
SECTION 3.04. The Residual Account; Payments.
(a) The Servicer shall within two Business Days of receipt
deposit the following funds, as received into the Residual Account:
(i) Residual Realizations;
(ii) proceeds from investment of funds in the Residual
Account and the Liquidity Reserve Account;
(iii) Residual Servicing Advances; and
(iv) payments from the Seller to effect a redemption of
the Class R Notes 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 amounts on deposit in the Residual Account
shall be withdrawn by the Servicer on or before each Payment Date in the
amounts required for application in the following order of priority, to make
the following required payments:
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(i) to pay the Residual Servicing Fee;
(ii) to reimburse unreimbursed Residual Servicing Advances
in respect of a prior Payment Date;
(iii) to make Interest Payments on the Class R-1 Notes;
(iv) to make Interest Payments on the Class R-2 Notes;
(v) to make a deposit to the Liquidity Reserve Account in
an amount equal to the excess of the Required Liquidity Reserve
over the amount then on deposit therein;
(vi) to pay principal on the Class R-1 Notes until such
time as the Outstanding Class R-1 Principal Amount is reduced
to zero;
(vii) to pay principal on the Class R-2 Notes until such
time as the Outstanding Class R-2 Principal Amount is reduced
to zero; and
(viii) to the Trust, the balance, if any.
SECTION 3.05. The Reserve Account.
(a) On the Closing Date, the Issuer has made an initial
deposit of $________ into the Reserve Account. On each Payment Date, the
Trustee shall transfer to the Reserve Account from the Collection Account such
amounts as shall be required by Section 3.03(b).
(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)(xiii) (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 to the
extent available as shall be necessary to make on such Payment Date all
Required Payments.
(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 Trust.
(d) Upon termination of this Indenture, any balance
remaining in the Reserve 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 Trust.
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SECTION 3.06. The Liquidity Reserve Account.
(a) On the Closing Date, the Issuer has made an initial
deposit of $___________ into the Liquidity Reserve Account. On each Payment
Date, the Trustee shall transfer to the Liquidity Reserve Account from the
Residual Account such amounts as shall be required by Section 3.04(b).
(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 Residual Account available for distribution under Section
3.04(b) is insufficient to permit on such Payment Date all distributions
required by Section 3.04(b)(i) through 3.04(b)(ii) then, to the extent of the
amount on deposit in the Liquidity Reserve Account, the Trustee shall
transfer, not later than the end of such Business Day, from the Liquidity
Reserve Account to the Residual Account such amount as shall be necessary to
make such distribution on such Payment Date.
(c) If on any Payment Date, the aggregate of the balance in
the Residual Account and the balance in the Liquidity Reserve Account is
greater than the outstanding balance of the Class R Notes and interest payable
thereon and the Residual Servicing Fee payable on such Payment Date, the
Trustee shall withdraw all amounts from the Liquidity Reserve Account and
deposit them in the Residual Account for distribution to the Class R
Noteholder on such date.
(d) Upon termination of this Indenture, any balance
remaining in the Liquidity Reserve 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 Trust.
SECTION 3.07. Reports by Trustee; Notices of Certain
Payments.
(a) The Trustee shall within two Business Days after the
request of the Trust, 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 Report from the Servicer pursuant to
Section 6.01 of the Sales and Servicing Agreement, the Trustee shall mail to
the Trust, Copelco, each Rating Agency and the Servicer and make available to
each Receivable 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, Class C Notes, Class D Notes, and Class E Notes
respectively.
(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
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A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class
D Notes and Class E Notes respectively, and with respect to the
Receivable Notes held by each Receivable 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); and
(iv) the amount on deposit in the Collection Account and
the Reserve 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, 3.04
and 3.05.
(c) The Trustee shall within two Business Days after the
request of the Trust, the Servicer, or any Residual Noteholder, deliver to the
requesting person a written report setting forth the amounts on deposit in the
Residual Account and the Liquidity Reserve Account, and identifying the
investments included therein.
(d) 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 Report from the Servicer pursuant to
Section 6.01 of the Sales and Servicing Agreement, the Trustee shall mail to
the Trust, Copelco, each Rating Agency and the Servicer and make available to
each Residual Noteholder the following information:
(i) the principal amount of all Outstanding Class R-1
Notes and Class R-2 Notes, respectively;
(ii) the amount of Interest Payments and payments in
reduction of principal paid on such Payment Date with respect
to all Class R-1 Notes and Class R-2 Notes, respectively, and
with respect to the Residual Notes held by each Residual
Noteholder;
(iii) the amount of the Residual Servicing Fee and
unreimbursed Residual Servicing Advances paid on such Payment
Date pursuant to Section 3.04(b)(i) and Section 3.04(b)(ii);
and
(iv) the amount on deposit in the Residual Account and the
Liquidity Reserve Account, in each case after giving effect to
all the withdrawals and applications or transfers required on
or before such Payment Date pursuant to Sections 3.04 and 3.06.
With each report of the Trustee furnished pursuant to this
Section 3.07(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 6.01 of the
Sales and Servicing Agreement or, if such reports have not been received, a
statement to such effect.
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SECTION 3.08. Trustee May Rely on Certain Information from
Copelco and Servicer.
Pursuant to Sections 4.01, 5.05, 6.01 and 6.02 of the Sales
and Servicing Agreement and Section 3.02 through 3.07 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.
ARTICLE IV
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 4.03(b) of the Sales and Servicing Agreement (unless
retained by the Trust 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, (c) the
repurchase of the related Lease in accordance with the provisions of Section 5
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 11 of the Sales and Servicing
Agreement and (e) upon the substitution of a Substitute Lease in accordance
with the provisions of Section 11 of the Sales and Servicing Agreement. The
proceeds (excluding Residual Realizations) of any such sale, repurchase or
releasing shall be deposited in the Collection Account for disposition under
this Indenture. The Residual Realizations shall be deposited in the Residual
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 from the Warranty 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
Warranty Payment in respect of such Lease, and the deposit of any Residual
Realization in respect thereof, (iv) a Casualty Payment under such Lease (and,
following such final Lease
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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 recoveries with respect to such Non-Performing 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 Trust), and take
such other actions as the Trust, by Trust 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 V
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 5 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 5 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
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successor to the Servicer in accordance with the provisions of Section 10.03
of the Sales and Servicing Agreement.
ARTICLE VI
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 at the Stated
Maturity of the relevant Receivables Notes or Interest Payments on the
Receivables Notes when such become due and payable;
(b) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Trust 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 Trust a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment, or composition of or
in respect of the Trust under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator,
or other similar official of the Trust 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
(c) the commencement by the Trust 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 Trust 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 Trust
or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the Trust's failure to pay its
debts generally as they become due, or the taking of corporate action by the
Trust in furtherance of any such action.
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SECTION 6.02. Acceleration of Maturity; Rescission and
Annulment.
(a) If an Event of Default occurs, the unpaid principal
amount of the Notes shall automatically become due 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 Trust.
(b) At any time after such an Event of Default has occurred
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 Principal Amount of the Notes by
written notice to the Trust and the Trustee, may rescind and annul such
declaration and its consequences if the Trust has paid or deposited with the
Trustee a sum sufficient to pay:
(A) all Principal Payments on any Class A Notes,
Class B Notes, Class C Notes, Class D Notes, Class E
Notes and Class R 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, Class C Notes, Class D
Notes, Class E Notes and Class R Notes and, to the extent
that payment 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;
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.
(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.
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(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 Trust for the whole
amount of principal and interest remaining unpaid.
(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 Trust 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 Trust, Copelco, the Servicer or
any other obligor upon the Notes or the other obligations secured hereby or
relating to the property of the Trust, 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 Trust, 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.
(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
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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
following an Event of Default, 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 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
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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 all accrued and unpaid interest on
the Outstanding Class D 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 D Note
Interest Rate, fifth, to the payment of all accrued and unpaid
interest on the Outstanding Class E 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 E
Note Interest Rate, sixth, to the payment of the Outstanding
Class A-1 Principal Amount, seventh, 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, eighth, to the payment of the Outstanding Class B
Principal Amount, ninth, to the payment of the Outstanding
Class C Principal Amount, tenth, to the payment of the
Outstanding Class D Principal Amount and eleventh, to the
payment of the Outstanding Class E 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 first pro-rata to the payment of all accrued and
unpaid interest in the Outstanding Class R-1 Principal Amount,
second to the payment of all accrued and unpaid interest on the
Outstanding Class R-2 Principal Amount, third to the payment of
the Outstanding Class R-1 Principal Amount and fourth to the
payment of the Outstanding Class R-2 Principal Amount.
fifth to the payment of amounts then due the Trustee
hereunder;
sixth 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
seventh to the payment of the remainder, if any, to the
Trust 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
Principal Amount of the Notes 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 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 66-2/3% 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(b), 3.05,
3.06, 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.
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 Trust, the
Trustee and the Noteholders shall be restored severally and respectively to
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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.
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
Principal Amount of the Notes 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. Residual Notes Events of Default.
[To provide that upon failure to pay interest and principal
on the Class R Notes, the Residual Realizations will be sold and proceeds
applied in payment of the Class R Notes.]
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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 Trust 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 Trust (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 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
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(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;
(iii) the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Trust 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 Trust 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.
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ARTICLE VII
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.
(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
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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 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 Trust mentioned herein
shall be sufficiently evidenced by a Trust Request or Trust Order and any
action of the Trust may be sufficiently evidenced by a Trust 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,
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report, notice, request, direction, consent, order, note, debenture, other
evidence of indebtedness, 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 Trust, 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 Trust, 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 Trust 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 Trust
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 Trust 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 Trust 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
(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
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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 Trust,
which holding Trust 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 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 Trust 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 Trust.
(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 Trust, with the consent of the holders of 66-2/3% of the
Outstanding Principal Amount of the Notes, by an act of the Trust, shall
promptly appoint a successor Trustee.
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(e) If no successor Trustee shall have been so appointed by
the Trust 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 Trust 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 Trust 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.
(a) Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Trust 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 Trust 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 Trust 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
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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 Trust, 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 Trust and the Trustee shall have 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 Trust 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 Trust 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 Trust 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 Trust.
(i) 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:
(ii) 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.
(iii) 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,
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duties and obligations shall be exercised and performed by such co-trustee or
separate trustee.
(iv) The Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Trust evidenced by a Trust 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
Trust. Upon the written request of the Trustee, the Trust 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.
(v) 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.
(vi) 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 Trust hereunder and declares that the Trustee, through a
custodian, will hold such Leases and other Granted Assets conveyed by the
Trust 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
Trust.
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.
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).
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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 Trust 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 Trust 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 VIII
COVENANTS
SECTION 8.01. Payment of Principal and Interest.
The Trust 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 Trust 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 Trust in respect of
the Notes and this Indenture may be served. The Trust hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
(b) The chief executive office of the Trust, and the office
at which the Trust 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 certain of
the Leases are maintained in Mt. Laurel, New Jersey. The Trust 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 or from amounts withdrawn
from the Residual Account pursuant to Section 3.04(b) shall be made on behalf
of the Trust by the Trustee, and no amounts so withdrawn from the Collection
Account or the Residual Account for
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payments of Notes shall be paid over to the Trust under any circumstances
except as provided in this Section 8.03 or in Section 3.03(b), Section 3.04(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 pursuant to Section 3.03(b), Section
3.04(b), or Section 6.06, as applicable, 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 Trust 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 Trust will promptly notify the Trustee of its action
or failure so to act.
The Trust 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 Trust
(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 Trust upon request; and such
Noteholder shall thereafter, as an unsecured general creditor, look only to
the Trust for payment thereof (but only to the extent of the amounts so paid
to the Trust), and all liability of the Trustee with respect to such trust
money shall thereupon cease.
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SECTION 8.04. Corporate Existence; Merger; Consolidation,
etc.
(a) The Trust will keep in full effect its existence and
rights as a business trust under the laws of the State of Delaware.
(b) The Trust shall at all times observe and comply in all
material respects with (i) all laws applicable to it, (ii) all requisite and
appropriate organizational and other formalities 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.
(c) The Trust 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.
SECTION 8.05. Protection of Trust Estate; Further
Assurances.
The Trust 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 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 Trust 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 Trust, upon the Trust'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 Trust with the foregoing covenants;
and provided, further, that the duty of the Trustee to execute any
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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
Trust to comply with the provisions of this Section 8.05.
SECTION 8.06. [Reserved].
SECTION 8.07. Performance of Obligations; Sales and
Servicing Agreement.
(a) The Trust will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Notes and the
Underwriting Agreement.
(b) The Trust 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 Trust
shall promptly notify the Trustee and the Noteholders thereof, and shall
specify in such notice the action, if any, the Trust 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 Trust may not waive any default
under or amend the Sales and Servicing Agreement.
SECTION 8.08. Negative Covenants.
The Trust 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, Class B Notes,
Class C Notes and Class D Notes, and the Sales and Servicing Agreement;
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(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 4.01(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 Trust
or to any other Person; provided that the Trust may from time to time make
Inter-Company Loans on the terms and conditions set forth in Section 15 of the
Sales and Servicing Agreement.
SECTION 8.09. Information as to Trust.
The Trust 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) 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 Trust is taking or proposes to take with respect
thereto; and
(i) Report on Proceedings - promptly upon the Trust's becoming aware
of
(ii) any proposed or pending investigation of it by any governmental
authority or agency, or
(iii) 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 Trust a written notice specifying the nature of such
investigation or proceeding and what action the Trust is taking or proposes to
take with respect thereto and evaluating its merits.
SECTION 8.10. Taxes.
The Trust 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.
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SECTION 8.11. Indemnification.
The Trust 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 Trust'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 Trust 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 Trust 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 Trust shall:
(a) file with the Trustee, within 15 days after the Trust is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports which the Trust may be
required to file with the Commission pursuant to Section 13 or Section 15(d)
of the Exchange Act (or copies of such portions thereof as may be prescribed
by rules and regulations of the Commission); or, if the Trust 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 Trust 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 Trust
with the conditions and covenants provided for in this Indenture as may be
required by such rules and regulations; 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
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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 IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of any Noteholders, the Trust, by a
Trust 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:
(i) to add to the covenants of the Trust for the benefit of the
Noteholders, or to surrender any right or power herein conferred upon the
Trust;
(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 Trust and the Trustee, the Trust, by a Trust
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
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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 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.
72
<PAGE>
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 Trust shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Trust, to any such supplemental indenture may be prepared and executed by the
Trust 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 X
SATISFACTION AND DISCHARGE
SECTION 10.01. Satisfaction and Discharge of Indenture.
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 Trust, 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 Trust and thereafter repaid to
the Trust 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
(1) have become due and payable, or
(2) will become due and payable at their Stated Maturity,
as applicable, within one year,
and the Trust 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
73
<PAGE>
date of such deposit (in the case of Notes which have become due and
payable) or to the Stated Maturity thereof;
(ii) the Trust has paid or caused to be paid all other sums payable
hereunder by the Trust for the benefit of the Noteholders; and
(iii) the Trust 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 Trust or, upon Trust 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 Trust 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.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. 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 11.02. Communication by Noteholders with Other
Noteholders.
Noteholders may communicate, pursuant to Trust Indenture Act
Section 312(b), with other Noteholders with respect to their rights under this
Indenture or the
74
<PAGE>
Notes. The Trust, the Trustee, the Note Registrar and all other parties shall
have the protection of Trust Indenture Act Section 312(c).
SECTION 11.03. Officers' Certificate and Opinion of Counsel
as to Conditions Precedent.
Upon any request or application by the Trust (or any other
obligor upon the Notes) to the Trustee to take any action under this
Indenture, the Trust (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 11.04. 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 11.05. Nonpetition.
The Trustee shall not petition or otherwise invoke the
process of any Governmental Authority for the purpose of commencing or
sustaining a case against the Trust 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 Trust or any
substantial part of its respective property, or ordering the winding up or
liquidation of the affairs of the Trust.
75
<PAGE>
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 TRUST 98-A
By: WILMINGTON TRUST COMPANY
as Owner-Trustee
By:
------------------------------------
Name:
Title:
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By
-------------------------------------
Name: RUSSELL T. WHITLEY
Title: ASSISTANT VICE PRESIDENT
COPELCO CAPITAL INC, as Servicer
By
--------------------------------------
Name:
Title:
COP
76
<PAGE>
SCHEDULE 1
LEASES
<PAGE>
EXHIBIT A
[FORM OF
CLASS A-1 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
______% CLASS A-1 LEASE-BACKED NOTE, SERIES 1998-A
CUSIP NO. ___________
No. R-_______________ $_______________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of __________________________________
($______________), payable in monthly installments beginning on August 17,
1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of ______% 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 August 1998 Payment Date, since the Issuance Date.
Principal and interest on this Class A-1 Note shall be paid
on the 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, either by check to the
registered 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
A-1
<PAGE>
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 __________, 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 Trust designated as its "_____% Class A-1 Lease-Backed
Notes, Series 1998-A" (herein called the "Class A-1 Notes") limited in
aggregate principal amount of $_____________, issued under the Indenture,
dated as of July __, 1998 (herein called the "Indenture"), between the Trust
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 Trust, 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 Trust with respect
to the payment of principal and interest on this Class A-1 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by the Trust
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any
A-2
<PAGE>
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 here for 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 Trust 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 $________. 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust 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 overdue, and neither the Trust, 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-3
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST 98-A
By: WILMINGTON TRUST COMPANY
[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 Officer
A-4
<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 Trust. 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-5
<PAGE>
[FORM OF
CLASS A-2 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS A-2 LEASE-BACKED NOTE, SERIES 1998-A
CUSIP NO. _____________
No. R-______________ $______________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of ____________________________
($___________), payable in monthly installments beginning on August 17, 1998,
in accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of ____% 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 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, 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 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
A-6
<PAGE>
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 _________, 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 Trust designated as its "_____% Class A-2 Lease-Backed
Notes, Series 1998-A" (herein called the "Class A-2 Notes") limited in
aggregate principal amount of $____________, issued under the Indenture, dated
as of July __, 1998 (herein called the "Indenture"), between the Trust 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 Trust, 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 Trust 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 here for or
A-7
<PAGE>
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 Trust 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 $______. 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust 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 Trust, the Trustee nor any such agent shall be
affected by notice to the contrary.
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-8
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST 98-A
By: WILMINGTON TRUST COMPANY
[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 Officer
A-9
<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 Trust. 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-10
<PAGE>
[FORM OF
CLASS A-3 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS A-3 LEASE-BACKED NOTE, SERIES 1998-A
CUSIP NO. ___________
No. R- $____________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of ________________________________
($_____________), payable in monthly installments beginning on August 17,
1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of _____% 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 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, 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 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
A-11
<PAGE>
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 ________, 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 Trust designated as its "_____% Class A-3 Lease-Backed
Notes, Series 1998-A" (herein called the "Class A-3 Notes") limited in
aggregate principal amount of $____________, issued under the Indenture, dated
as of July __, 1998 (herein called the "Indenture"), between the Trust 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 Trust, 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 Trust 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 here for or
A-12
<PAGE>
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 Trust 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 $______. 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust 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 Trust, the Trustee nor any such agent shall be
affected by notice to the contrary.
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-13
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST
98-A
By: WILMINGTON TRUST COMPANY
[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 Officer
A-14
<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 Trust. 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-15
<PAGE>
[FORM OF
CLASS A-4 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS A-4 LEASE-BACKED NOTE, SERIES 1998-A
CUSIP NO. 217246AD9________
No. R- $_______________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of ____________________________
($______________), payable in monthly installments beginning on August 17,
1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of _____% 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 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, 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 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
A-16
<PAGE>
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 ___________,
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 Trust designated as its "_____% Class A-4 Lease-Backed
Notes, Series 1998-A" (herein called the "Class A-4 Notes") limited in
aggregate principal amount of $____________, issued under the Indenture, dated
as of July __, 1998 (herein called the "Indenture"), between the Trust 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 Trust, 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 Trust 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 here for or
A-17
<PAGE>
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 Trust 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 $______. 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust 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 Trust, the Trustee nor any such agent shall be
affected by notice to the contrary.
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-18
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST
98-A
By: WILMINGTON TRUST COMPANY
[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 Officer
A-19
<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 Trust. 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-20
<PAGE>
[FORM OF
CLASS B NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
______% CLASS B LEASE-BACKED NOTE
CUSIP No. _______________
No. R- $____________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of __________________________ Dollars
($____________), payable in monthly installments beginning on August 17, 1998,
in accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of ____% 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 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, 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 of this Class B Note only
upon presentation and surrender of this Class B Note at the Corporate Trust
Office of the
A-21
<PAGE>
Trustee or at the principal office of any Paying Agent appointed pursuant to
the Indenture.
The Stated Maturity of the Class B Notes is _________, 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 Trust designated as its "____% Class B Lease-Backed Notes,
Series 1998-A" (herein called the "Class B Notes"), limited in aggregate
principal amount of $___________, issued under the Indenture, dated as of July
__, 1998 (herein called the "Indenture"), between the Trust 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 Trust, 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 Trust 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 here for 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
A-22
<PAGE>
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 Trust 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 $________. 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust 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 Trust, 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-23
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST
98-A
By: WILMINGTON TRUST COMPANY
[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 Officer
A-24
<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 Trust. The agent may substitute another to act for him.
Dated: Signed:
- ----------------------------- ------------------------------------
------------------------------------
(sign 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-25
<PAGE>
[FORM OF
CLASS C NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS C LEASE-BACKED NOTE
PP No. ___________
No. R- $____________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to [________], or
registered assigns, the principal sum of _________________________________
Dollars ($____________), payable in monthly installments beginning on August
17, 1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of _____% 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 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, 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 of this Class C Note only
upon presentation and surrender of this Class C Note at the Corporate Trust
Office of the
A-26
<PAGE>
Trustee or at the principal office of any Paying Agent appointed pursuant to
the Indenture.
The Stated Maturity of the Class C Notes is _________, 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 Trust designated as its "_____% Class C Lease-Backed Notes,
Series 1998-A" (herein called the "Class C Notes"), limited in aggregate
principal amount of $__________, issued under the Indenture, dated as of July
__, 1998 (herein called the "Indenture"), between the Trust 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 Trust, 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 Trust 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 here for 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
A-27
<PAGE>
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 Trust 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust 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 Trust, 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-28
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST
98-A
By: WILMINGTON TRUST COMPANY
[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 Officer
A-29
<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 Trust. The agent may substitute another to act for him.
Dated: Signed:
- ---------------------------------- --------------------------------
(sign 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-30
<PAGE>
[FORM OF
CLASS D NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS D LEASE-BACKED NOTE
PP No. ___________
No. R- $____________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to [________], or
registered assigns, the principal sum of _________________________________
Dollars ($____________), payable in monthly installments beginning on August
17, 1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of _____% 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 D Note shall be paid on
the 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, either by check to the
registered address of the Holder of this Class D 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 D Notes during the Principal
Amortization Period shall be payable to the Holder of this Class D Note only
upon presentation and surrender of this Class D Note at the Corporate Trust
Office of the
A-31
<PAGE>
Trustee or at the principal office of any Paying Agent appointed pursuant to
the Indenture.
The Stated Maturity of the Class D Notes is _________, on
which date the Outstanding Principal Amount of the Class D 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 D Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
This Class D Note is one of a duly authorized issue of Class
D Notes of the Trust designated as its "_____% Class D Lease-Backed Notes,
Series 1998-A" (herein called the "Class D Notes"), limited in aggregate
principal amount of $__________, issued under the Indenture, dated as of July
__, 1998 (herein called the "Indenture"), between the Trust 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 Trust, the Trustee and the Holders and of the terms upon
which the Class D 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 D Notes (but not less than all
the Class D 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 Trust with respect to the payment
of principal and interest on this Class D 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 D Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class D Note and of any Class D Note issued upon
the registration of transfer hereof or in exchange here for or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Class D
Note or any Class D Note.
No sale or transfer of this Class D Note may be made unless
such sale or transfer complies with or is exempt from registration
requirements of the Securities Act
A-32
<PAGE>
and applicable state securities laws. Prospective transferees of this Class D
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 D Note is
registrable in the Note Register, upon surrender of this Class D 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 Trust 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 D Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Class D 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 D Notes
are exchangeable for a like aggregate principal amount of Class D 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust or the
Trustee may treat the Person in whose name this Class D Note is registered as
the owner hereof for all purposes, whether or not this Class D Note may be
overdue, and neither the Trust, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class D 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-33
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST 98-A
By: WILMINGTON TRUST COMPANY
[SEAL]
By:
--------------------------------
Authorized Officer
Attest:
- ----------------------------
Trustee's Certificate of Authentication
---------------------------------------
This is one of the Class D Notes referred to in the within
mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
-------------------------------------
Authorized Officer
A-34
<PAGE>
ASSIGNMENT FORM
---------------
If you the holder want to assign this Class D Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class D 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 D Note on
the books of the Trust. The agent may substitute another to act for him.
Dated: Signed:
- -------------------------------- ---------------------------------
---------------------------------
(sign exactly as the name appears
on the other side of this Class D
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 D 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 D Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
D Note.
A-35
<PAGE>
[FORM OF
CLASS E NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS E LEASE-BACKED NOTE
PP No. ___________
No. R- $____________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to [________], or
registered assigns, the principal sum of _________________________________
Dollars ($____________), payable in monthly installments beginning on August
17, 1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of _____% 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 E Note shall be paid on
the 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, either by check to the
registered address of the Holder of this Class E 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 E Notes during the Principal
Amortization Period shall be payable to the Holder of this Class E Note only
upon presentation and surrender of this Class E Note at the Corporate Trust
Office of the
A-36
<PAGE>
Trustee or at the principal office of any Paying Agent appointed
pursuant to the Indenture.
The Stated Maturity of the Class E Notes is _________, on
which date the Outstanding Principal Amount of the Class E 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 E Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
This Class E Note is one of a duly authorized issue of Class
E Notes of the Trust designated as its "_____% Class E Lease-Backed Notes,
Series 1998-A" (herein called the "Class E Notes"), limited in aggregate
principal amount of $__________, issued under the Indenture, dated as of July
__, 1998 (herein called the "Indenture"), between the Trust 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 Trust, the Trustee and the Holders and of the terms upon
which the Class E 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 E Notes (but not less than all
the Class E 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 Trust with respect to the payment
of principal and interest on this Class E 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 E Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class E Note and of any Class E Note issued upon
the registration of transfer hereof or in exchange here for or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Class E
Note or any Class E Note.
No sale or transfer of this Class E Note may be made unless
such sale or transfer complies with or is exempt from registration
requirements of the Securities Act
A-37
<PAGE>
and applicable state securities laws. Prospective transferees of this Class E
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 E Note is
registrable in the Note Register, upon surrender of this Class E 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 Trust 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 E Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Class E 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 E Notes
are exchangeable for a like aggregate principal amount of Class E 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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust or the
Trustee may treat the Person in whose name this Class E Note is registered as
the owner hereof for all purposes, whether or not this Class E Note may be
overdue, and neither the Trust, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class E 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-38
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST
98-A
By: WILMINGTON TRUST COMPANY
[SEAL]
By:
-------------------------------
Authorized Officer
Attest:
- ----------------------------
Trustee's Certificate of Authentication
---------------------------------------
This is one of the Class E Notes referred to in the within
mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
-------------------------------------
Authorized Officer
A-39
<PAGE>
ASSIGNMENT FORM
---------------
If you the holder want to assign this Class E Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class E 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 E Note on
the books of the Trust. The agent may substitute another to act for him.
Dated: Signed:
- ---------------------------- -------------------------------------
(sign exactly as the name appears
on the other side of this Class E
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 E 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 E Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
E Note.
A-40
<PAGE>
[FORM OF
CLASS R-1 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS R-1 LEASE-BACKED NOTE
PP No. ___________
No. R- $____________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to [________], or
registered assigns, the principal sum of _________________________________
Dollars ($____________), payable in monthly installments beginning on August
17, 1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of _____% 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 R-1 Note shall be paid
on the 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, either by check to the
registered address of the Holder of this Class R-1 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 R-1 Notes during the Principal
Amortization Period shall be payable to the Holder of this Class R-1 Note only
upon presentation and surrender of this Class R-1 Note at the Corporate Trust
Office of the
A-41
<PAGE>
Trustee or at the principal office of any Paying Agent appointed pursuant to
the Indenture.
The Stated Maturity of the Class R-1 Notes is _________, on
which date the Outstanding Principal Amount of the Class R-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 R-1 Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
This Class R-1 Note is one of a duly authorized issue of
Class R-1 Notes of the Trust designated as its "_____% Class R-1 Lease-Backed
Notes, Series 1998-A" (herein called the "Class R-1 Notes"), limited in
aggregate principal amount of $__________, issued under the Indenture, dated
as of July __, 1998 (herein called the "Indenture"), between the Trust 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 Trust, the Trustee and the Holders and of the
terms upon which the Class R-1 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 R-1 Notes (but not less than
all the Class R-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 Trust with respect
to the payment of principal and interest on this Class R-1 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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 R-1 Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class R-1 Note and of any Class R-1 Note issued
upon the registration of transfer hereof or in exchange here for or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Class R-1 Note or any Class R-1 Note.
A-42
<PAGE>
No sale or transfer of this Class R-1 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 R-1 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 R-1 Note is
registrable in the Note Register, upon surrender of this Class R-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 Trust 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 R-1 Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Class R-1 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 R-1
Notes are exchangeable for a like aggregate principal amount of Class R-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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust or the
Trustee may treat the Person in whose name this Class R-1 Note is registered
as the owner hereof for all purposes, whether or not this Class R-1 Note may
be overdue, and neither the Trust, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class R-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-43
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST 98-A
By: WILMINGTON TRUST COMPANY
[SEAL]
By:
-----------------------------------
Authorized Officer
Attest:
- ----------------------------
Trustee's Certificate of Authentication
---------------------------------------
This is one of the Class R-1 Notes referred to in the within
mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
------------------------------------
Authorized Officer
A-44
<PAGE>
ASSIGNMENT FORM
---------------
If you the holder want to assign this Class R-1 Note, fill
in the form below and have your signature guaranteed:
I or we assign and transfer this Class R-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 R-1 Note on
the books of the Trust. The agent may substitute another to act for him.
Dated: Signed:
- ------------------------------ ------------------------------------
------------------------------------
(sign exactly as the name appears
on the other side of this Class
R-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 R-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 R-1 Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
R-1 Note.
A-45
<PAGE>
[FORM OF
CLASS R-2 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST, 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 TRUST 98-A
_____% CLASS R-2 LEASE-BACKED NOTE
PP No. ___________
No. R- $____________
Copelco Capital Funding Trust 98-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to [________], or
registered assigns, the principal sum of _________________________________
Dollars ($____________), payable in monthly installments beginning on August
17, 1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of _____% 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 R-2 Note shall be paid
on the 15th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing August 17, 1998, either by check to the
registered address of the Holder of this Class R-2 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 R-2 Notes during the Principal
Amortization Period shall be payable to the Holder of this Class R-2 Note only
upon presentation and surrender of this Class R-2 Note at the Corporate Trust
Office of the
A-46
<PAGE>
Trustee or at the principal office of any Paying Agent appointed pursuant to
the Indenture.
The Stated Maturity of the Class R-2 Notes is _________, on
which date the Outstanding Principal Amount of the Class R-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 R-2 Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
This Class R-2 Note is one of a duly authorized issue of
Class R-2 Notes of the Trust designated as its "_____% Class R-2 Lease-Backed
Notes, Series 1998-A" (herein called the "Class R-2 Notes"), limited in
aggregate principal amount of $__________, issued under the Indenture, dated
as of July __, 1998 (herein called the "Indenture"), between the Trust 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 Trust, the Trustee and the Holders and of the
terms upon which the Class R-2 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 R-2 Notes (but not less than
all the Class R-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 Trust with respect
to the payment of principal and interest on this Class R-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 Trust and the rights of the Holders under the Indenture at
any time by the Trust and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
outstanding, on behalf of all the Holders, to waive compliance by the Trust
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 R-2 Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class R-2 Note and of any Class R-2 Note issued
upon the registration of transfer hereof or in exchange here for or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Class R-2 Note or any Class R-2 Note.
A-47
<PAGE>
No sale or transfer of this Class R-2 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 R-2 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 R-2 Note is
registrable in the Note Register, upon surrender of this Class R-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 Trust 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 R-2 Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Class R-2 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 R-2
Notes are exchangeable for a like aggregate principal amount of Class R-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 Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trust, the Trustee and any agent of the Trust or the
Trustee may treat the Person in whose name this Class R-2 Note is registered
as the owner hereof for all purposes, whether or not this Class R-2 Note may
be overdue, and neither the Trust, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class R-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-48
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING TRUST
98-A
By: WILMINGTON TRUST COMPANY
[SEAL]
By:
-------------------------------------
Authorized Officer
Attest:
- ----------------------------
Trustee's Certificate of Authentication
---------------------------------------
This is one of the Class R-2 Notes referred to in the within
mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
-----------------------------------
Authorized Officer
A-49
<PAGE>
ASSIGNMENT FORM
---------------
If you the holder want to assign this Class R-2 Note, fill
in the form below and have your signature guaranteed:
I or we assign and transfer this Class R-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 R-2 Note on
the books of the Trust. The agent may substitute another to act for him.
Dated: Signed:
- -------------------------------- ------------------------------------
------------------------------------
(sign exactly as the name appears
on the other side of this Class
R-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 R-2 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 R-2 Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
R-2 Note.
A-50
<PAGE>
EXHIBIT B
[FORM OF
INVESTOR'S LETTER]
(Date)
Copelco Capital Funding Trust 98-A
700 East Gate Center
Mount Laurel, New Jersey 08110
Ladies and Gentlemen:
We propose to purchase $___________ in original aggregate
principal amount of Copelco Capital Funding TRUST 98-A _____% Class [E] [R-1]
[R-2] Lease-Backed Notes, Series 1998-A, (the "Notes"). The Notes were issued
pursuant to an Indenture (the "Indenture"), dated as of July 1, 1998, among
Copelco Capital Funding TRUST 98-A, MANUFACTURERS AND TRADERS TRUST COMPANY
and COPELCO CAPITAL INC. Capitalized terms used herein but not otherwise
defined shall have the same meaning as in the Indenture.
In connection with our proposed purchase of 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 TRUST 98-A and the parties to the
Placement Agent Agreement.
1. We understand that the 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 Notes and is able to bear the economic
risk of investment in the Notes.
___ (c) an "accredited investor" as defined in Rule 501
promulgated under the Securities Act that has such
B-1
<PAGE>
knowledge and experience in financial and business
matters as to be capable of evaluating the merits and
risks of investment in the Notes and is able to bear the
economic risk of investment in the Notes.
3. We agree that, to the extent that Section 2(a) of
this letter is applicable, that the 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 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 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 Notes except in accordance with the terms of the Notes and the
Indenture.
5. We agree not to sell the 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
Notes.
6. We understand that each of the Notes shall bear a
legend to substantially the following effect:
THIS 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.
7. We understand that there is no public market for
the Notes and it is unlikely that such market will develop.
8. We are authorized to invest in the Notes.
9. We certify that, in acquiring the Notes, we have
complied with any applicable guidelines or regulations for or limitations on
investments established by each
B-2
<PAGE>
regulatory agency or body, if any, which has jurisdiction over investments
made by us and that our acquisition and retention of the 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 Notes contained in the Indenture, as the
same may be amended from time to time.
Very truly yours,
[TRANSFEREE]
B-3
<PAGE>
Exhibit 5.1
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK 10019-6092
TELEPHONE 212 259-8000 FACSIMILE 212 259-6333
July 31, 1998
Copelco Capital Funding LLC 98-1
East Gate Drive
Mount Laurel, New Jersey 08054-5400
Copelco Capital Funding Trust 1998-A
c/o Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, DE 19890
Re: Copelco Capital Funding Trust 1998-A
Registration Statement on Form S-1
(File No. 333-53735)
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding
Trust 1998-A, a Delaware business trust (the "Issuer"), in connection with the
preparation of the above-referenced Registration Statement on Form S-1 (the
"Registration Statement"), filed with the Securities and Exchange Commission
contemporaneously herewith under the Securities Act of 1933, as amended (the
"Act"), which Registration Statement includes a Prospectus (the "Prospectus")
for the registration under the Act of Class A-1 Lease-Backed Notes, Series
1998-A, Class A-2 Lease-Backed Notes, Series 1998-A, Class A-3 Lease-Backed
Notes, Series 1998-A, Class A-4 Lease-Backed Notes, Series 1998-A, Class B
Leased-Backed Notes, Series 1998-A, Class C Leased-Backed Notes, Series 1998-A
and Class D Leased-Backed Notes, Series 1998-A (the "Offered Notes") to be
issued pursuant to the Indenture dated on or about August 1, 1998
("Indenture") between the Issuer and Manufacturers and Traders Trust Company,
as Indenture Trustee (substantially in the form filed as an Exhibit to the
Registration Statement).
<PAGE>
In that regard, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we have deemed necessary or
appropriate for the purposes of this opinion.
The opinions expressed below are subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general equity principles.
We are admitted to the Bar of the State of New York and we
express no opinion as to the laws of any other jurisdiction except as to
matters that are governed by Federal law or the laws of the State of New York.
All opinions expressed herein are based on laws, regulations and policy
guidelines currently in force and may be affected by future regulations.
Based upon the foregoing, we are of the opinion that when
the Indenture has been duly authorized by the Indenture Trustee and duly
executed and delivered by the Indenture Trustee and when the Offered Notes
have been duly executed and authenticated in accordance with the provisions of
the Indenture, and issued and sold as contemplated in the Registration
Statement and the Prospectus, as amended or supplemented, delivered pursuant
to Section 5 of the Act in connection therewith, such Offered Notes will be
legally and validly issued and the holders of such Offered Notes will be
entitled to the benefits of such Indenture.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. In giving this opinion, we do not
concede that we are experts within the meaning of the Act or the rules and
regulations therewith, or that this consent is required by Section 7 of the
Act.
Very truly yours,
DEWEY BALLANTINE LLP
2
<PAGE>
Exhibit 8.1
DEWEY BALLANTINE LLP
1301 Avenue of the Americas
New York, New York 10019
July 31, 1998
Copelco Capital Funding LLC 98-1
East Gate Drive
Mount Laurel, New Jersey 08054-5400
Copelco Capital Funding Trust 1998-A
c/o Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, DE 19890
Re: Copelco Capital Funding Trust 98-A
Registration Statement on Form S-1
(File No. 333-53735)
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding
Trust 98-A (the "Trust") in connection with the preparation and filing of the
registration statement on Form S-1 (such registration statement, the
"Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, in respect of the Copelco
Capital Funding Trust 1998-A Class A-1 Lease-Backed Notes, Class A-2
Lease-Backed Notes, Class A-3 Lease-Backed Notes, Class A-4 Lease-Backed
Notes, Class B Lease-Backed Notes, Class C Lease-Backed Notes and Class D
Lease-Backed Notes (collectively, the "Notes").
Our advice formed the basis for the description of federal
income tax consequences appearing under the heading "Material Federal Income
Tax Considerations" in the prospectus supplement contained in the Registration
Statement. Such description does not purport to discuss all possible federal
income tax consequences of an investment in the Notes but with respect to
those tax consequences which are discussed, it is our opinion that the
description is accurate.
In addition, assuming (i) the Indenture dated as of August
1, 1998 by and among the Trust, and Manufacturers and Traders Trust is fully
executed, delivered and enforceable against the parties thereto in accordance
with its terms, and (ii) the transaction described in the prospectus is
completed on substantially the terms and conditions set forth therein, it is
our opinion that the Notes will be characterized as indebtedness for federal
income tax purposes.
<PAGE>
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. In giving this opinion, we do not
concede that we are experts within the meaning of the Act or the rules and
regulations therewith, or that this consent is required by Section 7 of the
Act.
Very truly yours,
DEWEY BALLANTINE LLP
/TEXT>
<PAGE>
Exhibit 10.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COPELCO CAPITAL, INC.,
ORIGINATOR AND SERVICER
COPELCO CAPITAL FUNDING LLC 98-1,
SELLER
AND
COPELCO CAPITAL FUNDING TRUST 1998-A
PURCHASER
-------------------------
SALES AND SERVICING AGREEMENT
Dated as of August __, 1998
-------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF COPELCO CAPITAL
FUNDING TRUST 98-A HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST
IN FAVOR OF MANUFACTURERS AND TRADERS TRUST TRUST, AS TRUSTEE, UNDER THE
INDENTURE DATED AS OF AUGUST 1, 1998, FOR THE BENEFIT OF THE PERSONS REFERRED
TO THEREIN.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS.......................................................................1
AGREEMENTS.....................................................................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.....................3
1.05 Servicer to Act as Custodian.......................................3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR...................4
2.01 Corporate Organization and Authority...............................4
2.02 Business and Property..............................................5
2.03 Financial Statements...............................................5
2.04 Equipment and Leases...............................................5
2.05 Payments...........................................................8
2.06 Full Disclosure....................................................9
2.07 Pending Litigation.................................................9
2.08 Title to Properties................................................9
2.09 Transactions Legal and Authorized..................................9
2.10 Governmental Consent..............................................10
2.11 Taxes.............................................................10
2.12 Compliance with Law...............................................10
2.13 ERISA.............................................................11
2.14 Ability to Perform................................................11
2.15 Ordinary Course; No Insolvency....................................11
2.16 Assets and Liabilities............................................11
2.17 Fair Consideration................................................12
2.18 Ability to Pay Debts..............................................12
2.19 Bulk Transfer Provisions..........................................12
2.20 Transfer Taxes....................................................12
2.21 Principal Executive Office........................................12
2.22 Servicing Provisions Customary....................................13
2.23 Nonconsolidation..................................................13
2.24 Sale Treatment....................................................13
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER......................14
3.01 Corporate Organization and Authority..............................14
3.02 Business and Property.............................................14
i
<PAGE>
3.03 Transactions Legal and Authorized.................................14
3.04 Governmental Consent..............................................15
3.05 Compliance with Law...............................................15
3.06 Assets and Liabilities............................................15
3.07 Fair Consideration................................................15
3.08 Ability to Pay Debts..............................................16
3.09 Bulk Transfer Provisions..........................................16
3.10 Transfer Taxes....................................................16
3.11 Principal Executive Office........................................16
3.12 Nonconsolidation..................................................16
3.13 Sale Treatment....................................................17
SECTION 4. ADMINISTRATION OF LEASES..........................................17
4.01 Servicer to Act...................................................17
4.02 Lease Amendments and Modifications................................19
4.03 Non-Performing Leases.............................................20
4.04 Costs of Servicing; Servicing Fee; Administrative Expenses........21
4.05 Other Transactions................................................22
SECTION 5. SERVICER ADVANCES AND SELLER'S SUPPORT............................22
5.01 Late Lease Payments...............................................22
5.02 Early Termination Leases..........................................22
5.03 Indemnification...................................................23
5.04 Repurchases; Other Payments.......................................23
5.05 Payment Advices...................................................24
SECTION 6. INFORMATION TO BE PROVIDED........................................24
6.01 Monthly Status Reports; Servicing Reports.........................24
6.02 Annual Independent Public Accountant's Report.....................26
SECTION 7. THE SERVICER......................................................26
7.01 Merger or Consolidation of the Servicer...........................26
7.02 Limitation on Liability of the Servicer and Others................27
7.03 Servicer Not to Resign or Be Removed..............................27
7.04 Financial and Business Information................................27
7.05 Officers' Certificates............................................29
7.06 Inspection........................................................29
7.07 Servicer Records..................................................29
SECTION 8. THE ORIGINATOR....................................................29
8.01 Merger or Consolidation of the Originator.........................29
8.02 Control of Seller.................................................30
8.03 Financial and Business Information................................30
8.04 Officers' Certificates............................................31
8.05 Inspection........................................................31
ii
<PAGE>
8.06 Books and Records.................................................32
8.07 Communications....................................................32
SECTION 9. THE SELLER........................................................32
9.01 Merger or Consolidation of the Seller.............................32
9.02 Control of Trust..................................................32
9.03 Financial and Business Information................................32
9.04 Inspection........................................................33
9.05 Books and Records.................................................33
9.06 Communications....................................................33
SECTION 10. DEFAULT..........................................................34
10.01 Servicer Events of Default.......................................34
10.02 Termination......................................................35
10.03 Trustee to Act; Appointment of Successor.........................36
10.04 Servicer to Cooperate............................................37
10.05 Notification to Noteholders......................................37
10.06 Remedies Not Exclusive...........................................37
SECTION 11. SUBSTITUTION AND ADDITION OF LEASES..............................37
11.01 Substitution and Addition........................................37
11.02 Procedure........................................................39
11.03 Objection and Repurchase.........................................40
11.04 Seller's and Servicer's Subsequent Obligations...................40
SECTION 12. ASSIGNMENT.......................................................40
12.01 Assignment to Trustee............................................40
12.02 Assignment by Seller or Servicer.................................40
SECTION 13. NATURE OF OBLIGATIONS AND SECURITY THEREFOR......................41
13.01 Obligations Absolute.............................................41
13.02 Security for Obligations.........................................41
13.03 Further Assurances; Financing Statements.........................42
SECTION 14. DEFINITIONS......................................................42
SECTION 15. INTER-COMPANY LOANS..............................................48
15.01 Inter-Company Loans..............................................48
SECTION 16. MISCELLANEOUS....................................................48
16.01 Continuing Obligations...........................................48
16.02 GOVERNING LAW....................................................48
16.03 Successors and Assigns...........................................48
16.04 Modification.....................................................48
iii
<PAGE>
16.05 No Proceedings...................................................48
16.06 Notices..........................................................49
16.07 Counterparts.....................................................49
16.08 Nonpetition Covenant.............................................49
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 Receivables Servicing Report
iv
<PAGE>
SALES AND SERVICING AGREEMENT
This SALES AND SERVICING AGREEMENT is made and dated as of
August __, 1998, by and between COPELCO CAPITAL FUNDING TRUST 98-A, a Delaware
business trust, as purchaser hereunder (the "Trust"), COPELCO CAPITAL, INC., a
Delaware corporation, as originator of the Leases (defined below) (in such
capacity, the "Originator") and servicer (in such capacity, the "Servicer")
hereunder, and COPELCO CAPITAL FUNDING LLC 98-1, as seller of the Leases.
R E C I T A L S
A. The Originator wishes to sell and assign to the Seller,
and the Seller wishes to purchase from the Originator, all right, title and
interest of the Originator in, to and under the Leases and the Equipment (such
terms and all other capitalized terms used herein having the meanings ascribed
thereto in Section 14 hereof unless otherwise indicated).
B. The Seller wishes to contribute and assign to the Trust,
and the Trust wishes to acquire from the Seller, all right, title and interest
of the Seller in, to and under the Leases.
C. Contemporaneously with such sale and assignment, the
Seller wishes to contribute to the Trust all right, title and interest of the
Seller in and to each item of Equipment subject to each Lease.
D. Pursuant to the Indenture, the Trust is issuing one class
of _____% Class A-1 Lease-Backed Notes, Series 1998-A in the aggregate
principal amount of $__________ (the "Class A-1 Notes"), one class of _____%
Class A-2 Lease-Backed Notes, Series 1998-A in the aggregate principal amount
of $________ (the "Class A-2 Notes"), one class of _____% Class A-3
Lease-Backed Notes, Series 1998-A in the aggregate principal amount of
$__________ (the "Class A-3 Notes"), one class of _____% Class A-4
Lease-Backed Notes, Series 1998-A in the aggregate principal amount of
$___________ (the "Class A-4 Notes"; together with the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes, the "Class A Notes"), one class of
_____% Class B Leased-Backed Notes, Series 1998-A (the "Class B Notes"), in
the aggregate principal amount of $__________, one class of _____% Class C
Lease-Backed Notes, Series 1998-A, in the aggregate principal amount of
$__________ (the "Class C Notes"), one class of _____% Class D Leased-Backed
Notes, Series 1998-A in the aggregate principal amount of $__________ (the
"Class D Notes"), one class of _____% Class E Lease-Backed Notes, Series
1998-A, in the aggregate principal amount of $__________ (the "Class E Notes";
together with the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes, the "Receivables Notes"), one class of ____% Class R-1 Residual
Notes, Series 1998-A in the aggregate Principal amount of $_________ (the
"Class R-1 Notes") and one class of ______% Class R-2 Residual Notes, Series
1998-A in the aggregate principal amount of $____________ (the Class R-2
Notes; together with the Class R-1 Notes, the "Class R Notes"; the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class R Notes are referred to collectively as the "Notes"), the
proceeds of which are being used by the Trust to make payment to the Seller
for the Leases.
<PAGE>
E. Pursuant to the Indenture, the Trust 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 Trust in,
to and under the Leases, the interests in the Equipment and this Sales and
Servicing Agreement.
A G R E E M E N T S
SECTION 1. PURCHASE AND SALE
1.01 Purchase of Leases.
(a) By their execution and delivery of this Sales and Servicing
Agreement, the Originator hereby sells and assigns to the Seller, and the
Seller hereby purchases from the Originator without recourse (except to the
extent of the Originator's repurchase obligations as set forth herein), all of
the Originator'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).
(b) By their execution and delivery of this Sales and Servicing
Agreement, the Seller hereby contributes and assigns to the Trust, and the
Trust hereby acquires 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 for the transfer from the Originator
to the Seller (including the right to receive all payments due or to become
due thereunder since the Cut-Off Date) is $____________.
1.03 Capital Contribution.
(a) The Originator and the Seller each acknowledge and confirm that
contemporaneously with the sale and purchase of the Leases as hereinabove
provided, the Originator, as the sole member of the Seller, is contributing
and transferring to the Trust, and in connection with each sale, transfer and
assignment of Additional Leases and Substitute Leases, the Originator will
contribute and transfer to the Seller, without recourse, all right, title and
interest of the Originator in and to each item of Equipment subject to each
Lease, Additional Lease and Substitute Lease. After such contribution and
transfer by the Originator to the Seller, all right, title and interest of the
Originator in and to each item of Equipment subject to each Lease shall be
vested in the Seller.
(b) The Seller and the Trust each acknowledge and confirm that
contemporaneously with the sale and purchase of the Leases as hereinabove
provided, the Seller, as holder of beneficial interests in the Trust, is
contributing and transferring to the Trust, and in connection with each sale,
transfer and assignment of Additional Leases and Substitute Leases the Seller
will contribute and transfer to the Trust, without recourse, all right, title
and interest of the Seller in and to each item of Equipment subject to each
Lease, Additional Lease and
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Substitute Lease. After such contribution and transfer by the Seller to the
Trust, all right, title and interest of the Seller in and to each item of
Equipment subject to each Lease shall be vested in the Trust.
1.04 Transfer of Leases; Grant of Security Interest.
It is the intention of the parties hereto that each 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. Neither the Originator nor the Seller shall take
any action inconsistent with the Trust'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, each of the Originator and 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 Trust, and each
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 Trust and pledged to the
Trustee. In the event, 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 Trust and the Trustee shall be deemed to have been
granted a first priority security interest in (a) the Leases and all Lease
Payments, Casualty Payments, Termination Payments, Residual Realizations 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, Residual Realizations
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 Trust to or under any guarantees of or
collateral (including all rights of the Trust in any security deposits) for
the Lessee's obligations under any Lease, (c) all interests of the Trust 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
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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;
(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 ORIGINATOR
The Originator hereby represents and warrants as follows:
2.01 Corporate Organization and Authority.
The Originator:
(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 Originator 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,
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including performance of the duties of the Servicer and the
Originator'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 Originator 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
Originator.
2.03 Financial Statements.
(a) The consolidated balance sheet of the Originator and its
consolidated subsidiaries for the fiscal periods ended December 31, 1997 and
December 31, 1996 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 Originator and its consolidated subsidiaries as of March 31, 1998
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 Originator 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, 1997 there has been no change in the business,
condition or prospects (financial or otherwise) of the Originator except
changes in the ordinary course of business, none of which individually or in
the aggregate has been materially adverse. Neither the Originator 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 Originator relating to other asset securitization transactions involving
the Originator.
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 Originator 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 Originator has paid in full, to
the
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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 Trust of the Leases and all of the Originator'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 Originator is a party or by which
it is bound.
(b) Upon completion of the transfers described in Article I hereof,
the Trust 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 Originator'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 recourse obligation of the Lessee thereunder,
enforceable by the Trust (and by the Trustee as assignee of the Trust) 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
Originator 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
Originator's security interest in any item not owned by it) is contributed
hereunder, the Originator 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 Originator (or an Affiliate of the Originator)
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 Originator and the Trust. All
premiums in respect of such policies
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have been paid. Each of the Trustee and the Trust are named as loss payees and
additional insureds, as their interests may appear, on such casualty and
liability policies maintained by the Originator.
(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 Originator in
accordance with the Originator's regular credit approval process described in
the Prospectus, and no 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 Trust, the Originator 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 Originator has neither assigned
such master lease in its entirety, nor delivered physical possession of such
master lease, to any Person other than the Seller, the Trust 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, 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
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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 (i) originated by the Originator in the
ordinary course of its business or (ii) purchased by the Originator 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 $____________.
(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 May 2005.
(u) Each Lease agreement is "chattel paper" within the meaning of
The Uniform Commercial Code in the states of New York and New Jersey.
2.05 Payments.
(a) The aggregate amounts of Lease Payments payable by the Lessees
under the Leases during each lease payment period, including amounts on
deposit in the Reserve Account, are sufficient to cover the Servicing Fees and
pay the principal and interest on the Notes, as such payments become due and
payable.
(b) The aggregate amount of Residual Realizations using the average
historical realization rate, including amounts on deposit in the Liquidity
Reserve Account, is sufficient to cover the Residual Servicing Fee and pay the
principal and interest on the Class R Notes as such payments become due and
payable.
(c) 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 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
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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 Originator or any Affiliate of the Originator or,
to the knowledge of the Originator, any Lease, Lessee or item of Equipment,
which the Originator has not or will not disclose in the Prospectus or the
Private Placement Memorandum which materially affects adversely nor, so far as
the Originator can now reasonably foresee, will materially affect adversely
the ability of the Originator 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 Originator threatened, against or
affecting the Originator 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 Originator and
its subsidiaries, or the ability of the Originator or the Servicer to perform
its obligations under this Sales and Servicing Agreement. The Originator 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 Originator to the
Trust of the Leases and the Originator'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 Trust which is assigned to the Trustee
pursuant to the Indenture).
2.09 Transactions Legal and Authorized.
The transfer by the Originator 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 Originator 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 Originator, and do not require any stockholder approval, or
approval or consent of any trustee
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or holders of any indebtedness or obligations of the Originator except such as
have been duly obtained;
(b) are within the corporate powers of the Originator; 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 Originator under the provisions
of, any agreement, charter instrument, by-law or other instrument to which the
Originator 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 Originator or its properties, or any order to which the Originator 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 Originator 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 Originator or any
subsidiary in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon the Originator 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
Originator's knowledge all such tax returns were true and correct and neither
the Originator nor any subsidiary knows of any proposed additional tax
assessment against it in any material amount nor of any basis therefor.
(b) The provisions for taxes on the books of the Originator and each
of its subsidiaries are in accordance with generally accepted accounting
principles.
2.12 Compliance with Law.
The Originator:
(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
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condition (financial or otherwise) of the Originator 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 Originator 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 Originator 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.
2.14 Ability to Perform.
At the date hereof, the Originator 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 Originator in
furtherance of the Originator's ordinary business purposes and constitute a
practical and reasonable course of action by the Originator designed to
improve the financial position of the Originator, with no contemplation of
insolvency and with no intent to hinder, delay or defraud any of its present
or future creditors. The Originator 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 Originator's
assets was or will be in excess of the amount that will be required to pay the
Originator's probable liabilities as they then exist and as they become
absolute and matured; and
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(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 Originator's assets was or will be
greater than the sum of the Originator's debts, valuing the Originator's
assets at a fair salable value.
2.17 Fair Consideration.
The consideration received by the Originator, 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 Originator.
2.18 Ability to Pay Debts.
Neither as a result of the transaction contemplated by this Sales and
Servicing Agreement nor otherwise does the Originator believe that it will
incur debts beyond its ability to pay or which would be prohibited by its
charter documents or by-laws. The Originator's assets and cash flow enable it
to meet its present 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 Originator 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 Originator 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 Originator to any federal, state or local government ("Transfer
Taxes"). In the event that the Trust 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 Trust, or upon
the Originator otherwise being given notice thereof, the Originator shall pay,
and otherwise indemnify and hold the Trust, 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 Originator and the
Servicer is located at One International Boulevard, Mahwah, New Jersey
07430-0631.
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2.22 Servicing Provisions Customary.
The servicing arrangements hereunder, including without limitation the
terms and conditions pursuant to which the Originator will act as Servicer and
the Servicing Fee to be paid to the Originator, are consistent with the
arrangements and customary practices of the Originator when providing
comparable services to non-affiliated entities and of other servicers in the
equipment leasing industry.
2.23 Nonconsolidation.
The Originator is and at all times since its incorporation has been
operated in such a manner that it would not be substantively consolidated with
either the Seller or the Trust, such that the separate existence of the
Originator and the Seller or the Trust would be disregarded in the event of a
bankruptcy or insolvency of the Originator or the Seller or the Trust, and in
such regard:
(a) the Originator is not involved in the day-to-day management of
the Seller or the Trust;
(b) the Originator maintains separate corporate records and books
of account from the Seller and the Trust and otherwise observes corporate
formalities and has a separate business office from the Seller and the Trust;
(c) the financial statements and books and records of the Originator
prepared after the Closing Date will reflect the separate existence of the
Seller and the Trust;
(d) the Originator maintains its assets separately from the assets
of the Seller and the Trust (including through the maintenance of a separate
bank account), the Originator's funds and assets, and records relating
thereto, have not been and are not commingled with those of the Seller and the
Trust and the separate creditors of the Seller and the Trust will be entitled
to be satisfied out of the Seller's and the Trust's assets prior to any value
in the Seller or the Trust becoming available to the Seller or the Trust's
equityholders or the Originator's creditors;
(e) all business correspondence of the Originator and other
communications are conducted in the Originator's own name and on its own
stationery; and
(f) neither the Seller or the Trust acts as an agent of the
Originator in any capacity and the Originator does not act as agent for the
Seller or the Trust, but instead presents itself to the public as a
corporation separate from the Seller and the Trust; provided that the
Originator is the Servicer hereunder and under agreements substantially the
same as this Agreement.
2.24 Sale Treatment.
The Originator will treat the transfer to the Seller of the
Leases and the Lease Receivables as a sale for reporting and accounting
purposes and the Originator will treat the transfer to the Seller of its
interest in the Equipment as a contribution for reporting and accounting
purposes.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants as follows:
3.01 Corporate Organization and Authority.
The Seller:
(a) is a limited liability company 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 and to enter
into and perform its obligations under this Sales and
Servicing Agreement, and the transactions contemplated
hereby support, 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.
3.02 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.
3.03 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.
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3.04 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.
3.05 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.
3.06 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.
3.07 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.
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3.08 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 obligations in the ordinary course of business as they become
due.
3.09 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.
3.10 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 Trust 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 Trust, or upon the Seller
otherwise being given notice thereof, the Seller shall pay, and otherwise
indemnify and hold the Trust, 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).
3.11 Principal Executive Office.
The principal executive office of the Seller is located at
One International Boulevard, Mahwah, New Jersey 07430-0631.
3.12 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 Trust, such that the separate existence of the Seller and the Trust would
be disregarded in the event of a bankruptcy or insolvency of the Seller or the
Trust, and in such regard:
(a) the Seller is not involved in the day-to-day management of the
Trust;
(b) the Seller maintains separate corporate records and books of
account from the Trust and otherwise observes corporate formalities and has a
separate business office from the Trust;
(c) the financial statements and books and records of the Seller
prepared after the Closing Date will reflect the separate existence of the
Trust;
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(d) the Seller maintains its assets separately from the assets of
the Trust (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 Trust and the separate creditors of the Trust
will be entitled to be satisfied out of the Trust's assets prior to any value
in the Trust becoming available to the Trust's equityholders 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 Trust does not act as an agent of the Seller in any
capacity and the Seller does not act as agent for the Trust, but instead
presents itself to the public as a corporation separate from the Trust.
3.13 Sale Treatment.
The Seller will treat the transfer to the Trust of the Leases and the
Lease Receivables as a capital contribution for tax, reporting and accounting
purposes and the Seller will treat the transfer to the Trust of its interest
in the Equipment as a contribution for reporting and accounting purposes.
SECTION 4. ADMINISTRATION OF LEASES
4.01 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 Trust, 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 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 or the Residual Account, as applicable, within two Business Days of
the receipt thereof. Any other amount received by the Servicer from time to
time from the Originator, the Trust 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 or Residual 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
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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 Trust, 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 Trust 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 or Residual Account, in accordance with the terms of the Indenture.
(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 Trust 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 Originator 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 Trust 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 Trust as loss payees and additional
insureds if (A) the Originator is no longer the Servicer, (B) an
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Event of Default shall have occurred and be continuing or (C) a Servicer Event
of Default shall have occurred and be continuing.
(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 purchases of Additional Leases in
accordance with Section 11 and Lease substitutions pursuant to Section 11
hereof or otherwise so that (i) the ownership interest contemplated by this
Agreement in favor of the Trust and the security interest contemplated by the
Indenture in favor of the Trustee in each of the Leases and the Equipment will
be perfected by such filings with the appropriate Uniform Commercial Code
filing offices (to the extent this may be achieved by central filing), and
(ii) the security interest contemplated by the Sales and Servicing Agreement
in favor of the Seller and the Trust 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 the Closing Date and Equipment relating to not less
than 75% of the Booked Residual Value of such Equipment as of 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, Maintenance
Charges and Fee Per Scan Charges, if any, owing the related vendor in a timely
fashion.
4.02 Lease Amendments and Modifications.
In performing its obligations hereunder, the Servicer may, acting in
the name of the Trust and without the necessity of obtaining the prior consent
of the Trust 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 4.01 above, (b) would reduce the amount or extend the time for payment
of any Lease Payment, Casualty Payment, Termination Payment or Residual
Realizations 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 Trust, the
Trustee or the holders of the Notes.
In addition, following the transfer of any Lease to the Trust 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 Originator
substitutes a Substitute Lease therefor in accordance with Section 11 hereof,
the Servicer may permit such adjustments so long as the following conditions
precedent have been satisfied:
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(i) after giving effect to such adjustments and any additions
and substitutions pursuant to Section 11, the aggregate Booked Residual
Value of such Leases will not be less than 100% of the aggregate Booked
Residual Value of the Leases adjusted, replaced or substituted since
the Issuance Date.
(ii) after giving effect to such adjustment and any additions
and substitutions pursuant to Section 11, the final payment on such
Lease must be on or prior to May 2005.
(iii) after giving effect to such adjustments and any additions
and substitutions pursuant to Section 11 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 pursuant to Section 11, 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.
(v) after giving effect to such adjustments, additions, and
substitutions pursuant to Section 11, the weighted average remaining
term of the Performing Leases must not be greater than the weighted
average remaining term of the Performing Leases prior to such
adjustment, addition, and substitution.
4.03 Non-Performing Leases.
(a) Upon receipt of notice from the Trust, 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
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 Trust, that the Originator immediately repay any
Inter-Company Loan representing the advance pursuant to Section 15.01 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 4.03(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, monthly payments at
least equal to those of the Terminated Lease through the remaining term of
such Terminated Lease, a remaining term less than or equal to that of the
Terminated Lease and a Booked Residual Value at least equal to that of such
Terminated Lease.
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(c) In the event that the Servicer is required to sell or lease any
item of Equipment pursuant to the provisions of this Section 4.03 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 5.01 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 4.03(d).
4.04 Costs of Servicing; Servicing Fee; Administrative Expenses.
(a) All costs of servicing each Lease in the manner required by this
Section 4 shall be 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 4.03 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 4 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 Trust on each
Payment Date following the Closing Date a servicing fee with respect to the
Receivables Notes (the "Servicing Fee") and a servicing fee with respect to
the Class R Notes (the "Residual Servicing Fee") in the amounts 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 Receivables Notes shall be determined by multiplying (i) the Discounted
Present Value of Performing Leases as of the prior Payment Date times (ii)
one-twelfth of 0.75%. The amount of the Residual Servicing Fee which the
Servicer shall be entitled to receive on each Payment Date following the
issuance of the Class R Notes shall be determined by multiplying (i) the
Booked Residual Values as of the prior Payment Date for all Performing Leases
times (ii) 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.
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4.05 Other Transactions.
Nothing in this Sales and Servicing Agreement shall preclude the
Originator 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 5. SERVICER ADVANCES AND SELLER'S SUPPORT
5.01 Late Lease Payments.
(a) On each Determination Date, the Servicer may, but will not be
required to, advance and remit to the Trustee for deposit in the Collection
Account, 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 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.
(b) On each Determination Date, the Servicer will be required to
advance and remit to the Trustee for deposit in the Residual Account, 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 "Residual Servicer
Advance") equal to the difference between distributions due to be made
pursuant to Section 3.02(b)(i)-(iv) and the amounts then on deposit in the
Residual Account and the Liquidity Reserve Account. The Servicer will be
reimbursed for Residual Servicer Advances from funds in the Residual Account
in accordance with the Indenture on the second following Payment Date.
5.02 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
11 hereof (if the Seller is then entitled to substitute Leases and Equipment
in accordance with the provisions of Section 11.01 hereof) on or before the
second Business Day prior to the next succeeding Payment Date, (b) repurchase
from the Trust 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
11:00 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 Trust one or more
Additional Leases in consideration of the proceeds thereof in accordance with
Section 11 hereof. Unless the Seller takes one of the actions set forth in the
prior sentence, the Servicer will not permit a voluntary termination of a
Lease prior to its stated maturity unless it receives a payment in connection
with such termination equal to at least the Lease Repurchase Amount. Any Early
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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 5.02 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 11 hereof
or the Lease Purchase Amount has been paid. 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 (u) and
the requirements of Section 11 hereof.
5.03 Indemnification.
The Seller, as Seller and in its capacity as Servicer, agrees to
indemnify and hold harmless the Trust, 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 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 5, to make any payment with respect to principal or interest on the
Notes or to reimburse the Trust for any payments on account of the Notes. This
Section 5.03 shall bind any successor Servicer hereunder.
5.04 Repurchases; Other Payments.
(a) In the event that (i) any of the representations or warranties
made by the Originator 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 Originator
(other than any such action or inaction of the Originator, 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 Originator 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 Originator is given notice thereof by the Trust or the
Trustee or the date on which the Originator otherwise first has notice
thereof, the Originator 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 5.04(a)(i) and (ii), an
amount equal to the Repurchase Amount, and simultaneously with such
repurchase,
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the Originator shall reimburse the Servicer for all amounts, if any,
theretofore advanced by the Servicer pursuant to Section 5.01 with respect to
such Lease. Without limiting the generality of the foregoing, it is agreed and
understood that for purposes of this Section 5.04, 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, Termination Payment or
Booked Residual Value under any Lease shall be deemed to be material.
(b) By the Closing Date, the Originator agrees to obtain and provide
to the Trustee UCC searches against it from the central filing offices in New
Jersey confirming the absence of any UCC filings (other than those in the
process of being released pursuant to releases delivered on the Closing Date)
against the Originator 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 Seller or the Trust as the purchaser of the Leases or
the Trustee as secured party. In the event the Originator fails to provide any
such searches required by the preceding sentence of this Section 5.05(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 Originator 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 Originator's obligations under this Section 5.04 are the
full recourse obligations of the Originator and shall in no way be limited or
discharged by the application of any funds constituting part of the Trust
Estate.
5.05 Payment Advices.
Each payment 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, and the proper application pursuant to
the provisions of the Indenture of the amounts being paid.
SECTION 6. INFORMATION TO BE PROVIDED
6.01 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
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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 5.01 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, 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
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 two certificates signed by an officer of
the Servicer (a "Receivable Servicing Report" and a "Residual Servicing
Report," collectively "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,
Warranty Payment, recoveries related to Non-Performing Leases, Residual
Realizations, Similar Transaction Payments and Other Lease Payments received
by the Servicer and deposited in the Collection Account and Residual 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 or Residual Account, as applicable, 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 Warranty 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 5.01 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 5.01
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
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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 or Residual Account other than on a Payment Date, 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,
recoveries related to Non-Performing Leases, Warranty Payment, Casualty
Payment, Termination Payment or Residual Realizations, and (iii) identifying
the lease or leases to which such amounts relate.
6.02 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, 1998, 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 6.01 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 100 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 7. THE SERVICER
7.01 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 Trust, 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. [Rating Agency Notice]
7.02 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 Trust, 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.
7.03 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 10.02 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 10.02 hereof, or (ii) affect the Seller's obligations pursuant to
Section 4 hereof.
7.04 Financial and Business Information.
The Servicer will deliver to the Trust 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:
(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,
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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;
(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
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(f) Requested Information - with respect to the Class E Notes and
the Class R 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.
7.05 Officers' Certificates.
With each set of financial statements delivered pursuant to
Section 7.04, 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.
7.06 Inspection.
The Servicer will permit, on reasonable prior notice, the
representatives of the Trust and the Trustee and the holder of any 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 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 Trust, 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 7.06 shall be borne by the Servicer.
7.07 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 8. THE ORIGINATOR
8.01 Merger or Consolidation of the Originator.
The Originator 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
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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
Originator's duties under this Sales and Servicing Agreement.
The Originator 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 Originator, shall execute and deliver to
the Seller, the Trust, 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 Originator 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
Originator hereunder.
8.02 Control of Seller.
So long as any of the Notes or the other obligations secured by the
Indenture remain outstanding, the Originator will not sell, pledge or
otherwise transfer any of the ownership interest in the Seller held by the
Originator.
8.03 Financial and Business Information.
The Originator will deliver to the Trust 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 Originator
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 Originator'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 Originator'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 condition (financial
or otherwise) of the Originator, a
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written notice specifying the nature of such investigation or proceeding and
what action the Originator 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
Originator 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 Originator setting forth details as to
such Reportable Event and the action which the Originator 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 Trust 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 Originator describing
such event or condition; (v) promptly and in no event more than ten days after
receipt thereof by the Originator or any Related Person, each notice received
by the Originator 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 Originator 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
Originator 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.
8.04 Officers' Certificates.
With each set of financial statements delivered pursuant to Section
8.03, the Originator will deliver an Officers' Certificate stating that 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 Originator during the
period covered by the income statements then being furnished and, so long as
the Originator 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 Originator has taken and is
taking with respect thereto.
8.05 Inspection.
The Originator will permit, on reasonable prior notice, the
representatives of the Trust, 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 Originator, to make copies and extracts therefrom, and to
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discuss the Originator's affairs, finances and accounts with its officers,
employees and independent public accountants (and by this provision the
Originator authorizes said accountants to discuss the finances and affairs of
the Originator) 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 Originator or the Originator's performance of its duties and
obligations hereunder. Any expense incident to the exercise by the Trust, the
Trustee or any holder of the Notes during the continuance of any default by
the Originator in any of its obligations hereunder of any right under this
Section 8.05 shall be borne by the Originator.
8.06 Books and Records.
The Originator will clearly mark its books and records to reflect each
sale of a Lease and contribution of the Equipment pursuant to this Agreement.
8.07 Communications.
The Originator will reply to all inquiries by third parties with
respect to the transactions contemplated by this Agreement by indicating
that it has sold the Leases and contributed its right, title and interest in
the related Equipment and that the Trust now holds title to the Leases and
such interest in the related Equipment.
SECTION 9. THE SELLER
9.01 Merger or Consolidation of the Seller.
The Seller will keep in full force and effect its existence, rights
and franchise as a limited liability company under the laws of its
jurisdiction of incorporation and will preserve its qualification to do
business as a foreign limited liability company 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.
9.02 Control of Trust.
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 its beneficial interest in the Trust held by the
Seller or (ii) vote such beneficial interests in favor of any amendment to or
alteration of the certificate of formation of the Trust.
9.03 Financial and Business Information.
The Seller will deliver to the Trust 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):
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(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) 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, 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;
(c) Requested Information - with reasonable promptness, any other
data and information which may be reasonably requested from time to time.
9.04 Inspection.
The Seller will permit, on reasonable prior notice, the representatives
of the Trust, 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 Trust, 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 9.04 shall be borne by the Seller.
9.05 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
Trust.
9.06 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 Trust the Leases and contributed to the Trust its right, title and
interest in the related Equipment.
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SECTION 10. DEFAULT
10.01 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, Residual Account or other applicable account in
accordance with the terms of the Indenture 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.
(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
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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 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.
10.02 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
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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.
10.03 Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.02 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 5 hereof which shall survive any such termination
as above provided) and shall be entitled to receive from the Trust the
Servicing Fee provided for in Section 4.04 hereof; provided that the Trustee
shall in no way be responsible or liable for any action or actions of the
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 5 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, Fitch 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 4.04 hereof. The Trustee shall provide the Rating Agencies
with prior written notice of the appointment of any successor to the Servicer.
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10.04 Servicer to Cooperate.
The Servicer hereby agrees to cooperate with the Trustee or any
successor to the Servicer appointed in accordance with Section 10.03 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 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.
10.05 Notification to Noteholders.
Upon any such termination or appointment of a successor to the
Servicer, the Trust 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.
10.06 Remedies Not Exclusive.
Nothing in the preceding provisions of this Section 10 shall be
interpreted as limiting or restricting any rights or remedies which the Trust,
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 7.02 hereof.
SECTION 11. SUBSTITUTION AND ADDITION OF LEASES
11.01 Substitution and Addition.
(a) Subject to the satisfaction of the requirements set forth in
Section 11.01(b) hereof, the Originator 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 11 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;
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(ii) the aggregate Discounted Present Value of the
Non-Performing Leases that are Predecessor Leases shall not in the
aggregate 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 5 and Section 11.01(b) hereof, in the event of an Early Lease
Termination which has been prepaid in full, the Trust 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 4.02 thereof, the aggregate
Booked Residual Value of such Leases must be not less than 100% of
the Booked Residual Value of the Leases added, substituted or
adjusted since the Issuance Date.
(ii) the final payment on such Substitute Lease or Additional
Lease must be on or prior to May 2005.
(iii) after giving effect to such additions and substitutions
and any adjustments pursuant to Section 4.02 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
(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) after giving effect to such adjustments, additions, and
substitutions pursuant to Section 11, the weighted average remaining
term of the Performing Leases must not be greater than the weighted
average remaining term of the Performing Leases prior to such
adjustment, addition, and substitution.
(vi) such Additional Lease or Substitute Lease was originated
in the Healthcare Division, the Commercial and Industrial Division
and the Business Technology Division or its predecessors or
successors.
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(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.
11.02 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 pursuant to Section 11.01 of Substitute Leases for
Predecessor Leases or addition of Additional Leases for Early Termination
Leases which have been prepaid in full 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 Leases
or Predecessor Leases as may be needed for the Servicer to prepare its monthly
reports pursuant to Section 6.01 hereof and to otherwise carry out its duties
as servicer hereunder.
(b) Subject to the provisions of Section 11.03, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section 11.02(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Lease Payment Period (i) the Seller assigned to the
Trust pursuant to Section 11.01 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 11.01 hereof, (ii)
the Seller transferred to the Trust, 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 Trust assigned and transferred to the Seller,
without representation or warranty, all of the Trust'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 Trust's interest in such Equipment, including the Trust's
security interest in any Equipment which is not owned by the Trust). 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 Trust pursuant to Section 11.01 hereof and
the Trust shall
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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 11.01 hereof.
11.03 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 6.01 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 11.01 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 11.01 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 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 5.04
hereof.
11.04 Seller's and Servicer's Subsequent Obligations.
Upon any substitution of Leases in accordance with the provisions of
this Section 11, 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 12. ASSIGNMENT
12.01 Assignment to Trustee.
It is understood that this Sales and Servicing Agreement and all
rights of the Trust hereunder will be assigned by the Trust 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.
12.02 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
Trust, 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.
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SECTION 13. NATURE OF OBLIGATIONS AND SECURITY THEREFOR
13.01 Obligations Absolute.
The obligations of the Originator and Seller hereunder, and the rights
of the Trustee, as assignee of the Trust, in and to all amounts payable by the
Originator or the Seller hereunder, shall be absolute and 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 Originator or the Seller may have against the Servicer, the Trust,
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
Trust, the Originator, 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 Trust, the Originator, 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 Trust 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 Trust, the Servicer, the
Trustee, or any holder of the Notes to the Originator, the Seller or any other
Person or by reason of any insolvency, bankruptcy, or similar proceedings by
or against the Originator, the Seller, the Servicer, the Trust, 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 Originator or
the Seller hereunder and all amounts payable by the Originator or 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.
13.02 Security for Obligations.
As security for the full and timely performance by the Originator, the
Seller and the Servicer of each of its obligations hereunder, and by the Trust
of each of its obligations hereunder and under the Notes and the Indenture,
each of the Originator and 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 either 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 Originator or 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 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 Originator or the Seller.
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13.03 Further Assurances; Financing Statements.
Each of the Originator, 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 Trust 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 Trust 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 Originator and 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 Trust or the Trustee
may request to protect and preserve the assignments and security interests
granted by this Agreement with respect to the Leases.
SECTION 14. 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 Trust 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 11 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.
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 Trust's Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes and Class A-4 Notes.
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Class A-1 Notes - the Trust's ______% Class A-1 Lease-Backed Notes,
Series 1998-A.
Class A-2 Notes - the Trust's ______% Class A-2 Lease-Backed Notes,
Series 1998-A.
Class A-3 Notes - the Trust's ______% Class A-3 Lease-Backed Notes,
Series 1998-A.
Class A-4 Notes - the Trust's ______% Class A-4 Lease-Backed Notes,
Series 1998-A.
Class B Notes - the Trust's ______% Class B Lease-Backed Notes, Series
1998-A.
Class C Notes - the Trust's ______% Class C Lease-Backed Notes, Series
1998-A.
Class D Notes - the Trust's ______% Class D Lease-Backed Notes, Series
1998-A.
Class E Notes - the Trust's ______% Class E Lease-Backed Notes, Series
1998-A.
Class R-1 Notes - the Trust's ______% Class R-1 Lease-Backed Notes,
Series 1998-A.
Class R-2 Notes - the Trust's ______% Class R-2 Lease-Backed Notes,
Series 1998-A.
Closing Date - August __, 1998, 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.
Trust - the corporation so identified in the first paragraph of this
Sales and Servicing Agreement and any successor corporation.
Corporate Trust Office - Section 1.01 of the Indenture.
Cut-Off Date - close of business on June 30, 1998.
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.
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Early Termination Lease - a lease which has been prepaid prior to its
original stated maturity.
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
Trust'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 Trust and the perfected security interest of the
Trustee in the Leases and the 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.
Granted Assets - The assets of the Granting Clause of the Indenture.
Indemnified Party - Section 5.03 hereof.
Indenture - the Indenture dated as of the date hereof, between the
Trust 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 15.01 hereof.
Issuance Date - Augus11, 1998.
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.
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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 sum of (i) the Discounted Present Value of the
Lease as of the prior Payment Date plus any amounts previously due and unpaid,
and (ii) the product of (x) the Initial ADRB and (y) the ratio, as of the
Cut-Off Date, that the Booked Residual Value of the Lease bears to the
aggregate Booked Residual Value of all Leases.
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.
Liquidity Reserve Account - Section 1.01 of the Indenture.
Maintenance Charges - Section 1.01 of the Indenture.
Nominal Buy-Out Lease - each Lease identified on Exhibit A hereto as
having an estimated residual value of $10 or less in the column under the
heading "RESIDUAL".
Non-Performing Lease - Section 1.01 of the Indenture.
Nonrecoverable Advance - any advance made or to be made by the Servicer
pursuant to Section 5.01 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, Class C Notes, Class D Notes,
Class E Notes and Class R 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.
45
<PAGE>
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 15th day of each calendar month (or the next
Business Day thereafter if such day is not a Business Day).
Predecessor Lease - Section 11.01 hereof.
Pension Plan - Section 2.13 hereof.
Person - an individual, partnership, corporation, joint venture,
association, limited liability Trust, trust (including any beneficiary
thereof) or unincorporated organization, or a government or agency or
political subdivision thereof.
Prime Rate - the Manufacturers and Traders Trust Trust prime lending
rate.
Private Placement Memorandum - the final Private Placement Memoranda
used in connection with the private offering of the Class E Notes and the Class
R Notes.
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, the Class B Notes, the Class C Notes
and Class D 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, Fitch IBCA, Inc. or Duff & Phelps Credit Rating Co.
Registration Statement - the registration statement (File No. ________)
filed with the Securities and Exchange Commission for the registration of the
Class A Notes, the Class B Notes, the Class C Notes and the Class D 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.
46
<PAGE>
Reserve Account - Section 1.01 of the Indenture.
Residual Account - Section 1.01 of the Indenture.
Residual Realization - Section 1.01 of the Indenture.
Residual Servicing Fee - Section 4.04(a) hereof.
Seller - Copelco Capital Funding LLC 98-1, a Delaware limited liability
company, 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 10.01 hereof.
Servicing Fee - Section 4.04(a) hereof.
Servicing Report - Section 6.01(b) hereof.
Similar Transaction Amount - Section 1.01 of the Indenture.
Similar Transaction Payments - Section 1.01 of the Indenture.
Substitute Lease - Section 11.01(a) hereof.
Stated Maturity - Section 1.01 of the Indenture.
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 Trust, and any successor
thereto, as trustee under the Indenture.
Underwriting Agreement - the Underwriting Agreement dated August __,
1998 among the Trust, First Union Capital Markets, Lehman Brothers and
Prudential Securities Incorporated for the purchase and sale of the Class A
Notes, the Class B Notes, the Class C Notes and the Class D 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.
47
<PAGE>
SECTION 15. INTER-COMPANY LOANS
15.01 Inter-Company Loans.
With the purchase of the Leases, the Trust has acquired the right to
hold and apply in accordance with the provisions of certain of the Leases,
security deposits. The Trust may from time to time, to the extent permitted by
law, lend such security deposits and any amounts disbursed to the Trust
pursuant to Sections 3.03(b), 3.04(b) or 6.06 of the Indenture to the
Originator (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 Trust and the Originator may agree.
SECTION 16. MISCELLANEOUS
16.01 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.
16.02 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.
16.03 Successors and Assigns.
This Sales and Servicing Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Originator, the Trust, 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.
16.04 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).
16.05 No Proceedings.
The Originator, the Seller and the Servicer, each hereby agree that it
will not, directly or indirectly, institute, or cause to be instituted,
against the Trust any proceeding of the
48
<PAGE>
type referred to in Section 6.01(b) or (c) 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.
16.06 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 mail return receipt requested, or
sent by private courier or confirmed telecopy, in case of the Originator, to
East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey 08054-5400,
Attention: Stephen Shippie with a copy to the General Counsel (telecopy:
609-273-9288) and in the case of the Seller, the Trust, 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 16.06.
16.07 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.
16.08 Nonpetition Covenant.
The Originator shall not petition or otherwise invoke the process of
any Governmental Authority for the purpose of commencing or sustaining a case
against the Trust 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 Trust or any substantial part of
its respective property, or ordering the winding up or liquidation of the
affairs of the Trust. Neither the Originator nor the Seller shall petition or
otherwise invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Trust 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
Trust or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of the Trust.
49
<PAGE>
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:
------------------------------------
Name:
Title:
COPELCO CAPITAL FUNDING LLC 98-1
By: COPELCO CAPITAL FUNDING CORP. XI,
as manager
By:
--------------------------------
Name: STEPHEN W. SHIPPIE
Title: VICE PRESIDENT
COPELCO CAPITAL FUNDING TRUST 1998-A
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee
By:
-----------------------------
Name:
Title:
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:
-----------------------------
Name: RUSSELL T. WHITLEY
Title: ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
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 TRUST 1998-A HAS BEEN ASSIGNED TO AND IS SUBJECT TO A
SECURITY INTEREST IN FAVOR OF MANUFACTURERS AND TRADERS TRUST TRUST, AS
TRUSTEE, UNDER AN INDENTURE DATED AS OF AUGUST 1, 1998, FOR THE BENEFIT OF THE
PERSONS REFERRED TO THEREIN.
$_________ [Date]
COPELCO CAPITAL, INC., a Delaware corporation (the "Maker"),
with its principal office at , FOR VALUE RECEIVED, hereby promises to pay to
the order of Copelco Capital Funding Trust 1998-A, a trust with its offices
located at __________________ or its assignee (the "Payee"), for its account, at
__________________, the principal sum of _______________ Dollars
($____________) (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 August __, 1998, 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.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
COPELCO CAPITAL, INC.
By
-------------------------------------
B-1
<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>
<PAGE>
EXHIBIT C
Form of Receivables 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 (less than) 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
A/9 Casualty and Termination Payments
A/10 Servicer Advances
A/11 Total Receipts
C-2
<PAGE>
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
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 Class D Interest Paid ____%
C/8 Class E Interest Paid ____%
C/9 Beginning Class A-1 Note Balance
C/10 Class A-1 Note Value Target (___% of 1/9)
C/11 Class A-1 Principal Paid
C/12 Beginning Class A-2 Note Balance
C/13 Class A-2 Note Value
C/14 Ending Class A-2 Note Balance
C/15 Class A-2 Principal Paid
C/16 Beginning Class A-3 Note Balance
C/17 Class A-3 Note Value
C/18 Ending Class A-3 Note Balance
C/19 Class A-3 Principal Paid
C/20 Beginning Class A-4 Note Balance
C/21 Class A-4 Note Value
C/22 Class A-4 Principal Paid
C/23 Ending Class A-4 Note Balance
C/24 Beginning Class B Note Balance
C/25a Class B Note Value Target (__% of 1/9)
C/25b Class B Note Value Floor (__% of $__________ + Cum. Losses-C/12-6/4)
C/26 Class B Principal Paid
C/27 Ending Class B Note Balance
C/28 Beginning Class C Note Balance
C/29a Class C Note Value Target (__% of 1/9)
C/29b Class C Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C-3
<PAGE>
C/30 Class C Principal Paid
C/31 Ending Class C Note Balance
C/32 Beginning Class D Note Balance
C/33 Class D Note Value Target (__% of 1/9)
C/34 Class D Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/35 Class D Principal Paid
C/36 Ending Class D Note Balance
C/37 Beginning Class E Note Balance
C/38 Class E Note Value Target (__% of 1/9)
C/39 Class E Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/40 Class E Principal Paid
C/41 Ending Class E Note Balance
C/42 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>
FORM OF RESIDUAL SERVICING REPORT
[to be provided]
C-1
<PAGE>
Exhibit 10.2
COPELCO CAPITAL FUNDING TRUST 1998-A
___% CLASS E LEASE-BACKED NOTES
___% CLASS R-1 LEASE RESIDUAL BACKED NOTES
___% CLASS R-2 LEASE RESIDUAL BACKED NOTES
SERIES 1998-A
PLACEMENT AGENT AGREEMENT
August __, 1998
FIRST UNION CAPITAL MARKETS CORP.
301 South College Street
One First Union Center, TW-6
Charlotte, North Carolina 28288
Ladies and Gentlemen:
Copelco Capital Funding Trust 1998-A, a business trust
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 $________ of ___% Class E Lease-Backed Notes,
$______ of ___% Class R-1 Lease Residual Backed Notes and $______ of ___%
Class R-2 Lease Residual Backed Notes (collectively, the "Class R Notes")
Series 1998-A (the "Notes"). The Notes will be issued on August __, 1998 or
such other date as we shall mutually agree upon (the "Closing Date") pursuant
to an Indenture, dated as of August __, 1998 (the "Indenture"), between the
Issuer and Manufacturers and Traders Trust Company (the "Trustee"). The Notes
are more fully described in the Private Placement Memorandum (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 business and healthcare equipment lease contracts, including
all payments due thereunder (the "Leases") and certain interests in the
underlying equipment (the "Equipment"). The Issuer has also authorized the
issuance of $________ aggregate principal amount of the Issuer's ___% Class
A-1 Lease-Backed Notes, Series 1998-A (the "Class A-1 Notes"), $_______
aggregate principal amount of the Issuer's ___% Class A-2 Lease-Backed Notes,
Series 1998-A (the "Class A-2 Notes"), $___________ aggregate principal amount
of the Issuer's ___% Class A-3 Lease-Backed Notes, Series 1998-A (the "Class
A-3 Notes"), $________ aggregate principal amount of the Issuer's ___% Class
A-4 Lease-Backed Notes, Series 1998-A (the "Class A-4 Notes"; together with
the
<PAGE>
Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the "Class A Notes")
$________ of the ___% Class B Lease-Backed Notes, Series 1998-A (the "Class B
Notes") $_______ of the ___% Class C Lease-Backed Notes, Series 1998-A and
$________ of the ___% Class D Leased-Backed Notes Series 1998-A. The Class A
Notes and the Class B Notes are being sold in a public offering and are not
included in this private placement. A copy of the Prospectus dated August __,
1998 (the "Prospectus") relating to such public offering is included in the
Private Placement Memorandum (as defined below). Capitalized terms used and
not defined herein shall have the meanings specified in the Indenture.
Section 2. Appointment of Placement Agent; Placement of
Notes.
(a) The Issuer hereby appoints you as exclusive Placement
Agent in connection with the placement of all of the Notes (the "Placement
Agent") for the period (the "Offering Period") from the date hereof until such
date as may be agreed between us (the "Offering Termination Date"). Subject to
the performance in all material respects by the Issuer of its obligations to
be performed hereunder, and to the completeness and accuracy in all material
respects of all of the representations and warranties of the Issuer and
Copelco contained herein, you hereby accept such agency and agree on the terms
and conditions herein set forth to purchase, or to find qualified purchasers
("Purchasers") for, all of the Notes on the Closing Date. Your agency
hereunder is not terminable, except as provided herein, by the Issuer or
Copelco without your permission and shall continue until the close of business
on the Offering Termination Date.
(b) In the event the offering is commenced but no Notes
shall have been subscribed for prior to the Offering Termination Date, your
agency and this Agreement shall terminate without obligation on your part or
on the part of the Issuer except as provided in Section 7 hereof and except
that the indemnification and contribution referred to in Section 8 hereof
shall continue after such termination of this Agreement.
Section 3. Delivery. Delivery of the Notes to the purchasers
thereof (the "Purchasers") 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 the Closing Date. The denominations of the Notes to be delivered and the
name in which each such Note is to be registered will be set forth in a notice
to be delivered by you on behalf of the Purchasers to the Trustees. The Issuer
agrees to have the Notes available for inspection, checking and packaging by
the Placement Agent in New York, New York, not later than 1:00 P.M., New York
City time, on the Business Day prior to the Issuance Date.
Section 4. Representations and Warranties.
(a) The Issuer hereby represents and warrants to, and agrees
with you, as follows:
(i) The Issuer, with your assistance, will prepare and
furnish to you by the Closing Date a copy of a Private Placement
Memorandum dated August __, 1998 relating to the Class E Notes and a copy
of a Private Placement Memorandum dated August __, 1998 related to the
Class R Notes (collectively, as supplemented and amended, the "Private
Placement Memorandum") relating to the Notes. The Private Placement
2
<PAGE>
Memorandum does not, as its date, and as of the date hereof will not,
contain any untrue statement of a material fact or omit 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;
provided, however, that the Issuer makes no representations or warranties
as to the Underwriting Information (as defined in Section 8(b) hereof).
(ii) This Agreement has been duly authorized, executed and
delivered by the Issuer and constitutes a legal, valid and binding
agreement of the Issuer enforceable in accordance with its terms, except
that the provisions hereof relating to indemnification of the Placement
Agent may be subject to limitations of public policy.
(iii) 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.
(iv) The issuance of the Notes has been duly authorized by
the Issuer and, when duly and validly executed, authenticated and
delivered in accordance with the Indenture, 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.
(v) The issue and sale of the 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 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 state securities or Blue Sky
laws in connection with the purchase of the Notes by the Purchasers.
(vi) 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").
(vii) 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 Placement Agent and the Purchasers
may rely thereon as if such representations and warranties were fully set
forth herein.
3
<PAGE>
(b) Copelco hereby represents and warrants to and agrees
with the Placement Agent as follows:
(i) This Agreement has been duly authorized, executed and
delivered, the Sales and Servicing Agreement has been duly authorized,
executed and delivered, 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 with their respective terms, except that the provisions hereof
relating to indemnification of the Placement Agent 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 such 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 state securities
or Blue Sky laws in connection with the purchase of the Notes by the
Purchasers.
(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 Placement Agent and the
Purchasers may rely thereon as if such representations and warranties
were fully set forth herein.
(iv) Copelco represents and warrants it has delivered to the
Placement Agent 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 Final Memorandum, 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 Notes and with the transfer of
the Leases and the Equipment, have been paid or will be paid by Copelco.
(c) Each of the Issuer and Copelco represents and warrants
to you that 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 (i) asserting the
invalidity of this Agreement, the Sales and Servicing Agreement, the Indenture
or the Notes, (ii) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions
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contemplated by this Agreement, the Sales and Servicing Agreement or the
Indenture or (iii) seeking any determination or ruling that might materially
and adversely affect (A) its performance of its obligations under this
Agreement, the Sales and Servicing Agreement or the Indenture (as applicable)
or (B) the validity or enforceability of this Agreement, the Sales and
Servicing Agreement, the Indenture or the Notes.
(d) Each of the Placement Agent represents and warrants to,
and agrees with Copelco and the Issuer that:
(i) It understands that the Notes have not been registered
under the 1933 Act, in reliance upon the exemption provided in Section
4(2) of the 1934 Act, and it hereby covenants and agrees that it will not
offer or sell the Notes in a manner that would cause such exemption to be
inapplicable. Such Placement Agent has not utilized and will not utilize
any form of general solicitation or general advertising in connection
with the placement of the Notes, including any advertisement, article,
notice or other communication published in any newspaper, magazine or
similar medium or broadcast over television or radio, or conduct any
seminar or meeting with respect to the Notes whose attendees have been
invited by general solicitation or advertising.
(ii) The Notes will only be offered and sold by the
Placement Agent to Purchasers to whom the Placement Agent have delivered
a Final Memorandum.
(iii) It is understood that Copelco and the Issuer have only
authorized the Placement Agent to distribute the Private Placement
Memorandum, the information specifically referred to therein and any
other documents authorized by Copelco or the Issuer and each of the
Placement Agent agrees and covenants to Copelco and the Issuer that it
shall offer and sell the Notes only pursuant to delivery of such
materials.
(iv) The Placement Agent shall advise Copelco and the Issuer
of the jurisdictions in which it desires to sell the Notes.
Section 5. Covenants of the Issuer and Copelco. The Issuer
and Copelco, jointly and severally, hereby covenant and agree with you as
follows:
(a) The Issuer will promptly advise the Placement Agent of
the receipt by the Issuer of any notification with respect to the suspension
of the qualification of the Notes for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The Issuer will
not prepare any amendment or supplement to the Final Memorandum to which the
Placement Agent reasonably object.
(b) If, at any time when a Final Memorandum relating to the
Notes is to be delivered to a potential Purchaser, any event occurs as a
result of which the Final Memorandum 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, in
the opinion of the Placement Agent, to supplement such Final Memorandum, the
Issuer promptly will prepare and deliver to the Placement Agent or any such
potential Purchaser, subject to paragraph (a) of this Section 5, a supplement
which will correct such statement or omission.
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(c) The Issuer understands that pursuant to its Subscription
Agreement each potential Purchaser may request documents or information in
addition to those referred to in Section 5(b) relating to Copelco, the Issuer,
and the Leases. Copelco will provide to you and such Purchaser all such
documents and opportunities to meet with officials of Copelco as such
potential Purchasers shall reasonably request or have requested; it being
understood that all such documents and disclosures may be subject to
appropriate confidentiality agreements. Upon request, Copelco and the Issuer
will make available to Noteholders and to the Placement Agent such information
as will satisfy the provisions of Rule 144A under the Securities Act in order
to effect resales of the Notes pursuant thereto.
(d) Copelco and the Issuer will furnish to the Placement
Agent, so long as delivery of a placement memorandum is desired by the
Placement Agent, as many copies of the Private Placement Memorandum relating
to the Notes and any supplement thereto as the Placement Agent may reasonably
request.
(e) Copelco and the Issuer will take all reasonable actions
requested by the Placement Agent to arrange for the qualification of the Notes
for sale under the laws of such jurisdictions within the United States and as
the Placement Agent may designate, will maintain such qualifications in effect
so long as required for the completion of the placement of the Notes;
provided, that the Issuer shall not be required to register the Notes under
the Securities Act 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 Notes are outstanding, the Issuer and
Copelco shall deliver to the Placement Agent by first-class mail and as soon
as practicable a copy of all reports and notices delivered to the Trustee or
the Noteholders under the Indenture.
(g) For so long as the Notes are outstanding, the Issuer and
Copelco will furnish to the Placement Agent 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(e) 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 Placement Agents' Obligation. The
obligations of the Placement Agent to act as Placement Agent for the Notes on
the Closing 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 Closing Date, signed by
its President and its Chief Financial Officer to the effect that:
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(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;
(iii) nothing has come to such officer's attention that
would lead him to believe that the Final Memorandum 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 any notification with
respect to the suspension of the qualification of the Notes for sale in
any jurisdiction or the envision or 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
Closing Date and reasonably satisfactory in form and substance to the
Placement Agent 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 and the Indenture
and the transactions contemplated herein and therein; (ii) the due
authorization, execution, delivery and enforceability of this Agreement, the
Sales and Servicing Agreement and the Indenture, as applicable, by the Issuer
and Copelco; (iii) each of this Agreement, the Sales and Servicing Agreement
and the Indenture 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 Indenture and the Sales and Servicing Agreement,
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 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) (other than
with respect to financial data, as to which such counsel need not express an
opinion) nothing has come to such counsel's attention that leads such counsel
to believe that the Final Memorandum (as of its date or the Closing Date)
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the
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circumstances under which they were made, not misleading; (viii) in the event
a court disregarded the intent of the parties and characterized the transfers
of the Leases and the Equipment (or interests therein) by Copelco to the
Issuer as a pledge of collateral rather than as a sale or absolute assignment,
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; and (ix) assuming no prior financing statements covering
the Leases are in effect, 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 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. 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 Placement Agent.
(c) The Placement Agent shall have received from Dewey
Ballantine, special counsel for the Placement Agent, such opinion or opinions,
dated the Issuance Date, with respect to the validity of the Notes, the Final
Memorandum, true sale, nonconsolidation and other related matters as the
Placement Agent may require.
(d) On the date hereof and at the Closing Date, KMPG-Peat
Marwick shall have furnished to the Placement Agent a letter or letters, dated
the date of this Agreement and the Closing Date, respectively, in form and
substance satisfactory to the Placement Agent.
(e) The Notes shall have been rated at least BBB+ by Duff &
Phelps Credit Rating Co. ("DCR") and Fitch Investors Service, L.L.P.
("Fitch"), respectively, which rating 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 Closing Date,
as the case may be, and satisfactory in form and substance to the Placement
Agent and counsel for the Placement Agent 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 binding obligation of the Trustee, enforceable against
the Trustee in accordance with its terms (subject to customary and usual
exceptions) and (iv) the execution, delivery and performance of the Indenture
will not conflict with the Trustee's organizational documents.
(g) 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.
(h) The issuance and sale of the Class A Notes shall have
occurred.
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Section 7. Fees and Expenses. In consideration of the
Placement Agent' services in acting as exclusive Placement Agent for the
placement of the Notes on a firm commitment basis, the Company hereby agrees
to pay to the Placement Agent a fee in an amount equal to 0.86% of the Initial
Principal Amount. In the event that (x) no closing of the sale of the Notes
occurs by the Closing Date through no fault of the Issuer or Copelco or (y)
the Placement Agent 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 Placement Agent
shall be limited to the reimbursement of the Placement Agent' expenses
incurred through the date of termination for its reasonable out-of-pocket and
incidental expenses. In addition, whether or not the Notes are issued or sold:
(a) Copelco shall pay the reasonable fees and expenses
associated with the transactions contemplated hereby not paid by the Placement
Agent in accordance with the provisions of Section 7(b), including, without
limitation, the following fees and expenses:
(i) Rating Agency fees payable to DCR and Fitch with
respect to each of their ratings of the Notes;
(ii) Fees charged by the firm of independent public
accountants referred to in Section 6(d);
(iii) Filing fees in connection with the transactions
contemplated hereby;
(iv) Fees and expenses of counsel to the Placement Agent;
(v) Trustee's fees and fees of counsel to the Trustee;
(vi) the costs and expenses of printing any Private
Placement Memorandum;
(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 Notes;
(viii) all expenses in connection with the qualification of
the Notes under state securities laws as provided in Section 4(a)(v),
including the fees and disbursements of counsel in connection with the
Blue Sky Survey;
(ix) the filing fees incident to securing any required
review with the National Association of Securities Dealers, Inc.;
(x) the cost of preparing the Notes;
(xi) the cost or expenses of any transfer agent or
registrar; and
(xii) 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
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the Placement Agent in the event of the Placement Agent' failure to perform in
accordance with this Agreement.
(b) It is understood and agreed that, except as provided in
Sections 8 and 9, the Placement Agent will pay securities transfer taxes on
resale of any of the Notes by them, and any expenses connected with any
placements they may make.
Section 8. Indemnification and Contribution.
(a) The Issuer and Copelco, jointly and severally, will
indemnify and hold harmless each Placement Agent against any losses, claims,
damages or liabilities, joint or several, to which such Placement Agent 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 any Private Placement Memorandum, 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 each Placement Agent for any legal or other expenses reasonably
incurred by such Placement Agent 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 Private
Placement Memorandum or any such amendment or supplement in reliance upon and
in conformity with the Underwriting Information.
(b) The Placement Agent 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 Private Placement Memorandum, 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 Private Placement Memorandum 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
Placement Agent 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 Prospectus, which is included with the Private Placement
Memorandum, constitute the only information furnished in writing by or on
behalf of the Placement Agent for inclusion in the Private Placement
Memorandum (the "Underwriting Information"), and each of you confirm that such
statements are correct.
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(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 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 Placement Agent on the other from
the offering of the Notes. If, however, the allocation provided by the
immediately preceding
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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 respective Placement Agent 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 each of the Placement Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Issuer and Copelco
bear to the total commissions received by the Placement Agent. 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 or one or both of the Placement Agent 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
Placement Agent 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), neither of the Placement Agent shall be
required to contribute any amount in excess of the fee paid to the respective
Placement Agent pursuant to Section 7 hereof. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(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 the Placement Agent within the meaning of
the Securities Act; and the obligations of the Placement Agent under this
Section 8 shall be in addition to any liability which the Placement Agent 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 Placement Agent set
forth or made pursuant to this Agreement will remain in full force and effect,
notwithstanding any investigation heretofore or hereafter made by or on behalf
of the Issuer, Copelco or the Placement Agent, and such representations,
warranties and agreements made by the Issuer and Copelco shall survive the
delivery and payment for the Notes. The provisions of Section 7 and 8 shall
survive the termination or cancellation of this Agreement.
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(a) No other person will have any right or obligation
hereunder, except that the provisions of this Agreement, including, without
limitation, the representations and warranties and the covenants and
agreements of the Issuer and Copelco contained herein are intended to be for
the benefit of all Purchasers and shall be enforceable against Copelco by any
such Purchaser, whether or not an express assignment to such Purchaser of
rights under this Agreement has been made by you, any intervening Purchaser or
any of your or their successors and assigns.
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 Closing 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 Notes or enforce contracts
for the sale of the 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
Placement Agent.
(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 Placement
Agent' obligations hereunder may be immediately cancelled by the Placement
Agent 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 address 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 and if
to the Issuer addressed to the Issuer at Wilmington Trust Company, c/o
Wilmington Trust Company, 1100 North Market Street, Rodney Square North,
Wilmington, Delaware 19890 with a copy to Copelco or to such other address as
Copelco or the Issuer may have designated in writing to you.
13
<PAGE>
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 Placement Agent and its successors and assigns.
Section 13. 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 14. 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 TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
Section 15. 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.
14
<PAGE>
Section 16.
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 you, and the
Issuer and Copelco.
Very truly yours,
COPELCO CAPITAL, INC.
By:
----------------------------------
Name: STEPHEN V. SHIPPIE
Title: VICE PRESIDENT
COPELCO CAPITAL FUNDING TRUST 1998-A
By: WILMINGTON TRUST COMPANY
By:
---------------------------------
Name:
Title:
15
<PAGE>
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
FIRST UNION CAPITAL MARKETS CORP.
As Placement Agent
By:
------------------------------
Name:
Title:
[PLACEMENT AGENT AGREEMENT]
16
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of eligibility under the Trust Indenture Act
of 1939 of a Corporation designated to act as Trustee
Check if an application to determine eligibility of a Trustee
pursuant to Section 305(b)(2)___
MANUFACTURERS AND TRADERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 16-0538020
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a national bank) identification No.)
One M&T Plaza
Buffalo, New York 14240-2399
(Address of principal executive offices) (Zip Code)
COPELCO CAPITAL FUNDING TRUST 1998-A
(Exact name of obligor as specified in its charter)
DELAWARE Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
(Address of principal executive offices) (Zip Code)
CLASS A-1 LEASE-BACKED NOTES, SERIES 1998-A
CLASS A-2 LEASE-BACKED NOTES, SERIES 1998-A
CLASS A-3 LEASE-BACKED NOTES, SERIES 1998-A
CLASS A-4 LEASE-BACKED NOTES, SERIES 1998-A
CLASS B LEASE-BACKED NOTES, SERIES 1998-A
CLASS C LEASE-BACKED NOTES, SERIES 1998-A
CLASS D LEASE-BACKED NOTES, SERIES 1998-A
(Title of indenture securities)
<PAGE>
Item 1. General Information
Furnish the following information as to the trustee:
I. Name and address of each examining or supervising authority to which
it is subject.
Superintendent of Banks of the State of New York, 2 World Trade
Center, New York, NY 10047 and Albany, NY 12203.
Federal Reserve Bank of New York, 33 Liberty Street, New York, NY
10045.
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
[Items 3 through 15 omitted pursuant to General Instruction B to Form T-1]
<PAGE>
Item 16. List of Exhibits
Exhibit A. Organization Certificate of the Trustee as now in effect
(incorporated herein by reference to Exhibit 1, Form T-1,
Registration Statement No. 33-7309).
Exhibit B. Certificate of Authority of the Trustee to commence
business (incorporated herein by reference to Exhibit 2,
Form T-1, Registration Statement No. 33-7309).
Exhibit C. Authorization of the Trustee to exercise corporate trust
powers (incorporated herein by reference to Exhibit 3,
Form T-1, Registration Statement No. 33-7309).
Exhibit D. Existing By-Laws of the Trustee (incorporated herein by
reference to Exhibit 4, Form T-1, Registration Statement
No. 33-7309).
Exhibit E. Not Applicable.
Exhibit F. Consent of the Trustee (incorporated herein by reference
to Exhibit 6, Form T-1, Registration Statement No.
33-7309).
Exhibit G. Report of Condition of the Trustee.*
Exhibit H. Not Applicable.
Exhibit I. Not Applicable
* Filed Herewith
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Manufacturers and Traders Trust Company, a banking corporation
organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Buffalo, and State of New York, on the 31st day of July, 1998.
MANUFACTURERS AND TRADERS TRUST COMPANY
<PAGE>
By: /s/ STEVEN J. WATTIE
----------------------------------
Steven J. Wattie
Trust Officer
<PAGE>
EXHIBIT G
REPORT OF CONDITION OF THE TRUSTEE
MANUFACTURERS AND TRADERS TRUST COMPANY
---------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31
Dollars in thousands 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets Cash and due from banks $ 436,526
Money-market assets 356,703
Investment securities
Available for sale (cost: $1,267,451) 1,271,387
Held to maturity (market value: $78,915) 78,152
Other (market value: $56,964) 56,964
-----------
Total investment securities 1,406,503
-----------
Loan and leases, net of unearned discount 11,493,787
Allowance for possible credit losses (273,991)
-----------
Loan and leases, net 11,219,796
Other assets 590,654
-----------
Total assets $14,010,182
-----------
Liabilities Deposits
Noninterest-bearing $ 1,425,705
Interest-bearing 9,335,726
-----------
Total deposits 10,761,431
Short-term borrowings 1,724,359
Accrued interest and other liabilities 277,257
Long-term borrowings 177,397
-----------
Total liabilities 12,940,444
-----------
Stockholder's equity 1,069,738
-----------
Total liabilities and stockholder's equity $14,010,182
-----------
</TABLE>
