<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 1999
Registration No. 333-69983
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COPELCO CAPITAL FUNDING LLC 99-1
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6799 PENDING
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
COPELCO CAPITAL FUNDING LLC 99-1
700 EAST GATE DRIVE
MOUNT LAUREL, NEW JERSEY 08054-5404
(609) 231-9600
(Name, address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Copies to:
SPENCER LEMPERT, ESQ. PETER HUMPHREYS, ESQ.
COPELCO CAPITAL FINANCIAL SERVICES GROUP, INC. DEWEY BALLANTINE
700 EAST GATE DRIVE 1301 AVENUE OF THE AMERICAS
MOUNT LAUREL, NJ 08054 NEW YORK, NEW YORK 10019
(609) 231-9600 (212) 259-6730
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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 this Form is a post-effective amendment filed pursuant to Rule
462(d) 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>
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Title of each class of Amount to be Proposed maximum Proposed maximum
securities to be registered registered offering aggregate offering Amount of
price per unit(1) price(1) registration fee
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Class A-1 Lease-Backed Notes............. $139,000,000.00 100% 100% $38,642.00
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Class A-2 Lease-Backed Notes............. $ 95,000,000.00 100% 100% $26,410.00
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Class A-3 Lease-Backed Notes............. $110,000,000.00 100% 100% $30,580.00
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Class A-4 Lease-Backed Notes............. $ 90,000,000.00 100% 100% $25,020.00
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Class A-5 Lease-Backed Notes............. $ 76,000,000.00 100% 100% $21,128.00
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Class B Lease-Backed Notes............... $ 12,200,000.00 100% 100% $ 3,341.00
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Class C Lease-Backed Notes............... $ 9,300,000.00 100% 100% $ 2,585.40
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
Class D Lease-Backed Notes............... $ 16,000,000.00 100% 100% $ 4,448.00
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
(2) In addition to the $152,349 paid on February 26, 1999, $1,946 was paid on
December 30, 1999.
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> 2
COPELCO CAPITAL FUNDING LLC 99-1
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> 3
The Information In this Prospectus is not complete and may be changed. This
Prospectus is not an offer to sell these notes and it is not soliciting an offer
to buy these notes in any state where the offer or sale is not permitted.
(SUBJECT TO COMPLETION, DATED FEBRUARY 26, 1999)
$548,701,000
COPELCO CAPITAL FUNDING LLC 99-1, ISSUER
COPELCO CAPITAL, INC., SERVICER
SERIES 1999-A
<TABLE>
<S> <C>
$139,000,000 __% CLASS A-1 LEASE-BACKED NOTES $75,613,000 __% CLASS A-5 LEASE-BACKED NOTES
$95,000,000 __% CLASS A-2 LEASE-BACKED NOTES $13,029,000 __% CLASS B LEASE-BACKED NOTES
$110,000,000 __% CLASS A-3 LEASE-BACKED NOTES $10,134,000 __% CLASS C LEASE-BACKED NOTES
$90,000,000 __% CLASS A-4 LEASE-BACKED NOTES $15,925,000 __% CLASS D LEASE-BACKED NOTES
</TABLE>
YOU SHOULD READ THE SECTION ENTITLED --"RISK FACTORS" STARTING ON PAGE 6 OF THIS
PROSPECTUS AND CONSIDER THESE FACTORS BEFORE MAKING A DECISION TO INVEST IN THE
NOTES.
The notes represent non-recourse obligations of the issuer only and are other
person.
The notes will not be insured or guaranteed by any governmental agency or
instrumentality.
THE ISSUER WILL ISSUE
- - Eight classes of notes which are to be offered by this prospectus;
- - Class E Lease-Backed Notes, which are not offered by this prospectus
but serve as credit support to the notes offered by this prospectus;
and
- - Residual Notes which are not offered by this prospectus and which will
not not interests in or obligations of any provide credit support to
the other notes.
THE NOTES --
- - Are backed by a pledge of assets of the Issuer. 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;
- - Receive distributions beginning on April 15, 1999;
- - Represent debt obligations of Copelco Capital Funding LLC 99-1; and
- - Currently have no trading market.
<TABLE>
<CAPTION>
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Interest Rate Initial Initial Underwriting Proceeds to Final
per annum Principal Public Issuer Scheduled
Balance Offering Price (before Distribution
deducting Date
expenses)
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Note % $139,000,000 % % % 3/15/2000
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Class A-2 Note % $95,000,000 % % % 10/15/2001
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Class A-3 Note % $110,000,000 % % % 9/15/2002
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Class A-4 Note % $90,000,000 % % % 10/15/2003
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Class A-5 Note % $75,613,000 % % % 1/15/2007
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Class B Note % $13,029,000 % % % 1/15/2007
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Class C Note % $10,134,000 % % % 1/15/2007
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Class D Note % $15,925,000 % % % 1/15/2007
- -------------------------- --------------- -------------- --------------- --------------- --------------- ---------------
Total.................... % $ % % %
========================== =============== ============== =============== =============== =============== ===============
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PRUDENTIAL SECURITIES FIRST UNION CAPITAL MARKETS CORP.
The date of this Prospectus is March ___, 1999
<PAGE> 4
We include cross-references in this prospectus to captions in these
materials where you can find further related discussions. The following table of
contents provides the pages on which these captions are located.
Some persons participating in this offering may engage in transactions
that stabilize, maintain, or in some way affect the price of the notes. These
types of transactions may include stabilizing the purchase price of notes to
cover syndicate short positions and the imposition of penalty bids. For a
description of these activities, please read the section entitled "Underwriting"
in this prospectus.
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, the 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 issuer or any affiliate thereof or the leases since the date hereof.
TABLE OF CONTENTS
Page
----
Prospectus Summary.........................................................4
Issuer.....................................................................4
Servicer...................................................................4
Trustee....................................................................4
The Pledged Assets.........................................................4
Leases.....................................................................4
Cut-off Date...............................................................4
Payment Date...............................................................4
Determination Date.........................................................5
Record Date................................................................5
Issuance Date..............................................................5
Denominations..............................................................5
Priority of Distributions..................................................5
Reserve Account............................................................6
Optional Redemption........................................................6
Final Scheduled Payment Date...............................................6
Federal Income Tax Consequences............................................6
ERISA Considerations.......................................................6
Ratings....................................................................6
Risk Factors...............................................................7
Use of Proceeds...........................................................12
The Series Pool...........................................................12
Copelco Capital's Underwriting and Servicing Practices....................22
The Issuer................................................................28
Management's Discussion and Analysis of Financial Condition...............28
Directors and Executive Officers of the Manager of the Issuer.............28
Description of the Notes..................................................29
Prepayment and Yield Considerations.......................................45
Security for the Notes....................................................50
The Indenture Trustee.....................................................50
Certain Legal Matters Affecting a Lessee's Rights and Obligations........50
Material Federal Income Tax Consequences..................................51
ERISA Considerations......................................................55
Underwriting..............................................................56
Experts...................................................................57
Legal Matters.............................................................57
Rating of the Offered Notes...............................................57
Index of Terms............................................................59
2
<PAGE> 5
PROSPECTUS SUMMARY
- - This summary highlights select information from this prospectus and
does not contain all of the information that you need to consider in
making your investment decision. This summary provides general,
simplified descriptions of matters which, in some cases, are highly
technical and complex. To understand all of the terms of the offering
of the notes, carefully read this entire prospectus.
- - This summary provides an overview of certain calculations, cash flows
and other information to aid your understanding. To understand all of
the terms of the offering, carefully read this entire document and, in
particular, the full description of these calculations, cash flows and
other information in this prospectus.
LEASE-BACKED NOTES
SERIES 1999-A
The Issuer will issue the notes offered by this prospectus in book-entry
form through the facilities of The Depository Trust Company.
ISSUER
- - Copelco Capital Funding LLC 99-1. The address of the issuer is 700 East
Gate Drive, Mt. Laurel, NJ 08054.
- - The issuer will be a limited liability company formed under the laws of
the State of Delaware.
SERVICER
Copelco Capital, Inc. The address of the servicer is One International
Boulevard, Mahwah, NJ 07430.
TRUSTEE
Manufacturers and Traders Trust Company. The address of the Trustee is One M&T
Plaza, Buffalo, NY 14248.
THE PLEDGED ASSETS
The Issuer will pledge its property to secure payments on the notes. The pledged
assets will include a pool of leases, cash on deposit in a reserve account and
the collection account and other assets as described in detail elsewhere in this
prospectus.
LEASES
- - On or about March 9, 1999, the issuer will receive, as a capital
contribution, a pool of leases and the related equipment from Copelco
Capital, Inc. Payments on the notes will be made from payments on these
leases.
- - The leases will include healthcare, manufacturing and business
equipment leases.
- - The lessees under the leases are primarily hospitals, non-hospital
medical facilities, physicians, businesses and individual businesses.
- - The leases are triple-net leases, which means that the lessee is
required 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.
- - We will calculate the principal value of the pool of leases at any time
by discounting their remaining payments (except for certain minor
charges and delinquent payments) at a rate equal to ___.
CUT-OFF DATE
The opening of business on February 1, 1999.
PAYMENT DATE
The 15th day of each month if the fifteenth is a business day. If the fifteenth
is not a business day, the payment date will be the following day that is a
business day. The first payment date will be April 15, 1999.
3
<PAGE> 6
DETERMINATION DATE
Five business days before the payment date. The Trustee will calculate the
amounts to be paid on the notes on this date.
RECORD DATE
The last business day preceding a payment date unless the notes are no longer
book-entry notes. If the notes are definitive notes, the record date is the last
business day of the month preceding a payment date.
ISSUANCE DATE
On or about March 9, 1999.
DENOMINATIONS
The notes will be issued in minimum denominations of $1,000 and integral
multiples of $1,000. One note of each class may be issued in another
denomination.
PRIORITY OF DISTRIBUTIONS
Each month, the amounts received on the leases and any other collections
available as property of the Issuer will be distributed as follows:
Interest Distributions
On each payment date you will be entitled to interest at the applicable interest
rate that accrued during the prior interest accrual period.
Principal Distributions
On each payment date you will be entitled to principal in reduction of the
outstanding principal balance of the notes.
Principal will be paid to the noteholders in an amount usually equal to the
decrease in the principal value of the leases between determination dates.
Principal payments will be made in the following priority:
- - to the Class A-1 Noteholders only, until the principal amount on the
Class A-1 Notes has been reduced to zero;
- - when the Class A-1 Notes have been paid in full:
- to the Class A-2 Noteholders, until the principal amount on
the Class A-2 Notes has been reduced to zero, an amount
generally equal to 84.21% of the decrease in the principal
value of the leases;
- when the Class A-2 Notes have been paid in full, to the Class
A-3 Noteholders, until the principal amount on the Class A-3
Notes has been reduced to zero, an amount generally equal to
84.21% of the decrease in the principal value of the leases;
- when the Class A-3 Notes have been paid in full, to the Class
A-4 Noteholders, until the principal amount on the Class A-4
Notes has been reduced to zero, an amount generally equal to
84.21% of the decrease in the principal value of the leases;
- when the Class A-4 Notes have been paid in full, to the Class
A-5 Noteholders, until the principal amount on the Class A-5
Notes has been reduced to zero, an amount generally equal to
84.21% of the decrease in the principal value of the leases;
- to the Class B Noteholders, an amount generally equal to 2.96%
of the decrease in the principal value of the leases;
- to the Class C Noteholders, an amount generally equal to 2.30%
of the decrease in the principal value of the leases;
- to the Class D Noteholders, an amount generally equal to 3.62%
of the decrease in the principal value of the leases;
- to the Class E Noteholders, an amount generally equal to 3.95%
of the decrease in the principal value of the leases.
4
<PAGE> 7
This general description of distributions of principal to the notes is subject
to certain targets and floors. We refer you to "Descriptions of the Notes --
Distributions" in this prospectus for further information regarding the payment
of interest and principal on the notes.
RESERVE ACCOUNT
After interest and principal payments on the notes have been made on any payment
date, any remaining collections received from the leases will be deposited in a
reserve account held by the trustee until the balance in the reserve account is
at the lesser of 1% of the principal value of the leases at February 1, 1999 and
the outstanding principal amount of the notes. Amounts on deposit in the reserve
account will be used to pay any shortfalls in amounts due to the noteholders on
future payment dates.
OPTIONAL REDEMPTION
When the total lease principal balance of the performing leases is less than or
equal to 5% of the total principal value of the leases as of February 1, 1999,
the issuer may, on any payment date, redeem the notes if it fulfills certain
conditions. If such an event occurs, you will receive a final distribution
equaling the entire unpaid principal balance of the notes plus any accrued and
unpaid interest.
FINAL SCHEDULED PAYMENT DATE
If the notes have not already been paid in full, the outstanding principal
amount of the notes will be paid in full on the following payment dates:
Class A-1 March 15, 2000
Class A-2 October 15, 2001
Class A-3 September 15, 2002
Class A-4 October 15, 2003
Class A-5 January 15, 2007
Class B January 15, 2007
Class C January 15, 2007
Class D January 15, 2007
Class E January 15, 2007
Final payment on the notes will probably be earlier than the final scheduled
payment date set forth above for the related class of notes.
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes:
- - Dewey Ballantine LLP, special tax counsel to the issuer and counsel to
the underwriters, is of the opinion that the notes will be characterized as
debt. By your acceptance of a note, you agree to treat the notes as debt.
- - Dewey Ballantine LLP has prepared the discussion under "Material
Federal Income Tax Consequences" and is of the opinion that such discussion is
correct in all material respects.
ERISA CONSIDERATIONS
Subject to the important considerations described under "ERISA Considerations"
in this prospectus, the notes are eligible for purchase by pension,
profit-sharing and other employee benefit plans. You should consult with your
counsel regarding the applicability of the provisions of the Employee Retirement
Income Security Act of 1974, as amended, before purchasing a note.
RATINGS
- - The issuer will not issue the notes unless they have been assigned the
following ratings:
INITIAL RATING OF OFFERED NOTES
CLASS MOODY'S DCR FITCH
Class A-1......... P-1 D-1+ F1+/AAA
Class A-2......... Aaa AAA AAA
Class A-3......... Aaa AAA AAA
Class A-4......... Aaa AAA AAA
Class A-5......... Aaa AAA AAA
Class B........... Aa2 AA AA
Class C........... A2 A A
Class D........... Baa2 BBB BBB
- - You must not assume that the rating initially assigned to the notes
will not subsequently be lowered, qualified or withdrawn by the rating agencies.
5
<PAGE> 8
RISK FACTORS
You should carefully consider, among other things, the following risk factors
before deciding to invest in the notes offered by this prospectus.
ABILITY TO SELL THE NOTES IS NOT There is currently no public market for the
ASSURED notes. We offer no assurance that one will
develop. The underwriters expect, but are
not obligated, to make a market in the
notes. There is no assurance that any such
market will be created or, if created, will
continue. If no public market develops, as a
noteholder, you may not be able to liquidate
your investment in the notes prior to
maturity.
PREPAYMENTS AND RELATED The rate of payment of principal cannot be
REINVESTMENT RISK MAY REDUCE predicted. It is not predictable because the
YIELD TO NOTEHOLDERS rate on the notes will depend on, among
other things, the rate of payment on the
underlying equipment leases. In addition to
the normally scheduled payments on the
leases, payments may come from a number of
different sources. Payments on the leases
will include the following:
- prepayments permitted by the
servicer;
- payments as a result of leases
which are defaulted;
- payments as a result of leases
accelerated by the servicer;
- payments due to loss, theft,
destruction or other casualty; and
- payments upon repurchases by
Copelco Capital, Inc. on account of
a breach of certain representations
and warranties.
Copelco Capital, Inc. has the option, but
not the obligation, to reinvest the proceeds
of a lease which was partially or fully
repaid or upgraded in one or more leases
having similar characteristics to such
terminated lease.
The rate of early terminations of leases due
to prepayments and various non-payments 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 you as a noteholder.
SECURITY INTERESTS IN THE Prior to February 1, 1999, Copelco Capital,
EQUIPMENT; CERTAIN SECURITY Inc. will file Uniform Commercial Code
INTERESTS NOT PERFECTED financing statements against lessees with
respect to equipment with an original
equipment cost equal to or more than
$25,000. We expect that financing statements
with respect to approximately 59.11% of the
discounted present value of the leases will
be filed. In addition, the indenture and the
assignment and servicing agreement will
require Uniform Commercial Code financing
statements for all security interests in the
equipment owned by the issuer which are
pledged to the trustee to be filed (to the
extent possible by central filing in a
state) against the Issuer and Copelco
Capital, Inc.
6
<PAGE> 9
Copelco Capital, Inc. will not perfect its
interest in any equipment if the original
cost of the related equipment is less than
$25,000. As a result, Copelco Capital, Inc.
does not have a perfected security interest
in such equipment, which represents
approximately 40.89% of the discounted
present value of the leases. In such cases,
security interests in the equipment will
also not be perfected in favor of Copelco
Capital Funding LLC 99-1 or the trustee.
Additionally, because the indenture and the
assignment and servicing agreement will only
require Uniform Commercial Code financing
statements to be filed in central locations
for any given state, security interests in
the equipment will also not be perfected in
favor of Copelco Capital Funding LLC 99-1 or
the trustee in any state requiring other
than central filings. Therefore, other
creditors of Copelco Capital, Inc., may
acquire rights in the equipment superior to
those of Copelco Capital Funding LLC 99-1 or
the trustee. The lack of a perfected
security interest in certain equipment may
adversely affect the ability of Copelco
Capital Funding LLC 99-1 to recoup any
moneys on such equipment.
STATE LAW MAY IMPEDE State laws impose requirements and
RECOVERY EFFORTS restrictions relating to foreclosure sales
and obtaining deficiency judgments following
such sales. In the event that Copelco
Capital Funding LLC 99-1 must rely on
repossession and sale of equipment to
recover losses on non-performing leases,
Copelco Capital Funding LLC 99-1 may not
recoup the full amount due because of the
application of those requirements and
restrictions.
Additional factors that may affect the
ability of Copelco Capital Funding LLC 99-1
to recoup the full amount due on a lease
include -
- the failure to file financing
statements to perfect Copelco
Capital Funding LLC 99-1'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.
7
<PAGE> 10
DEFAULT OR INSOLVENCY OF COPELCO Copelco Capital, Inc. believes that each
CAPITAL, INC. MAY REDUCE contribution of the leases should be treated
PAYMENTS TO NOTEHOLDERS as an absolute and unconditional assignment.
However, in the event of an insolvency of
Copelco Capital, Inc., a court could attempt
to -
- recharacterize the contribution of
the related leases by Copelco
Capital, Inc. to Copelco Capital
Funding LLC 99-1 as a loan to
Copelco Capital Funding LLC 99-1
from Copelco Capital, Inc., secured
by a pledge of such leases or could
allow Copelco Capital, Inc. in
bankruptcy to repudiate the leases
that are operating leases and all
obligations thereunder; or
- consolidate the assets of Copelco
Capital Funding LLC 99-1 with those
of Copelco Capital, Inc. since
Copelco Capital, Inc. will
indirectly own all of the
membership interests in Copelco
Capital Funding LLC 99-1.
Either attempt, even if unsuccessful, could
result in delays in payments to you. If such
attempts were successful, such notes would
be accelerated, and the trustee's recovery
on behalf of you could be limited to the
then current value of the leases or the
underlying equipment. Thus, you could lose
the right to future payments and you might
incur reinvestment losses on amounts
recovered.
Although Copelco Capital, Inc. believes that
the contribution of the leases should be
treated as an absolute and unconditional
assignment, for accounting and tax purposes,
the leases will be treated as assets of
Copelco Capital, Inc. on its consolidated
financial statements and on the tax return
for its consolidated group. Such treatment
of the assets might increase the risk of
recharacterization of the transfer to
Copelco Capital Funding LLC 99-1 as a
financing.
NO RECOURSE AGAINST THE The Notes represent debt of Copelco Capital
AFFILIATES OF COPELCO Funding LLC 99-1 secured primarily by the
CAPITAL LLC 99-1 leases. If the lease payments and other
assets pledged to secure the notes are
insufficient to pay the notes in full, you
have no rights to obtain payment from
Copelco Capital, Inc. or any of its
affiliates other than Copelco Capital
Funding LLC 99-1. Copelco Capital Funding
LLC 99-1 is a limited liability company with
limited assets. Consequently, the
noteholders must rely solely upon the
leases, the equipment and funds in the
reserve account and in the collection
account for repayment.
GEOGRAPHIC CONCENTRATION OF As of February 1, 1999, approximately
LEASES MAY ADVERSELY AFFECT 18.24%, 5.53%, 13.95% and 8.28% of the
THE LEASES leases (based on the statistical discounted
present value of the leases) were located in
California, Florida, New York and Texas,
respectively. No other state accounts for
more than 5% of the leases. Accordingly,
adverse economic conditions or other factors
particularly affecting any of these regions
could adversely affect the performance on
the leases. The Issuer is unable to
determine and has no basis to predict, with
respect to any state or region, whether any
such events have occurred or may occur, or
to what extent any such events may affect
the leases or the repayment of amounts due
under the notes.
8
<PAGE> 11
COMMINGLING OF FUNDS WITH COPELCO Under the Indenture, the servicer is
CAPITAL, INC. MAY RESULT IN required to deposit all periodic lease
REDUCED OR DELAYED PAYMENTS TO payments, payments resulting from loss,
NOTEHOLDERS theft or other casualty and payments as a
result of early termination received after
February 1, 1999 to the collection account
within two business days of receipt of those
payments. If bankruptcy or reorganization
proceedings were commenced with respect to
the servicer, those funds held by the
servicer and not transferred to the
collection account may be subject to an
automatic stay resulting in a delay in the
transfer of such funds to the trustee. This
could result in delayed or reduced payments
to you.
DEFAULT OR INSOLVENCY OF To the extent lessees default on the leases,
LESSEES MAY REDUCE including through insolvency, lease payments
PAYMENTS TO NOTEHOLDERS will decrease and, accordingly, funds
available for payment to you, as a
noteholder, will be reduced.
RISKS ASSOCIATED WITH YEAR The servicer is faced with the task of
2000 COMPLIANCE completing its goals for compliance in
connection with the year 2000 issue. The
year 2000 issue is the result of prior
computer programs being written using two
digits to define the applicable year. Any
computer programs that have time-sensitive
software may recognize a date using "00" as
the year 1900 rather than the year 2000. Any
such occurrence could result in major
computer system failure or miscalculations.
Although the servicer reasonably believes
that its servicing system will be year 2000
compliant prior to the year 2000, it is
presently engaged in various procedures to
determine if its computer systems and
software, and those of its material
suppliers, customers, brokers and agents
will be year 2000 compliant.
In the event that the servicer, any
subservicer or any of their suppliers,
customers, brokers or agents do not
successfully and timely achieve year 2000
compliance, the servicer's performance of
its obligations under the Assignment and
Servicing Agreement could be adversely
affected. This could result in delays in
processing payments on the leases and could
cause a delay in distributions to you.
9
<PAGE> 12
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires the filing of certain information with
the Securities and Exchange Commission, including annual, quarterly and special
reports, proxy statements and other information. You can read and copy these
documents at the public reference facility maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, NW, Room 1024, Washington, DC 20549. You can also copy
and inspect such reports, proxy statements and other information at the
following regional offices of the SEC:
New York Regional Office Chicago Regional Office
Seven World Trade Center Citicorp Center
Suite 1300 500 West Madison Street, Suite 1400
New York, NY 10048 Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. SEC filings are also available to the public on the
SEC's web site at http://www.sec.gov.
This prospectus is part of a registration statement filed by the
Sponsor with the SEC (Registration No. 333-69983). You may request a free copy
of this filing by writing or calling:
Copelco Capital, Inc.
700 East Gate Drive
Mount Laurel, New Jersey 08054-5404
Attention: Stephen W. Shippie
(609) 231-9600
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the cover page of
this prospectus.
You can find a listing of the pages where capitalized terms used in
this prospectus are defined under "Index of Terms" beginning on page 53 in this
prospectus.
10
<PAGE> 13
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be distributed to the
owners of Copelco Capital Funding LLC 99-1 (the "Issuer"). The distribution will
occur after the contribution from Copelco Capital, Inc. ("Copelco Capital" or
the "Servicer") of the healthcare, manufacturing and business equipment lease
contracts (each a "Lease Contract", collectively the "Lease Contracts"),
including payments due thereunder (the "Lease Receivables", together with the
Lease Contracts, the "Leases") and interests in the related equipment (the
"Equipment") to the Issuer. The net proceeds will be utilized to repay bank debt
and for general corporate purposes.
THE SERIES POOL
THE LEASES. As of the opening of business on February 1, 1999 (the
"Cut-Off Date"), the Notes will be secured by a pool (the "Series Pool") of
healthcare, manufacturing and business equipment lease contracts. The Lessees
(as defined herein) are primarily hospitals, medical facilities, physicians and
business owners throughout the United States. The Leases were originated or
acquired by the Business Technology Group, the Healthcare Group and the
Commercial & Industrial Group of Copelco Capital (or their predecessors)
(collectively, the "Origination Groups"). See "Risk Factors," "Security for the
Notes" and "Certain Legal Matters Affecting a Lessee's Rights and Obligations."
Unless otherwise noted, the statistical information included herein was computed
using the Statistical Discounted Present Value of the Leases as of the Cut-Off
Date. The actual principal value of the Leases on March 9, 1999 (the "Issuance
Date") will be calculated using the Discounted Present Value of the Leases (as
defined herein). The Statistical Discounted Present Value of the Leases as of
the Cut-Off Date will not vary materially from the Discounted Present Value of
the Leases as of the Cut-Off Date.
The Leases are triple-net leases, which means that the terms of the
leases require the lessees to pay all taxes, maintenance and insurance
associated with the Equipment, and impose no affirmative obligations on the
lessor, and are non-cancelable by the Lessees (as defined herein). 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 Equipment. All payments under the Leases are absolute,
unconditional obligations of the hospitals, non-hospital medical facilities,
physicians, businesses and individual business owners who lease the Equipment
(each, a "Lessee," and collectively, the "Lessees"). Lessees are without right
of offset for any reason. Such payments will be made by the Lessees to Copelco
Capital, as servicer, for the account of Copelco Capital Funding LLC 99-1.
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 46.954 months. Copelco
Capital will represent and warrant that, as of the Cut-Off Date, all Leases will
be current or less than 63 days delinquent and, as of the initial Determination
Date (as defined herein), 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 may obtain such insurance and
invoice 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, of 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.
11
<PAGE> 14
The Servicer's customary practices with respect to Non-Performing
Leases include such action as is necessary to cause, or attempt to cause, the
Lessee thereunder to cure such non-performance or to terminate such lease and
recover the outstanding amount owed under the lease and all damages resulting
from any default on the Non-Performing Leases. The Servicer will take action
that is consistent with the customary practices of servicers in the equipment
leasing industry. In addition, the Servicer will use its best efforts to sell or
lease any Equipment 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 order
to recoup any amounts still due on the Lease.
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 Groups is purchased or re-leased by the original lessee at the
expiration of the lease term. 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 91 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.
THE PLEDGED ASSETS. The assets pledged to secure the Notes (the
"Pledged Assets") will consist of a pool of healthcare, manufacturing and
business equipment lease contracts, including payments due thereunder and
certain interests in the related leased equipment acquired or originated by
Copelco Capital and transferred to the Issuer. The Pledged Assets will, in
addition, include the funds on deposit in Collection Account (as defined herein)
and the Reserve Account (as defined herein).
12
<PAGE> 15
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
PERCENTAGE
OF
STATISTICAL PERCENTAGE
STATISTICAL DISCOUNTED OF AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE 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>
Alaska 38 0.105% $ 629,328.70 0.109% $ 698,584.49 0.112%
Alabama 252 0.699 4,101,671.77 0.708 4,482,672.28 0.717
Arkansas 62 0.172 4,036,402.01 0.697 3,931,536.13 0.628
Arizona 420 1.166 8,518,039.36 1.471 9,363,133.71 1.497
California 6,321 17.544 105,627,694.23 18.240 113,286,210.11 18.108
Colorado 749 2.079 10,322,675.69 1.783 11,089,877.23 1.773
Connecticut 758 2.104 9,045,712.08 1.562 9,773,060.27 1.562
District of Columbia 260 0.722 4,380,171.96 0.756 4,837,286.73 0.773
Delaware 76 0.211 1,056,181.81 0.182 1,162,769.43 0.186
Florida 2,003 5.559 32,029,403.74 5.531 34,368,582.58 5.494
Georgia 989 2.745 17,933,966.76 3.097 18,950,301.41 3.029
Hawaii 52 0.144 788,053.14 0.136 817,866.26 0.131
Iowa 74 0.205 1,001,510.12 0.173 1,067,787.51 0.171
Idaho 68 0.189 599,665.76 0.104 634,636.74 0.101
Illinois 1,499 4.161 21,695,549.35 3.746 23,243,596.46 3.715
Indiana 433 1.202 5,763,119.26 0.995 6,424,314.92 1.027
Kansas 139 0.386 3,962,800.14 0.684 4,005,123.87 0.640
Kentucky 201 0.558 3,349,691.35 0.578 3,975,821.94 0.636
Louisiana 1,137 3.156 10,392,923.89 1.795 13,007,123.36 2.079
Massachusetts 1,177 3.267 14,884,810.10 2.570 15,960,476.12 2.551
Maryland 406 1.127 6,224,124.90 1.075 6,691,705.12 1.070
Maine 320 0.888 3,309,967.98 0.572 3,455,903.69 0.552
Michigan 383 1.063 7,253,190.74 1.252 8,102,519.49 1.295
Minnesota 191 0.530 4,910,196.52 0.848 5,601,404.94 0.895
Missouri 334 0.927 7,294,605.49 1.260 7,405,179.69 1.184
Mississippi 193 0.536 2,847,752.01 0.492 2,948,199.35 0.471
Montana 59 0.164 873,373.40 0.151 931,235.95 0.149
North Carolina 666 1.849 10,415,591.40 1.799 11,101,323.80 1.775
North Dakota 4 0.011 30,102.05 0.005 33,402.41 0.005
Nebraska 74 0.205 1,133,218.89 0.196 1,227,253.14 0.196
New Hampshire 252 0.699 3,000,375.37 0.518 3,255,954.65 0.520
New Jersey 1,851 5.138 27,739,453.31 4.790 30,175,612.07 4.823
New Mexico 143 0.397 5,265,763.44 0.909 5,911,245.03 0.945
Nevada 330 0.916 4,327,404.63 0.747 4,590,473.55 0.734
New York 5,436 15.088 80,809,149.44 13.954 88,937,803.48 14.216
Ohio 1,014 2.814 18,326,823.00 3.165 19,546,904.48 3.124
Oklahoma 189 0.525 6,153,399.96 1.063 6,236,443.35 0.997
Oregon 358 0.994 5,455,494.76 0.942 6,025,066.27 0.963
Pennsylvania 1,390 3.858 23,606,739.24 4.076 25,285,699.41 4.042
Puerto Rico 4 0.011 352,667.29 0.061 357,279.64 0.057
Rhode Island 236 0.655 4,283,473.59 0.740 4,392,229.47 0.702
South Carolina 266 0.738 3,312,135.78 0.572 3,813,693.83 0.610
South Dakota 14 0.039 147,939.72 0.026 159,060.04 0.025
Tennessee 280 0.777 5,055,224.40 0.873 5,401,918.77 0.863
Texas 2,754 7.644 47,940,745.52 8.278 50,919,574.36 8.139
Utah 218 0.605 3,697,977.33 0.639 3,883,623.92 0.621
Virginia 733 2.034 9,909,546.40 1.711 10,917,639.91 1.745
Vermont 33 0.092 426,822.78 0.074 452,067.84 0.072
Washington 848 2.354 13,611,079.04 2.350 14,758,291.37 2.359
Wisconsin 211 0.586 9,534,673.73 1.646 10,129,593.02 1.619
West Virginia 119 0.330 1,546,068.41 0.267 1,674,924.47 0.268
Wyoming 12 0.033 190,925.27 0.033 197,902.50 0.032
==================================================================================================================
Total 36,029 100.00% $579,105,376.99 100.00% $625,601,890.56 100.00%
==================================================================================================================
</TABLE>
13
<PAGE> 16
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
PERCENTAGE
OF
STATISTICAL PERCENTAGE
STATISTICAL DISCOUNTED OF AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
STATISTICAL DISCOUNTED NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT
PRESENT VALUE OF THE LEASES LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST
--------------------------- ------ --------- --------- ------ -------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0.01 - 5,000.00 13,245 36.762% $ 37,327,809.53 6.446% $45,732,625.75 7.310%
5,000.01 - 10,000.00 9,090 25.230 65,855,255.63 11.372 73,776,533.44 11.793
10,000.01 - 15,000.00 4,850 13.461 59,483,189.73 10.272 65,238,482.06 10.428
15,000.01 - 20,000.00 2,751 7.636 47,545,164.01 8.210 50,980,068.69 8.149
20,000.01 - 25,000.00 1,637 4.544 36,550,419.35 6.312 39,313,580.37 6.284
25,000.01 - 30,000.00 1,032 2.864 28,210,382.60 4.871 30,228,935.61 4.832
30,000.01 - 35,000.00 673 1.868 21,776,321.12 3.760 23,235,106.83 3.714
35,000.01 - 40,000.00 424 1.177 15,821,223.21 2.732 16,520,678.05 2.641
40,000.01 - 45,000.00 344 0.955 14,543,684.13 2.511 15,279,910.17 2.442
45,000.01 - 50,000.00 274 0.760 12,954,807.26 2.237 13,913,936.20 2.224
50,000.01 - 60,000.00 391 1.085 21,419,472.19 3.699 22,397,259.09 3.580
60,000.01 - 70,000.00 281 0.780 18,155,025.75 3.135 19,291,034.06 3.084
70,000.01 - 80,000.00 196 0.544 14,711,000.53 2.540 15,789,581.94 2.524
80,000.01 - 90,000.00 141 0.391 11,953,617.66 2.064 12,459,756.55 1.992
90,000.01 - 100,000.00 93 0.258 8,843,510.32 1.527 9,853,853.68 1.575
100,000.01 - 125,000.00 176 0.488 19,508,129.01 3.369 20,591,878.95 3.292
125,000.01 - 150,000.00 108 0.300 14,903,495.41 2.574 16,326,784.34 2.610
150,000.01 - 175,000.00 60 0.167 9,627,953.07 1.663 10,068,077.44 1.609
175,000.01 - 200,000.00 52 0.144 9,701,713.75 1.675 10,474,791.21 1.674
200,000.01 - 300,000.00 73 0.203 17,744,491.08 3.064 19,283,108.68 3.082
300,000.01 - 400,000.00 45 0.125 15,594,570.62 2.693 16,712,088.23 2.671
400,000.01 - 500,000.00 29 0.080 12,983,107.75 2.242 13,708,203.11 2.191
500,000.01 - 600,000.00 15 0.042 8,212,540.34 1.418 9,089,861.67 1.453
600,000.01 - 700,000.00 13 0.036 8,732,300.17 1.508 8,886,114.23 1.420
700,000.01 - 800,000.00 6 0.017 4,426,118.94 0.764 4,782,921.98 0.765
800,000.01 - 900,000.00 2 0.006 1,711,244.87 0.295 1,676,079.00 0.268
900,000.01 -1,000,000.00 6 0.017 5,683,745.42 0.981 5,626,494.71 0.899
1,000,000.01 -1,500,000.00 16 0.044 18,668,159.85 3.224 18,936,950.67 3.027
1,500,000.01 -2,000,000.00 2 0.006 3,715,484.23 0.642 3,416,250.00 0.546
greater than2,000,000.00 4 0.011 12,741,439.46 2.200 12,010,943.85 1.920
=====================================================================================================================
Total 36,029 100.00% $579,105,376.99 100.00% $625,601,890.56 100.00%
=====================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE
OF
STATISTICAL PERCENTAGE
STATISTICAL DISCOUNTED OF AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT
REMAINING TERM LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST
-------------- ------ --------- --------- ------ -------------- ----
<S> <C> <C> <C> <C> <C> <C>
0 - 12 1,323 3.672% $ 7,447,405.73 1.286% $16,248,199.65 2.597%
13 - 24 2,647 7.347 18,971,848.45 3.276 26,935,964.07 4.306
25 - 36 16,022 44.470 152,681,866.61 26.365 174,022,920.62 27.817
37 - 48 5,160 14.322 82,536,829.93 14.252 88,426,560.80 14.135
49 - 60 10,614 29.460 281,652,759.58 48.636 285,871,185.19 45.695
61 - 72 207 0.575 19,182,085.65 3.312 18,568,395.52 2.968
73 - 84 56 0.155 16,632,581.05 2.872 15,528,664.71 2.482
=================================================================================================================
Totals: 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
=================================================================================================================
</TABLE>
14
<PAGE> 17
DISTRIBUTION OF LEASES BY ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE
STATISTICAL OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER PRESENT VALUE OF VALUE OF ORIGINAL EQUIPMENT
ORIGINAL TERM LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST
------------- ------ --------- ------ ------ -------------- ----
<S> <C> <C> <C> <C> <C> <C>
0 - 12 237 0.658% $ 2,116,299.09 0.365% $2,705,498.42 0.432%
13 - 24 1,095 3.039 8,900,516.36 1.537 11,187,095.37 1.788
25 - 36 3,503 9.723 37,957,386.80 6.554 45,934,304.61 7.342
37 - 48 15,656 43.454 144,905,047.84 25.022 166,226,218.12 26.571
49 - 60 6,484 17.997 142,977,578.86 24.689 152,031,550.42 24.302
61 - 72 8,972 24.902 217,248,058.67 37.514 223,244,176.41 35.685
73 - 84 72 0.200 18,716,309.40 3.232 17,869,682.99 2.856
85 - 96 10 0.028 6,284,179.97 1.085 6,403,364.22 1.024
====================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
====================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE
STATISTICAL OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT
LEASE TYPE LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST
- ---------- ------ --------- --------- ------ -------------- ----
<S> <C> <C> <C> <C> <C> <C>
Finance Lease 35,938 99.747% $569,341,250.88 98.314% $612,670,878.20 97.933%
Operating Lease 91 0.253 9,764,126.12 1.686 12,931,012.36 2.067
====================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
====================================================================================================================
</TABLE>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE
STATISTICAL OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT
PURCHASE OPTION LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST
- --------------- ------ --------- --------- ------ -------------- ----
<S> <C> <C> <C> <C> <C> <C>
Fixed Purchase Option 3,283 9.112% $71,715,198.61 12.384% $79,439,976.44 12.698%
Fair Market Value 24,276 67.379 307,906,221.51 53.169 338,334,820.24 54.081
Nominal Buyout 8,470 23.509 199,483,956.87 34.447 207,827,093.88 33.220
====================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
====================================================================================================================
</TABLE>
15
<PAGE> 18
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE
STATISTICAL OF
STATISTICAL DISCOUNTED AGGREGATE
NUMBER PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
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>
Multiple Product 141 0.391% $ 2,553,602.71 0.441% $ 4,212,218.19 0.673%
Anesthesia Equipment 13 0.036 558,211.61 0.096 784,352.44 0.125
Automated Chemistry Systems 168 0.466 6,721,582.38 1.161 7,613,215.53 1.217
Automated Hematology Systems 249 0.691 5,591,379.54 0.966 6,072,774.59 0.971
Automated Test Equipment 8 0.022 113,023.46 0.020 170,741.16 0.027
Automobile Shop 6 0.017 92,442.92 0.016 80,515.00 0.013
C.T. Systems 4 0.011 1,791,003.81 0.309 2,038,020.70 0.326
Carts, Stretchers, Wheel 56 0.155 863,385.57 0.149 902,062.46 0.144
Chairs
Cash Registers 83 0.230 2,345,494.84 0.405 2,488,156.83 0.398
Cobalt and X-Ray Therapy 1 0.003 16,354.80 0.003 16,500.00 0.003
Equipment
Communication Equipment 22 0.061 686,218.56 0.118 719,554.01 0.115
Computer Systems-Doctors & 579 1.607 13,829,672.61 2.388 14,427,473.74 2.306
Hospitals
Computer 2,440 6.772 28,999,010.93 5.008 34,413,680.87 5.501
Construction Equipment 7 0.019 326,643.70 0.056 292,638.73 0.047
Copiers 25,562 70.948 299,580,916.86 51.732 323,872,861.44 51.770
Cranes and Derricks 2 0.006 29,954.26 0.005 25,800.00 0.004
Data Processing 1 0.003 63,030.75 0.011 56,085.00 0.009
Dental Operatory Equipment 477 1.324 10,782,993.68 1.862 10,820,841.99 1.730
Digital Cameras 1 0.003 5,667.88 0.001 6,213.39 0.001
Document Imaging Equipment 353 0.980 6,647,848.43 1.148 7,128,829.46 1.140
ECG (EKG) and Defibrillators 99 0.275 1,720,973.79 0.297 1,829,466.76 0.292
EEG 2 0.006 24,265.99 0.004 24,754.00 0.004
Electronics Production 181 0.502 30,914,636.05 5.338 36,417,060.37 5.821
Equipment
Fabrication Equipment 4 0.011 1,019,672.09 0.176 1,081,561.72 0.173
Facsimiles 1,853 5.143 6,559,439.96 1.133 7,389,237.53 1.181
Food Processing 2 0.006 108,416.80 0.019 95,834.29 0.015
Furniture and Fixtures 14 0.039 566,965.12 0.098 543,446.59 0.087
Gamma Cameras 27 0.075 4,499,304.47 0.777 4,982,225.05 0.796
Heating and Air 2 0.006 29,125.53 0.005 25,870.00 0.004
Holter Monitors 39 0.108 619,056.78 0.107 648,810.99 0.104
Hosp Beds; Elec. Stryker 25 0.069 320,368.91 0.055 331,594.93 0.053
FRMS, Burn Beds
Image Setters 1 0.003 92,509.50 0.016 121,195.00 0.019
Industrial Production 3 0.008 171,501.38 0.030 149,531.25 0.024
Jukeboxes/storage 2 0.006 27,817.13 0.005 28,400.00 0.005
Laminating Devices 2 0.006 16,157.08 0.003 15,626.69 0.002
Lasers 27 0.075 1,734,880.74 0.300 1,921,502.30 0.307
Laundry, Kitchen, Food Srvc 3 0.008 50,880.81 0.009 43,485.10 0.007
Eqp., Central Supply
Laundry Equipment Lift Trucks 1 0.003 115,925.91 0.020 120,000.00 0.019
Lift Trucks 2 0.006 21,931.69 0.004 43,067.22 0.007
Linear Accelerators 1 0.003 535,390.95 0.092 960,012.50 0.153
Lithotripters and Dialysis 6 0.017 621,047.95 0.107 649,049.00 0.104
Equipment
Machine Tools 2 0.006 245,529.86 0.042 247,015.00 0.039
Mailing Equipment 39 0.108 407,569.49 0.070 407,532.91 0.065
Mammography 11 0.031 1,178,601.28 0.204 1,380,290.54 0.221
Materials Handling 1 0.003 5,385.47 0.001 4,858.00 0.001
Mobile X-Ray Systems 4 0.011 314,313.59 0.054 352,376.31 0.056
Medical Equipment 11 0.031 630,771.92 0.109 622,355.87 0.099
Microfilm Equipment 4 0.011 76,099.89 0.013 92,866.12 0.015
Micrographics 2 0.006 41,509.23 0.007 41,673.00 0.007
Misc. Comm. & Indus. Equip. 84 0.233 1,528,605.43 0.264 1,776,955.28 0.284
Misc. Hospital Equipment 286 0.794 $ 61,742,560.58 10.662 $ 60,451,330.80 9.663
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE
STATISTICAL OF
STATISTICAL DISCOUNTED AGGREGATE
NUMBER PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
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>
Misc Lab Eqp 7 0.019 191,352.06 0.033 184,913.42 0.030
Misc Vet Eqp; Cages, Scales, 4 0.011 36,119.74 0.006 59,793.00 0.010
Tables
Misc X-Ray Eqp 14 0.039 774,590.25 0.134 828,802.16 0.132
Miscellaneous 121 0.336 1,861,701.66 0.321 1,879,393.86 0.300
MRI Systems 4 0.011 1,807,076.92 0.312 2,056,507.07 0.329
Office Furniture & Equipment 31 0.086 656,191.69 0.113 638,707.31 0.102
Operating Microscopes 7 0.019 139,323.16 0.024 222,546.31 0.036
Opthlmc Diag Eqp (Slit Lamps, 150 0.416 3,198,659.98 0.552 3,337,217.75 0.533
Tonometers)
Opt Eqp; Lens Grinding, 386 1.071 4,719,383.80 0.815 5,215,735.15 0.834
Resurfacing
Packaging Equipment 42 0.117 1,403,419.91 0.242 1,602,221.75 0.256
Patient Monitoring Systems 122 0.339 4,394,101.66 0.759 4,688,692.91 0.749
Patient Room Furnishing & 5 0.014 34,905.65 0.006 53,216.45 0.009
Fixtures
Phone, TV, Comm Equipment 18 0.050 220,405.02 0.038 225,225.14 0.036
Photo Equipment 2 0.006 29,389.25 0.005 26,395.00 0.004
Photocopy Equipment 3 0.008 92,409.66 0.016 104,897.35 0.017
Phys Misc Medical Eqp & Exam 882 2.448 21,429,056.23 3.700 22,334,278.53 3.570
Tables
Physician Office Furn, 24 0.067 434,642.73 0.075 522,730.49 0.084
Fixtures and Phones
Podiatry Equipment 2 0.006 29,724.97 0.005 29,650.00 0.005
Printing Equipment 200 0.555 6,838,084.06 1.181 6,776,333.97 1.083
Processing Equipment 4 0.011 208,962.35 0.036 214,505.00 0.034
Pulse Oximetry Equipment 2 0.006 25,044.27 0.004 30,235.50 0.005
Radiographic Fluoroscopic 3 0.008 318,084.44 0.055 336,670.00 0.054
Systems
Respiratory Therapy Equipment 753 2.090 20,388,913.25 3.521 22,189,415.91 3.547
Restaurant, Motel Equipment 3 0.008 120,341.03 0.021 109,170.73 0.017
Sales Tax 1 0.003 42,417.87 0.007 42,325.75 0.007
Scanners 8 0.022 140,029.79 0.024 153,230.85 0.024
Security Systems 3 0.008 37,473.64 0.006 34,743.67 0.006
Standard Printers 41 0.114 580,318.63 0.100 635,318.14 0.102
Standard Test Systems 1 0.003 2,554.69 0.000 2,708.48 0.000
Standard X-Ray Systems 28 0.078 1,380,892.41 0.238 1,466,565.70 0.234
Surgical Equip. Scopes, 9 0.025 174,476.45 0.030 171,598.28 0.027
Electrosurgical
Telephone 45 0.125 816,197.09 0.141 832,829.94 0.133
Telex 1 0.003 8,466.19 0.001 15,221.00 0.002
Transportation 1 0.003 5,599.92 0.001 5,950.00 0.001
Ultrasound 126 0.350 7,195,679.48 1.243 7,887,466.31 1.261
Vending Machines 8 0.022 102,038.24 0.018 82,500.00 0.013
Wide Format Printers 1 0.003 13,582.83 0.002 20,034.48 0.003
Woodworking 1 0.003 26,747.66 0.005 23,320.00 0.004
Working Capital 51 0.142 1,461,160.75 0.252 1,408,745.89 0.225
X-Ray Spec Systems; 2 0.006 226,202.96 0.039 210,556.66 0.034
Angiography
===================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
===================================================================================================================
</TABLE>
1 The following abbreviations used in this table have the following meanings:
"Eqp." -- Equipment
"Misc." -- Miscellaneous
17
<PAGE> 20
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 not written
down in the Origination Groups that are owned by Copelco Capital is set forth
below.
HISTORICAL DELINQUENCY EXPERIENCE
COPELCO CAPITAL COMBINED PORTFOLIO
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Receivables $2,000,113,149 $1,732,009,721 $1,503,055,810 $1,238,424,241 $1,000,488,313
- ------------------------------------------------------------------------------------------------------------------------------------
Balance (1)
No. of Delinquent
Days
30-59 days 43,823,866 2.19% 38,610,259 2.23% 34,481,668 2.29% 26,255,335 2.12% 14,846,559
60-89 days 16,739,163 0.84 11,999,057 0.69 8,136,578 0.54 4,976,920 0.40 3,971,389
90 Days+ 5,720,230 0.29 10,437,965 0.60 7,587,972 0.50 6,703,063 0.54 6,748,827
Total Delinquencies $66,283,259 3.31% $61,047,281 3.52% $50,206,218 3.34% $37,935,318 3.06% $25,566,775
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
1993
----
<S> <C> <C>
Total Receivables $736,373,700
- ---------------------------------------------------------
Balance (1)
No. of Delinquent
Days
30-59 days 1.48% 9,184,216 1.25%
60-89 days 0.40 1,886,765 0.26
90 Days+ 0.67 5,099,200 0.69
Total Delinquencies 2.56% $16,170,181 2.20%
- ---------------------------------------------------------
</TABLE>
(1) The Total Receivables Balance is equal to the aggregate future rent
owing on the leases.
BUSINESS TECHNOLOGY
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Total $1,137,122,973 $964,765,984 $812,719,952 $669,800,055 $543,197,213
Receivables
Balance (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
No. of Delinquent
Days
30-59 days 24,718,601 2.18% 21,036,692 2.17% 24,072,598 2.96% 18,298,832 2.73% 8,636,836 1.59%
60-89 days 7,367,101 0.57 5,451,379 0.65 5,249,429 0.65 3,492,843 0.52 2,281,428 0.42
90 Days+ 3,438,342 0.67 6,432,173 0.30 4,940,285 0.61 4,867,482 0.73 3,096,224 0.57
- ------------------------------------------------------------------------------------------------------------------------------------
Total Delinquencies $35,524,044 3.41% $32,920,244 3.12% $34,262,311 4.22% $26,659,157 3.98% $14,014,488 2.58%
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
1993
----
Total $ 385,838,619
Receivables
Balance (1)
- -------------------------------------------
<S> <C> <C>
No. of Delinquent
Days
30-59 days 5,401,741 1.40%
60-89 days 1,234,684 0.32
90 Days+ 2,315,032 0.60
- -------------------------------------------
Total Delinquencies $8,951,457 2.32%
</TABLE>
(1) The Total Receivables Balance is equal to the aggregate future rent owing on
the leases.
HEALTHCARE COMMERCIAL & INDUSTRIAL GROUP
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Total $862,990,176 $767,243,737 $690,335,858 $568,624,186 $457,291,099
Receivables
Balance (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
No. of Delinquent
Days
30-59 days 19,105,265 2.21% 17,573,567 2.29% 10,409,069 1.51% 7,956,503 1.40% 6,209,723 1.36%
60-89 days 9,372,062 1.09 6,547,678 0.85 2,887,149 0.42 1,484,077 0.26 1,689,961 0.37
90 Days+ 2,281,888 0.26 4,005,792 0.53 2,647,688 0.38 1,835,581 0.32 3,652,603 0.80
- ------------------------------------------------------------------------------------------------------------------------------------
Total Delinquencies $30,759,215 3.56% $28,127,037 3.67% $15,943,906 2.31% $11,276,161 1.98% $11,552,287 2.53%
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
1993
----
Total $350,535,081
Receivables
Balance (1)
- ------------------------------------------
<S> <C> <C>
No. of Delinquent
Days
30-59 days 3,782,475 1.08%
60-89 days 652,082 0.19
90 Days+ 2,784,168 0.79
- ------------------------------------------
Total Delinquencies $7,218,725 2.06%
</TABLE>
(1) The Total Receivables Balance is equal to the aggregate future rent owing on
the leases.
18
<PAGE> 21
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 Groups
that are owned and serviced by Copelco Capital for the period January 1, 1993 to
September 30, 1998 is set forth below.
HISTORICAL CHARGE-OFF EXPERIENCE
(DOLLARS IN THOUSANDS)
COPELCO CAPITAL COMBINED PORTFOLIO
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1998 31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $1,866,061 $1,617,532 $1,370,740 $1,119,456 $ 868,431 $ 649,278
- --------------------------------------------------------------------------------------------------------------
Net Losses $ 21,476 $ 22,138 $ 15,713 $ 11,457 $ 10,328 $ 8,842
Net Losses as a % of Avg. 1.53%(2) 1.37% 1.15% 1.02% 1.19% 1.36%
Receivables
</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
BUSINESS TECHNOLOGY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1998 31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $1,050,944 $ 888,742 $ 741,260 $ 606,499 $ 464,518 $ 321,439
- ---------------------------------------------------------------------------------------------------------
Net Losses $ 16,326 $ 16,295 $ 13,386 $ 9,969 $ 7,415 $ 5,307
Net Losses as a % of Avg. 2.07%(2) 1.83% 1.81% 1.64% 1.60% 1.65%
Receivables
</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
HEALTHCARE COMMERCIAL & INDUSTRIAL GROUP
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
30, 1998 31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $ 815,117 $ 728,790 $ 629,480 $ 512,958 $ 403,913 $ 327,840
- ----------------------------- ------------- ------------ ------------ ------------ ------------ -------------
Net Losses $ 5,150 $ 5,843 $ 2,327 $ 1,488 $ 2,913 $ 3,535
Net Losses as a % of Avg. 0.84%(2) 0.80% 0.37% 0.29% 0.72% 1.08%
Receivables
</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.
19
<PAGE> 22
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 One
International Boulevard, Mahwah, New Jersey 07430 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 Copelco Leasing's and Copelco Capital's leasing
operations.
Copelco Capital currently consists of three separate operating
groups (each, a "Group") the Business Technology Group, the Healthcare Group and
the Commercial & Industrial Group. The Business Technology Group, the Healthcare
Group and the Commercial & Industrial Group originated 61.96%, 32.41% and 5.63%,
respectively, of the Leases to be included in the subject transaction (based
upon the Statistical Discounted Present Value of the Leases as of the Cut-Off
Date).
The Business Technology Group 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 Group is the successor Group
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 Group 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 Group 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 Group in November 1996. The
rationale for the consolidation of the Healthcare Group was to achieve greater
operating efficiencies and eliminate certain operating and marketing
redundancies.
The Commercial & Industrial Group is segmented into three
distinct business units: the Manufacturing Technology Group, the Financial
Intermediary Group and the Material Handling Group. The Manufacturing Technology
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 September 30, 1998, Copelco Capital had total assets of
$2,525,448,000 compared with $2,083,256,000 as of December 31, 1997, total
liabilities of $2,342,868,000 compared with $1,927,558,000 as of December 31,
1997, shareholder's equity of $182,580,000 compared with $155,698,000 as of
December 31, 1997 and total revenues and net income of $217,683,000 and
$26,382,000, respectively, for the nine months ended September 30, 1998,
compared with $253,787,000 and $32,137,000, respectively, for the year ended
December 31, 1997.
Since 1986, Copelco Capital and its predecessors have
participated in 38 equipment lease securitizations involving the issuance of in
excess of $3.8 billion in securities. Copelco Capital and its predecessors
performed all servicing functions in each of these prior transactions, 9 of
which remain outstanding.
20
<PAGE> 23
ORIGINATIONS. The Business Technology Group leases
small-ticket office equipment, primarily photocopiers and computers, to
businesses and business owners throughout the United States. The Business
Technology Group 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 Group 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 Business Technology Group 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 Group 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 Group 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 Group
originates leases through five sales groups: National Accounts, Medical
Business, Vendor Services, Home Care, and Ambulatory Care.
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 leasing line of credit for the leasing of medium-ticket medical
equipment such as computed topography 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
leasing line of credit for use in leasing small- and medium-ticket medical
equipment. Approximately 25% of all leases originated by the Healthcare Group
are made to individual physicians. The average size of such Leases are generally
less than or equal to $50,000. Copelco Capital requires individual physicians to
meet the same rigorous criteria and credit scores as a physician group.
21
<PAGE> 24
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 Group: The Manufacturing
Technology Group and the Financial Intermediary Group provide equipment leasing
services primarily to mid-sized companies. Since early 1993, the Group has
focused on marketing through manufacturers and distributors in the electronics
manufacturing service industry. Currently, approximately 90% of the leases
originated by this Group 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 Groups. Within the parameters established by Copelco Capital,
each Group 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 $3,000,000 must be approved by
the senior management of Copelco Financial.
Business Technology Group: Prior to a lease being approved by
the Business Technology Group, 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 Moberly, Missouri. 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.
22
<PAGE> 25
The Business Technology Group has also implemented an
automated credit scoring system. The system, designed by Dun & Bradstreet
Information Services ("Dun & Bradstreet") specifically for the Business
Technology Group, 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 Group's traditional credit
decision-making criteria (i.e., Dun & Bradstreet data, consumer credit bureau
information, and bank and trade references).
Healthcare Group: 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 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 Care 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
Group's credit staff under the supervision of a senior credit officer.
Commercial & Industrial Group: In the Manufacturing Technology
Group and Financial Intermediary Group, all credit decisions are made by credit
analysts. Credit scoring is not used. In general, 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 Group. The majority of
business is originated 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 Group's credit scoring model, in which the filters and scoring
23
<PAGE> 26
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 Groups
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 uniformly utilized throughout Copelco Capital's Groups.
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 the lessee and any 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.
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 Assignment and Servicing Agreement, including, without limitation, in
connection with a full or partial buy-out or equipment upgrade.
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 for 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.
24
<PAGE> 27
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. In addition, after giving effect to such
additions and substitutions, the aggregate Booked Residual Value of the Leases
will not be materially less than the aggregate Booked Residual Value of the
Leases immediately prior to such substitutions or additions. Additionally,
either the final payment on such Substitute Lease or Additional Lease will be on
or prior to December 30, 2005, or, to the extent the final payment on such Lease
is due subsequent to December 30, 2005, only scheduled payments due on or prior
to such date may be included in the Discounted Present Value of such Lease for
the purpose of making any calculation under the Indenture.
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."
ASSIGNMENT AND SERVICING AGREEMENT. Copelco Capital will enter
into an agreement (the "Assignment and Servicing Agreement") with Copelco
Capital Funding LLC 99-1 as Transferor (in such capacity, the "Transferor") and
Manufacturers and Traders Trust Company, a New York banking corporation, as
indenture trustee (the " Trustee"), 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 Assignment 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 those leases Copelco
Capital permitted to be terminated early (an "Early Lease Termination") in a
manner consistent with the provisions of the Assignment and Servicing 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 Copelco Capital
Funding LLC 99-1 or the 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 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 Assignment and Servicing Agreement, Copelco
Capital will have the option to substitute one or more Substitute Leases (as
defined herein) 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").
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 Trustee fees.
25
<PAGE> 28
THE ISSUER
GENERAL. Copelco Capital Funding LLC 99-1 is a limited
liability company formed in accordance with the laws of the State of Delaware,
pursuant to the limited liability company agreement between Copelco Capital,
Inc. and Copelco Manager, Inc., dated as of February 23, 1999, 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 is structured to insulate it from bankruptcy risk and 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 Notes and (iii) distributing payments thereon.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
As of the date of this Prospectus, the Issuer has had no
operating history. The net proceeds of the sale of the Notes will be distributed
to the owners of the Issuer. See "Use of Proceeds". The Issuer is prohibited by
its Limited Liability Company Agreement from engaging in business other than (i)
the purchase of equipment leases and lease receivables (including equipment)
from Copelco Capital and its affiliates , (ii) the issuance of notes
collateralized by its assets and (iii) engaging in acts incidental, necessary or
convenient to the foregoing and permitted under Delaware law. The Issuer's
ability to incur, assume or guaranty indebtedness for borrowed money is also
restricted by its Limited Liability Company Agreement.
DIRECTORS AND EXECUTIVE OFFICERS OF THE MANAGER OF THE ISSUER
The following table sets forth the executive officers and
directors of Copelco Manager, Inc., the manager of the Issuer ("Manager") and
their ages and positions as of February 26, 1999. Because the Issuer is
organized as a special purpose company and will be largely passive, it is
expected that the officers and directors of the Manager will participate in the
management of the Issuer to a limited extent. Most of the actions related to
maintaining and servicing the assets will be performed by the Servicer.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Name Age Position
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ian J. Berg 55 Chairman of the Board (Principal Executive Officer), Director
Robert J. Lemenze, Jr. 39 President, Chief Operating Officer
John Hakemian 58 Director
Nicholas Antonaccio 50 Vice President - Finance
Tadeyuki Seki 47 Director
Stephen W. Shippie 47 Vice President
Spencer Lempert 52 Secretary
</TABLE>
Ian J. Berg has served as Chairman of the Board, (Principal
Executive Officer) and Director of the Manager since being appointed/elected on
February 23, 1999. Mr. Berg founded Copelco Financial in October 1972 and has
continuously served as its President and CEO from inception. Prior to founding
Copelco Financial, Mr. Berg served as Senior Vice President and Director of MDC
Corporation (an AMEX listed corporation) and as President and Director of MDC
Leasing Corporation from 1967 through 1972. He is a past Vice President and
Director of the Equipment Leasing Association (the industry trade association)
and a founder, past officer and Director of the Eastern Association of Equipment
Lessors.
Robert J. Lemenze, Jr. has served as President of the Manager
since being appointed/elected on February 23, 1999. Mr. Lemenze was elected
President and Chief Operating Officer of Copelco Capital in January 1997. Prior
to this he served as Vice President of Sales and head of the Document Imaging
Sales Group since joining Copelco Capital in 1987.
John Hakemian has served as Director since being elected on
February 23, 1999. For the last five years, Mr. Hakemian has served, initially,
as the chief financial officer for a subsidiary of Itochu International (the
26
<PAGE> 29
Issuer's ultimate parent company in the United States) and, more recently, as
the Vice President - Finance of Itochu International Enterprise.
Nicholas Antonaccio has served as Vice President - Finance and
Treasurer since being elected on February 23, 1999. Mr. Antonaccio joined
Copelco Capital as a Senior Vice President and Chief Financial Officer in
September 1995. He formerly served as the Treasurer of Concord Leasing Company.
Tadeyuki Seki has served as Director since being elected on
February 23, 1999. For the last six months, Mr. Seki has served as the Vice
President and Treasurer of Itochu International and for the year and a half
prior, as Assistant Senior Manager and for the three years prior to that, as
General Manager of the Credit Finance Department of the Itochu Corporation in
Japan.
Stephen W. Shippie has served as Vice President since being
elected on February 23, 1999. For the last five years, Mr. Shippie has served as
the Vice President-Finance of Copelco Financial.
Spencer Lempert has served as Secretary since being elected on
February 23, 1999. For the last five years, Mr. Lempert has served as the
General Counsel for Copelco Financial.
None of the above-listed directors and officers of the Manager
will be compensated directly by the Issuer or the Manager nor with any funds or
assets of the Issuer or the Manager nor will any such directors and officers
receive compensation in the capacities in which they act for the Manager of the
Issuer.
DESCRIPTION OF THE NOTES
The ___% Class A-1 Lease-Backed Notes (the "Class A-1 Notes"),
____% Class A-2 Lease-Backed Notes (the "Class A-2 Notes"), ___% Class A-3
Lease-Backed Notes (the "Class A-3 Notes"), % Class A-4 Lease-Backed Notes (the
"Class A-4 Notes") and ____% Class A-5 Lease-Backed Notes (the "Class A-5 Notes,
together with the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes, the "Class A Notes"), ____% Class B Lease-Backed Notes (the "Class B
Notes"), _____% Class C Lease-Backed Notes (the "Class C Notes") and _____%
Class D Lease-Backed Notes (the "Class D Notes", together with the Class A
Notes, the Class B Notes and the Class C Notes, the "Offered Notes") and the %
Class E Lease-Backed Notes (the "Class E Notes", together with the Offered
Notes, the "Notes") will be issued pursuant to the Indenture (the "Indenture")
between the Issuer and the Trustee. The following statements with respect to the
Notes is a summary of all material terms relating to a description of the
Offered Notes. However, investors in the Offered Notes should review 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 section in the
Indenture or the term used therein should be reviewed by you in order to fully
understand this offering.
The Offered Notes represent secured debt obligations of the
Issuer secured by the Pledged Assets and the privately placed Class E Notes
represent subordinated debt obligations of the Issuer secured by certain assets
in the Pledged Assets as provided in the related Indenture. The Class E Notes
are subordinated to the Offered Notes for the purpose of, among other things,
offsetting losses and other shortfalls. 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 limited liability company 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 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 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.
The Notes will bear interest from the Issuance Date at the
applicable interest rate for the respective class as set forth below. The
Interest Rate is 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, for which
interest will be calculated on the basis of a year of
27
<PAGE> 30
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 (as defined
herein). The interest rate for the Notes is as follows: ____% per annum on the
Class A-1 Notes (the "Class A-1 Interest Rate"), ____% 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 A-5 Notes (the
"Class A-5 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"). With respect
to any particular Class, the "Interest Rate" refers to the applicable rate
indicated in the immediately preceding sentence.
Principal will be payable as set forth under "Distributions on
Notes." Notes may be presented to the corporate trust office of the 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. The holders of the Class A-1 Notes
(the "Class A-1 Noteholders"), the holders of the Class A-2 Notes (the "Class
A-2 Noteholders"), the holders of the Class A-3 Notes (the "Class A-3
Noteholders"), the holders of the Class A-4 Notes ( the "Class A-4
Noteholders"), the holders of the Class A-5 Notes (the "Class A-5 Noteholders,"
together with the Class A-1 Noteholders, the Class A-2 Noteholders, the Class
A-3 Noteholders, and the Class A-4 Noteholders, the "Class A Noteholders"), the
holders of the Class B Notes (the "Class B Noteholders"), the holders of the
Class C Notes (the "Class C Noteholders") and the holders of the Class D Notes
the ("Class D Noteholders," together with the Class A Noteholders, the Class B
Noteholders and the Class C Noteholders, the "Offered Noteholders") may hold
their notes through The Depository Trust Company ("DTC") (in the United States)
or Cedel Bank ("CEDEL") and the Euroclear System ("Euroclear") (in Europe) if
they are participants of such systems, or indirectly through organizations which
are participants in such systems.
Cede & Co. ("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.
Cross-market transfers between persons holding directly 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
28
<PAGE> 31
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 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 38 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
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.
29
<PAGE> 32
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 37 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.
DTC management is aware that some computer applications,
systems, and the like for processing data ("SYSTEMS") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its Participants and other
members of the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and interest payments) to security
holders, book-entry deliveries, and settlement of trades within DTC ("DTC
Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to properly perform its services is
also dependent upon other parties, including, but not limited to, issuers and
their agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information and the
provision of services, including telecommunications and electrical utility
service providers, among others. DTC has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (i) impress upon them the importance of such services
being Year 2000 compliant; and (ii) determine the extent of their
30
<PAGE> 33
efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In additional, DTC is in the process of developing such contingency
plans as it deems appropriate.
According to DTC, the foregoing information with respect to
DTC has been provided to the Industry for informational purposes only and is not
intended to serve as a representation, warranty, or contract modification of any
kind.
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 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 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 2.07).
Upon the occurrence of any of the events described in the
immediately preceding paragraph, the 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 reregistration, the Trustee will issue such Definitive Notes,
and thereafter the Trustee will recognize the holders of such Definitive Notes
as Offered Noteholders under the related Indenture (the "Holders") (Section
2.07). The Trustee will also notify the Holders of any adjustment to the Record
Date with respect to the Notes necessary to enable the 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 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 Trustee or its agent in New York, New York,
which the 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 Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith (Section 2.03(e)).
INITIAL PRINCIPAL AMOUNT. $139,000,000 for the Class A-1 Notes
(the "Class A-1 Initial Principal Amount"), $95,000,000 for the Class A-2 Notes
(the "Class A-2 Initial Principal Amount"), $110,000,000 for the Class A-3 Notes
(the "Class A-3 Initial Principal Amount"), $90,000,000 for the Class A-4 Notes
(the "Class A-4 Initial Principal Amount"), $75,613,000 for the Class A-5 Notes
(the "Class A-5 Initial Principal Amount," together with the Class A-1 Initial
Principal Amount, the Class A-2 Initial Principal Amount, the Class A-3 Initial
Principal Amount and the Class A-4 Initial Principal Amount, the "Class A
Initial Principal Amount"), $13,029,000 for the Class B Notes (the "Class B
Initial Principal Amount"), $10,134,000 for the Class C Notes (the "Class C
Initial Principal Amount"), $15,925,000 for the Class D Notes (the "Class D
Initial Principal Amount") and $17,373,000 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) 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 A-5 Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes, each weighted
by (i) the initial principal amount of the Class A-1 Notes, the initial
principal amount of the Class A-2 Notes, the initial principal amount of the
Class A-3 Notes, the initial principal amount of the Class A-4 Notes, the
initial principal amount of the Class A-5 Notes, the initial principal amount of
the Class B Notes, the initial principal amount of the Class C Notes, the
initial principal amount of the Class D Notes, and the initial principal amount
of the Class E Notes, 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
31
<PAGE> 34
annum. The discounted present value of the Performing Leases (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
Assignment 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 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 ______% (the "Statistical Discount Rate").
The Statistical Discounted Present Value of the Leases as of the Cut-Off Date is
$579,105,376.99 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 Transferor will represent in the Assignment and Servicing Agreement that at
the time of transfer of any Lease to Copelco Capital Funding LLC 99-1, 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 and Class A-5 Notes are the Payment Dates on January 15, 2000,
October 15, 2000, September 15, 2001, October 15, 2002, and December 15, 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 January 15, 2004,
February 15, 2004 and June 15, 2004, respectively. The stated maturity date with
respect to the Class A-1 Notes is the Payment Date on March 15, 2000 (the "Class
A-1 Stated Maturity Date"), the stated maturity date with respect to the Class
A-2 Notes is the Payment Date on October 15, 2001 (the "Class A-2 Stated
Maturity Date"), the stated maturity date with respect to the Class A-3 Notes is
the Payment Date on September 15, 2002 (the "Class A-3 Stated Maturity Date"),
the stated maturity date with respect to the Class A-4 Notes is the Payment Date
on October 15, 2003 (the "Class A-4 Stated Maturity Date"), the stated maturity
with respect to the Class A-5 Notes is the Payment Date on January 15, 2007 (the
"Class A-5 Stated Maturity Date") the stated maturity date with respect to the
Class B Notes is the Payment Date on January 15, 2007 (the "Class B Stated
Maturity Date"), the stated maturity date with respect to the Class C Notes is
the Payment Date on January 15, 2007 (the "Class C Stated Maturity Date") and
the stated maturity date with respect to the Class D Notes is the Payment Date
in January 15, 2007 (the "Class D Stated Maturity Date"). However, if all
payments on the Leases are made as scheduled, final payment with respect to the
Notes would occur prior to stated maturity.
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 April 15, 1999, 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 A-5 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, since the Issuance Date)
(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 A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes
32
<PAGE> 35
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 A-5 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
"Description of the Notes -- Distributions on Notes." On each Payment Date, to
the extent funds are available therefor, the Principal Payment 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, (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 and (v) to the Class A-5
Noteholders, until the Outstanding Principal Amount on the Class A-5 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, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 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.
"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 "Class A Principal Payment" shall equal (a) while the
Class A-1 Notes are outstanding, (i) on all Payment Dates prior to the March
2000 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 March 2000 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.
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
33
<PAGE> 36
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 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 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 Floors" means the Class B Floor, the Class C Floor,
the Class D Floor or the Class E Floor.
The "Class Target Investor Principal Amounts" means the Class
A Target Investor Principal Amount or the Class B Target Investor Principal
Amounts or the Class C Target Investor Principal Amount or the Class D Target
Investor Principal Amount or the Class E Target Investor Principal Amounts,
respectively.
The "Class A Percentage" will be equal approximately to
84.21%. The "Class B Percentage" will be equal approximately to 2.96%. The
"Class C Percentage" will be equal approximately to 2.30%. The "Class D
Percentage" will be equal approximately to 3.62%. The "Class E Percentage" will
be equal approximately to 3.95%.
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 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.
34
<PAGE> 37
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 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 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" 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.
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 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 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.
COLLECTION ACCOUNT. The Trustee will establish and maintain an
Eligible Account (as defined herein) (the "Collection Account") into which the
Servicer will deposit all Lease Payments, Casualty Payments, Termination
Payments, certain proceeds from repurchases by Copelco Capital of Leases as a
result of breaches of representations and warranties, 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 (as defined herein) 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 each of the Rating
Agencies, 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 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
35
<PAGE> 38
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 Trustee shall deposit within two Business Days of receipt
the following funds, as received, into the Collection Account (Section 3.03(a)),
including any funds deposited into the Collection Account from the Reserve
Account, ("Available Funds"):
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, with respect to a Warranty Lease, the Residual
Warranty Payments. "Residual Warranty Payments" means
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 beginning of the Due Period
relating to such date of determination (plus any
amounts previously due and unpaid);
e) proceeds from investment of funds in the Collection
Account and the Reserve Account, if any;
f) Casualty Payments other than residual casualty
payments ("Residual Casualty Payments") which are, at
any date of determination 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 beginning of the Due Period relating to such date
of determination (plus any amounts previously
unpaid);
g) Servicer Advances (as defined herein);
h) Termination Payments to the extent the Issuer does
not reinvest such Termination Payments in Additional
Leases (as defined herein) other than Residual
Prepayments (as defined below); and
i) proceeds received once the Issuer exercises its right
to redeem the Notes;
j) to the extent there occurs an Available Funds
Shortfall (as defined below), funds, if any, on
deposit in the Reserve Account to the extent of such
Available Funds Shortfall.
Available Funds will not include (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
(as defined below) ("Residual Realizations").
"Residual Prepayments" means, at any date of determination
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 beginning of the Due Period relating
to such date of determination (plus any amounts previously due and unpaid).
36
<PAGE> 39
RESERVE ACCOUNT. The Trustee will establish and maintain an
Eligible Account (the "Reserve Account"). On the Issuance 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 (as
defined herein) on the Notes and 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 (such payments, the "Required Payments" and
such shortfall, an "Available Funds Shortfall"), the 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 then unpaid
principal amounts (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
April 15, 1999. On each 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 (or, in the case of the first Payment Date, the Issuance
Date), plus all previously accrued and unpaid interest on the Notes (Section
2.01(c)). Funds in the Collection Account, together with reinvestment earnings
thereon, will be used by the Trustee to make required payments of principal and
interest on the related Notes (Section 3.03(b)).
For each Payment Date, Principal Payments due with respect to
the Class A Notes, the Class B Notes, the Class C Notes, the 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, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class A-5 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 (as defined herein) and
acceleration of the Notes has occurred, on or before each Payment Date, the
Servicer will instruct the 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 (as
defined herein) 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, Class A-4
Noteholders and Class A-5 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;
37
<PAGE> 40
(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,
then (iv) to the Class A-4 Noteholders, until the
Outstanding Principal Amount on the Class A-4 Notes
is reduced to zero, and finally (v) to the Class A-5
Noteholders, until the Outstanding Principal Amount
on the Class A-5 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
Noteholders;
(l) to make the Class E Principal Payment to the Class E
Noteholders;
(m) to pay the Additional Principal, if any, as an
additional reduction of principal to the Class A
Noteholders, 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 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;
(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 Trustee an amount sufficient to cover delinquencies on some or all Leases
with respect to prior Due Periods. The Servicer will be reimbursed for such
Servicer Advances from Available Funds on the 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).
The Issuer will give notice of such redemption to each Noteholder and the
Trustee at least 30 days before the Payment Date fixed for such prepayment. Upon
deposit of funds necessary to effect such redemption, the 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 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).
38
<PAGE> 41
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 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 (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 Trustee shall be applied in the following
order of priority, 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
Assignment 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, Class A-4 Notes and Class A-5 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, Class A-4 Interest
Rate and Class A-5 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, Class A-4 Notes and Class A-5 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 Notes; 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 Class R-1
Lease-Residual Backed Notes (the "Class R-1 Notes") and the Class R-2
Lease-Residual Backed Notes (the "Class R-2 Notes" together with the
Class R-1 Notes, the "Residual Notes");
Fifth to the payment of amounts then due the Trustee under the
Indenture;
39
<PAGE> 42
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 Issuer
or any other person legally entitled thereto (Section 6.06).
The Issuer will be required to furnish annually to the
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 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
Trustee or exercising any trust or power conferred on the 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 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 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 Trustee reasonable security or indemnity
(Section 6.12). Upon request of a Noteholder, the Trustee will provide
information as to the outstanding principal amount of each Class of 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 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).
SERVICER EVENTS OF DEFAULT. The following events and
conditions shall be defined in the Assignment and Servicing Agreement as
"Servicer Events of Default":
(a) failure on the part of the Servicer to remit to the
Trustee within three Business Days following the
receipt thereof any monies received by the Servicer
required to be remitted to the Trustee under the
Assignment and Servicing Agreement;
(b) so long as Copelco Capital is the Servicer, failure
on the part of Copelco Capital to pay to the Trustee
on the date when due, any payment required to be made
by Copelco Capital pursuant to the Assignment 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 Assignment and Servicing Agreement which
failure continues unremedied for a period of 30 days
after the earlier of (i) the date it first becomes
known to any officer of Copelco Capital or the
Servicer, as the case may be, and (ii) the date on
which written notice thereof requiring the same to be
remedied shall have been given to the Servicer or
Copelco Capital, as the case may be, by the Trustee,
or to the Servicer or Copelco Capital, as the case
may be, and the Trustee by any holder of the Notes;
(d) if any representation or warranty of Copelco Capital
made in the Assignment 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 Assignment 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 Assignment and
Servicing Agreement with respect to any of the Leases
or the Equipment
40
<PAGE> 43
subject thereto will not constitute a Servicer Event of
Default if Copelco Capital repurchases such Lease and
Equipment in accordance with the Assignment 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 Assignment and Servicing Agreement is continuing, the Trustee shall,
upon the instructions of the holders of 66 2/3% in principal amount of the
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 Assignment and Servicing Agreement
(Section 5.01). Upon the receipt by the Servicer of such written notice, all
authority and power of the Servicer under the Assignment 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 Trustee pursuant to and under the
Assignment 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 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
Assignment 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 lease
subject to repurchase as a result of a breach of representation and warranty (a
"Warranty Lease") or a lease following a modification or adjustment to the terms
of such Lease (an "Adjusted Lease"), Copelco Capital will have the option to
substitute for the terminated lease another lease 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.
41
<PAGE> 44
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-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class B, Class C, Class D, and Class E Notes which would be outstanding on the
Payment Dates set forth below assuming a Conditional Prepayment Rate ("CPR") of
0% and 12%, respectively, and were calculated using the Discount Rate. Such
information is hypothetical and is set forth for illustrative purposes only. The
CPR 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 Series 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 March
9, 1999 and the first Payment Date is April 15, 1999.
42
<PAGE> 45
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE RESPECTIVE CPR SET FORTH
BELOW
<TABLE>
<CAPTION>
0% CPR
----------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- --------- ------- ------- ------- -------
ISSUANCE DATE
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 9,1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April 15, 1999 82.14 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 15, 1999 73.07 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 15, 1999 63.89 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 15, 1999 54.66 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
August 15, 1999 45.34 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 1999 35.97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
October 15, 1999 26.67 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
November 15, 1999 17.45 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 15, 1999 8.26 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 15, 2000 0.00 99.05 100.00 100.00 100.00 99.76 99.76 99.76 99.76
February 15, 2000 0.00 87.81 100.00 100.00 100.00 96.88 96.88 96.88 96.88
March 15, 2000 0.00 76.68 100.00 100.00 100.00 94.02 94.02 94.02 94.02
April 15, 2000 0.00 65.54 100.00 100.00 100.00 91.17 91.17 91.17 91.17
May 15, 2000 0.00 54.34 100.00 100.00 100.00 88.30 88.30 88.30 88.30
June 15, 2000 0.00 43.12 100.00 100.00 100.00 85.42 85.42 85.42 85.42
July 15, 2000 0.00 31.96 100.00 100.00 100.00 82.56 82.56 82.56 82.56
August 15, 2000 0.00 20.80 100.00 100.00 100.00 79.70 79.70 79.70 79.70
September 15, 2000 0.00 9.70 100.00 100.00 100.00 76.85 76.85 76.85 76.85
October 15, 2000 0.00 0.00 98.79 100.00 100.00 74.01 74.01 74.01 74.01
November 15, 2000 0.00 0.00 89.25 100.00 100.00 71.18 71.18 71.18 71.18
December 15, 2000 0.00 0.00 79.74 100.00 100.00 68.35 68.35 68.35 68.35
January 15, 2001 0.00 0.00 70.27 100.00 100.00 65.54 65.54 65.54 65.54
February 15, 2001 0.00 0.00 60.74 100.00 100.00 62.71 62.71 62.71 62.71
March 15, 2001 0.00 0.00 51.29 100.00 100.00 59.91 59.91 59.91 59.91
April 15, 2001 0.00 0.00 41.81 100.00 100.00 57.10 57.10 57.10 57.10
May 15, 2001 0.00 0.00 32.32 100.00 100.00 54.28 54.28 54.28 54.28
June 15, 2001 0.00 0.00 22.82 100.00 100.00 51.46 51.46 51.46 51.46
July 15, 2001 0.00 0.00 13.48 100.00 100.00 48.69 48.69 48.69 48.69
August 15, 2001 0.00 0.00 4.49 100.00 100.00 46.02 46.02 46.02 46.02
September 15, 2001 0.00 0.00 0.00 95.05 100.00 43.48 43.48 43.48 43.48
October 15, 2001 0.00 0.00 0.00 85.17 100.00 41.08 41.08 41.08 41.08
November 15, 2001 0.00 0.00 0.00 75.87 100.00 38.83 38.83 38.83 38.83
December 15, 2001 0.00 0.00 0.00 67.17 100.00 36.71 36.71 36.71 36.71
January 15, 2002 0.00 0.00 0.00 59.11 100.00 34.76 34.76 34.76 34.76
February 15, 2002 0.00 0.00 0.00 51.47 100.00 32.90 32.90 32.90 32.90
March 15, 2002 0.00 0.00 0.00 44.12 100.00 31.12 31.12 31.12 31.12
April 15, 2002 0.00 0.00 0.00 36.85 100.00 29.35 29.35 29.35 29.35
May 15, 2002 0.00 0.00 0.00 29.61 100.00 27.59 27.59 27.59 27.59
June 15, 2002 0.00 0.00 0.00 22.42 100.00 25.85 25.85 25.85 25.85
July 15, 2002 0.00 0.00 0.00 15.30 100.00 24.12 24.12 24.12 24.12
August 15, 2002 0.00 0.00 0.00 8.35 100.00 22.43 22.43 22.43 22.43
September 15, 2002 0.00 0.00 0.00 1.58 100.00 20.79 20.79 20.79 20.79
October 15, 2002 0.00 0.00 0.00 0.00 94.01 19.18 19.18 19.18 19.18
November 15, 2002 0.00 0.00 0.00 0.00 86.36 17.62 17.62 17.62 17.62
December 15, 2002 0.00 0.00 0.00 0.00 78.92 16.10 16.10 16.10 16.10
January 15, 2003 0.00 0.00 0.00 0.00 71.82 14.65 14.65 14.65 14.65
February 15, 2003 0.00 0.00 0.00 0.00 64.05 13.24 13.24 14.58 14.65
March 15, 2003 0.00 0.00 0.00 0.00 55.88 13.24 13.24 14.58 14.65
April 15, 2003 0.00 0.00 0.00 0.00 46.49 13.24 13.24 14.58 14.65
May 15, 2003 0.00 0.00 0.00 0.00 38.45 13.24 13.24 14.58 14.65
June 15, 2003 0.00 0.00 0.00 0.00 30.52 13.24 13.24 14.58 14.65
July 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.44 1.26 2.07 3.01 4.07 2.51 2.51 2.52 2.52
To Maturity 0.44 1.26 2.07 3.01 4.12 2.57 2.58 2.63 2.69
</TABLE>
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3
Note, Class A-4 Note, Class A-5 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> 46
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE
RESPECTIVE CPR SET FORTH BELOW
<TABLE>
<CAPTION>
12% CPR
-----------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- --------- ------- ------- ------- -------
ISSUANCE DATE
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 9, 1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April 15, 1999 77.91 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 15, 1999 64.85 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 15, 1999 51.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 15, 1999 39.17 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
August 15, 1999 26.56 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 1999 14.14 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
October 15, 1999 2.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
November 15, 1999 0.00 87.88 100.00 100.00 100.00 96.89 96.89 96.89 96.89
December 15, 1999 0.00 73.58 100.00 100.00 100.00 93.23 93.23 93.23 93.23
January 15, 2000 0.00 59.72 100.00 100.00 100.00 89.68 89.68 89.68 89.68
February 15, 2000 0.00 46.02 100.00 100.00 100.00 86.16 86.16 86.16 86.16
March 15, 2000 0.00 32.67 100.00 100.00 100.00 82.74 82.74 82.74 82.74
April 15, 2000 0.00 19.54 100.00 100.00 100.00 79.38 79.38 79.38 79.38
May 15, 2000 0.00 6.62 100.00 100.00 100.00 76.06 76.06 76.06 76.06
June 15, 2000 0.00 0.00 94.73 100.00 100.00 72.80 72.80 72.80 72.80
July 15, 2000 0.00 0.00 84.01 100.00 100.00 69.62 69.62 69.62 69.62
August 15, 2000 0.00 0.00 73.48 100.00 100.00 66.50 66.50 66.50 66.50
September 15, 2000 0.00 0.00 63.19 100.00 100.00 63.44 63.44 63.44 63.44
October 15, 2000 0.00 0.00 53.10 100.00 100.00 60.45 60.45 60.45 60.45
November 15, 2000 0.00 0.00 43.24 100.00 100.00 57.52 57.52 57.52 57.52
December 15, 2000 0.00 0.00 33.57 100.00 100.00 54.65 54.65 54.65 54.65
January 15, 2001 0.00 0.00 24.14 100.00 100.00 51.85 51.85 51.85 51.85
February 15, 2001 0.00 0.00 14.83 100.00 100.00 49.09 49.09 49.09 49.09
March 15, 2001 0.00 0.00 5.75 100.00 100.00 46.39 46.39 46.39 46.39
April 15, 2001 0.00 0.00 0.00 96.13 100.00 43.75 43.75 43.75 43.75
May 15, 2001 0.00 0.00 0.00 85.43 100.00 41.15 41.15 41.15 41.15
June 15, 2001 0.00 0.00 0.00 74.93 100.00 38.60 38.60 38.60 38.60
July 15, 2001 0.00 0.00 0.00 64.77 100.00 36.13 36.13 36.13 36.13
August 15, 2001 0.00 0.00 0.00 55.12 100.00 33.79 33.79 33.79 33.79
September 15, 2001 0.00 0.00 0.00 46.07 100.00 31.59 31.59 31.59 31.59
October 15, 2001 0.00 0.00 0.00 37.59 100.00 29.53 29.53 29.53 29.53
November 15, 2001 0.00 0.00 0.00 29.69 100.00 27.61 27.61 27.61 27.61
December 15, 2001 0.00 0.00 0.00 22.36 100.00 25.83 25.83 25.83 25.83
January 15, 2002 0.00 0.00 0.00 15.62 100.00 24.20 24.20 24.20 24.20
February 15, 2002 0.00 0.00 0.00 9.30 100.00 22.66 22.66 22.66 22.66
March 15, 2002 0.00 0.00 0.00 3.31 100.00 21.21 21.21 21.21 21.21
April 15, 2002 0.00 0.00 0.00 0.00 97.00 19.79 19.79 19.79 19.79
May 15, 2002 0.00 0.00 0.00 0.00 90.22 18.41 18.41 18.41 18.41
June 15, 2002 0.00 0.00 0.00 0.00 83.62 17.06 17.06 17.06 17.06
July 15, 2002 0.00 0.00 0.00 0.00 77.20 15.75 15.75 15.75 15.75
August 15, 2002 0.00 0.00 0.00 0.00 71.03 14.49 14.49 14.49 14.49
September 15, 2002 0.00 0.00 0.00 0.00 64.32 13.29 13.81 14.49 14.49
October 15, 2002 0.00 0.00 0.00 0.00 57.59 13.29 13.81 14.49 14.49
November 15, 2002 0.00 0.00 0.00 0.00 51.16 13.29 13.81 14.49 14.49
December 15, 2002 0.00 0.00 0.00 0.00 45.01 13.29 13.81 14.49 14.49
January 15, 2003 0.00 0.00 0.00 0.00 39.23 13.29 13.81 14.49 14.49
February 15, 2003 0.00 0.00 0.00 0.00 33.69 13.29 13.81 14.49 14.49
March 15, 2003 0.00 0.00 0.00 0.00 28.30 13.29 13.81 14.49 14.49
April 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
May 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.33 0.96 1.68 2.55 3.72 2.14 2.15 2.15 2.15
To Maturity 0.33 0.96 1.68 2.55 3.77 2.21 2.22 2.24 2.29
</TABLE>
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3
Note, Class A-4 Note, Class A-5 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> 47
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 Trustee
under the Indenture. Copelco Capital, as Transferor or Servicer, and its
affiliates may from time to time enter into normal banking and Trustee
relationships with the Trustee and its affiliates. The 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 Trustee shall have the power to appoint a co-Trustee or a
separate Trustee under the Indenture. In the event of such appointment, all
rights, powers, duties and obligations conferred or imposed upon the Trustee by
the Indenture will be conferred or imposed upon the Trustee and such separate
Trustee or co-Trustee jointly, or in any jurisdiction in which the Trustee shall
be incompetent or unqualified to perform certain acts, singly upon such separate
Trustee or co-Trustee, who shall exercise and perform such rights, powers,
duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Issuer
will be obligated to appoint a successor Trustee. The Issuer may also remove
each Trustee if such 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 Trustee. Any resignation or removal of a
Trustee and appointment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
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 is absolute and unconditional, regardless of any
defense, setoff or abatement which the Lessee may have against Copelco Capital,
as Transferor 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 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 Assignment
and Servicing Agreement, Copelco Capital will sell the Leases to the Issuer,
make a capital contribution to the Issuer of the Leases and Equipment owned by
Copelco Capital and subject to the Leases, and assign its security interests in
the Equipment subject to Nominal Buy-Out Leases. Copelco Capital will warrant
that each of the contribution of the Leases from
45
<PAGE> 48
Copelco Capital 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 Trustee and UCC financing statements identifying equipment
owned by Copelco Capital, transferred to the Issuer and pledged to the Trustee
will be filed in favor of the Issuer or the Trustee in the central filing
location for any given state. 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 Transferor or Servicer, various provisions of the
Bankruptcy Code of 1978, 11 U.S.C Section 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 CONSEQUENCES
The following is a summary of the material federal income tax
consequences to the original purchasers of the Offered Notes of the purchase,
ownership and disposition of the Offered Notes. Tax Counsel's opinion does not
purport to deal with all federal tax considerations applicable to all categories
of investors. Certain holders, including insurance companies, tax-exempt
organizations, financial institutions or broker dealers, taxpayers subject to
the alternative minimum tax, and holders that will hold the Offered Notes as
other than capital assets, may be subject to special rules that are not
discussed below. 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.
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
46
<PAGE> 49
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
partnership 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. Noteholders using the accrual method of accounting may be
required to report income for tax purposes in advance of receiving a
corresponding cash distribution with which to pay the related tax. 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.
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.
47
<PAGE> 50
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 Transferor 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, 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
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).
48
<PAGE> 51
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. 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, profit-sharing 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 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, a "Benefit Plan") and persons who are "parties in interest," within the
49
<PAGE> 52
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. Section 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 acquired 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 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
decision by the United States Supreme Court in John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank (510 U.S. 86) 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.
Employee benefit plans that are governmental plans (as defined
in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements; however, governmental plans may
be subject to comparable federal, state or local law restrictions.
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.
The sale of Notes to a Benefit Plan is in no respect a
representation by the Issuer or the Underwriters that this investment meets all
relevant legal requirements with respect to investments by Benefit Plans
generally or by a particular Benefit Plan, or that this investment is
appropriate for Benefit Plans generally or any particular Benefit Plan.
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 Prudential Securities
Incorporated ("Prudential Securities") and First Union Capital Markets Corp.
("First Union", and together with Prudential Securities, the "Underwriters")
have agreed to purchase the principal amount of the Offered Notes set forth
below:
50
<PAGE> 53
Prudential Securities First Union Totals
--------------------- ----------- ------
Class A-1 Notes
Class A-2 Notes
Class A-3 Notes
Class A-4 Notes
Class A-5 Notes
Class B Notes
Class C Notes
Class D Notes
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 Prudential
Securities, 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 selling concession not in excess of ___% per Class
A-1 Note, ___% per Class A-2 Note, ___% per Class A-3 Note, ___% per Class A-4
Note, ___% per Class A-5 Note, ___% per Class B Note, ___% per Class C Note and
___% per Class D Note. The Underwriters may, allow and such dealers may reallow
to other dealers, a discount not in excess of ___% per Class A-1 Note, ___% per
Class A-2 Note, ___% per Class A-3 Note, ___% per Class A-4 Note, ___% per Class
A-5 Note, ___% per Class B Note, ___% per Class C Note and ___% per Class D
Note. After the initial public offering, the public offering price and such
concessions may be changed.
The Underwriters will each represent and agree that:
(a) it has not offered or sold, and, prior to the expiration
of six months from the Issuance 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 and Copelco Capital, Inc. have agreed to jointly
and severally 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, Prudential Securities, on behalf of
the Underwriters, may impose
51
<PAGE> 54
"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.
Prudential Securities is also serving as the placement agent
for the Class E Notes and the Residual Notes.
EXPERTS
The balance sheet of Copelco Capital Funding LLC 99-1 as of
February 24, 1999, has been included herein and in the Registration Statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
auditing and accounting.
LEGAL MATTERS
Certain legal matters relating to the Notes will be passed
upon for Copelco Capital, Inc., the Servicer and the Issuer by Spencer N.
Lempert, General Counsel of Copelco Financial Services Group, Inc., and for
Copelco Capital, the Issuer and the Underwriters 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 "P-1", "D-1+" and "F1+/AAA" , that the
Class A-2, A-3, A-4 and A-5 Notes be rated at least "Aaa", "AAA" and "AAA", that
the Class B Notes be rated at least "Aa2", "AA" and "AA", that the Class C Notes
be rated at least "A2", "A" and "A" and that the Class D Notes be rated at least
"Baa2", "BBB" and "BBB" by Moody's Investors Service ("Moody's"), 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 Agencies
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 Agencies 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> 55
INDEX OF TERMS
TERM PAGE(S)
Additional Lease....................................... 24, 41
Additional Principal................................... 33
Adjusted Lease......................................... 24, 41
Assignment and Servicing Agreement..................... 25
Available Funds........................................ 36
Available Funds Shortfall.............................. 37
Available Reserve Amount............................... 37
Bankruptcy Code........................................ 46
Benefit Plan........................................... 49
Booked Residual Value.................................. 25
Casualty............................................... 35
Casualty Payment....................................... 35
Cede................................................... 28
CEDEL.................................................. 28
Cedel Participants..................................... 29
Class A Initial Principal Amount....................... 31
Class A Noteholders.................................... 28
Class A Notes.......................................... 27
Class A Percentage..................................... 34
Class A Principal Payment.............................. 33
Class A-Stated Maturity Date........................... 32
Class A Target Investor Principal Amount............... 34
Class A-1 Initial Principal Amount..................... 31
Class A-1 Interest Rate................................ 28
Class A-1 Noteholders.................................. 28
Class A-1 Notes........................................ 27
Class A-1 Stated Maturity Date......................... 32
Class A-2 Initial Principal Amount..................... 31
Class A-2 Interest Rate................................ 28
Class A-2 Noteholders.................................. 28
Class A-2 Notes........................................ 27
Class A-2 Stated Maturity Date......................... 32
Class A-3 Initial Principal Amount..................... 31
Class A-3 Interest Rate................................ 28
Class A-3 Noteholders.................................. 28
Class A-3 Notes........................................ 27
Class A-3 Stated Maturity Date......................... 32
Class A-4 Initial Principal Amount..................... 31
Class A-4 Interest Rate................................ 28
Class A-4 Noteholders.................................. 28
Class A-4 Notes........................................ 27
Class A-4 Stated Maturity Date......................... 32
Class A-5 Initial Principal Amount..................... 31
Class A-5 Interest Rate................................ 28
Class A-5 Noteholders.................................. 28
Class A-5 Notes........................................ 27
Class B Floor.......................................... 34
Class B Initial Principal Amount....................... 31
Class B Interest Rate.................................. 28
Class B Noteholders.................................... 28
53
<PAGE> 56
Class B Notes.......................................... 27
Class B Percentage..................................... 34
Class B Principal Payment.............................. 33
Class B Stated Maturity Date........................... 32
Class B Target Investor Principal Amount............... 34
Class C Floor.......................................... 34
Class C Initial Principal Amount....................... 31
Class C Interest Rate.................................. 28
Class C Noteholders.................................... 28
Class C Notes.......................................... 27
Class C Percentage..................................... 34
Class C Principal Payment.............................. 33
Class C Stated Maturity Date........................... 32
Class C Target Investor Principal Amount............... 34
Class D Floor.......................................... 35
Class D Initial Principal Amount....................... 31
Class D Interest Rate.................................. 28
Class D Noteholders.................................... 28
Class D Notes.......................................... 27
Class D Percentage..................................... 34
Class D Principal Payment.............................. 33
Class D Stated Maturity Date........................... 32
Class D Target Investor Principal Amount............... 34
Class E Floor.......................................... 35
Class E Initial Principal Amount....................... 31
Class E Interest Rate.................................. 28
Class E Noteholders.................................... 33
Class E Notes.......................................... 27
Class E Percentage..................................... 34
Class E Principal Payment.............................. 34
Class Floors........................................... 34
Class R-1 Notes........................................ 39
Class R-2 Notes........................................ 39
clearing agency........................................ 28
clearing corporation................................... 28
Closing Date........................................... 11
Code................................................... 46
Collection Account..................................... 35
Cooperative............................................ 30
Copelco Capital........................................ 11
Copelco Credit......................................... 20
Copelco Financial...................................... 20
Copelco Leasing........................................ 20
Cost per Copy.......................................... 21
CPR.................................................... 42
Cumulative Loss Amount................................. 35
Cut-Off Date........................................... 11
DCR.................................................... 52
Definitive Notes....................................... 31
Depositaries........................................... 28
Determination Date..................................... 32
Discount Rate.......................................... 31
Discounted Present Value of the Leases................. 31
Discounted Present Value of the Performing Leases...... 32
DTC.................................................... 28
Due Period............................................. 32
54
<PAGE> 57
Dun & Bradstreet....................................... 23
Early Lease Termination................................ 24, 25
Eligible Account....................................... 35
Equipment.............................................. 11
Equipment Financing Portion............................ 21
ERISA.................................................. 49
Euroclear.............................................. 28
Euroclear Operator..................................... 30
Euroclear Participants................................. 30
Events of Default...................................... 38
Excess Copy Charge..................................... 21
Fee Per Scan Charges................................... 22
First Union............................................ 50
Fitch.................................................. 52
Fixed Payment.......................................... 21
Group.................................................. 20
HILL................................................... 21
Holders................................................ 31
Indenture.............................................. 27
Indirect Participants.................................. 28
Industry............................................... 30
Initial Principal Amount............................... 27
Interest Accrual Period................................ 32
Interest Payments...................................... 32
Interest Rate.......................................... 28
IRS.................................................... 46
Issuer................................................. 11
Lease Contract......................................... 11
Lease Payment.......................................... 35
Lease Receivables...................................... 11
Leases................................................. 11
Lessee................................................. 11
Lessees................................................ 11
Maintenance Charge..................................... 21
Manager................................................ 26
Moody's................................................ 52
Non-Performing Leases.................................. 11, 32
Non-U.S. Person........................................ 49
Notes.................................................. 27
Offered Noteholders.................................... 28
Offered Notes.......................................... 27
OID.................................................... 47
Origination Divisions.................................. 11
Outstanding Principal Amount........................... 37
Outstanding Principal Amounts.......................... 32
Overcollateralization Balance.......................... 35
Participants........................................... 28
Payment Date........................................... 25
PILL................................................... 21
Plan Asset Regulations................................. 50
Pledged Assets......................................... 12
Principal Payments..................................... 33
Prudential Securities.................................. 50
PTCE................................................... 50
Rating Agency.......................................... 52
Record Date............................................ 32
55
<PAGE> 58
Required Payments...................................... 37
Required Reserve Amount................................ 37
Reserve Account........................................ 37
Residual Casualty Payments............................. 36
Residual Notes......................................... 39
Residual Prepayments................................... 36
Residual Realizations.................................. 36
Residual Warranty Payments............................. 36
SBU.................................................... 20
Series Pool............................................ 11
Servicer............................................... 11
Servicer Advance....................................... 38
Servicer Events of Default............................. 40
Servicing Fee.......................................... 25
Statistical Discount Rate.............................. 32
Statistical Discounted Present Value of the Leases..... 32
Substitute Lease....................................... 24, 41
SYSTEMS................................................ 30
Tax Counsel............................................ 46
Termination Payment.................................... 36
Terms and Conditions................................... 30
Transferor............................................. 25
Trustee................................................ 25
U.S. Person............................................ 49
Underwriters........................................... 50
Underwriting Agreement................................. 50
Vendor................................................. 21
Warranty Lease......................................... 24, 25, 41
56
<PAGE> 59
$548,701,000
Copelco Capital
Funding LLC 99-1
P R O S P E C T U S
PRUDENTIAL SECURITIES
FIRST UNION CAPITAL MARKETS CORP.
Dated March ___, 1999
Until 90 days after the date of this prospectus, all dealers
that effect transactions in the Offered Notes, whether or not $13,029,000 ___%
Class B participating in this offering, may be required to deliver a
Lease-Backed Notes prospectus. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
$139,000,000 ___% Class A-1
Lease-Backed Notes
$95,000,000 ___% Class A-2
Lease-Backed Notes
$110,000,000 ___% Class A-3
Lease-Backed Notes
$90,000,000 ___% Class A-4
Lease-Backed Notes
$75,613,000 ___% Class A-5
Lease-Backed Notes
$10,134,000 ___% Class C
Lease-Backed Notes
$15,925,000 ___% Class D
Lease-Backed Notes
<PAGE> 60
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.
<TABLE>
<S> <C>
Registration Fee.................................................. $ 155,000.00
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. $ 730,000.00
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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 [manager(s)] 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.
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.
II-1
<PAGE> 61
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
1.1 -- Form of Underwriting Agreement for the Offered Notes.
3.1 -- Certificate of Formation of the Issuer.
3.2 -- Form of Limited Liability Company Agreement of the Issuer
4.1 -- Form of Indenture, including forms of the Notes and certain
other related agreements as Exhibits thereto.
5.1 -- Opinion of Dewey Ballantine LLP regarding the securities being
registered.
8.1 -- Opinion of Dewey Ballantine LLP regarding the tax treatment
of the Notes.
10.1 -- Form of Assignment and Servicing Agreement.
10.2 -- Form of Placement Agent Agreement.
23.1 -- Consent of Dewey Ballantine LLP is included in the opinion
filed as Exhibit 5.1 hereto.
23.2 -- Consent of Independent Auditor.
24.1 -- Power of Attorney (Included on Page II-4 hereof).
25.1 -- Statement of Eligibility and Qualification of Trustee
(Form T-1).
99.1 -- Computational Materials.
99.2 -- Audited Financial Statements of the Issuer.
*To Be Completed by Amendment
(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 foregoing provisions, 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
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
II-2
<PAGE> 62
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> 63
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 March 1, 1999.
COPELCO CAPITAL FUNDING LLC 99-1,
Registrant
By: COPELCO MANAGER, INC.
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Ian J. Berg Chairman of the Board March 1, 1999
- -------------------------------- Director
Ian J. Berg
/s/ John Hakemian Director March 1, 1999
- --------------------------------
John Hakemian
/s/ Tadayuki Seki Director March 1, 1999
- --------------------------------
Tadayuki Seki
</TABLE>
II-4
<PAGE> 1
COPELCO CAPITAL FUNDING LLC 99-1
$_________ - _____% Class A-1 Lease-Backed Notes, Series 1999-A
$_________ - _____% Class A-2 Lease-Backed Notes, Series 1999-A
$_________ - _____% Class A-3 Lease-Backed Notes, Series 1999-A
$_________ - _____% Class A-4 Lease-Backed Notes, Series 1999-A
$_________ - _____% Class B Lease-Backed Notes, Series 1999-A
$_________ - _____% Class C Lease-Backed Notes, Series 1999-A
$_________ - _____% Class D Lease-Backed Notes, Series 1999-A
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza, 14th Floor
New York, New York 10292-2014
FIRST UNION CAPITAL MARKETS CORP.
301 S. College Street
One First Union Center, TW 9
Charlotte, NC 28288
Ladies and Gentlemen:
Copelco Capital Funding LLC 99-1, a limited liability company 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 $___________ (the "Class A-1 Initial Principal Amount") of _____%
Class A-1 Lease-Backed Notes, Series 1999-A (the "Class A-1 Notes");
$___________ (the "Class A-2 Initial Principal Amount") of _____% Class A-2
Lease-Backed Notes, Series 1999-A (the "Class A-2 Notes"); $___________ (the
"Class A-3 Initial Principal Amount") of _____% Class A-3 Lease-Backed Notes,
Series 1999-A (the "Class A-3 Notes"); $___________ (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
1999-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"); $___________ (the "Class B
Initial Principal Amount") of _____% Class B Lease-Backed Notes, Series 1999-A
(the "Class B Notes"); $___________ (the "Class C Initial Principal Amount") of
_____% Class C Lease-Backed Notes, Series 1999-A (the "Class C Notes");
$___________ (the "Class D Initial Principal Amount") of _____% Class D
Lease-Backed Notes, Series 1999-A (the "Class D Notes"; together with the Class
A Notes, the
<PAGE> 2
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 March 1, 1999 (the "Indenture"), among the Issuer, Copelco 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 Offered Notes will be sold by the Issuer to you as underwriters in
the amounts set forth on Schedule I hereto.
The terms which follow, when used in this Underwriting Agreement
(the "Agreement"), shall have the meanings indicated:
"Effective Date" means each date that the Registration Statement
and any post-effective amendment or amendments thereto became or become
effective under the Securities Act.
"Execution Time" means the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" means any prospectus delivered to purchasers of
the Offered Notes at or before the time of confirmation of their purchases.
"Preliminary Prospectus" means any preliminary prospectus included
in the Registration Statement, and which, as of the Effective Date, omits
Rule 430A Information.
"Registration Statement" means the registration statement referred
to in the preceding paragraph and any registration statement required to be
filed under the Securities Act or rules thereunder, including amendments,
incorporated documents, exhibits and financial statements, in the form in
which it has or shall become effective and, in the event that any
post-effective amendment thereto becomes effective prior to the Issuance
Date, shall also mean such registration statement as so amended. Such term
shall include Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
2
<PAGE> 3
"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.
"Underwriters" means Prudential Securities Incorporated and First
Union Capital Markets Corp.
"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 Underwriters
agree to purchase from the Issuer the Class A Initial Principal Amount of the
Class A Notes, Class B Initial Principal Amount of the Class B Notes, Class C
Initial Principal Amount of the Class C Notes and Class D Initial Principal
Amount of the 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.
(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
March __, 1999 (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
3
<PAGE> 4
and participating members thereof. Definitive Notes representing the Offered
Notes will be available under the circumstances described in the Indenture.
Section 4. Representations and Warranties.
(a) The Issuer hereby represents and warrants to, and agrees with, the
Underwriters as follows:
(i) The Issuer meets the requirements for use of Form S-1 under
the Securities Act of 1933, as amended (the "Securities Act") and has filed
with the Securities and Exchange Commission (the "Commission") a
registration statement (Registration No. 333-69983), 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 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.
4
<PAGE> 5
(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 Assignment and Servicing
Agreement (the "Assignment 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 Assignment and Servicing Agreement
by the Issuer will (A) not conflict with or result in a breach of, and will
not constitute a default under any of the provisions of, its certificate of
incorporation or any law, governmental rule or regulation, or any judgment,
decree or order binding on the Issuer or its properties, or any of the
provisions of any indenture, mortgage, deed of trust, contract or other
agreement or instrument to which the Issuer is a party or by which it is
bound or (B) not result in the creation or imposition of any adverse claim
and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Offered Notes or the consummation by
the Issuer of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or qualifications as may
be required under the Securities Act and under state securities or Blue Sky
laws in connection with the purchase and distribution of the Offered Notes
by the Underwriters.
(vii) The Issuer is not, and will not, as of the Issuance Date, be
an "investment company" under the Investment Company Act of 1940, as amended
(the "1940 Act").
(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 Assignment and Servicing Agreement has been duly authorized,
and this Agreement constitutes, and when executed and delivered, the
Assignment and Servicing Agreement will constitute the legal, valid and
binding obligations of Copelco, enforceable in accordance with their
respective terms, except that the
5
<PAGE> 6
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. As used herein, "Adverse Claim" means a lien, pledge,
security interest or other charge or encumbrance.
(iii) Copelco hereby makes and repeats the representations and
warranties set forth in Section 2 of the Assignment and Servicing Agreement.
Such representations and warranties are incorporated by reference in this
Section 4(b), and the Underwriters may rely thereon as if such
representations and warranties were fully set forth herein.
(iv) Copelco represents and warrants it has delivered to the
Underwriters complete and correct copies of its balance sheet and statements
of income and retained earnings reported by Copelco Capital Inc. and Copelco
Financial Services Group, Inc. (the "Copelco Entities") for the year ended
December 31, 1997 and the period ended September 30, 1998. 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 September 30, 1998.
(v) Any taxes, fees and other governmental charges arising from
the execution and delivery of this Agreement, the Assignment 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.
(vi) 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.
(vii) Each of the Issuer and Copelco represents and warrants to
you that there is no pending or threatened action, suit or proceeding
against or
6
<PAGE> 7
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 Assignment and Servicing Agreement, the Indenture or the
Offered Notes, (ii) seeking to prevent the issuance of the Offered Notes or
the consummation of any of the transactions contemplated by this Agreement,
the Assignment 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 Assignment and
Servicing Agreement or the Indenture (as applicable) or (B) the validity or
enforceability of this Agreement, the Assignment and Servicing Agreement,
the Indenture or the Offered 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) To use best efforts to cause the Registration Statement, and any
amendment thereto, if not effective as of the date hereof, to become effective.
If the Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Final Prospectus is otherwise required under Rule 424(b),
the Issuer will file the Final Prospectus, properly completed, pursuant to Rule
424(b) within the time period prescribed and will provide evidence satisfactory
to the Underwriters of such timely filing. The Issuer will promptly advise the
Underwriters (i) when the Registration Statement shall have become effective,
(ii) when any amendment thereof shall have become effective, (iii) of any
request by the Commission for any amendment or supplement of the Registration
Statement or the Final Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose, and (v) of the receipt by the Issuer of any notification with
respect to the suspension of the qualification of the Offered Notes for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Issuer will not file any amendment of the Registration Statement or
supplement to the Final Prospectus to which the Underwriters reasonably object.
The Issuer and Copelco will use 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
7
<PAGE> 8
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, a signed copy 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 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 Assignment 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 Vice 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
Assignment and Servicing Agreement are true and correct in all material
respects
8
<PAGE> 9
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
Assignment 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) with respect to Copelco
and the Issuer, dated the Issuance Date and reasonably satisfactory in form and
substance to the Underwriters and their counsel with respect to, or to the
effect that: (i) the due formation and qualification of each of the Issuer and
Copelco and that the Issuer and Copelco, as applicable, have the corporate power
and authority to perform this Agreement, the Assignment 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 Offered
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 Offered 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
9
<PAGE> 10
which would have a material adverse effect on the issuance of the Offered Notes;
(vii) in the event a court disregarded the intent of the parties and
characterized the transfers as a pledge of collateral, the Assignment and
Servicing Agreement and accompanying documentation creates a valid security
interest in the Leases and the Equipment (or interests therein) under applicable
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.
(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 "P-1", "D-1+",
and "F1+", 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 "Aa2", "AA", and "AA", that
the Class C Notes be rated at least "A2", "A", and "A", and that the Class D
Notes be rated at least "Baa2", "BBB", and "BBB" by Moody's Investors Service,
Inc. ("Moody's"), Duff & Phelps Credit Ratings Co. ("DCR"), and Fitch IBCA, Inc.
("Fitch"), respectively, which ratings shall not have been reduced or withdrawn
as evidenced by the Officer's Certificate referred to in Section 6(b).
10
<PAGE> 11
(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
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) 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 your special counsel shall have
received such other information, certificates and documents as you or they may
reasonably request.
Section 7. Reimbursement of Expenses. In the event that (x) no closing
of the sale of the Offered Notes occurs by the Issuance Date through no fault of
the Issuer or Copelco or because the conditions set forth in Sections 6(c),
6(d), 6(e), 6(f) and 6(g) have not been met, or (y) the Underwriters terminate
the engagement pursuant to Section 10 or because any conditions precedent in
Section 6 (other than Section 6(d)) have not been fulfilled, then the Issuer and
Copelco's liability to the Underwriters shall be limited to the reimbursement of
the Underwriters' expenses incurred through the date of termination for its
reasonable out-of-pocket and incidental expenses. In addition, whether or not
the Offered Notes are issued or sold:
(a) The Issuer or Copelco shall pay the reasonable fees and expenses
associated with the transactions contemplated hereby not paid by the
Underwriters in accordance with the provisions of Section 7(b), including,
without limitation, the following fees and expenses:
(i) Rating Agency fees payable with respect to their ratings of
the Notes;
(ii) fees charged by the firm of independent public accountants
referred to in Section 6(e);
(iii) filing fees in connection with the transactions
contemplated hereby, including, but not limited to, the Commission;
(iv) fees and expenses of counsel to the Underwriters;
(v) Trustee's fees and fees of counsel to the Trustee;
11
<PAGE> 12
(vi) the costs and expenses of printing the Registration
Statement and the Prospectus;
(vii) the costs of printing or reproducing this Agreement, the
Blue Sky Survey and any other documents in connection with the offer, sale
and delivery of the Offered Notes;
(viii) all expenses in connection with the qualification of the
Offered Notes under state securities laws as provided in section 4(a)(vi),
including the fees and disbursements of counsel in connection with the Blue
Sky Survey;
(ix) the cost of preparing the Offered Notes;
(x) the cost or expenses of any transfer agent or registrar;
and
(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 the resale of any
of the Offered Notes by them, and any advertising expenses connected with any
offers they may make.
Section 8. Indemnification and Contribution.
(a) The Issuer and Copelco, jointly and severally, will indemnify and
hold harmless each Underwriter, the officer's and directors of each Underwriter,
and each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such Underwriter or any such
controlling person 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 is based upon (i) 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, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, and will promptly reimburse each such
Underwriter and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, preparing to defend or defending, or appearing as a
third-party witness in connection with, any such loss, claim, damage, liability
or action as such expenses are incurred; 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). The
12
<PAGE> 13
foregoing indemnity agreement is in addition to any liability which each of the
Issuer and Copelco may otherwise have to you or any person who controls you.
(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 (i)
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, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in the
light of the circumstances under which they were made 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 provided that such written information was not based upon
Company-Provided Information (as defined herein); 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 loss, claim,
damage, liability or action as such expenses are incurred. 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, the Preliminary Prospectus or the Final
Prospectus (the "Underwriting Information"), and each of you confirm that such
statements are correct. The foregoing indemnity agreement is in addition to any
liability which you may otherwise have to each of the Issuer and Copelco.
(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
claim or 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
13
<PAGE> 14
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) You agree to deliver to the Issuer or Copelco no later than the
date on which the Prospectus Supplement is required to be filed pursuant to Rule
424 with a copy of its Derived Information (defined below) for filing with the
Commission on Form 8-K.
(e) You agree, assuming all Company-Provided Information (defined
below) is accurate and complete in all material respects, to indemnify and hold
harmless the Issuer and Copelco against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of a material fact contained in the Derived Information provided by you, 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, in the light of the circumstances under which they were
made, not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by him, her or it in connection
with investigating or defending or preparing to defend any such loss, claim,
damage, liability or action as such expenses are incurred. Your obligations
under this Section 8(e) shall be in addition to any liability which you may
otherwise have.
14
<PAGE> 15
(f) Each of the Issuer and Copelco agrees to indemnify and hold
harmless the Underwriters, each of the Underwriters' officers and directors and
each person who controls the Underwriters within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages or liabilities, joint
or several, to which they may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of a material fact
contained in the Company-Provided Information provided by the Issuer or Copelco,
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, in the light of the circumstances under which they were
made, not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by him, her or it in connection
with investigating or defending or preparing to defend any such loss, claim,
damage, liability or action as such expenses are incurred. Your obligation under
this Section 8(f) shall be in addition to any liability which you may otherwise
have.
The procedures set forth in Section 8(c) shall be equally applicable to
Sections 8(e) and 8(f).
(g) For purposes of this Section 8, the term Derived Information means
such portion, if any, of the information delivered to the Issuer or Copelco by
the Underwriters pursuant to Section 8(d) for filing with the Commission on Form
8-K as:
(i) is not contained in the Final Prospectus without taking into
account information incorporated therein by reference;
(ii) does not constitute Company-Provided Information; and
(iii) is of the type of information defined as Collateral Term
Sheets, Structural Term Sheets or Computational Materials (as such terms are
interpreted in the No-Action Letters).
"Company-Provided Information" means any computer tape furnished to the
Underwriters by the Company concerning the Leases or any other information
furnished by the Company to the Underwriters that is relied on or is reasonably
anticipated by the parties hereto to be relied on by the Underwriters in the
course of the Underwriters' preparation of its Derived Information or the
written information to be included in the Final Prospectus or Preliminary
Prospectus by the Underwriters as set forth in Section 8(b) herein.
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall
have the respective meanings assigned to them in the February 13, 1995 letter
(the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, were
publicly available February 17, 1995). The term "Collateral Term Sheet" as used
herein includes any subsequent Collateral Term Sheet that reflects a substantive
change in the information presented. The term "Computational Materials" has the
meaning assigned to it in the
15
<PAGE> 16
May 17, 1994 letter (the "Kidder letter" and together with the PSA Letter, the
"No-Action Letters") of Brown & Wood on behalf of Kidder, Peabody & Co., Inc.
(which letter, and the SEC staff's response thereto, were publicly available May
20, 1994).
(h) 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, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Issuer and Copelco on the one hand and the Underwriters
on the other from the offering of the Offered Notes. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Issuer or Copelco on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Issuer or Copelco on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion that the total net proceeds
from the offering (before deducting expenses) received by the Issuer and Copelco
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Final Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer or Copelco on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Issuer, Copelco and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (h) 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
(h). 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 (h) 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 (h), neither of the
Underwriters shall be required to contribute any amount in excess of the
underwriting discount as set forth on the cover page of the Prospectus paid to
the respective Underwriter. 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.
16
<PAGE> 17
(i) 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, 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 in your absolute discretion
at any time upon the giving of notice at any time prior to the Issuance Date:
(i) if there has been 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
without the written consent of the Underwriters, except in accordance with law.
(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.
17
<PAGE> 18
Section 11. Notices. All communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by certified or registered mail, postage
prepaid, or transmitted by telex or telegraph and confirmed by a similar mailed
writing, if to you, addressed to you, at the addresses first stated in this
Agreement, or to such other address as you may designate in writing to the
Issuer and Copelco; if to Copelco, addressed to Copelco at East Gate Center, 700
East Gate Drive, Mount Laurel, New Jersey 08054-5400, if to the Issuer,
addressed to Copelco at East Gate Center, 700 East Gate Drive, Mount Laurel, New
Jersey 08054-5400, or such other address as Copelco or the Issuer may have
designated in writing to you.
Section 12. Successors. This Agreement will inure to the benefit of and
be binding upon the Issuer and Copelco and their successors and assigns and the
Underwriters and their respective successors and assigns.
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.
18
<PAGE> 19
(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 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.
19
<PAGE> 20
Very truly yours,
COPELCO CAPITAL, INC.
By:________________________________
Name:
Title:
COPELCO CAPITAL FUNDING LLC 99-1
By:________________________________
as manager
By:________________________________
Name:
Title:
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
FIRST UNION CAPITAL MARKETS CORP.
By:________________________________
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:________________________________
Name:
Title:
[Signature Page to the Underwriting Agreement]
<PAGE> 21
SCHEDULE A
All Class A Notes, Class B Notes, Class C Notes and Class D Notes will be
purchased by Prudential Securities Incorporated.
<TABLE>
<CAPTION>
Principal Amount Purchase Price
---------------- --------------
<S> <C> <C>
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 ____________ ____________
</TABLE>
<PAGE> 1
CERTIFICATE OF FORMATION
OF
COPELCO CAPITAL FUNDING LLC 99-1
1. The name of the limited liability company is Copelco Capital Funding
LLC 99-1 (the "LLC").
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 as of December 29,
1998.
4. The period of duration of the LLC is perpetual.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation
of Copelco Capital Funding LLC 99-1 this 29th day of December, 1998.
________________________________
Ian J. Berg
Authorized Signatory
<PAGE> 1
Exhibit 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
COPELCO CAPITAL FUNDING LLC 99-1
This Limited Liability Company Agreement, dated as of February
__, 1999, is adopted by Copelco Capital, Inc., a Delaware corporation
("COPELCO"), and Copelco Manager, Inc., a Delaware corporation ("Copelco
Manager"), as the Members (the "Members"), and Copelco Manager (in such
capacity, the "Manager"), acting as the initial Manager.
WHEREAS, the Members and the Manager desire to form a limited
liability company pursuant to the terms hereof;
NOW, THEREFORE, the Members 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.
Assignment and Servicing Agreement" shall mean that certain
Assignment and Servicing Agreement dated as of March 1, 1999 between COPELCO and
the Company.
"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.
<PAGE> 2
"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).
"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
Members in accordance with this Agreement or the effective date of dissolution
in accordance with the Act.
"Indemnified Party" means the Members, the Manager, any
officer, agent, shareholder, director, employee or incorporator of the Members
or the Manager, or any officer, manager, employee, organizer or agent of the
Company.
"Indenture" shall mean that certain Indenture dated as of
March 1, 1999 between the Company, COPELCO and the Trustee.
"Independent Director" shall mean a director of the Manager,
not less than two (2) in number, who shall not be, and for the continuation of
his or her service as Independent Director, is not: (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
2
<PAGE> 3
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 Members' ownership interest in the
Company.
"Manager" shall initially have the meaning set forth in the
preamble to this Agreement, and thereafter, as applicable, shall mean the Person
selected by the Members pursuant to Section 5.1 as the manager) of the Company.
"Members" shall initially have the meaning set forth in the
preamble to this Agreement. Thereafter, "Member" shall mean a Person admitted as
a member of the Company as provided under Section 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.
"Secretary" means the Secretary of State of Delaware.
"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 Members have
resolved to form a limited liability company (the "Company") pursuant to the
Act. For that purpose, COPELCO has caused a Certificate of Formation to be
executed and filed with the Secretary. 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. Each of the Members shall be, and hereby
is, admitted as a member of the Company, and each of the Members' Interest in
the Company shall be, and hereby is,
3
<PAGE> 4
authorized and issued. The Company is authorized to issue 1000 Membership
Interests of which 99 such units have been issued to COPELCO and 1 unit has been
issued to Copelco Manager. 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 Members from pledging its
Membership Interests to the Trustee. Notwithstanding anything to the contrary
herein, no Membership Interest may be issued or transferred to (i) an "employee
benefit plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to Title I of
ERISA, (ii) a "plan" (within the meaning of Section 4975 (e)(1) of the Internal
Revenue Code of 1986, as amended (the "Code")) that is subject to Section 4975
of the Code, or (iii) any person acting on behalf of or investing the assets a
plan described in (i) or (ii).
Section 2.2. Company Name and Principal Office. The name of the Company
shall be "COPELCO CAPITAL Funding LLC 99-1". 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 Members 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
December 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 issue and sell notes collateralized by any or all of
the Assets pursuant to the Indenture;
4
<PAGE> 5
(d) to hold and enjoy all of the rights and privileges as the
owner or otherwise of the Assets;
(e) to enter into, execute, deliver and perform its
obligations under the Assignment and Servicing Agreement, the Indenture or other
agreement related to the Assets (the "Securitization Agreements");
(f) to enter into and perform obligations under any
intercompany services agreement or management agreement with the Members, the
Manager or any affiliate of either thereof; and
(g) 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 Members and the Manager. The addresses of
the Members 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 Members 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 Members shall have no
obligation to make additional contributions after the date hereof, but may elect
to do so from time to time.
5
<PAGE> 6
ARTICLE IV
DISTRIBUTIONS
Section 4.1. Distributions of Net Cash Flow. Distributions of Net Cash
Flow shall be made to the Members 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
available assets of the Company.
ARTICLE V
MANAGEMENT
Section 5.1. Manager. (a) The Members shall appoint the Manager and
hereby appoint the Copelco Manager as the initial Manager.
(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) 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.
(c) There shall be no change of Manager without prior
confirmation from Moody's Investor Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch IBCA, Inc. that such change will not result in either a downgrade
or withdrawal of the then current ratings of the outstanding notes issued by the
Company.
Section 5.2. Resignation. The Manager may resign at any time by giving
written notice to the Members; provided that the Manager may resign only after
(a) a successor Manager meeting the requirements and having similar restrictions
in its certificate or other charter documents as the resigning manager and meets
the requirements set forth in Section 5.1 and (b) the successor Manager has
executed a counterpart to this Agreement and has assumed the duties and
obligations of the resigning Manager.
6
<PAGE> 7
Section 5.3. Removal. Any Manager may be removed with or without cause
by the Members by written notice to the Manager being removed 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 Members 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 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 and the prior written consent of
all of the Members, 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
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.
7
<PAGE> 8
Section 5.6. Conduct of Business. The Company shall conduct its affairs
in accordance with the following provisions:
(a) it shall maintain separate records and books of account
from those of any direct or ultimate parent of any Affiliate and any other
Person;
(b) it shall not commingle the Company's assets with those of
any Affiliate;
(c) its Members shall hold meetings, as appropriate to
authorize all action on behalf of the Company and observe all other
organizational formalities of the Company;
(d) it shall not become involved in the day to day management
of any Affiliate;
(e) it shall operate so as not to be substantively
consolidated with any Affiliate;
(f) it shall maintain its assets separately from those of any
Affiliate or any other Person (including through the maintenance of a separate
bank account);
(g) it shall hold itself out as a separate entity from any
Affiliate and shall conduct business in its own name on its own stationary;
(h) it shall not act as the agent of any Affiliate;
(i) it shall pay its own expenses from its own funds,
including fairly allocating expenses shared with an affiliate;
(j) it shall maintain adequate capital in light of its
contemplated business activities; and
(k) it shall ensure that any financial transaction between the
Company and any of its affiliates shall be on commercially reasonable terms.
Section 5.7. 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 MEMBERS AND THE MANAGER
Section 6.1. Liability of the Members and the Manager. Neither the
Members nor the Manager shall be personally liable for any of the debts,
liabilities, contracts or other
8
<PAGE> 9
obligations of the Company solely by reason of being a Members or a Manager of
the Company.
Section 6.2. No Management Responsibility. The Members 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 Members 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 Members and the
Manager. (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 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;
9
<PAGE> 10
(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. No Member may 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
(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) and the Members as provided in Section
5.5. Neither the Members acting alone or the Members 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 Members, 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
10
<PAGE> 11
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 Members. 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 Members, 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 Members 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 Members 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, each of the Members 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, 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 Members 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. Each of the Members 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
11
<PAGE> 12
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 Members 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 Members executing any agreement, certificate, instrument or
other document with the signature of a duly authorized officer of such
attorneys-in-fact for such Members; and
(c) shall not be affected by and shall survive the bankruptcy,
insolvency, dissolution, disability, incapacity or cessation of existence of the
Members and shall survive the delivery of an assignment by the Members of its
interest in the Company, except that where an assignee of the Members is
admitted as a substituted Members, 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.
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. This Agreement shall be amended only by the
written consent of the Members and the Manager; provided, however, that this
Section 11.2 and Sections 5.1, 5.2 and 5.4 may not be amended
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
12
<PAGE> 13
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 understandings and contemporaneous
agreements and understandings pertaining thereto.
IN WITNESS WHEREOF, this Limited Liability Company Agreement
has been executed as of the date first above written.
COPELCO CAPITAL, INC., as a Member
By:________________________________________
Nicholas Antonaccio
Vice President, Chief Financial Officer
and Treasurer
COPELCO MANAGER, INC., as a
Member and the Manager
By:________________________________________
Stephen Shippie
Vice President
13
<PAGE> 14
EXHIBIT A
ADDRESSES OF THE MEMBERS AND THE MANAGER
Copelco Capital, Inc., as a Member
One International Boulevard
Mahwah, New Jersey 07430
Copelco Manager, Inc., as a Member and the Manager
700 East Gate Drive
Mt. Laurel, New Jersey 08054
14
<PAGE> 15
EXHIBIT "B"
CAPITAL CONTRIBUTION OF MEMBERS
Copelco Capital, Inc.: [$ 990.00]
Copelco Manager, Inc.: [$ 10.00]
15
<PAGE> 1
COPELCO CAPITAL FUNDING LLC 99-1,
Issuer
MANUFACTURERS AND TRADERS TRUST COMPANY,
Trustee
and
COPELCO CAPITAL, INC.,
Servicer
----------------------
INDENTURE
Dated as of March 1, 1999
----------------------
$____________ in aggregate principal amount of
Receivables Notes, and $____________ in aggregate
principal amount of Class R Notes, Series 1999-A,
consisting of:
$______________% 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
$_________________% Class D Lease-Backed Notes
$_________________% Class E Lease-Backed Notes
$_______________% Class R-1 Lease Residual-Backed Notes
$_______________% Class R-2 Lease Residual-Backed Notes
<PAGE> 2
COPELCO CAPITAL FUNDING LLC 99-1
Reconciliation and Tie between the Indenture
dated as of March 1, 1999 and the
Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
Section 310 (a)(1).................... Section 7.08
(a)(2).................... 7.08
(a)(3).................... Not Applicable
(a)(4).................... Not Applicable
(b)....................... 7.08; 7.09; 6.07; 1.05; 1.06
(c)....................... Not Applicable
311 (a)....................... 7.14
(b)....................... 7.14
312 (a)....................... 2.11
(b)....................... 11.02
(c)....................... 11.02
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).................... 11.03
(c)(2).................... 11.03
(c)(3).................... 11.01
(d)....................... 11.01
(e)....................... 11.04
(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)....................... 11.01, 11.02
(c)....................... 11.01
i
<PAGE> 3
INDENTURE
This INDENTURE dated as of March 1, 1999, is among COPELCO CAPITAL
FUNDING LLC 99-1, a Delaware limited liability company (herein called the
"Issuer"), 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 Issuer has duly authorized the issuance of $__________ in aggregate
principal amount of its Lease-Backed Notes, and $_________ in aggregate
principal amount of its Lease Residual-Backed-Notes, Series 1999-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 Issuer 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 Issuer and
authenticated and delivered hereunder, the valid obligations of the Issuer, and
to make this Indenture a valid agreement of the Issuer, 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:
1
<PAGE> 4
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee on the Issuance Date, for the
benefit and security of the Noteholders, all of the Issuer's right, title and
interest in and to (a) the Leases and all Lease Payments, Casualty Payments,
Lease Repurchase Amounts, 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, Lease Repurchase Amounts, 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 Issuer to or under any
guarantees of collateral (including all rights of the Issuer in any security
deposits and the Issuer's right to repayment by Copelco Capital, Inc.
("Copelco") of any Inter-Company loans pursuant to Section 13.01 of the
Assignment and Servicing Agreement) for the Lessee's obligations under any
Lease, (c) all interests of the Issuer 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 Issuer
under the Assignment 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
2
<PAGE> 5
the definitions of such terms are applicable to the singular as well as to the
plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such terms.
Accredited Investor: as defined in Section 2.03 of this Agreement.
Act: with respect to any Noteholder, as defined in Section 1.04.
Additional Lease: as defined in Section 12 of the Assignment 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: with respect to 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.
Assignment and Servicing Agreement: the Assignment and Servicing
Agreement dated as of March 1, 1999 between the Issuer and Copelco, as the same
may be amended or modified from time to time in accordance with the provisions
hereof and thereof.
Authorized Officer: with respect to any matter, any officer of or other
Person representing the Issuer, Copelco or the Servicer, as the case may be, who
is authorized to act for the Issuer, 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 Copelco 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 Assignment and Servicing Agreement); (c)
proceeds from repurchases by Copelco of Leases as a result of breaches of
representations and warranties to the extent Copelco has not substituted
Substitute Leases for such Leases other than Residual Warranty Payments; (d)
proceeds from the investment of funds in the Collection Account and the
3
<PAGE> 6
Reserve Account, if any; (e) Casualty Payments other than Residual Casualty
Payments; (f) Servicer Advances; (g) Termination Payments other than Residual
Prepayments; (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.
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.
Book-Entry Class R-1 Notes: beneficial interests in the Class R-1
Notes, the ownership and transfers by which shall be made through book entries
by a Clearing Agency as described in Section 2.05.
Book-Entry Class R-2 Notes: beneficial interests in the Class R-2
Notes, the ownership and transfers of which shall be made through book-entries
by a Clearing Agency as described in Section 2.05.
4
<PAGE> 7
Booked Residual Value - the estimated residual value of the Equipment
recorded on the books of the Transferor as of the Cut-Off Date in the case of
the initial Leases, and as of the date of substitution in the case of a
Substitute Lease.
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, the
Class B Notes, the Class C Notes, the Class D Notes, the Class R-1 Notes and the
Class R-2 Notes, acting as nominee of The Depository Trust Company.
Class A Notes: as defined in the Recitals hereto.
Class A Percentage: _______% (approximately).
Class A Principal Payment: (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates prior to the _____ 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 ______ 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 Initial Principal Amount: $_______________.
Class A-1 Note Interest Rate: with respect to any Interest Accrual
Period, the rate at which interest accrues on the Class A-1 Notes, which rate
shall be equal to ___% per annum.
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
5
<PAGE> 8
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 Initial Principal Amount: $______________. Class A-2 Note
Interest Rate: with respect to any Interest Accrual Period, the rate at which
interest accrues on the Class A-2 Notes, which rate shall be equal to ________%
per annum.
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 Initial Principal Amount: $____________.
Class A-3 Note Interest Rate: with respect to any Interest Accrual
Period, the rate at which interest accrues on the Class A-3 Notes, which rate
shall be equal to _____% per annum.
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 Initial Principal Amount: $___________.
Class A-4 Note Interest Rate: with respect to any Interest Accrual
Period, the rate at which interest accrues on the Class A-4 Notes, which rate
shall be equal to _____% per annum.
6
<PAGE> 9
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 Initial Principal Amount: $___________.
Class B Floor: with respect to each Payment Date, an amount equal to
the total of (a) ______% 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: with respect to any Interest Accrual
Period, 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.
Class B Percentage: _______% (approximately).
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.
7
<PAGE> 10
Class C Initial Principal Amount: $_________.
Class C Floor: With respect to each Payment Date, the amount equal to
the total of (a) ______% 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: with respect to any Interest Accrual
Period, 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: ________% (approximately).
Class C Principal Payment: (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class C Notes to the greater of the Class C
Target Investor Principal Amount and the Class C Floor.
Class C Target Investor Principal Amount: with respect to each Payment
Date, an amount equal to the product of (a) the Class C Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date.
Class D Initial Principal Amount: $_________.
Class D Floor: with respect to each Payment Date, an amount equal to
the total of (a) _____% 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
8
<PAGE> 11
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: with respect to any Interest Accrual
Period, 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: _______% (approximately).
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 Date.
Class E Initial Principal Amount: $_________.
Class E Floor: With respect to each Payment Date, an amount equal to
the total of (a) ____% 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.
9
<PAGE> 12
Class E Note Interest Rate: with respect to any Interest Accrual
Period, 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: _____% (approximately).
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 Date.
Class R Notes: as defined in the Recitals hereto.
Class R-1 Initial Principal Amount: $___________.
Class R-1 Notes: as defined in the Recitals hereto.
Class R-1 Note Interest Rate: with respect to any Interest Accrual
Period, the rate of which interest accrues on the Class R-1 Notes, which rate
shall be _____% per annum.
Class R-1 Note Owner: with respect to a Book-Entry Class R-1 Note, the
Person who is the beneficial owner of such Book-Entry Class R-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 R-1 Noteholder: Cede & Co. or a holder of a Definitive Class R-1
Note.
Class R-2 Initial Principal Amount: $__________.
Class R-2 Notes: as defined in the Recitals hereto.
Class R-2 Note Interest Rate: with respect to any Interest Accrual
Period, the rate of which interest accrues on the Class R-2 Notes, which rate
shall be _____% per annum.
10
<PAGE> 13
Class R-2 Noteholder: Cede & Co. or a holder of a Definitive Class R-2
Note.
Class R-2 Note Owner: with respect to a Book-Entry Class R-2 Note, the
Person who is the beneficial owner of such Book-Entry Class R-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 Target Investor Principal Amounts: means the Class A Target
Investor Principal Amount or the Class B Target Investor Principal Amounts or
the Class C Target Investor Principal Amounts or the Class D Target Investor
Principal Amounts or the Class E Target Investor Principal Amounts,
respectively.
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.
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: As defined in the Granting Clause.
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 Issuer 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 Receivable 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 January 31, 1999.
DCR: Duff & Phelps Credit Rating Co, and any such successor.
11
<PAGE> 14
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 Issuer
and the Depository Trust Company, as Clearing Agency.
Determination Date: with respect to any Payment Date, the fifth
Business Day immediately preceding such Payment Date.
Discount Rate: with respect to any Determination Date, ______%, which
equals 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 on the
Issuance Date 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 and
(b) the Servicing Fee rate of 0.75% per annum.
Discounted Present Value of the Leases: with respect to any Lease as of
the Cut-Off Date or any date thereafter, an amount equal to the net present
value of all Lease Payments (not including delinquent amounts, Excess Copy
Charges, Maintenance Charges and Fee Per Scan Charges) to become due thereunder
following the Cut-Off Date or during 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
the date such Lease Payment was due). 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.
12
<PAGE> 15
Discounted Present Value of the Performing Leases: the Discounted
Present Value of the Leases, reduced by the present value of 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. In determining the Discounted Present
Value of the Performing Leases on any Determination Date or with respect to a
Payment Date, the future remaining Lease Payments will be calculated after
giving effect to any payments received prior to such date of calculation to the
extent such payments relate to Lease Payments due and payable by the Lessees
with respect to the related Due Period and any prior Due Period.
Due Period: with respect to any Payment Date and the Determination Date
with respect thereto, the period beginning on the first day and ending on the
last day of the calendar month prior to the month in which such Payment Date and
such Determination Date occurs.
Eligible Account: either (a) an account maintained with a depository
institution or trust company acceptable to each of the Rating Agencies or (b) a
trust account or similar account maintained in the corporate trust department
with a federal or state chartered depository institution, which may be an
account maintained with the Trustee.
Eligible Investments: any one or more of the following obligations or
securities:
(a) direct non-callable obligations of, and non-callable obligations
fully guaranteed by, the United States of America, or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
(b) demand and time deposits in, certificates of deposits of, and
bankers' acceptances issued by, any depository institution or company
(including the Trustee acting in its commercial capacity) incorporated under
the laws of the United States of America or any state thereof, having a
combined capital and surplus of at least $100,000,000, and subject to
supervision and examination by federal and/or state banking authorities, so
long as at the time of such investment or contractual commitment providing
for such investment the commercial paper or other short-term debt obligations
of such depository institution or company (or, in the case of a depository
institution that is the principal subsidiary of a holding company, the
commercial paper or other short-term debt obligations of such holding
company) have the highest short-term credit ratings available from 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 company
(acting as
13
<PAGE> 16
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 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 Aaa by Moody's;
(f) demand notes payable on demand issued by an institution rated "P-1"
by Moody's, 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 provided by
issuers rated "P-1" by Moody's (and to the extent rated by DCR and Fitch, DCR
and Fitch at the time of such investment) which provide, by their terms, for
receipt by the trustee on or prior to the next Payment Date of a
predetermined fixed dollar amount which cannot vary or change; and
(h) such other investments as may be approved by Moody's, DCR and
Fitch.
Equipment: each item of personal property, together with any
replacement parts, additions, and repairs thereto, any replacements thereof, and
any accessories incorporated therein and/or affixed thereto, subject to a Lease
or, following expiration or termination of the Lease to which the same was
previously subject, remaining subject to the lien of this Indenture in
accordance with the provisions hereof.
Event of Default: as defined in Section 6.01.
Exchange Act: the Securities Exchange Act of 1934, as amended.
Excess Copy Charge: with respect to any Lease, means the amount owing
by such Lessee under such Lease reflecting usage of the related Equipment in
excess of a specified copy amount per month.
Fee Per Scan Charge: with respect to any Lease, means the amount owing
by such Lessee under such Lease reflecting usage of the related Equipment in
excess of a specified scan amount per month.
Financing Statement: as defined in Section 12 of the Assignment and
Servicing Agreement.
Fitch: Fitch IBCA, Inc.
14
<PAGE> 17
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 Issuer 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 Issuer or otherwise, and generally to do
and receive anything that the Issuer 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: the Initial Aggregate Discounted Residual Balance of the
Leases is equal to $_____________. Initial ADRB means the sum of the discounted
present value of 145% of the Booked Residual Values of all Leases, as of the
Cut-Off Date, discounted monthly at one twelfth the Residual Discount Rate.
Initial Booked Residual Value: $___________.
Initial Payment Date: March 15, 1999.
Inter-Company Loans: as defined in Section 13.01 of the Assignment and
Servicing Agreement.
"Interest Accrual Period": With respect to any Payment Date for the
Class A-1 Notes, the period from and including the prior Payment Date (or, in
the case of the first Payment Date, from and including the Issuance Date) to,
but excluding, the current Payment Date, with interest being computed on the
basis of the actual number of days in such Interest Accrual Period and a 360-day
year. With respect to any Payment Date for 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, the Class E Notes, the Class R-1 Notes and the Class R-2 Notes, the
period from and including the first day of the prior calendar month (or in the
case of the first Payment Date, from and including February 15, 1999) to but
excluding the first day of the calendar month in which such Payment Date occurs,
with interest being computed on the basis of a 30-day month and a 360-day year.
15
<PAGE> 18
Interest Payments: as defined in Section 2.01(c).
Issuance Date: __________, 1999.
Issuer: the Person named as the "Issuer" in the first paragraph of this
instrument.
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 Assignment and
Servicing Agreement, (b) by a transfer from the Reserve Account pursuant to
Section 3.05, or (c) by the Issuer 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: at any date of determination with respect to
any Lease, means an amount equal to the sum of (a) the sum of (i) the Discounted
Present Value of the Lease as of the Due Period relating to such date of
determination (plus any amounts previously due and unpaid) and (ii) the product
of (x) the amount described in the foregoing clause (i) and (y) one-twelfth of
the Discount Rate and (b) the product of (i) the Initial ADRB and (ii) 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: with respect to any Lease, the lessee thereunder.
Lien: as defined in Section 12 of the Assignment and Servicing
Agreement.
Liquidity Reserve Account: the account by that name established and
maintained by the Trustee pursuant to Section 3.01.
16
<PAGE> 19
Maintenance Charges: with respect to any Lease, the amount owing by the
Lessee under the terms of the related Lease in respect of maintenance services
being provided in connection therewith.
Maturity: with respect to any installment of principal of or interest
on any Note, the date on which such installment is due and payable as therein or
herein provided, whether at the Stated Maturity, by declaration of acceleration,
or otherwise.
Moody's: Moody's Investors Services, Inc. and any successors thereto.
Nominal Buy-Out Lease: as defined in Section 12 of the Assignment 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, the Class E Note Interest Rate, the Class R-1 Note
Interest Rate or the Class R-2 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 Issuer, and by
another Vice President, the Treasurer, and Assistant Treasurer, the Secretary,
or an Assistant Secretary of the Issuer 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
Issuer and who shall be satisfactory to the Trustee.
17
<PAGE> 20
Other Lease Payments: all payments on or in respect of leases which are
not Lease Payments, Lease Delinquency Payments, Casualty Payments, Termination
Payments, Similar Transaction Payments or Residual Realizations.
Outstanding: with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes or portions thereof for whose payment money in the necessary
amount has been theretofore irrevocably deposited with the Trustee in trust
for the holders of such Notes; and
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by a
Person in whose hands the Note is a valid obligation;
provided, however, that in determining whether the holders of the requisite
percentage of the Outstanding Principal Amount of the Notes have given any
request, demand, authorization, direction, notice, consent, or waiver hereunder,
Notes owned by the Issuer or any Affiliate of the Issuer 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.
18
<PAGE> 21
Outstanding Class D Principal Amount: the aggregate principal amount of
the Class D Notes Outstanding at any time.
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 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 Issuer 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 company, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
Placement Agent Agreement: the Placement Agent Agreement, among the
Issuer, Copelco, and Prudential.
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 Moody's.
19
<PAGE> 22
Receivable Noteholder: at any time, any Person in whose name a
Receivable Note is registered in the Note Register.
Receivable Notes: as defined in the Recitals hereto.
Record Date: with respect to any Payment Date, the last day of the
calendar month immediately preceding such Payment Date. The Record Date will be
the Issuance Date with respect to the first Payment Date.
Required Deposit Date: as defined in Section 3.03(a).
Required Liquidity Reserve: during the first ____ months from the
Cut-Off Date, $_________ and thereafter, $________.
Required Payment: as defined in Section 3.05(b).
Required Reserve Amount: shall equal the lesser of (a) $__________ 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 of determination 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 Due Period relating to such date of determination (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 Class R Notes under a zero prepayment and no loss
scenario, as applicable, and (b) the Residual Servicing Fee expressed as
percentage.
Residual Event of Default: as defined in Section 6.13.
Residual Prepayments: at any date of determination 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
related to the Terminated Lease as of the Due Period relating to such date of
determination (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 re-lease of
any
20
<PAGE> 23
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 4.01(b) of the
Assignment and Servicing Agreement.
Residual Servicing Fee: with respect to any Payment Date, the Residual
Servicing Fee payable pursuant to the Assignment and Servicing Agreement.
Residual Warranty Payments: at any date with respect to a Warranty
Lease, means the excess of (a) the Lease 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 Due Period relating to such
date of determination (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.
Securities Act: the Securities Act of 1933, as amended.
Servicer: Copelco and any successor Servicer appointed pursuant to the
terms hereof and of the Assignment 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 4.01(a) of the Assignment and
Servicing Agreement.
Servicer Event of Default: as defined in Section 8.01 of the Assignment
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 Assignment and Servicing Agreement.
Servicing Report: as defined in Section 5.01(b) of the Assignment and
Servicing Agreement.
21
<PAGE> 24
Similar Transaction Agreement: an indenture between the Trustee and a
wholly-owned special purpose subsidiary of Copelco other than the Issuer,
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 5.01(a) of the Assignment 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 stated maturity date with respect to the Class A-1
Notes is the Payment Date in __________ (the "Class A-1 Stated Maturity Date"),
the stated maturity date with respect to the Class A-2 Notes is the Payment Date
in ____________ (the "Class A-2 Stated Maturity Date"), the stated maturity date
with respect to the Class A-3 Notes is the Payment Date in ___________ (the
"Class A-3 Stated Maturity Date"), the stated maturity date with respect to
Class the A-4 Notes is the Payment Date in _________ (the "Class A-4 Stated
Maturity Date"), the stated maturity date with respect to the Class B Notes is
the Payment Date in ___________ (the "Class B Stated Maturity Date"), the stated
maturity date with respect to the Class C Notes is the Payment Date in
__________ (the "Class C Stated Maturity Date"), the stated maturity date with
respect to the Class D Notes is the Payment Date in __________ (the "Class D
Stated Maturity Date"), the stated maturity date with respect to the Class E
Notes is the Payment Date in __________ (the "Class E Stated Maturity Date") and
the stated maturity date with respect to the Class R-1 and Class R-2 Notes is
____________ (the "Class R 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, the Class C Stated Maturity Date, the Class D Stated Maturity Date and the
Class E Stated Maturity Date, the "Stated Maturity Dates").
Substitute Lease: as defined in Section 12 of the Assignment 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
Issuer, and the Lessee in accordance with the provisions of Section 4.02 of the
Assignment and Servicing Agreement.
22
<PAGE> 25
Transaction Payment Amount: for each Required Deposit Date, the amount
of all Lease Payments, Lease Delinquency Payments, Non-Performing Lease
Payments, Casualty Payments, Termination Payments and other payments on or in
respect of a Lease received by the Servicer and deposited in the Collection
Account pursuant to Section 3.02(a) and reported by the Servicer for such
Required Deposit Date in accordance with Section 5.01(c) of the Assignment and
Servicing Agreement.
Trust Accounts: the Collection Account, the Reserve Account, the
Residual Account and the Liquidity Reserve Account.
Trust Estate: all money, instruments and other property subject to or
intended to be subject to the lien of this Indenture including all proceeds
thereof.
Trustee: the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Person shall have become the Trustee pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Person; provided, that the provisions of Section 7.07 and
Section 8.11, as applicable to any Person at any time serving as Trustee
hereunder, shall survive the termination of such Person's status as Trustee
hereunder and the succession of any other Person to such status.
Trust Indenture Act: the Trust Indenture Act of 1939 as in effect on
the date on which this Indenture is qualified under the Trust Indenture Act,
except as provided in Section 9.06 hereof.
Trust Order or Trust Request: a written order or request delivered to
the Trustee and signed in the name of the Issuer by an Authorized Officer.
Underwriting Agreement: the Underwriting Agreement, among the Issuer,
Copelco and Prudential Securities Incorporated ("Prudential").
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 Transferor as a
result of a breach of a representation or warranty in accordance with the
provisions of Section 4 of the Assignment and Servicing Agreement.
SECTION 1.02 Compliance Certificates and Opinions.
Upon any written application or request (or oral application with
prompt written or telecopied confirmation) by the Issuer 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 Issuer hereunder to the Issuer's assignee specified in such
request, the Trustee shall require the Issuer to furnish to the Trustee an
Officers'
23
<PAGE> 26
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and that the
request otherwise is in accordance with the terms of the Indenture, and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such requested action as to which other evidence of satisfaction of the
conditions precedent thereto is specifically required by any provision 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 Issuer 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 Issuer 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 Issuer 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 Issuer 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).
24
<PAGE> 27
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 Issuer, then, notwithstanding that the
satisfaction of such condition is a condition precedent to the Issuer'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 Issuer, 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
Issuer. 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 Issuer, 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 Issuer in
reliance thereon, whether or not notation of such action is made upon such Note.
25
<PAGE> 28
(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, Issuer 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 Issuer 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 Issuer and the Servicer by
the Trustee; or
b) if to the Issuer, 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 Issuer by the Servicer; 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 Issuer by the Servicer.
d) if to the Rating Agencies: to Duff & Phelps Credit Rating Co., 55
East Monroe Street, Chicago, Illinois 60603, Attention: Structured Finance
Monitoring Group, to Fitch IBCA, Inc., One State Street Plaza, New York, NY
10004, Attention: ABS Surveillance, and to Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: ABS Monitoring Department.
26
<PAGE> 29
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 Issuer 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
27
<PAGE> 30
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 Issuer 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 Receivable Notes or 25% of the Outstanding Principal Amount of the Class R
Notes, during the Issuer's normal business hours, to examine all of the books of
account, records, reports and other papers of the Issuer, to make copies thereof
and extracts therefrom, to cause such books to be audited by independent
accountants selected by the Issuer 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 Issuer 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 Issuer or the
performance of and compliance with the covenants and undertakings of the Issuer
in this Indenture, the Assignment 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
Issuer.
SECTION 1.13 Survival of Representations and Warranties.
The representations, warranties and certifications of the Issuer made
in this Indenture or in any certificate or other writing delivered by the Issuer
pursuant hereto shall survive the authentication and delivery of the Notes
hereunder.
28
<PAGE> 31
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 $___________ of Receivable Notes
and $___________ of Class R Notes, except for Notes authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Section 2.03, 2.04, or 9.05. The Notes shall be issuable only in
registered form and only in minimum denominations of at least $1,000,000 with
respect to 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; provided that the foregoing
shall not restrict or prevent the transfer in accordance with Section 2.03 of
any Note having a remaining Outstanding Principal Amount of other than an
integral multiple of $1,000,000, or the issuance of a single Note of each Class,
with a denomination less than $1,000,000.
(b) For each Payment Date, payments of principal (the "Principal
Payments") on the Notes will be made in accordance with Sections 3.03(b),
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 Issuer may redeem the Notes in their entirety
(including any unpaid interest due), 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 Issuer 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
29
<PAGE> 32
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 Issuance Date for the Class A-1 Notes and
February 15, 1999 for all other Notes, 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
D Notes, Class E Notes, Class R-1 Notes, and Class R-2 Notes respectively, on
the preceding Payment Date. With respect to the Class A-1 Notes, the interest
will be calculated on the basis of a year of 360 days and the actual number of
days in the related interest accrual period. With respect to all other Notes,
the interest will be calculated on the basis of a year of 360 days comprised of
twelve 30-day months. 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
30
<PAGE> 33
interest on the Class A-4 Notes shall be made pro rata among all Outstanding
Class A-4 Notes, without preference or priority of any kind.
(i) The Class B Notes shall be subordinated to the Class A Notes to the
extent set forth herein. All Class B Notes issued under this Indenture shall be
in all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture. Payments of principal and interest on the Class B Notes shall be
made pro rata among all Outstanding Class B Notes, without preference or
priority of any kind.
(j) The Class C Notes shall be subordinated to the Class A Notes and
the Class B Notes to the extent set forth herein. All Class C Notes issued under
this Indenture shall be in all respects equally and ratably entitled to the
benefits hereof without preference, priority or distinction on account of the
actual time or times of authentication and delivery, all in accordance with the
terms and provisions of this Indenture. Payments of principal and interest on
the Class C Notes shall be made pro rata among all Outstanding Class C Notes,
without preference or priority of any kind.
(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
Realizations 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
31
<PAGE> 34
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) The Class R-2 Notes shall be subordinated to the Class R-1 Notes to
the extent set forth herein. 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 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 by the Issuer.
(b) Any Note bearing the signature of an individual who was at the time
of execution thereof a proper officer of the Issuer shall bind the Issuer,
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 Issuer 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 Issuer 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 Issuer 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 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
32
<PAGE> 35
transfer is being made in reliance upon Rule 144A under the Securities Act as
certified by such transferee in a letter in the form of Exhibit B hereto; (ii)
after the appropriate holding period, such transfer is pursuant to an exemption
from registration under the Securities Act provided by Rule 144 under the
Securities Act; (iii) such transfer is to a transferee who is an "Accredited
Investor" (as defined in Rule 501 of the Securities Act) in a transaction exempt
from the registration requirements of the Securities Act, in each case in
accordance with any applicable securities laws of any State of the United States
or (iv) such transfer is otherwise exempt from the registration requirements of
the Securities Act. If any resale or other transfer of (a) the Class R Notes is
proposed to be made to an Accredited Investor pursuant to clause (iii) above or
(b) the Class E Notes is proposed, 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 Issuer 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
Issuer). None of the Issuer, 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.
The Trustee shall not register the transfer of any Note (other than the
transfer of a Note to the nominee of the Clearing Agency) unless the transferee
has executed and delivered to the Trustee a certification to the effect that
either (i) the transferee is not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA or (B) a plan
(as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "Code")) that is subject to Section 4975 of the Code (each of the
foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the
assets of a Benefit Plan, or (ii) the transferee's acquisition and continued
holding of the Note will be covered by a U.S. Department of Labor Prohibited
Transaction Class Exemption. Each transferee of a book-entry Note shall be
deemed to make one of the foregoing representations.
(b) Each transferee of Class R Notes represented by an interest in a
Rule 144A Global Note will be deemed to have represented and agreed as follows
(terms used in this paragraph that are defined in Rule 144A under the Securities
Act are used herein as defined therein):
(1) The transferee (A) is a "qualified institutional buyer", (B) is
aware that the sale of the Class R Notes to it is being made in reliance on
the exemption from registration provided by Rule 144A under the Securities
Act and (C) is acquiring the Class R Notes for its own account or for one or
more accounts, each of which is a QIB, and as to each of which the transferee
exercises
33
<PAGE> 36
sole investment discretion, and in a principal amount of not less than
$1,000,000, for the transferee and for each such account. The transferee has
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment in the Class R
Notes, and the transferee and any accounts for which it is acting are each
able to bear the economic risk of the transferee's or its investment.
(2) The transferee understands that the Class R Notes are being
offered only in a transaction not involving any public offering in the United
States within the meaning of the Securities Act, the Class R Notes have not
been and will not be registered under the Securities Act, and, if in the
future the transferee decides to offer, resell, pledge or otherwise transfer
the Class R Notes, such Class R Notes may be offered, resold, pledged or
otherwise transferred only in accordance with the legend on such Class R
Notes described above. The transferee acknowledges that no representation is
made by the Issuer as to the availability of any exemption under the
Securities Act or any state securities laws for resale of the Class R Notes.
(3) The transferee has carefully read and understands the Class R
Private Placement Memorandum, including, without limitation, the "Risk
Factor" section therein, and has based its decision to purchase the Class R
Notes upon the information contained therein and not upon any information, if
any, provided to it by any of the Issuer, the Placement Agent or any other
Person. The transferee is not purchasing the Class R Notes with a view to the
resale, distribution or other disposition thereof in violation of the
Securities Act. The transferee understands that an investment in the Class R
Notes involves certain risks, including the risk of loss of a substantial
part of its investment under certain circumstances. The transferee has had
access to such financial and other information concerning the Issuer and the
Class R Notes as it deemed necessary or appropriate in order to make an
informed investment decision with respect to its purchase of the Class R
Notes, including an opportunity to ask questions of and request information
from the Placement Agent.
(4) In connection with the transfer of the Class R Notes: (i) none
of the Issuer, the Placement Agent or the Servicer is acting as a fiduciary
or financial or investment adviser for the transferee; (ii) the transferee is
not relying (for purposes of making any investment decision or otherwise)
upon any advice, counsel or representations (whether written or oral) of the
Issuer, the Placement Agent or the Servicer other than any in a current
private placement memorandum for such Class R Notes and any representations
expressly set forth in a written agreement with such party; (iii) none of the
Issuer, the Placement Agent or the Servicer has given to the transferee
(directly or indirectly through any other person) any assurance, guarantee,
or representation whatsoever as to the expected or projected success,
profitability, return, performance, result, effect, consequence, or benefit
(including legal, regulatory, tax, financial, accounting, or otherwise) of
the Indenture or documentation for the Class R Notes; (iv) the transferee has
consulted with its own legal, regulatory, tax, business, investment,
34
<PAGE> 37
financial, and accounting advisers to the extent it has deemed necessary, and
it has made its own investment decisions (including decisions regarding the
suitability of any transaction pursuant to the Indenture) based upon its own
judgment and upon any advice from such advisers as it has deemed necessary
and not upon any view expressed by the Issuer; (v) the transferee has
determined that the rates, prices or amounts and other terms of the purchase
and sale of the Class R Notes reflect those in the relevant market for
similar transactions; (vi) the transferee is acquiring the Class R Notes with
a full understanding of all of the terms, conditions and risks thereof
(economic and otherwise), and it is capable of assuming and willing to assume
(financially and otherwise) those risks; and (vii) the transferee is a
sophisticated investor.
(5) The transferee understands that the Class R Notes offered in
reliance on Rule 144A will bear the legend set forth in the form of Class R
Notes attached hereto as Exhibit A, and will be represented by one or more
Rule 144A Global Notes. The Class R Notes may not at any time be held by or
on behalf of U.S. persons that are not QIBs or institutional accredited
investors. Before any interest in a Rule 144A Global Note may be offered,
resold, pledged or otherwise transferred to a person who takes delivery in
the form of an interest in a Definitive Note, the transferor will be required
to provide the Trustee with a written certification (in the form provided as
Exhibit B hereto) as to compliance with the transfer restrictions.
(6) The transferee will not, at any time, offer to buy or offer to
sell the Class R Notes by any form of general solicitation or advertising,
including, but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio or seminar or meeting whose attendees have
been invited by general solicitations or advertisings.
(7) The transferee by its purchase of the Class R Notes, represents
that either (i) it is not a Benefit Plan and is not acting on behalf of or
investing the assets of a Benefit Plan or (ii) the transferee's acquisition
and continued holding of such Class R Notes will be covered by a U.S.
Department of Labor Prohibited Transaction Class Exemption.
(8) The transferee acknowledges that the Issuer, the Placement
Agent and others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations and agreements and agrees that, if any of
the acknowledgments, representations or warranties deemed to have been made
by it by or in connection with its purchase of Class R Notes is no longer
accurate, it shall promptly notify the Issuer and the Placement Agent. If the
transferee is acquiring any Class R Notes as a fiduciary or agent for one or
more investor accounts, it shall be deemed to have represented that it has
sole investment discretion with respect to each such account and that it has
full power to make the foregoing acknowledgments, representations and
agreements on behalf of each such account.
35
<PAGE> 38
(c) Subject to Section 2.03(a), upon surrender for
registration of transfer of any Note at the office of the Issuer designated
pursuant to Section 8.02 for such purpose, the Issuer 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.
(d) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(e) Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Issuer or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee duly executed, by the holder thereof
or his attorney duly authorized in writing.
(f) No service charge shall be made for any registration of
transfer or exchange of Notes, but the Issuer 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
Issuer shall execute and the Trustee shall authenticate and deliver in exchange
therefore a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
(b) If there shall be delivered to the Issuer 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 Issuer or the Trustee that such Note has been acquired by a bona
fide purchaser, the Issuer 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 Issuer 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 Issuer or the Trustee may require the payment by the Noteholder of
a sum sufficient to
36
<PAGE> 39
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 Issuer, 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, Class D Notes and Class R 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, the Class D Notes, the
Class R-1 Notes, and the Class R-2 Notes, upon original issuance, shall be
issued in the form attached as Exhibit A and delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the Issuer. 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, Class D Notes, the Class R-1 Notes and the Class R-2 Notes
shall initially be registered on the Note Register in the name of Cede & Co.,
the nominee of The Depository Trust Company, as the initial Clearing Agency, and
no Class A-1 Note Owner, Class A-2 Note Owner, Class A-3 Note Owner, Class A-4
Note Owner, Class B Note Owner, Class C Note Owner, Class D Note Owner, Class
R-1 Note Owner, or Class R-2 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, Definitive Class D Notes, Definitive Class R-1
Notes and/or Definitive Class R-2 Notes ("Definitive Notes") have been issued to
the applicable Note Owners pursuant to Section 2.07:
(a) the provisions of this Section 2.05 shall be in full force
and effect with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes or the Class B Notes, Class C Notes, Class D Notes or
Class R Notes, as the case may be;
(b) the Issuer, 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, Class D Notes or Class R 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, Class D
Notes and Class R Notes, as the case may be), as the authorized representatives
of the respective Note Owners;
37
<PAGE> 40
(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,
Class D Notes, Class R-1 Notes and Class R-2 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, Class D Notes, Class R-1 Notes or Class R-2 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, Class D Notes, Class R-1 Notes or Class R-2 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, Class D Notes, Class R-1 Notes or Class R-2 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, Class D Noteholders,
Class R-1 Noteholders or Class R-2 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 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, Class D
Noteholders, Class R-1 Noteholders or Class R-2 Noteholders in accordance with
its applicable rules, regulations and procedures.
SECTION 2.07. Definitive Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class R Notes.
(a) If (a) (i) the Issuer advises the Trustee in writing that
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities under the
38
<PAGE> 41
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, Class D Notes, the
Class R-1 Notes and/or the Class R-2 Notes and (ii) the Trustee or the Issuer is
unable to locate a qualified successor, (b) the Issuer, 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, Class D Notes, the Class R-1 Notes
and/or the Class R-2 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, Class B Note Owners, Class
C Note Owners, Class D Note Owners, Class R-1 Note Owners and Class R-2 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, Class D Notes, Class R-1 Notes
and Class R-2 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, Class D Notes, Class R-1
Notes and Class R-2 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, Class D Notes,
Class R-1 Notes or Class R-2 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, Class D Note Owners, Class R-1 Note Owners or Class R-2 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, Class B
Note Owners, Class C Note Owners, Class D Note Owners, Class R-1 Note Owners and
Class R-2 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, Class D Notes,
Class R-1 Notes and Class R-2 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, Class D Note Owners,
Class R-1 Note Owners or Class R-2 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, Class D Notes,
Class R-1 Notes or Class R-2 Notes, as the case may be, by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, the Issuer shall execute and the Trustee shall authenticate and
deliver the relevant Definitive Notes. Neither the Issuer 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 Notes, and the Trustee shall recognize the
holders of the relevant Definitive Notes as Noteholders hereunder.
(b) The Class R Notes sold to QIBs will be represented by a
permanent global note in fully registered form without coupons (the "Rule 144A
Global Note") deposited with a custodian for, and registered in the name of, a
nominee of DTC.
39
<PAGE> 42
In the case of Class R Notes that are Definitive Notes initially issued to an
Accredited Investor or in exchange for the Rule 144A Global Notes, such
Definitive Notes will bear, and be subject to the legend set forth in the form
of Class R Notes attached hereto as Exhibit A. The holder of such Definitive
Note may transfer such Definitive Note by surrendering it at the office or
agency maintained by the Trustee. Upon the transfer, exchange or replacement of
Definitive Notes bearing such legend, or upon specific written request for
removal of the legend on a Definitive Note, the Trustee will deliver only
Definitive Notes that bear such legend, or will refuse to remove such legend, as
the case may be, unless there is delivered to the Trustee such satisfactory
evidence, which may include an opinion of counsel, as may reasonably be required
by the Trustee that neither such legend nor the restrictions on transfer set
forth therein are required to ensure compliance with the provisions of the
Securities Act.
Definitive Notes will not be eligible for clearing or
settlement through DTC, Euroclear or Cedel.
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 Issuer 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 Issuer, the Trustee, and any agent of the Issuer 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
Issuer, the Trustee, nor any agent of the Issuer 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
40
<PAGE> 43
the Trustee and shall be promptly cancelled by it. The Issuer may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer 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 312(a) of the
Trust Indenture Act. In the event the Trustee no longer serves as the Note
Registrar, the Issuer (or any other obligor upon the Notes) shall furnish to the
Trustee at least five Business Days before each interest payment date (and in
all events in intervals of not more than 6 months) and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Noteholders,
and the Issuer shall otherwise comply with Section 312(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 Issuer, any other obligor upon the Notes
or an Affiliate of the Issuer 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 Assignment 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
41
<PAGE> 44
(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 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 Issuer
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 Issuer 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, the Residual Account, or the Liquidity Reserve Account. Each of
the Issuer and the Servicer agrees to give appropriate and timely investment
directions to the Trustee so that there will not be more than two Business
42
<PAGE> 45
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 Issuer 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.
(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.
43
<PAGE> 46
(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 address, deposit such
payment (excluding Residual Realizations) in the Collection Account and Residual
Realizations in the Residual Account. All Lease Payments, Casualty Payments,
Termination Payments and other payments relating to a Lease received at such
designated address and so deposited 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 Issuer 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 Issuer, 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:
44
<PAGE> 47
(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;
(viii) Termination Payments (other than Residual Prepayments)
to the extent the Issuer does not reinvest such Termination Payments in
Additional Leases; and
(ix) payments from the Transferor to effect a redemption of
the Receivable 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 3.05 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 and pro rata: (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;
45
<PAGE> 48
(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;
(xiii) 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 (viii) above on all of the Class A Notes 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 Issuer, 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(c) shall have been
recovered, or shall be subject to recovery, in any proceeding with respect to
the Issuer or otherwise, then for purposes of determining future distributions
pursuant to this Section 3.03(c) such amount or portion thereof shall be deemed
to have not been previously so distributed.
46
<PAGE> 49
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 Servicer Advances; and
(iv) payments from the Transferor 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 and
the amounts, if any, deposited into the Residual Account from the Liquidity
Reserve Account in accordance with the provisions of Section 3.06 shall be
withdrawn by the Servicer on or before each Payment Date from the Residual
Account, in the amounts required, for application in the following order of
priority, to make the following required payments:
(i) to pay the Residual Servicing Fee;
(ii) to reimburse unreimbursed Residual Servicer 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 Issuer, the balance, if any.
SECTION 3.05. The Reserve Account.
(a) On the Issuance 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 3.05(b).
47
<PAGE> 50
(b) If by 12:00 noon, New York City time, one 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)(xii) (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 Issuer.
(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 Issuer.
SECTION 3.06. The Liquidity Reserve Account.
(a) On the Issuance Date, the Issuer has made an initial
deposit of $____________ into the Liquidity Reserve Account for the sole benefit
of the Class R Notes. 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 3.06(b).
(b) If by 12:00 noon, New York City time, one 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)(iv) 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-1 Noteholders and Class R-2
Noteholders on such date.
(d) If on any Payment Date, the balance in the Liquidity
Reserve Account after giving effect to all distributions required by Section
3.04(b)(i) through 3.04(b)(iv) is greater than the Required Liquidity Reserve
the Trustee shall withdraw
48
<PAGE> 51
such excess from the Liquidity Reserve Account and deposit them in the Residual
Account for distribution to the Class R Noteholder on such Payment Date.
(e) Upon termination of this Indenture, any balance remaining
in the Liquidity Reserve Account, after all obligations to the Class R
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 Issuer.
SECTION 3.07. Reports by Trustee; Notices of Certain Payments.
(a) The Trustee shall within two Business Days after the
request of the Issuer, the Servicer or any Receivable Noteholder, deliver to the
requesting person a written report setting forth the amounts on deposit in the
Collection Account and the Reserve 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 5.01 of the Assignment and Servicing Agreement, the Trustee shall mail
to the Issuer, 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 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 and 3.05.
(c) The Trustee shall within two Business Days after the
request of the Issuer, the Servicer, or any Class R 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
49
<PAGE> 52
the receipt of the Monthly Report from the Servicer pursuant to Section 5.01 of
the Assignment and Servicing Agreement, the Trustee shall mail to the Issuer,
Copelco, each Rating Agency and the Servicer and make available to each Class R
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 Class R Notes held by
each Class R Noteholder;
(iii) the amount of the Residual Servicing Fee and
unreimbursed Residual Servicer 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.
(e) With each report of the Trustee furnished pursuant to this
Section 3.07 following any Payment Date, the Trustee shall enclose a copy of the
relevant 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
Assignment and Servicing Agreement or, if such reports have not been received, a
statement to such effect.
(f) Upon request of a Noteholder, the Trustee will provide
information as to the Outstanding Principal Amount of each Class of Notes.
SECTION 3.08. Trustee May Rely on Certain Information from
Copelco and Servicer.
Pursuant to Sections 4.01, 4.05, 5.01 and 6.02 of the
Assignment 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.
50
<PAGE> 53
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 Assignment and Servicing Agreement (unless
retained by the Issuer 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
Assignment 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 Assignment and Servicing
Agreement and (e) upon the substitution of a Substitute Lease related to such
Equipment in accordance with the provisions of Section 11 of the Assignment 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,
the Lease Repurchase Amount, or from the proceeds of the Equipment subject to
any Lease (i) the final Lease Payment due and payable under such Lease and the
deposit of any Residual Realization in respect thereof, (ii) a Termination
Payment in respect of such Lease, and the deposit of any Residual Realization in
respect thereof, (iii) a Lease Repurchase Amount 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 Payment, Casualty
Payment, Lease Repurchase Amount 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 Issuer), and take such other actions as
the Issuer, 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.
51
<PAGE> 54
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 Assignment and Servicing Agreement (but none of
Copelco's obligations pursuant to Section 4 of the Assignment 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
Assignment and Servicing Agreement, including, without limitation, the
Servicer's right thereunder to receive the Servicing Fee, but none of the
Servicer obligations pursuant to Section 4 thereof, shall pass to, be vested in,
and be assumed by the Trustee, and the Trustee shall be authorized to, and
shall, execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
termination and of such passing, vesting, and assumption; provided that in
performing the duties of the Servicer under the Assignment and Servicing
Agreement the Trustee shall at all times be deemed to be acting as the Trustee
hereunder and shall be entitled to the full benefit of all the protections,
benefits, immunities and indemnities provided in this Indenture for or with
respect to the Trustee, including without limitation those set forth in Article
Seven hereof.
SECTION 5.02. Substitute Servicer.
Notwithstanding the provisions of Section 5.01, the Trustee
may, if it shall be unwilling to continue to act as the successor to the
Servicer in accordance with Section 5.01, or shall, if it is unable to continue
to so act or is so instructed in writing by the holders of 66-2/3% of the then
Outstanding Principal Amount of the Notes, appoint a successor to the Servicer
in accordance with the provisions of Section 8.03 of the Assignment 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):
52
<PAGE> 55
(a) default in making of Principal Payments at the Stated
Maturity of the relevant Receivable Notes or Interest Payments on the Receivable
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 Issuer 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
Issuer a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the Issuer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Issuer 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 Issuer 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 Issuer 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 Issuer or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the Issuer's failure to pay its debts generally as they
become due, or the taking of corporate action by the Issuer in furtherance of
any such action.
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 Issuer.
(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 Issuer and the Trustee, may rescind and annul such
declaration and its consequences if the Issuer 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
53
<PAGE> 56
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.
(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 Issuer 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 (other than the Liquidity
Reserve Account); 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 unless directed otherwise by the holders of 66 - 2/3% of the
then Outstanding Principal Amount of the Notes. Neither the Trustee nor any
Noteholder shall have any rights against the Issuer other than to enforce the
Lien against the Leases and the Equipment and to sell the Trust Estate.
54
<PAGE> 57
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 Issuer, Copelco, the Servicer or
any other obligor upon the Notes or the other obligations secured hereby or
relating to the property of the Issuer, 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 Issuer, 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 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
55
<PAGE> 58
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 (excluding
amounts on deposit in the Liquidity Reserve Account which will be used, on the
Payment Date immediately following an Event of Default for the payment of
interest and principal to Class R Noteholders in accordance with Clause fourth
below) or thereafter received by the Trustee (other than the Liquidity Reserve
Account) 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
Assignment 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 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
56
<PAGE> 59
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 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 Issuer
or any other Person legally entitled thereto.
On the Payment Date following an Event of Default, amounts in
the Liquidity Reserve Account shall be used to make any amounts not
paid under item fourth above and thereafter in the priority first
through seventh above.
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;
(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;
57
<PAGE> 60
(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 Issuer, the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Noteholders
continue as though no such proceeding had been instituted.
58
<PAGE> 61
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(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.
(a) Upon a default in making of Principal Payments at the
Stated Maturity of the relevant Class R Notes or Interest Payments on the Class
R Notes when such become due and payable (a "Residual Event of Default"), the
unpaid principal amount of the Class R 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 Issuer.
59
<PAGE> 62
(b) At any time after such a Residual 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
Class R Notes evidencing 66-2/3% of the then Outstanding Principal Amount of the
Class R Notes by written notice to the Issuer and the Trustee, may rescind and
annul such declaration and its consequences if the Issuer has paid or deposited
with the Trustee a sum sufficient to pay all Principal Payments on the 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 all Interest
Payments due with respect to any 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 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 Residual Event of Default or impair any
right consequent thereon.
(c) If a Residual 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. Following any
acceleration of the Class R Notes, the Trustee shall have all of the rights,
powers and remedies with respect to the Residual Realizations 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. If a Residual Event of Default occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Issuer for the whole amount of principal
and interest remaining unpaid. In exercising its rights and obligations under
this Section 6.13, the Trustee may sell the rights to receive Residual
Realizations to a third party. Neither the Trustee nor any Class R Noteholder
shall have any rights against the Issuer other than to sell the Residual
Realizations.
(d) Any money collected by the Trustee pursuant to this
Article following a sale of rights to Residual Realizations following a Residual
Event of Default, and any moneys that may then be held or thereafter received by
the Trustee for the benefit of the Class R Notes or otherwise available in the
Residual Account or the Liquidity Reserve Account shall be applied in the
following order, at the date or dates fixed by the Trustee, upon presentation of
the Class R Notes and surrender thereof:
first to the payment of all costs and expenses of collection
incurred by the Trustee and the Class R 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
Assignment and Servicing Agreement is not Copelco Capital or an
Affiliate of Copelco Capital, to the payment of all Residual Servicer's
Fees then due to such person;
60
<PAGE> 63
third first to the payment of all accrued and unpaid interest
on 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;
fourth to the payment of amounts then due the Trustee
hereunder;
fifth if the person then acting as Servicer is Copelco Capital
or an Affiliate of Copelco Capital, to the payment of all Residual
Servicer's Fees then due to such Person; and
sixth to the payment of the remainder, if any, to the Issuer
or any other Person legally entitled thereto.
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 Issuer 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 Issuer (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 described 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
61
<PAGE> 64
been paid. The Trustee may from time to time, upon directions in accordance with
Section 6.12, postpone any public sale by public announcement made at the time
and place of such sale. For any public sale of the Trust Estate, the Trustee
shall have provided each Noteholder with notice of such sale at least two weeks
in advance of such sale which notice shall specify the date, time and location
of such sale.
(b) To the extent permitted by applicable law, the Trustee
shall not in any private sale sell to a third party the Trust Estate, or any
portion thereof unless,
(i) until such time as the conditions specified in Sections
10.01(a)(i) and (ii) have been satisfied in full, the holders of 66-2/3% of the
then Outstanding Principal Amount of each Class of the Notes voting separately
consent to or direct the Trustee in writing to make such sale; or
(ii) the proceeds of such sale would be not less than the sum
of all amounts due to the Trustee hereunder and the entire unpaid principal
amount of the Notes and interest due or to become due thereon in accordance with
Section 6.06 on the Payment Date next succeeding the date of such sale.
The foregoing provisions shall not preclude or limit the ability of the Trustee
to purchase all or any portion of the Trust Estate at a private sale.
(c) In connection with a sale of all or any portion of the
Trust Estate:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale may hold,
retain, and possess and dispose of such property, without further
accountability, and any Noteholder may, in paying the purchase money therefore,
deliver in lieu of cash any Outstanding Notes or claims for interest thereon for
credit in the amount that shall, upon distribution of the net proceeds of such
sale, be payable thereon, and the Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Noteholders
after being appropriately stamped to show such partial payment;
(ii) the Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the Trust
Estate in connection with a sale thereof;
(iii) the Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Issuer 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.
62
<PAGE> 65
(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 Issuer or the Trust Estate that are vested in the Trustee by this Indenture,
including, without limitation, the power of the Trustee to proceed against the
collateral subject to the lien of this Indenture and to institute judicial
proceedings for the collection of any deficiency remaining thereafter.
ARTICLE 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
63
<PAGE> 66
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 7.02. Notice of Defaults or Events of Default.
Within two Business Days after a Responsible Officer obtaining
knowledge of the occurrence of any Default or Event of Default hereunder, the
Trustee shall transmit, by certified mail return receipt requested, hand
delivery or overnight courier, to all Noteholders, as their names and 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 Issuer mentioned herein
shall be sufficiently evidenced by a Trust Request or Trust Order and any action
of the Issuer 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
64
<PAGE> 67
Noteholders pursuant to this Indenture, unless such Noteholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, note,
debenture, other evidence of indebtedness, 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 Issuer, 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 Issuer, 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 Issuer 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 Issuer 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.
The Issuer 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 Issuer 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
65
<PAGE> 68
(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 to the Issuer under Section 3.03(b) or Section 3.04(b) or
payable to the Trustee under clause first of Section 6.06 or clause first of
Section 6.13), for all reasonable expenses, disbursements, and advances incurred
or made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement, or advance as may be
attributable to its negligence or bad faith.
SECTION 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall
(a) be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers; (b) have a combined capital
and surplus of at least $100,000,000; (c) be subject to supervision or
examination by federal or state authority; and (d) at the time of appointment,
shall have long-term debt obligations (or, if the Trustee does not have
outstanding long-term debt obligations and is a subsidiary of a holding company,
which holding company shall have long-term obligations) having a credit rating
of at least "A-" from S&P and Baa3 from Moody's.
If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
This Indenture shall always have a Trustee who satisfies the
requirements of Section 310(a)(1) of the Trust Indenture Act. The Trustee is
subject to the provisions of Section 310(b) of the Trust Indenture Act regarding
disqualification of a trustee upon acquiring any conflicting interest.
SECTION 7.09. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this 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 Issuer 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 Issuer.
66
<PAGE> 69
(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 Issuer, with the consent of the holders of 66-2/3% of the
Outstanding Principal Amount of the Notes, by an act of the Issuer, shall
promptly appoint a successor Trustee.
(e) If no successor Trustee shall have been so appointed by
the Issuer 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 Issuer 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 Issuer 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
310(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 Issuer 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 Issuer
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 Issuer 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.
67
<PAGE> 70
SECTION 7.11. Merger, Conversion, Consolidation or Succession
to Business.
Any Person into which the Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Notes shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion,
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Notes so authenticated with the same effect as if such successor
Trustee had itself authenticated such Notes. The Trustee shall provide prompt
written notice to each Rating Agency of any event referenced in this Section
7.11.
SECTION 7.12. Co-trustees and Separate Trustees.
(a) At any time or times, if the Issuer, 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 Issuer 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 Issuer 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 Issuer 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 Issuer 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 Issuer.
(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.
68
<PAGE> 71
(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, 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 Issuer 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
Issuer. Upon the written request of the Trustee, the Issuer 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
Issuer hereunder and declares that the Trustee, through a custodian, will hold
such Leases and other Granted Assets conveyed by the Issuer 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
Issuer.
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.
69
<PAGE> 72
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).
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 Issuer 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 Issuer any proceeding of the type referred to in Section
6.01(b) or (c) 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 Issuer 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 Issuer 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 Issuer in respect of the
Notes and this Indenture may be served. The Issuer hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and demands.
(b) The chief executive office of the Issuer, and the office
at which the Issuer maintains its records with respect to the Leases, the
interests in the Equipment, and the transactions contemplated hereby, is
currently located in Wilmington, Delaware; and records with respect to certain
of the Leases are maintained in Mt. Laurel, New Jersey. The Issuer will not
change the location of such offices without giving the Trustee at least 30 days
prior written notice thereof.
70
<PAGE> 73
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
Issuer by the Trustee, and no amounts so withdrawn from the Collection Account
or the Residual Account for payments of Notes shall be paid over to the Issuer
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 Issuer 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 Issuer will promptly notify the Trustee of its action or failure so
to act.
The Issuer 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 Issuer (or
any other obligor upon the Securities) in the making of any payment of
principal or interest.
71
<PAGE> 74
(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 Issuer upon request; and such Noteholder
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee with respect to such trust money shall
thereupon cease.
SECTION 8.04. Corporate Existence; Merger; Consolidation, etc.
(a) The Issuer will keep in full effect its existence and
rights as a business trust under the laws of the State of Delaware.
(b) The Issuer 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 Assignment and Servicing Agreement.
(c) The Issuer 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 Issuer 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 Issuer shall not be required to file Financing Statements with respect to
the interests in the Equipment in addition to those contemplated by Section
11.03 of the Assignment 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
72
<PAGE> 75
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 Issuer, upon the Issuer'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 Issuer with the foregoing covenants;
and provided, further, that the duty of the Trustee to execute any instrument
required pursuant to this Section 8.05 shall arise only if a Responsible Officer
of the Trustee has actual knowledge of any failure of the Issuer to comply with
the provisions of this Section 8.05.
SECTION 8.06. [Reserved].
SECTION 8.07. Performance of Obligations; Assignment and
Servicing Agreement.
(a) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Notes, the
Underwriting Agreement and the Placement Agent Agreement.
(b) The Issuer 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 Assignment and Servicing Agreement.
(c) If any Authorized Officer shall have knowledge of the
occurrence of a default under the Assignment and Servicing Agreement, the Issuer
shall promptly notify the Trustee and the Noteholders thereof, and shall specify
in such notice the action, if any, the Issuer 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 Issuer may not waive any default under or
amend the Assignment and Servicing Agreement.
SECTION 8.08. Negative Covenants.
The Issuer 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;
73
<PAGE> 76
(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 Assignment and Servicing Agreement;
(e) seek dissolution or liquidation in whole or in part or
reorganization of its business or affairs;
(f) (i) permit the validity or effectiveness of this Indenture
or any Grant hereby to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations under this Indenture,
except as may be expressly permitted hereby, (ii) permit any lien, charge,
security interest, mortgage or other encumbrance to be created on or to extend
to or otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof other than the lien of this Indenture,
or (iii) subject to Section 3.01(c) of the Assignment 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 Issuer or
to any other Person; provided that the Issuer may from time to time make
Inter-Company Loans on the terms and conditions set forth in Section 13 of the
Assignment and Servicing Agreement.
SECTION 8.09. Information as to Issuer.
The Issuer 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 Issuer is taking or proposes to take with respect
thereto; and
(b) Report on Proceedings - promptly upon the Issuer's
becoming aware of (i) any proposed or pending investigation of it by any
governmental authority or agency, or (ii) any pending or proposed court or
administrative proceeding which involves or may involve the possibility of
materially and adversely affecting the properties, business, prospects, profits
or condition (financial or otherwise) of the Issuer, a written notice specifying
the nature of such investigation or proceeding and what action the Issuer is
taking or proposes to take with respect thereto and evaluating its merits.
74
<PAGE> 77
SECTION 8.10. Taxes.
The Issuer shall pay all taxes when due and payable or levied
against its assets, properties or income, including any property that is part of
the Trust Estate.
SECTION 8.11. Indemnification.
The Issuer 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 Assignment 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 Issuer'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 Issuer 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 Issuer 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 Issuer shall:
(a) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports which the Issuer 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 Issuer 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 Issuer 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 Issuer with
the conditions and
75
<PAGE> 78
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 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 Issuer, 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 Issuer for the benefit of
the Noteholders, or to surrender any right or power herein conferred upon the
Issuer;
(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 Issuer and the Trustee, the Issuer, 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
76
<PAGE> 79
Indenture; provided, that no supplemental indenture shall, without the consent
of the holder of each Outstanding Note affected thereby:
(i) change the Stated Maturity of any Note or the Principal
Payments or Interest Payments due or to become due on any Payment Date with
respect to any Note, or change the priority of payment thereof as set forth
herein, or reduce the principal amount thereof or the Note Interest Rate
thereon, or change the place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Maturity thereof;
(ii) reduce the percentage of the Outstanding Principal Amount
of the Notes the consent of whose Noteholders is required for any such
supplemental indenture, for any waiver of compliance with provisions 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 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.
77
<PAGE> 80
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.
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 Issuer shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Issuer, to any such supplemental indenture may be prepared and executed by the
Issuer 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
Issuer, 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 Issuer and thereafter repaid to the Issuer 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
78
<PAGE> 81
(2) will become due and payable at their
Stated Maturity, as applicable,
within one year,
and the Issuer has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal and interest to the
date of such deposit (in the case of Notes which have become
due and payable) or to the Stated Maturity thereof;
(ii) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer for the benefit of the Noteholders; and
(iii) the Issuer 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 Issuer 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(i)(B), for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer 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(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.
79
<PAGE> 82
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 Notes. The Issuer, 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 Issuer (or any other
obligor upon the Notes) to the Trustee to take any action under this Indenture,
the Issuer (or such other Obligor) shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the
statements set forth in Section 11.04) 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 11.04) 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;
80
<PAGE> 83
(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 Issuer 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.
81
<PAGE> 84
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 LLC 99-1,
as Issuer
By:
Name:
Title:
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By
Name:
Title:
COPELCO CAPITAL INC., as Servicer
By
Name:
Title:
[Signature Page to the Indenture]
82
<PAGE> 85
EXHIBIT A
CLASS A-1 NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS A-1 LEASE-BACKED NOTE, SERIES 1999-A
CUSIP NO. _______________
No. R-1 $____________
Copelco Capital Funding LLC 99-1, a limited liability company
duly organized and existing under the laws of Delaware (herein called the
"Issuer", which term includes any successor Person under the Indenture referred
to herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of
_______________________________________________ ($_____________), payable in
monthly installments beginning on March 15, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance 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 March 1999 Payment Date, since March __, 1999.
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 March 15, 1999, 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 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
<PAGE> 86
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 Issuer designated as its "___% Class A-1 Lease-Backed Notes,
Series 1999-A" (herein called the "Class A-1 Notes") limited in aggregate
principal amount of $____________, issued under the Indenture, dated as of March
1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital,
Inc., as Servicer, 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 Issuer, 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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Class A-1
Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Class A-1 Note and of any
A-1-2
<PAGE> 87
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 Issuer for that
purpose, duly endorsed by, or accompanied by a written instrument of transfer in
the form satisfactory to the Note Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Class
A-1 Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Class A-1 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000,000. As provided in the
Indenture and subject to certain limitations therein set forth, Class A-1 Notes
are exchangeable for a like aggregate principal amount of Class A-1 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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-1-3
<PAGE> 88
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: _______________, as Manager
By: __________________________
Authorized Officer
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-1-4
<PAGE> 89
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 Issuer. 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-1-5
<PAGE> 90
CLASS A-2 NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS A-2 LEASE-BACKED NOTE, SERIES 1999-A
CUSIP NO. _______________
No. R-1 $____________
Copelco Capital Funding LLC 99-1, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _________________________________________________
($___________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, 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
this Note at the Corporate Trust Office of the Trustee or at the principal
office of any Paying Agent appointed pursuant to the Indenture.
<PAGE> 91
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 Notes of the Trust designated as its "___% Class A-2 Lease-Backed Notes,
Series 1999-A" (herein called the "Class A-2 Notes") limited in aggregate
principal amount of $____________, issued under the Indenture, dated as of March
1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital
Funding LLC 99-1, as Servicer, 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 Issuer, 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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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 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.
A-2-2
<PAGE> 92
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 Issuer for that
purpose, duly endorsed by, or accompanied by a written instrument of transfer in
the form satisfactory to the Note Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Class
A-2 Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Class A-2 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000,000. As provided in the
Indenture and subject to certain limitations therein set forth, Class A-2 Notes
are exchangeable for a like aggregate principal amount of Class A-2 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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-2-3
<PAGE> 93
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: _______________, as Manager
By: __________________________
Authorized Officer
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-2-4
<PAGE> 94
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 Issuer. 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-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 A-2 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-2-5
<PAGE> 95
CLASS A-3 NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS A-3 LEASE-BACKED NOTE, SERIES 1999-A
CUSIP NO. _______________
No. R-1 $____________
Copelco Capital Funding LLC 99-1, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _________________________________________________
($___________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, 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
this Note at the Corporate Trust Office of the Trustee or at the principal
office of any Paying Agent appointed pursuant to the Indenture.
<PAGE> 96
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 Notes of the Trust designated as its "___% Class A-3 Lease-Backed Notes,
Series 1999-A" (herein called the "Class A-3 Notes") limited in aggregate
principal amount of $____________, issued under the Indenture, dated as of March
1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital
Funding LLC 99-1, as Servicer, 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 Issuer, 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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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 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.
A-3-2
<PAGE> 97
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 Issuer for that
purpose, duly endorsed by, or accompanied by a written instrument of transfer in
the form satisfactory to the Note Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Class
A-3 Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Class A-3 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000,000. As provided in the
Indenture and subject to certain limitations therein set forth, Class A-3 Notes
are exchangeable for a like aggregate principal amount of Class A-3 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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-3-3
<PAGE> 98
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: _______________, as Manager
By: __________________________
Authorized Officer
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-3-4
<PAGE> 99
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 Issuer. 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-3 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-3 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-3-5
<PAGE> 100
CLASS A-4 NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS A-4 LEASE-BACKED NOTE, SERIES 1999-A
CUSIP NO. _______________
No. R-1 $____________
Copelco Capital Funding LLC 99-1, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _________________________________________________
($___________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, 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
this Note at the Corporate Trust Office of the Trustee or at the principal
office of any Paying Agent appointed pursuant to the Indenture.
<PAGE> 101
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 Notes of the Trust designated as its "___% Class A-4 Lease-Backed Notes,
Series 1999-A" (herein called the "Class A-4 Notes") limited in aggregate
principal amount of $____________, issued under the Indenture, dated as of March
1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital
Funding LLC 99-1, as Servicer, 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 Issuer, 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-4 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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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 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.
A-4-2
<PAGE> 102
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 Issuer for that
purpose, duly endorsed by, or accompanied by a written instrument of transfer in
the form satisfactory to the Note Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Class
A-4 Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Class A-4 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000,000. As provided in the
Indenture and subject to certain limitations therein set forth, Class A-4 Notes
are exchangeable for a like aggregate principal amount of Class A-4 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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-4-3
<PAGE> 103
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: _______________, as Manager
By: __________________________
Authorized Officer
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-4-4
<PAGE> 104
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 Issuer. 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-4 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-4 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-4-5
<PAGE> 105
CLASS B NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS B LEASE-BACKED NOTE, SERIES 1999-A
CUSIP NO. _______________
No. R-1 $____________
Copelco Capital Funding LLC 99-1, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _________________________________________________
($___________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, either by check to the
registered address of the Holder of this Class B Note as of the relevant Record
Date or by wire transfer to an account at a bank in the United States as the
Holder shall specify, as provided more fully in the Indenture; provided, that
the final payment of principal and interest in respect of the Notes shall be
payable to the Holder of this Note only upon presentation and surrender of this
Note at the Corporate Trust Office of the Trustee or at the principal office of
any Paying Agent appointed pursuant to the Indenture.
<PAGE> 106
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 A
Notes of the Trust designated as its "___% Class B Lease-Backed Notes, Series
1999-A" (herein called the "Class B Notes") limited in aggregate principal
amount of $____________, issued under the Indenture, dated as of March 1, 1999
(herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC
99-1, as Servicer, 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 Issuer, 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.
This Class B 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 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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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.
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
B-2
<PAGE> 107
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 Issuer for that purpose, duly endorsed by, or accompanied by a written
instrument of transfer in the form satisfactory to the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Class B Notes, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Class B Notes are issuable only in registered form without
coupons in minimum denominations of $1,000,000. As provided in the Indenture and
subject to certain limitations therein set forth, Class B Notes are exchangeable
for a like aggregate principal amount of Class B Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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.
B-3
<PAGE> 108
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: _______________, as Manager
By: __________________________
Authorized Officer
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
B-4
<PAGE> 109
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 Issuer. 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.
B-5
<PAGE> 110
CLASS C NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS C LEASE-BACKED NOTE, SERIES 1999-A
CUSIP NO. _______________
No. R-1 $____________
Copelco Capital Funding LLC 99-1, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _________________________________________________
($___________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, either by check to the
registered address of the Holder of this Class C Note as of the relevant Record
Date or by wire transfer to an account at a bank in the United States as the
Holder shall specify, as provided more fully in the Indenture; provided, that
the final payment of principal and interest in respect of the Notes shall be
payable to the Holder of this Note only upon presentation and surrender of this
Note at the Corporate Trust Office of the Trustee or at the principal office of
any Paying Agent appointed pursuant to the Indenture.
<PAGE> 111
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 A
Notes of the Trust designated as its "___% Class C Lease-Backed Notes, Series
1999-A" (herein called the "Class C Notes") limited in aggregate principal
amount of $____________, issued under the Indenture, dated as of March 1, 1999
(herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC
99-1, as Servicer, 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 Issuer, 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.
This Class C 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 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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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.
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
C-2
<PAGE> 112
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 Issuer 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 $1,000,000. 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 Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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.
C-3
<PAGE> 113
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: _______________, as Manager
By: __________________________
Authorized Officer
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
C-4
<PAGE> 114
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 Issuer. 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.
C-5
<PAGE> 115
CLASS D NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS D LEASE-BACKED NOTE, SERIES 1999-A
CUSIP NO. _______________
No. R-1 $____________
Copelco Capital Funding LLC 99-1, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _________________________________________________
($___________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, either by check to the
registered address of the Holder of this Class D Note as of the relevant Record
Date or by wire transfer to an account at a bank in the United States as the
Holder shall specify, as provided more fully in the Indenture; provided, that
the final payment of principal and interest in respect of the Notes shall be
payable to the Holder of this Note only upon presentation and surrender of this
Note at the Corporate Trust Office of the Trustee or at the principal office of
any Paying Agent appointed pursuant to the Indenture.
<PAGE> 116
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 A
Notes of the Trust designated as its "___% Class D Lease-Backed Notes, Series
1999-A" (herein called the "Class D Notes") limited in aggregate principal
amount of $____________, issued under the Indenture, dated as of March 1, 1999
(herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC
99-1, as Servicer, 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 Issuer, 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.
This Class D 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 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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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.
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
D-2
<PAGE> 117
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 Issuer 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 $1,000,000. 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 Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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.
D-3
<PAGE> 118
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: _______________, as Manager
By: __________________________
Authorized Officer
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
D-4
<PAGE> 119
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 Issuer. 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.
D-5
<PAGE> 120
CLASS E NOTE
NO TRANSFER OF ANY CLASS E 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 TO THE
INDENTURE; (II) AFTER THE APPROPRIATE HOLDING PERIOD, SUCH TRANSFER IS PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
UNDER THE SECURITIES ACT; (III) SUCH TRANSFER IS TO A TRANSFEREE WHO IS AN
ACCREDITED INVESTOR (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR (IV) SUCH TRANSFER IS OTHERWISE EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE TRUSTEE WILL REQUIRE, IN ORDER TO ASSURE
COMPLIANCE WITH SUCH LAWS, THAT THE CLASS E NOTEHOLDER'S PROSPECTIVE TRANSFEREE
REFERRED TO IN THE PRECEDING CLAUSES (III) OR (IV) DELIVER AN INVESTMENT LETTER
CERTIFYING TO THE ISSUER AND THE TRUSTEE AS TO THE FACTS SURROUNDING SUCH
TRANSFER IN THE FORM OF EXHIBIT B TO THE INDENTURE. EXCEPT IN THE CASE OF A
TRANSFER OF CLASS E 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 ISSUER). NONE OF THE ISSUER,
THE SERVICER OR THE TRUSTEE IS OBLIGATED TO REGISTER OR QUALIFY THE CLASS E
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 WITHOUT REGISTRATION.
COPELCO CAPITAL FUNDING LLC 99-1
____% CLASS E LEASE-BACKED NOTE
CUSIP No. ____________
No. R-1 $_______________
Copelco Capital Funding LLC 99-1, a limited liability company
duly organized and existing under the laws of Delaware (herein called the
"Issuer", which term
<PAGE> 121
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay __________, or registered assigns, the
principal sum ___________ ($____________), payable in monthly installments
beginning on March 15, 1999, in accordance with the Indenture. Interest will
accrue on the unpaid principal hereof from February 15, 1999, 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 March 15, 1999, 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 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 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 Issuer designated as its "____% Class E Lease-Backed Notes, Series
1999-A" (herein called the "Class E Notes"), limited in aggregate principal
amount of $________, issued under the Indenture, dated as of March 1, 1999
(herein called the "Indenture"), among the Issuer, Copelco Capital, Inc., as
Servicer, 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 Issuer, 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 Issuer with respect to the payment
of principal and interest on this Class E Note shall terminate.
E-2
<PAGE> 122
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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 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 Issuer 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 $1,000,000. 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 Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
E-3
<PAGE> 123
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.
E-4
<PAGE> 124
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: ________________, as manager
By: ____________________________
Authorized Officer
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
E-5
<PAGE> 125
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 Issuer. 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.
E-6
<PAGE> 126
CLASS R-1 NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE JURISDICTION. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT, TO REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE ISSUER, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVE IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) TO AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $1,000,000, FOR INVESTMENT PURPOSES ONLY
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO,
IN EACH CASE, COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND THE
ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D) AND (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN THE CASE OF THE FOREGOING CLAUSE (E), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) COMPLETED AND
DELIVERED BY THE PROSPECTIVE TRANSFEROR HEREOF TO THE ISSUER AND THE TRUSTEE AND
(2) THAT SUCH HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PROSPECTIVE PURCHASER OF THIS SECURITY FROM IT OR THE RESALE RESTRICTIONS
REFERRED TO IN (1) ABOVE.
<PAGE> 127
COPELCO CAPITAL FUNDING LLC 99-1
___% CLASS R-1 LEASE-BACKED NOTE
CUSIP No. ____________
No. R-1 $______________
Copelco Capital Funding LLC 99-1, a limited liability company
duly organized and existing under the laws of Delaware (herein called the
"Issuer", which term includes any successor Person under the Indenture referred
to herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _____________________________________,
($____________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, 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 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 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 1999-A" (herein called the "Class R-1 Notes"), limited in aggregate
principal amount of $_______, issued under the Indenture, dated as of March 1,
1999 (herein called the "Indenture"), among the Issuer, Copelco Capital, Inc.,
as Servicer, 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 Issuer, the Trustee and the
R-1-2
<PAGE> 128
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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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.
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 Issuer 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 $1,000,000. As provided in the
Indenture and subject to certain limitations therein set forth, Class R-1 Notes
are exchangeable for a like aggregate
R-1-3
<PAGE> 129
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 Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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.
R-1-4
<PAGE> 130
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: COPELCO __________, as manager
By: ______________________________
Authorized Officer
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
R-1-5
<PAGE> 131
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 Issuer. 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.
R-1-6
<PAGE> 132
CLASS R-2 NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE JURISDICTION. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT, TO REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE ISSUER, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVE IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) TO AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $1,000,000, FOR INVESTMENT PURPOSES ONLY
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO,
IN EACH CASE, COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND THE
ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D) AND (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN THE CASE OF THE FOREGOING CLAUSE (E), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) COMPLETED AND
DELIVERED BY THE PROSPECTIVE TRANSFEROR HEREOF TO THE ISSUER AND THE TRUSTEE AND
(2) THAT SUCH HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PROSPECTIVE PURCHASER OF THIS SECURITY FROM IT OR THE RESALE RESTRICTIONS
REFERRED TO IN (1) ABOVE.
<PAGE> 133
COPELCO CAPITAL FUNDING LLC 99-1
___% CLASS R-2 LEASE-BACKED NOTE
CUSIP No. ____________
No. R-1 $______________
Copelco Capital Funding LLC 99-1, a limited liability company
duly organized and existing under the laws of Delaware (herein called the
"Issuer", which term includes any successor Person under the Indenture referred
to herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _____________________________________,
($____________), payable in monthly installments beginning on March 15, 1999, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from February 15, 1999, 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 March 15, 1999, 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 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 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 1999-A" (herein called the "Class R-2 Notes"), limited in aggregate
principal amount of $_______, issued under the Indenture, dated as of March 1,
1999 (herein called the "Indenture"), among the Issuer, Copelco Capital, Inc.,
as Servicer, 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 Issuer, the Trustee and the
R-2-2
<PAGE> 134
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 Issuer 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 Issuer and the rights of the Holders under the Indenture at
any time by the Issuer 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 Issuer 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.
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 Issuer 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 $1,000,000. As provided in the
Indenture and subject to certain limitations therein set forth, Class R-2 Notes
are exchangeable for a like aggregate
R-2-3
<PAGE> 135
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 Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Issuer, the Trustee and any agent of the Issuer 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 Issuer, 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.
R-2-4
<PAGE> 136
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated: March __, 1999
COPELCO CAPITAL FUNDING LLC 99-1
By: COPELCO __________, as manager
By: ______________________________
Authorized Officer
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
R-2-5
<PAGE> 137
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 Issuer. 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.
R-2-6
<PAGE> 138
EXHIBIT B
[FORM OF
INVESTOR'S LETTER]
(Date)
Copelco Capital Funding LLC 99-1
700 East Gate Drive
Mount Laurel, New Jersey 08110
Prudential Securities Incorporated
One New York Plaza
New York, NY 10292-2014
Ladies and Gentlemen:
We propose to purchase $___________ in original aggregate
principal amount of Copelco Capital Funding LLC 99-1 _____% Class [E] [R-1]
[R-2] Lease-Backed Notes, Series 1999-A, (the "Notes"). The Notes were issued
pursuant to an Indenture (the "Indenture"), dated as of March 1, 1999, among
Copelco Capital Funding LLC 99-1, as Issuer, Manufacturers and Traders Trust
Company, as Trustee, and Copelco Capital, Inc., as Servicer. Capitalized terms
used herein but not otherwise defined shall have the same meaning as in the
Indenture.
In connection with our proposed purchase of the 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 LLC 99-1 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
<PAGE> 139
economic risk of investment in the Notes.
(c) an "accredited investor" as defined in Rule
501 promulgated under the Securities Act
that has such knowledge and experience in
financial and business matters as to be
capable of evaluating the merits and risks
of investment in the 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 substantially as set forth in the form of Note included in 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 and we are
sophisticated institutional investors and have knowledge and experience in
financial and business matters and we are capable of evaluating the merits and
risks of its investment in the Notes and we are able to bear the economic risk
of such investment for an indefinite period of time. We have been given such
information concerning the Notes as we have requested.
9. The Purchaser represents that either (a) it is not
(i) an employee benefit plan (as defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), which is subject
to the provisions of Title I of ERISA, or (ii) a plan (as defined in section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "code")) that
is subject to Section 4975 of the Code (each of the foregoing,
B-2
<PAGE> 140
a "Benefit Plan"), and is not acting on behalf of or investing the assets of a
Benefit Plan, or (b) its acquisition and continued holding of the Notes is
covered by a U.S. Department of Labor Prohibited Transaction Class Exemption.
10. We certify that, in acquiring the Notes, we have
complied with any applicable guidelines or regulations for or limitations on
investments established by each regulatory agency or body, if any, which has
jurisdiction over investments made by us and that our acquisition and retention
of the Notes will not violate the limitations on possession contained in any
such guidelines, regulations or limitations.
11. We will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Notes.
Very truly yours,
[TRANSFEREE]
B-3
<PAGE> 141
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........................................2
SECTION 1.01. General Definitions..................................................................2
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, Issuer 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.........................................36
SECTION 2.05. Book-Entry Registration of Class A Notes, Class B Notes, Class C Notes, Class D
Notes and Class R Notes....................................................37
SECTION 2.06. Notice to Clearing Agency...........................................................38
SECTION 2.07. Definitive Class A Notes, Class B Notes, Class C Notes, Class D Notes and Class R
Notes......................................................................38
SECTION 2.08. Payment of Interest and Principal; Rights Preserved.................................40
SECTION 2.09. Persons Deemed Owners...............................................................40
SECTION 2.10. Cancellation........................................................................40
SECTION 2.11. Noteholder Lists....................................................................41
SECTION 2.12. Treasury Securities.................................................................41
ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION AND APPLICATION OF MONEYS; REPORTS...............41
SECTION 3.01. Trust Accounts; Investments by Trustee..............................................41
SECTION 3.02. Collection of Moneys................................................................44
SECTION 3.03. Collection Account; Payments........................................................44
SECTION 3.04. The Residual Account; Payments......................................................47
SECTION 3.05. The Reserve Account.................................................................47
</TABLE>
<PAGE> 142
<TABLE>
<S> <C>
SECTION 3.06. The Liquidity Reserve Account.......................................................48
SECTION 3.07. Reports by Trustee; Notices of Certain Payments.....................................49
SECTION 3.08. Trustee May Rely on Certain Information from Copelco and Servicer...................50
ARTICLE IV RELEASE OF LEASES AND EQUIPMENT..............................................................51
SECTION 4.01. Release of Equipment................................................................51
SECTION 4.02. Release of Leases Upon Final Lease Payment..........................................51
SECTION 4.03. Execution of Documents..............................................................51
ARTICLE V SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER...............................................52
SECTION 5.01. Servicer Events of Default..........................................................52
SECTION 5.02. Substitute Servicer.................................................................52
ARTICLE VI EVENTS OF DEFAULT; REMEDIES..................................................................52
SECTION 6.01. Events of Default...................................................................52
SECTION 6.02. Acceleration of Maturity; Rescission and Annulment..................................53
SECTION 6.03. Remedies............................................................................54
SECTION 6.04. Trustee Shall File Proofs of Claim..................................................55
SECTION 6.05. Trustee May Enforce Claims Without Possession of Notes..............................55
SECTION 6.06. Application of Money Collected......................................................56
SECTION 6.07. Limitation on Suits.................................................................57
SECTION 6.08. Unconditional Right of Noteholders to Receive Principal and Interest................58
SECTION 6.09. Restoration of Rights and Remedies..................................................58
SECTION 6.10. Rights and Remedies Cumulative......................................................59
SECTION 6.11. Delay or Omission Not Waiver........................................................59
SECTION 6.12. Control by Noteholders..............................................................59
SECTION 6.13. Residual Notes Events of Default....................................................59
SECTION 6.14. Undertaking for Costs...............................................................61
SECTION 6.15. Waiver of Stay or Extension Laws....................................................61
SECTION 6.16. Sale of Trust Estate................................................................61
ARTICLE VII THE TRUSTEE.................................................................................63
SECTION 7.01. Certain Duties and Responsibilities.................................................63
SECTION 7.02. Notice of Defaults or Events of Default.............................................64
SECTION 7.03. Certain Rights of Trustee...........................................................64
SECTION 7.04. Not Responsible for Recitals or Issuance of Notes...................................65
SECTION 7.05. May Hold Notes......................................................................65
SECTION 7.06. Money Held in Trust.................................................................65
SECTION 7.07. Compensation, Reimbursement, etc....................................................65
SECTION 7.08. Corporate Trustee Required; Eligibility.............................................66
SECTION 7.09. Resignation and Removal; Appointment of Successor...................................66
SECTION 7.10. Acceptance of Appointment by Successor..............................................67
SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business.........................68
SECTION 7.12. Co-trustees and Separate Trustees...................................................68
</TABLE>
ii
<PAGE> 143
<TABLE>
<S> <C>
SECTION 7.13. Acceptance by Trustee...............................................................69
SECTION 7.14. Preferential Collection of Claims Against the Issuer................................69
SECTION 7.15. Reports by Trustee to Noteholders...................................................70
SECTION 7.16. No Proceedings......................................................................70
ARTICLE VIII COVENANTS..................................................................................70
SECTION 8.01. Payment of Principal and Interest...................................................70
SECTION 8.02. Maintenance of Office or Agency; Chief Executive Office.............................70
SECTION 8.03. Money for Payments to Noteholders to be Held in Trust...............................71
SECTION 8.04. Corporate Existence; Merger; Consolidation, etc.....................................72
SECTION 8.05. Protection of Trust Estate; Further Assurances......................................72
SECTION 8.06. [Reserved]..........................................................................73
SECTION 8.07. Performance of Obligations; Assignment and Servicing Agreement......................73
SECTION 8.08. Negative Covenants..................................................................73
SECTION 8.09. Information as to Issuer............................................................74
SECTION 8.10. Taxes...............................................................................75
SECTION 8.11. Indemnification.....................................................................75
SECTION 8.12. Commission Reports; Reports to Trustee; Reports to Noteholders......................75
ARTICLE IX SUPPLEMENTAL INDENTURES......................................................................76
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders..............................76
SECTION 9.02. Supplemental Indentures with Consent of Noteholders.................................76
SECTION 9.03. Execution of Supplemental Indentures................................................77
SECTION 9.04. Effect of Supplemental Indentures...................................................78
SECTION 9.05. Reference in Notes to Supplemental Indentures.......................................78
SECTION 9.06. Compliance with Trust Indenture Act.................................................78
ARTICLE X SATISFACTION AND DISCHARGE....................................................................78
SECTION 10.01. Satisfaction and Discharge of Indenture............................................78
SECTION 10.02. Application of Trust Money.........................................................79
ARTICLE XI MISCELLANEOUS................................................................................80
SECTION 11.01. Trust Indenture Act Controls.......................................................80
SECTION 11.02. Communication by Noteholders with Other Noteholders................................80
SECTION 11.03. Officers' Certificate and Opinion of Counsel as to Conditions Precedent............80
SECTION 11.04. Statements Required in Certificate or Opinion......................................80
SECTION 11.05. Nonpetition........................................................................81
SCHEDULES
SCHEDULE 1 Leases
EXHIBITS
</TABLE>
iii
<PAGE> 144
EXHIBIT A Forms of Notes and Form of Trustee's Certificate of
Authentication
EXHIBIT B Form of Investor Letter
iv
<PAGE> 1
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE (212) 259-8000 FACSIMILE (212) 259-6333
February 26, 1999
Copelco Capital Funding LLC 99-1
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
Re: Copelco Capital Funding LLC 99-1
Registration Statement on Form S-1
(File No. 333-69983)
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding LLC
99-1, a Delaware limited liability company (the "Issuer") in connection with the
preparation and filing of the above-referenced registration statement on Form
S-1 ( 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 99-1 Class A-1 Lease-Backed Notes, Series 1999-A, Class
A-2 Lease-Backed Notes, Series 1999-A, Class A-3 Lease-Backed Notes, Series
1999-A, Class A-4 Lease-Backed Notes, Series 1999-A, Class A-5 Lease-Backed
Notes, Series 1999-A, Class B Lease-Backed Notes, Series 1999-A, Class C
Lease-Backed Notes, Series 1999-A, and Class D Lease-Backed Notes Series 1999-A
(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 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 March 1, 1999
among Copelco Capital Funding LLC 99-1, Copelco Capital, Inc. and Manufacturers
and Traders Trust Company 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> 2
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
<PAGE> 1
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK 10019-6092
TELEPHONE 212 259-8000 FACSIMILE 212 259-6333
February 26, 1999
Copelco Capital Funding LLC 99-1
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
Re: Copelco Capital Funding LLC 99-1
Registration Statement on Form S-1
(File No. 333-69983)
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding LLC
99-1, a Delaware limited liability company (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
1999-A, Class A-2 Lease-Backed Notes, Series 1999-A, Class A-3 Lease-Backed
Notes, Series 1999-A, Class A-4 Lease-Backed Notes, Series 1999-A, Class A-5
Lease-Backed Notes, Series 1999-A, Class B Lease-Backed Notes, Series 1999-A,
Class C Lease-Backed Notes, Series 1999-A and Class D Lease-Backed Notes, Series
1999-A (the "Offered Notes") to be issued pursuant to the Indenture dated on or
about March 1, 1999 ("Indenture") among the Issuer, Copelco Capital, Inc., as
servicer, and Manufacturers and Traders Trust Company, as Trustee (substantially
in the form filed as an exhibit to the Registration Statement).
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
<PAGE> 2
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 Trustee and duly executed and
delivered by the 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
<PAGE> 1
COPELCO CAPITAL, INC.,
TRANSFEROR AND SERVICER
AND
COPELCO CAPITAL FUNDING LLC 99-1
ISSUER
-------------------------
ASSIGNMENT AND SERVICING AGREEMENT
Dated as of March 1, 1999
-------------------------
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF COPELCO CAPITAL
FUNDING LLC 99-1 HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN
FAVOR OF MANUFACTURERS AND TRADERS TRUST COMPANY, AS TRUSTEE, UNDER THE
INDENTURE DATED AS OF MARCH 1, 1999, FOR THE BENEFIT OF THE PERSONS REFERRED TO
THEREIN.
<PAGE> 2
TABLE OF CONTENTS
Page
R E C I T A L S .........................................................1
A G R E E M E N T S .........................................................2
SECTION 1. CAPITAL CONTRIBUTION.............................................2
1.01 Contribution of Leases...........................................2
1.02 Capital Contribution.............................................2
1.03 Transfer of Leases; Grant of Security Interest...................2
1.04 Servicer to Act as Custodian.....................................3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.....................4
2.01 Corporate Organization and Authority.............................4
2.02 Business and Property............................................4
2.03 Financial Statements.............................................4
2.04 Equipment and Leases.............................................5
2.05 Payments.........................................................8
2.06 Full Disclosure..................................................8
2.07 Pending Litigation...............................................8
2.08 Title to Properties..............................................9
2.09 Transactions Legal and Authorized................................9
2.10 Governmental Consent.............................................9
2.11 Taxes............................................................9
2.12 Compliance with Law.............................................10
2.13 ERISA...........................................................10
2.14 Ability to Perform..............................................10
2.15 Ordinary Course; No Insolvency..................................11
2.16 Assets and Liabilities..........................................11
2.17 Fair Consideration..............................................11
2.18 Ability to Pay Debts............................................11
2.19 Bulk Transfer Provisions........................................11
2.20 Transfer Taxes..................................................12
2.21 Principal Executive Office......................................12
2.22 Servicing Provisions Customary..................................12
2.23 Nonconsolidation................................................12
2.24 Contribution Treatment..........................................13
SECTION 3. ADMINISTRATION OF LEASES........................................13
3.01 Servicer to Act.................................................13
3.02 Lease Amendments and Modifications..............................15
3.03 Non-Performing Leases...........................................16
i
<PAGE> 3
3.04 Costs of Servicing; Servicing Fee; Administrative Expenses......17
3.05 Other Transactions..............................................17
SECTION 4. SERVICER ADVANCES AND SELLER'S SUPPORT..........................18
4.01 Late Lease Payments.............................................18
4.02 Early Termination Leases........................................18
4.03 Indemnification.................................................19
4.04 Purchases; Other Payments.......................................19
4.05 Payment Advice..................................................20
SECTION 5. INFORMATION TO BE PROVIDED......................................20
5.01 Monthly Status Reports; Servicing Reports.......................20
5.02 Annual Independent Public Accountant's Report...................22
SECTION 6. THE SERVICER....................................................22
6.01 Merger or Consolidation of the Servicer.........................22
6.02 Limitation on Liability of the Servicer and Others..............22
6.03 Servicer Not to Resign or Be Removed............................23
6.04 Financial and Business Information..............................23
6.05 Officers' Certificates..........................................25
6.06 Inspection......................................................25
6.07 Servicer Records................................................25
SECTION 7. THE SELLER......................................................25
7.01 Merger or Consolidation of the Transferor.......................25
7.02 Control of Issuer...............................................26
7.03 Financial and Business Information..............................26
7.04 Officers' Certificates..........................................27
7.05 Inspection......................................................27
7.06 Books and Records...............................................28
7.07 Communications..................................................28
SECTION 8. DEFAULT ........................................................28
8.01 Servicer Events of Default......................................28
8.02 Termination.....................................................30
8.03 Trustee to Act; Appointment of Successor........................30
8.04 Servicer to Cooperate...........................................31
8.05 Notification to Noteholders.....................................31
8.06 Remedies Not Exclusive..........................................31
SECTION 9. SUBSTITUTION AND ADDITION OF LEASES.............................32
9.01 Substitution and Addition.......................................32
9.02 Procedure.......................................................33
9.03 Objection and Purchase..........................................34
9.04 Transferor's and Servicer's Subsequent Obligations..............34
ii
<PAGE> 4
SECTION 10. ASSIGNMENT.....................................................35
10.01 Assignment to Trustee..........................................35
10.02 Assignment by Transferor or Servicer...........................35
SECTION 11. NATURE OF OBLIGATIONS AND SECURITY THEREFOR....................35
11.01 Obligations Absolute...........................................35
11.02 Security for Obligations.......................................36
11.03 Further Assurances; Financing Statements.......................36
SECTION 12. DEFINITIONS....................................................36
SECTION 13. INTER-COMPANY LOANS............................................42
13.01 Inter-Company Loans............................................42
SECTION 14. MISCELLANEOUS..................................................42
14.01 Continuing Obligations.........................................42
14.02 GOVERNING LAW..................................................43
14.03 Successors and Assigns.........................................43
14.04 Modification...................................................43
14.05 No Proceedings.................................................43
14.06 Notices........................................................43
14.07 Counterparts...................................................43
14.08 Nonpetition Covenant...........................................44
Schedule 1 - Subsidiaries of the Transferor
Exhibit A - Schedule of Leases and Equipment
Exhibit B - Form of Inter-Company Loan Note
Exhibit C - Form of Receivables Servicing Report
iii
<PAGE> 5
ASSIGNMENT AND SERVICING AGREEMENT
This ASSIGNMENT AND SERVICING AGREEMENT is made and dated as
of March 1, 1999, by and between COPELCO CAPITAL FUNDING LLC 99-1, a Delaware
limited liability company, as purchaser hereunder (the "Issuer") and COPELCO
CAPITAL, INC., a Delaware corporation, as originator and seller of the Leases
(in such capacity, the "Transferor") and servicer (in such capacity, the
"Servicer").
R E C I T A L S
A. The Transferor wishes to contribute and assign to the
Issuer, and the Issuer wishes to acquire from the Transferor, all right, title
and interest of the Transferor in, to and under the Leases and the Equipment
subject to the Leases (such terms and all other capitalized terms used herein
having the meanings ascribed thereto in Section 12 hereof unless otherwise
indicated).
B. Pursuant to the Indenture, the Issuer is issuing one class
of ______% Class A-1 Lease-Backed Notes, Series 1999-A in the aggregate
principal amount of $________ (the "Class A-1 Notes"), one class of ____% Class
A-2 Lease-Backed Notes, Series 1999-A in the aggregate principal amount of
$_________ (the "Class A-2 Notes"), one class of ___% Class A-3 Lease-Backed
Notes, Series 1999-A in the aggregate principal amount of $______ (the "Class
A-3 Notes"), one class of ____% Class A-4 Lease-Backed Notes, Series 1999-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 1999-A
(the "Class B Notes"), in the aggregate principal amount of $_________, one
class of ____% Class C Lease-Backed Notes, Series 1999-A, in the aggregate
principal amount of $__________ (the "Class C Notes"), one class of _____% Class
D Leased Backed Notes, Series 1999-A in the aggregate principal amount of
$_________ (the "Class D Notes"), one class of ______% Class E Lease-Backed
Notes, Series 1999-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 "Receivable Notes"), one class of ____% Class
R-1 Residual Notes, Series 1999-A in the aggregate principal amount of $________
(the "Class R-1 Notes") and one class of ____% Class 2 Residual Notes, Series
1999-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 Issuer to make payment to the Transferor for the
Leases.
C. Pursuant to the Indenture, the Issuer 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 Issuer in, to
and under the Leases, the interests in the Equipment and this Assignment and
Servicing Agreement.
<PAGE> 6
A G R E E M E N T S
SECTION 1. CAPITAL CONTRIBUTION
1.01 Contribution of Leases.
By their execution and delivery of this Assignment and
Servicing Agreement, the Transferor hereby contributes and assigns to the
Issuer, and the Issuer hereby acquires from the Transferor without recourse
(except to the extent of the Transferor's purchase obligations as set forth
herein), all of the Transferor'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 Capital Contribution.
The Transferor and the Issuer each acknowledge and confirm
that contemporaneously with the contribution of the Leases as hereinabove
provided, the Transferor, as a holder of beneficial interests in the Issuer, is
contributing and transferring to the Issuer, and in connection with each
transfer and assignment of Additional Leases and Substitute Leases the
Transferor will contribute and transfer to the Issuer, without recourse, all
right, title and interest of the Transferor in and to each item of Equipment
subject to each Lease, Additional Lease and Substitute Lease. After such
contribution and transfer by the Transferor to the Issuer, all right, title and
interest of the Transferor in and to each item of Equipment subject to each
Lease shall be vested in the Issuer.
1.03 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 capital contribution and not a
loan. The Transferor shall not take any action inconsistent with the treatment
of such transfers as capital contributions or with the Issuer's ownership of the
Leases, the Lease Receivables and all other amounts due or becoming due with
respect thereto and the interests in the Equipment. The Transferor 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 Issuer, 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 Issuer 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 capital
contribution, it is the intention of the parties hereto that this Agreement
shall constitute a security agreement under applicable law and that the Issuer
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
2
<PAGE> 7
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 Issuer to or under any guarantees of or collateral (including all rights
of the Issuer in any security deposits) for the Lessee's obligations under any
Lease, (c) all interests of the Issuer in the Equipment at any time subject to
any Lease including any security interest of the Transferor in the Equipment and
(d) all proceeds of the conversion, whether voluntary or involuntary, of any of
the foregoing into cash or other property.
1.04 Servicer to Act as Custodian.
(a) The Servicer shall hold and acknowledges that it is
holding the Leases and all other Granted Assets that it may from time to time
receive hereunder as custodian for the Trustee.
(b) The Servicer shall perform its duties under this Section
1.05 in accordance with the standard set forth in Section 3.01 as such standard
applies to servicers acting as custodial agents. The Servicer shall promptly
report to the Trustee any failure by it to hold the complete Leases as herein
provided and shall promptly take appropriate action to remedy any such failure
but only to the extent (i) any such failure is caused by the acts or omissions
of the Servicer and (ii) such remedial action is otherwise within its
capabilities or control. As custodian, the Servicer shall have and perform the
following powers and duties:
(A) hold the Leases on behalf of the Trustee for the benefit
of the Noteholders, maintain accurate records pertaining to each Lease
to enable it to comply with the terms and conditions of this Assignment
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 its office
in Mt. Laurel, New Jersey or Mahwah, New Jersey or Moberly, Missouri 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.
3
<PAGE> 8
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Transferor hereby represents and warrants as follows:
2.01 Corporate Organization and Authority.
The Transferor:
(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 Transferor or impair
the enforceability of any Lease) and to enter into
and perform its obligations under this Assignment and
Servicing Agreement, and the transactions
contemplated hereby, including performance of the
duties of the Servicer and the Transferor'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
Transferor or impair the enforceability of any
Lease).
2.02 Business and Property.
The Prospectus and the Private Placement Memoranda, accurately
describe in all material respects the general nature of the business of the
Transferor.
2.03 Financial Statements.
(a) The consolidated balance sheet of the Transferor 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 Transferor and its consolidated subsidiaries as of September 30,
1998 and the related consolidated statements of income, retained earnings and
cash flow for the nine 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 Transferor and its subsidiaries
as of such dates and the results of their operations for such periods.
4
<PAGE> 9
(b) Except as disclosed in the Prospectus, the Private
Placement Memoranda and the financial statements referred to in the preceding
Section 2.03(a), since September 30, 1998 there has been no change in the
business, condition or prospects (financial or otherwise) of the Transferor
except changes in the ordinary course of business, none of which individually or
in the aggregate has been materially adverse. Neither the Transferor 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
Transferor relating to other asset securitization transactions involving the
Transferor.
2.04 Equipment and Leases.
(a) Prior to the date of each transfer of any Leases and
Equipment in accordance with Sections 1.01 and 1.02, respectively, the
Transferor 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 Transferor has paid in full, to the manufacturer
or supplier or Lessee, as the case may be, the purchase price and any related
charges in connection with the acquisition of the Equipment. The transfer to the
Issuer of the Leases and all of the Transferor'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 Transferor is a party or by which it is bound.
(b) Upon completion of the transfer described in Article I
hereof, the Issuer 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 (or other finance lease), (iii) have a valid security interest in
each item of Equipment subject to any Lease other than a Nominal Buy-Out Lease
(or other finance lease) and (iv) have a perfected security interest in each
item of Equipment with a purchase price in excess of $25,000 subject to a
Nominal Buy-Out Lease (or other finance lease). At such time, the Leases
(including the right to receive all payments due or to become due thereunder)
and the Transferor'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, (ii) is or will be a legal,
valid and binding full recourse obligation of the Lessee thereunder, enforceable
by the Issuer (and by the Trustee as assignee of the Issuer) 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
and (iii) 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 Transferor has no knowledge
(after
5
<PAGE> 10
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
Transferor's security interest in any item not owned by it) is contributed
hereunder, the Transferor 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 Transferor (or an Affiliate of the
Transferor) 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 Transferor and the
Issuer. All premiums in respect of such policies have been paid. Each of the
Trustee and the Issuer are named as loss payees and additional insureds, as
their interests may appear, on such casualty and liability policies maintained
by the Transferor.
(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 Transferor
in accordance with the Transferor'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 contribution under this
Assignment 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 Issuer, the Transferor 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 (plus any unpaid rents).
(j) In the case of each Lease which consists of a master lease
and one or more exhibits or schedules thereto, the Transferor has neither
assigned such master lease in its entirety, nor delivered physical possession of
such master lease, to any Person other than the Issuer 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
6
<PAGE> 11
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 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 Transferor in the
ordinary course of its business or (ii) purchased by the Transferor 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 any of the transfers and sales thereof
under this Assignment and Servicing Agreement unlawful.
(p) All parties to each Lease had all requisite 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) As of the Cut-Off Date, the Final Lease Payment on each
Lease was due and payable on or prior to _________.
(t) Each Lease agreement is "chattel paper" within the meaning
of The Uniform Commercial Code in the states of New York and New Jersey.
7
<PAGE> 12
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 Fee and
pay the principal and interest on the Receivable 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 Issuance 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 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 Memoranda (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 Transferor or any Affiliate of the Transferor or, to the
knowledge of the Transferor, any Lease, Lessee or item of Equipment, which the
Transferor has not or will not disclose in the Prospectus or the Private
Placement Memoranda which materially affects adversely nor, so far as the
Transferor can now reasonably foresee, will materially affect adversely the
ability of the Transferor to perform the transactions contemplated by this
Assignment and Servicing Agreement.
2.07 Pending Litigation.
There are no proceedings or investigations pending, or to the
knowledge (after due inquiry) of the Transferor threatened, against or affecting
the Transferor 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 Transferor and its subsidiaries, or the ability
of the Transferor or the Servicer to perform its obligations under this
Assignment and Servicing Agreement. The Transferor is not in default with
respect to any order of any court, governmental authority or agency or
arbitration board or tribunal.
8
<PAGE> 13
2.08 Title to Properties.
Immediately following the transfer by the Transferor to the
Issuer of the Leases and the Transferor'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 Issuer which is assigned to the Trustee
pursuant to the Indenture).
2.09 Transactions Legal and Authorized.
The transfer by the Transferor 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
Transferor with all of the provisions of this Assignment and Servicing
Agreement:
(a) have been duly authorized by all necessary corporate
action on the part of the Transferor, and do not require any stockholder
approval, or approval or consent of any trustee or holders of any indebtedness
or obligations of the Transferor except such as have been duly obtained;
(b) are within the corporate powers of the Transferor; 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 Transferor under the provisions
of, any agreement, charter instrument, by-law or other instrument to which the
Transferor 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
Transferor or its properties, or any order to which the Transferor 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 Transferor in connection with the execution and
delivery of this Assignment and Servicing Agreement or the contribution of the
Leases and Equipment or the performance of its obligations as Servicer.
2.11 Taxes.
(a) All tax returns required to be filed by the Transferor or
any subsidiary in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon the Transferor 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
Transferor's knowledge all such tax returns were true and correct and neither
the Transferor nor any subsidiary knows of any proposed additional tax
assessment against it in any material amount nor of any basis therefor.
9
<PAGE> 14
(b) The provisions for taxes on the books of the Transferor
and each of its subsidiaries are in accordance with generally accepted
accounting principles.
2.12 Compliance with Law.
The Transferor:
(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 Transferor 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(2) of
ERISA, maintained by or contributed to by the Transferor and its Related Persons
(other than "multiemployer plans", as such term is defined in Section 3(37) 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 or Reportable Events have occurred with respect to any Pension
Plans that, in the aggregate, could subject the Transferor 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 Transferor does not believe, nor does
it have any reasonable cause to believe, that it cannot perform each and every
covenant contained in this Assignment and Servicing Agreement or its ability to
perform as Servicer.
10
<PAGE> 15
2.15 Ordinary Course; No Insolvency.
The transactions contemplated by the Notes, the Indenture and
this Assignment and Servicing Agreement are being consummated by the Transferor
in furtherance of the Transferor's ordinary business purposes and constitute a
practical and reasonable course of action by the Transferor designed to improve
the financial position of the Transferor, with no contemplation of insolvency
and with no intent to hinder, delay or defraud any of its present or future
creditors. The Transferor will not, either as a result of the transaction
contemplated by this Assignment 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
Assignment and Servicing Agreement, the present fair salable value of the
Transferor's assets was or will be in excess of the amount that will be required
to pay the Transferor'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
Assignment and Servicing Agreement, the sum of the Transferor's assets was or
will be greater than the sum of the Transferor's debts, valuing the Transferor's
assets at a fair salable value.
2.17 Fair Consideration.
The consideration received by the Transferor, 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 Transferor.
2.18 Ability to Pay Debts.
Neither as a result of the transaction contemplated by this
Assignment and Servicing Agreement nor otherwise does the Transferor believe
that it will incur debts beyond its ability to pay or which would be prohibited
by its charter documents or by-laws. The Transferor'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 transfer, assignment and conveyance of the Leases and its
interests in the Equipment by the Transferor pursuant to this Assignment and
Servicing Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
11
<PAGE> 16
2.20 Transfer Taxes.
The transfer, assignment and conveyance of the Leases
(including all payments due or to become due thereunder) and its interests in
the Equipment by the Transferor pursuant to this Assignment and Servicing
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Transferor to any federal, state or local government
("Transfer Taxes"). In the event that the Issuer 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 Issuer,
or upon the Transferor otherwise being given notice thereof, the Transferor
shall pay, and otherwise indemnify and hold the Issuer, 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 Transferor and
the Servicer is located at One International Boulevard, Mahwah, New Jersey
07430-0631.
2.22 Servicing Provisions Customary.
The servicing arrangements hereunder, including without
limitation the terms and conditions pursuant to which the Transferor will act as
Servicer and the Servicing Fee to be paid to the Transferor, are consistent with
the arrangements and customary practices of the Transferor when providing
comparable services to non-affiliated entities and of other servicers in the
equipment leasing industry.
2.23 Nonconsolidation.
The Transferor is and at all times since its incorporation has
been operated in such a manner that it would not be substantively consolidated
with the Issuer, such that the separate existence of the Transferor and the
Issuer would be disregarded in the event of a bankruptcy or insolvency of the
Transferor or the Issuer, and in such regard:
(a) the Transferor is not involved in the day-to-day
management of the Issuer;
(b) the Transferor maintains separate corporate records and
books of account from the Issuer and otherwise observes corporate formalities
and has a separate business office from the Issuer;
(c) the financial statements and books and records of the
Transferor prepared after the Issuance Date will reflect the separate existence
of the Issuer;
(d) the Transferor maintains its assets separately from the
assets of the Issuer (including through the maintenance of a separate bank
account), the Transferor's funds and assets, and records relating thereto, have
not been and are not commingled with those of the Issuer and the separate
creditors of the Transferor and the Issuer will be entitled to be satisfied
12
<PAGE> 17
out of the Transferor's and the Issuer's assets prior to any value in the
Transferor or the Issuer becoming available to the Issuer's equityholders or the
Transferor's creditors;
(e) all business correspondence of the Transferor and other
communications are conducted in the Transferor's own name and on its own
stationery; and
(f) the Issuer does not act as an agent of the Transferor in
any capacity and the Transferor does not act as agent for the Issuer, but
instead presents itself to the public as a corporation separate from the Issuer.
2.24 Contribution Treatment.
The Transferor will treat the transfer to the Issuer of the
Leases and the Lease Receivables as a capital contribution and absolute
assignment for tax reporting and accounting purposes.
SECTION 3. ADMINISTRATION OF LEASES
3.01 Servicer to Act.
(a) Notwithstanding the transfers and assignments of the
Leases (including the right to receive all payments due or to become due
thereunder) and the related interests in the Equipment contemplated hereby, the
Servicer, for the benefit of the Issuer, will service and administer each Lease
in accordance with the terms thereof and of this Assignment 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 Issuer 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, as applicable, 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 Assignment and Servicing Agreement, any and all things in connection with
the servicing and administration of the Leases and the interests in the
Equipment which are consistent with the manner in which it services leases and
equipment constituting part of its own portfolio and consistent with the
customary practices of servicers in the equipment leasing industry, but in
performing its duties hereunder, the Servicer will act on behalf and for the
benefit of the Issuer, the Trustee and the holders of the Notes, subject at all
times to the provisions of the Indenture, without regard to any relationship
13
<PAGE> 18
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 Issuer 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 Assignment 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 Issuer 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 Transferor 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
Issuer 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 Issuer as loss payees and additional insureds if (A)
the Transferor is no longer the Servicer, (B) an Event of Default shall have
occurred and be continuing or (C) a Servicer Event of Default shall have
occurred and be continuing.
(e) On or prior to the Issuance Date, the Servicer will file
the Financing Statements and assignments of Financing Statements in accordance
with the Filing Requirements
14
<PAGE> 19
and thereafter will file such additional Financing Statements and continuation
statements and assignments with respect to the Leases as may be necessary
because of equipment replacements in accordance with the provisions of any
Lease, purchases of Additional Leases in accordance with Section 9 and Lease
substitutions pursuant to Section 9 hereof or otherwise so that (i) the
ownership interest contemplated by this Agreement in favor of the Issuer 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
Assignment and Servicing Agreement in favor of the Transferor and the Issuer in
each of the Leases and 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).
(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.
3.02 Lease Amendments and Modifications.
In performing its obligations hereunder, the Servicer may,
acting in the name of the Issuer and without the necessity of obtaining the
prior consent of the Issuer or the Trustee, enter into and grant modifications,
waivers and amendments to the terms of any Lease except for modifications,
waivers or amendments that (a) are inconsistent with the servicing standards set
forth in Section 3.01 above, (b) would reduce the amount or extend the time for
payment of any Lease Payment, Casualty Payment, 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 Purchase 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 Issuer, the Trustee or the holders of the
Notes.
In addition, following the transfer of any Lease to the Issuer
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 Transferor
substitutes a Substitute Lease therefor in accordance with Section 9 hereof, the
Servicer may permit such adjustments so long as the following conditions
precedent have been satisfied:
(i) after giving effect to such adjustments and any
additions and substitutions pursuant to Section 9, the
aggregate Booked Residual Value of such Leases will not be
less than 100% of the aggregate Booked Residual Value of the
Leases adjusted, replaced or substituted since the Issuance
Date.
15
<PAGE> 20
(ii) after giving effect to such adjustment and any
additions and substitutions pursuant to Section 9, the final
payment on such Lease must be on or prior to __________.
(iii) after giving effect to such adjustments and any
additions and substitutions pursuant to Section 9 the
aggregate amount of Lease Payments through the term of the
Leases (including the Substitute Leases and the Additional
Leases) will not be materially less than the aggregate
scheduled Lease Payments of the Leases prior to such
adjustment, substitution or addition.
(iv) after giving effect to such adjustments,
additions and substitutions pursuant to Section 9, 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 9, 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.
3.03 Non-Performing Leases.
(a) Upon receipt of notice from the Issuer, 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 Issuer, that the Transferor immediately repay any
Inter-Company Loan representing the advance pursuant to Section 13.01 hereof of
any security deposit with respect to any Lease which becomes a Non-Performing
Lease, and the Servicer shall apply such security deposit in accordance with
Section 3.03(d) hereof.
(b) The Servicer will use its best efforts to sell or lease
any Equipment upon the expiration or early termination of a Lease or that is
subject to a Non-Performing Lease in a timely manner and upon the most favorable
terms and conditions available at the time. In the event of an early lease
termination, any Substitute Lease must have a Discounted Present Value equal to
or greater than that of the Terminated Lease, 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.
(c) In the event that the Servicer is required to sell or
lease any item of Equipment pursuant to the provisions of this Section 3.03 at a
time when the Servicer has other similar items of equipment available to it, the
Servicer will not favor any such other item in its remarketing efforts.
16
<PAGE> 21
(d) All amounts realized by the Servicer in the performance of
its duties hereunder with respect to any Lease or Equipment remaining subject to
the Lien of the Indenture (net of the Servicer's actual out-of-pocket expenses
reasonably incurred in such realization) shall be held in trust by the Servicer,
as agent for the Trustee and deposited into the Collection Account for
application in accordance with the provisions of the Indenture; provided that,
to the extent that (i) the Servicer has made any advances pursuant to Section
4.01 hereof with respect to any Lease which thereafter became a Non-Performing
Lease, and (ii) the Servicer has not otherwise been fully reimbursed for such
advances or payments, the Servicer shall reimburse itself for such advances or
payments from any amounts recovered with respect to such Non-Performing Lease
before depositing any such amounts pursuant to this Section 3.03(d).
3.04 Costs of Servicing; Servicing Fee; Administrative
Expenses.
(a) All costs of servicing each Lease in the manner required
by this Section 3 shall be borne by the Servicer, but the Servicer shall be
entitled to retain, out of any amounts actually recovered by the Servicer in the
performance of its obligations under Section 3.03 hereof with respect to any
Lease or the interests in the Equipment subject thereto, the Servicer's actual
out-of-pocket expenses reasonably incurred in the course of such performance
with respect to such Lease or the interests in the Equipment. (For all purposes
of this Section 3 the Servicer's "out-of-pocket expenses" means only those
expenses incurred to third parties (e.g., reasonable fees of outside counsel in
a collection suit) and not salaries, operating costs, overtime wages and other
such "overhead" costs or expenses of the Servicer.) In addition, the Servicer
shall be entitled to receive from the Issuer on each Payment Date following the
Issuance 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.
3.05 Other Transactions.
Nothing in this Assignment and Servicing Agreement shall
preclude the Transferor 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.
17
<PAGE> 22
SECTION 4. SERVICER ADVANCES AND SELLER'S SUPPORT
4.01 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) of the Indenture 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.
4.02 Early Termination Leases.
Following the Determination Date as of which any Lease first
becomes an Early Termination Lease the Transferor may, but shall have no
obligation to, either (a) substitute one or more Eligible Leases and the
Equipment subject thereto for such Lease and the Equipment subject thereto
pursuant to Section 9 hereof (if the Transferor is then entitled to substitute
Leases and Equipment in accordance with the provisions of Section 9.01 hereof)
on or before the second Business Day prior to the next succeeding Payment Date,
(b) purchase from the Issuer such Lease and the related Equipment by remitting
to the Trustee an amount equal to the Lease Purchase 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) transfer to the Issuer one or more Additional
Leases in consideration of the proceeds thereof in accordance with Section 9
hereof. Unless the Transferor 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 Purchase Amount. Any Early Termination
Lease and the Equipment subject thereto which is acquired, or for which
Additional Leases have been acquired or Substitute Leases transferred, pursuant
to this Section 4.02 shall nevertheless remain subject to the Lien of the
Indenture until such time as an Additional Lease or Additional Leases have been
acquired or Substitute Lease or Substitute Leases have been transferred in
accordance with the provisions of Section 9 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
18
<PAGE> 23
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 9 hereof.
4.03 Indemnification.
The Transferor in its capacity as Servicer, agrees to
indemnify and hold harmless the Issuer, 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 Assignment 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 Transferor any obligation,
other than to the extent specifically set forth in this Section 4, to make any
payment with respect to principal or interest on the Notes or to reimburse the
Issuer for any payments on account of the Notes. This Section 4.03 shall bind
any successor Servicer hereunder.
4.04 Purchases; Other Payments.
(a) In the event that (i) any of the representations or
warranties made by the Transferor 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 Issuance 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 Transferor
(other than any such action or inaction of the Transferor, when acting as
Servicer, in connection with the enforcement of any Lease in a manner consistent
with the provisions of this Assignment and Servicing Agreement) or any claim by
any Lessee against the Transferor 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 Transferor is given notice thereof by the Issuer or the Trustee or the
date on which the Transferor otherwise first has notice thereof, the Transferor
will purchase such Lease and the Equipment subject thereto by paying to the
Trustee, not later than the third Business Day after the Determination Date next
following the expiration of such 30-day period with respect to the events
referenced in Section 4.04(a)(i) and (ii), an amount equal to the Lease Purchase
Amount, and simultaneously with such purchase, the Transferor shall reimburse
the Servicer for all amounts, if any, theretofore advanced by the Servicer
pursuant to Section 4.01 with respect to such Lease. Without limiting the
generality of the foregoing, it is agreed and understood that for purposes of
this Section 4.04, any inaccuracy in any representation or warranty with respect
to (i) the priority of the Lien of the Indenture with respect to any Lease or
(ii) the amount (if less than represented) of the Lease Payments, Casualty
Payments, Termination Payment or Booked Residual Value under any Lease shall be
deemed to be material.
19
<PAGE> 24
(b) By the Issuance Date, the Transferor 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 Issuance Date)
against the Transferor 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 Transferor or the Issuer as the owner of the Leases or the
Trustee as secured party. In the event the Transferor fails to provide any such
searches required by the preceding sentence of this Section 4.04(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
Transferor shall be required to purchase 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 Purchase Amount for such Lease.
(c) The Transferor's obligations under this Section 4.04 are
the full recourse obligations of the Transferor and shall in no way be limited
or discharged by the application of any funds constituting part of the Trust
Estate.
4.05 Payment Advice.
Each payment to the Trustee pursuant to any of the provisions
of this Assignment 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 Assignment 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 5. INFORMATION TO BE PROVIDED
5.01 Monthly Status Reports; Servicing Reports.
(a) Within five Business Days following each Payment Date, the
Servicer will send to the Trustee (copies of which the Trustee shall send to
each Rating Agency and to each holder of the Notes as provided in the Indenture)
a written report, signed by one of the Servicer's financial officers, (i)
identifying each Lease with respect to which any Lease Payment was 30 or more
days overdue as of the end of the immediately preceding Lease Payment Period,
the Discounted Present Value of such Lease as of such Payment Date, the amount
advanced by the Servicer with respect to such Lease pursuant to Section 4.01
hereof since the Servicer's previous monthly report (or, in the case of the
first such report, since the Cut-Off Date), (ii) identifying each Lease with
respect to which any Lease Payment was 60 or more days overdue as of the end of
the immediately preceding Lease Payment Period, the Discounted Present Value of
such Lease as of such Payment Date, the amount advanced by the Servicer with
respect to such Lease pursuant to Section 4.01 hereof since the Servicer's
previous monthly report (or, in the case of the first such report, since the
Issuance Date), (iii) identifying each Lease with respect to which any Lease
Payment was 93 or more days overdue as of the end of the immediately preceding
Lease Payment Period, the Discounted Present Value of such Lease as of such
Payment Date, the amount advanced by the Servicer with respect to such Lease
pursuant to Section 4.01 hereof
20
<PAGE> 25
since the Servicer's previous monthly report (or, in the case of the first such
report, since the Issuance 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 Transferor 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 second Business Day preceding the Payment Date, the
Servicer shall deliver to the Trustee and to each Rating Agency two certificates
signed by an officer of the Servicer (a "Receivable Servicing Report" and a
"Residual Servicing Report," collectively, the "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,
Lease Purchase Amount, 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 Lease Purchase Amount was made during such time period.
Such report shall also indicate (i) the aggregate amount paid by the Servicer on
or subsequent to the most recent Determination Date with respect to
Non-Performing Leases pursuant to Section 4.01 hereof, and (ii) the aggregate
amount reimbursed to the Servicer prior to the most recent Determination Date
and on or subsequent to the Determination Date preceding such Determination Date
(or, in the case of the first Determination Date, on or subsequent to the
Cut-Off Date) for actual cash payments made by the Servicer with respect to
Non-Performing Leases pursuant to Section 4.01 hereof. The Servicer hereby
represents and warrants that such calculations will be correct and accurate, and
the Servicer shall be fully responsible for, and shall reimburse and indemnify
each Indemnified Party for, any loss resulting from such Indemnified Party's
reliance on any such calculations which are not correct.
(d) If the Servicer intends to withdraw any funds from the
Collection Account 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, Lease Purchase Amount, Casualty
Payment,
21
<PAGE> 26
Termination Payment or Residual Realizations, and (iii) identifying the
lease or leases to which such amounts relate.
5.02 Annual Independent Public Accountant's Report.
The Servicer shall cause a firm of independent public
accountants (who may also render other services to the Servicer or to the
Transferor) 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, 1999, a written statement to the
effect that such firm has (a) obtained from the Servicer a copy of the monthly
status report pursuant to Section 5.01 for a single month during the previous
calendar year; (b) compared the information contained in such monthly status
report and in the monthly summaries prepared by the Servicer in support of such
monthly status report to the computer printouts and accounts prepared by the
Servicer and supporting such reports; and (c) selected, at random, at least 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 6. THE SERVICER
6.01 Merger or Consolidation of the Servicer.
The Servicer will keep in full force and effect its existence,
rights and franchise as a corporation under the laws of its jurisdiction of
incorporation and will preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is necessary to
protect the validity and enforceability of any of the Leases or to permit
performance of the Servicer's duties under this Assignment 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 Issuer, 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 described in the preceding
clause (i) and has effectively assumed the obligations of the Servicer
hereunder. Upon the occurrence of any such merger or consolidation, the Servicer
shall give notice promptly to the Rating Agencies.
6.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers,
employees or agents of the Servicer shall incur any liability to the Issuer, the
Trustee or the holders of the Notes for any action taken or not taken in good
faith pursuant to the terms of this Assignment and Servicing Agreement with
respect to any Lease (including any Non-Performing Lease) or the Equipment
22
<PAGE> 27
subject thereto; provided, however, that this provision shall not protect the
Servicer or any such person against any breach of warranties, representations or
covenants made by it herein or in any certificate delivered in conjunction with
the purchase of the Notes or for any liability which would otherwise be imposed
for any action or inaction resulting from willful misconduct or bad faith or for
negligence in the performance or nonperformance of its duties hereunder.
6.03 Servicer Not to Resign or Be Removed.
The Servicer shall not resign from the servicing obligations
and duties hereby imposed on it except upon determination that such duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced by an opinion of
independent counsel to the Servicer, in form and substance satisfactory to the
holders of the Notes, to such effect delivered to the Trustee.
Except as provided in Section 8.02 hereof, the Servicer shall
not be removed or be replaced as Servicer with respect to any Lease or any of
the Equipment.
No resignation or removal of the Servicer shall in any event
(i) become effective until the Trustee or a successor servicer shall have
assumed the Servicer's servicing responsibilities and obligations in accordance
with Section 8.02 hereof, or (ii) affect the Transferor's obligations pursuant
to Section 3 hereof.
6.04 Financial and Business Information.
The Servicer will deliver to the Issuer 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 Receivable Notes or the Class R 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,
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:
23
<PAGE> 28
(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
(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.
24
<PAGE> 29
6.05 Officers' Certificates.
With each set of financial statements delivered pursuant to
Section 6.04, the Servicer will deliver an Officers' Certificate stating (i)
that the officers signing such Officers' Certificate have reviewed the relevant
terms of this Assignment and Servicing Agreement and have made, or caused to be
made under such officers' supervision, a review of the activities of the
Servicer during the period covered by the statements then being furnished, (ii)
that the review has not disclosed the existence of any Servicer Event of Default
or, if a Servicer Event of Default exists, describing its nature and what action
the Servicer has taken and is taking with respect thereto, and (iii) that on the
basis of such review the officers signing such certificate are of the opinion
that during such period the Servicer has serviced the Leases in compliance with
the procedures hereof except as described in such certificate.
6.06 Inspection.
The Servicer will permit, on reasonable prior notice, the
representatives of the Issuer 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 Issuer, the Trustee, or any holder
of the Notes during the continuance of any Servicer Event of Default, or any
event or condition which with the giving of notice or the lapse of time or both
would become a Servicer Event of Default, of any right under this Section 6.06
shall be borne by the Servicer.
6.07 Servicer Records.
The Servicer will indicate in its records that it is servicing
and administering each Lease in its capacity as Servicer hereunder, and to the
extent it is in possession of any original Lease agreement, will hold such
Lease, subject to the provisions of the Indenture as Custodian for the Trustee.
SECTION 7. THE SELLER
7.01 Merger or Consolidation of the Transferor.
The Transferor 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 Transferor's duties under this Assignment and
Servicing Agreement.
The Transferor 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
25
<PAGE> 30
United States or any jurisdiction thereof and (ii) the surviving entity, if not
the Transferor, shall execute and deliver to the Issuer or 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 Transferor 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 Transferor hereunder.
7.02 Control of Issuer.
So long as any of the Notes or the other obligations secured
by the Indenture remain outstanding, the Transferor will not (i) sell, pledge or
otherwise transfer any of its membership interest in the Issuer held by the
Transferor or (ii) vote such beneficial interests in favor of any amendment to
or alteration of the certificate of formation of the Issuer.
7.03 Financial and Business Information.
The Transferor will deliver to the Issuer 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 of Receivable Notes or to any holder of Outstanding
Notes evidencing not less than 25% of the Outstanding Principal Amount of the
Class R 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 Transferor 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 Transferor'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 Transferor'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 Transferor, a written notice specifying the nature of such
investigation or proceeding and what action the Transferor is taking or proposes
to take with respect thereto and evaluating its merits;
26
<PAGE> 31
(d) ERISA - (i) promptly and in any event within ten days
after the Transferor 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 Transferor setting forth details as to such
Reportable Event and the action which the Transferor 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 Issuer 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 Transferor describing such event or
condition; (v) promptly and in no event more than ten days after receipt thereof
by the Transferor or any Related Person, each notice received by the Transferor
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 Transferor 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 Transferor or any Related Person; and
(e) Requested Information - with reasonable promptness, any
other data and information which may be reasonably requested from time to time.
7.04 Officers' Certificates.
With each set of financial statements delivered pursuant to
Section 7.03, the Transferor will deliver an Officers' Certificate stating that
the officers signing such Certificate have reviewed the relevant terms of this
Assignment and Servicing Agreement and have made, or caused to be made under
such officers' supervision, a review of the activities of the Transferor during
the period covered by the income statements then being furnished and, so long as
the Transferor 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 Transferor has taken and is
taking with respect thereto.
7.05 Inspection.
The Transferor will permit, on reasonable prior notice, the
representatives of the Issuer, 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 Transferor, to make copies and extracts therefrom, and to
discuss the Transferor's affairs, finances and accounts with its officers,
employees and independent public accountants (and by this provision the
Transferor authorizes said accountants to discuss the finances and affairs of
the Transferor) all at such reasonable times and as often as
27
<PAGE> 32
may be reasonably requested for the purpose of reviewing or evaluating the
financial condition or affairs of the Transferor or the Transferor's performance
of its duties and obligations hereunder. Any expense incident to the exercise by
the Issuer, the Trustee or any holder of the Notes during the continuance of any
default by the Transferor in any of its obligations hereunder of any right under
this Section 7.05 shall be borne by the Transferor.
7.06 Books and Records.
The Transferor will clearly mark its books and records to
reflect each assignment of a Lease and contribution of the Equipment pursuant to
this Agreement.
7.07 Communications.
The Transferor will reply to all inquiries by third parties
with respect to the transactions contemplated by this Agreement by indicating
that it has sold and assigned the Leases and contributed its right, title and
interest in the related Equipment and that the Issuer now holds title to the
Leases and such interest in the related Equipment.
SECTION 8. DEFAULT
8.01 Servicer Events of Default.
The following events and conditions shall constitute Servicer
Events of Default hereunder:
(i) failure on the part of the Servicer to deposit to the
Collection Account, 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 Transferor is the Servicer hereunder,
failure on the part of the Transferor to pay to the Trustee on the date
when due in accordance with the terms hereof, any payment required to
be made by the Transferor pursuant to Section 4 hereof;
(iii) failure on the part of either the Servicer or (so long
as the Transferor is the Servicer) the Transferor to observe or perform
in any material respect any other of their respective covenants or
agreements in this Assignment 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 Transferor 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
Transferor or the Servicer, as the case may be, by the Trustee, or to
the Transferor or the Servicer, as the case may be, and the Trustee by
any holder of the Notes;
28
<PAGE> 33
(iv) if any representation or warranty made by the Transferor
in this Assignment 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
Transferor or Servicer in this Assignment 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
Transferor in this Assignment 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 Transferor repurchases such Lease
and Equipment in accordance with this Assignment 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 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 $5,000,000, or the occurrence of any event or the existence
of any condition, the effect of which
29
<PAGE> 34
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; or
(viii) 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.
8.02 Termination.
So long as a Servicer Event of Default shall be continuing,
the Trustee shall, upon the instructions of the holders of 66-2/3% in
Outstanding Principal Amount of the Notes, by notice in writing to the Servicer
terminate all of the rights and obligations of the Servicer (but not the
Transferor's obligations which shall survive any such termination) under this
Assignment and Servicing Agreement. On the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Assignment
and Servicing Agreement to take any action with respect to any Lease or
Equipment shall cease and the same shall pass to and be vested in the Trustee
pursuant to and under this Section and the Indenture; and, without limitation,
the Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and assignment of any Lease and
the related Equipment, or otherwise.
8.03 Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.02 hereof, the Trustee, subject to the terms
of Section 4.02 of the Indenture, shall be the successor in all respects to the
Servicer in its capacity as servicer of the Leases under this Assignment 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 Transferor
contained in Section 4 hereof which shall survive any such termination as above
provided) and shall be entitled to receive from the Issuer the Servicing Fee
provided for in Section 3.04 hereof; provided that the Trustee shall in no way
be responsible or liable for any action or actions of the 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 Transferor contained in Section 4 hereof) or, (ii) if no such institution
satisfactory to the holders of 66-2/3% in
30
<PAGE> 35
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 Assignment and Servicing
Agreement except that such agreement shall not include any of the Transferor'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.
8.04 Servicer to Cooperate.
The Servicer hereby agrees to cooperate with the Trustee or
any successor to the Servicer appointed in accordance with Section 8.03 hereof,
as applicable, in effecting the termination and transfer of the responsibilities
and rights of the Servicer hereunder to the Trustee or any successor to the
Servicer, including, without limitation, the execution and delivery of
assignments of Financing Statements, and the transfer to the Trustee or the
successor to the Servicer for administration by it of all cash amounts which
shall at the time be held by the Servicer or thereafter received with respect to
the Leases. The Servicer hereby agrees to transfer to any successor to the
Servicer its electronic records and all other records, correspondence and
documents relating to the Leases and Equipment in the manner and at such times
as the successor to the Servicer shall reasonably request. The Servicer hereby
designates the Trustee and any successor to the Servicer its agent and
attorney-in-fact to execute transfers of Financing Statements (including any and
all Financing Statements naming an individual Lessee as debtor and the Servicer
as secured party) and any other filings or instruments which may be necessary or
advisable to effect such transfer of the Servicer's responsibilities and rights
hereunder.
8.05 Notification to Noteholders.
Upon any such termination or appointment of a successor to the
Servicer, the Issuer shall cause the Trustee to give prompt written notice
thereof to each Rating Agency and to each holder of the Notes in the manner
provided in the Indenture.
8.06 Remedies Not Exclusive.
Nothing in the preceding provisions of this Section 8 shall be
interpreted as limiting or restricting any rights or remedies which the Issuer,
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 Assignment and
Servicing Agreement by the Servicer, including, without limitation, the
31
<PAGE> 36
right to recover full and complete damages on account thereof to the extent not
inconsistent with Section 6.02 hereof.
SECTION 9. SUBSTITUTION AND ADDITION OF LEASES
9.01 Substitution and Addition.
(a) Subject to the satisfaction of the requirements set forth
in Section 9.01(b) hereof, the Transferor will have the right (but not the
obligation) at any time to substitute one or more Eligible Leases and the
Equipment subject thereto (each, a "Substitute Lease") for a Lease (for purposes
of this Section 9 referred to as a "Predecessor Lease") and the Equipment
subject thereto if:
(i) the Predecessor Lease became (A) a Non-Performing Lease,
(B) a Warranty Lease or (C) an Adjusted Lease during the immediately
preceding Due Period;
(ii) the aggregate Discounted Present Value of the
Non-Performing Leases that are Predecessor Leases shall not in the
aggregate exceed 10% of the Discounted Present Value of the Leases on
the Cut-Off Date; and
(iii) the aggregate Discounted Present Value of the Adjusted
Leases and Warranty Leases that are Predecessor Leases shall not exceed
10% of the Discounted Present Value of the Leases on the Cut-off Date.
Subject to the satisfaction of the requirements set forth in
Section 4 and Section 9.01(b) hereof, in the event of an Early Lease Termination
which has been prepaid in full, the Issuer 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 __________.
(iii) after giving effect to such additions and substitutions
and any adjustments pursuant to Section 4.02 hereof 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
32
<PAGE> 37
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 9, 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.
(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 Transferor 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 Transferor shall transfer
to the Trustee all Lease Payments actually received by the Transferor which
became due during the current Lease Payment Period.
9.02 Procedure.
(a) By 11:00 A.M. on the third Business Day following each
Determination Date, the Transferor shall give written notice to the Servicer of
any substitution pursuant to Section 9.01 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 Transferor 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
33
<PAGE> 38
monthly reports pursuant to Section 5.01 hereof and to otherwise carry out its
duties as servicer hereunder.
(b) Subject to the provisions of Section 9.03, the delivery of
any Officer's Certificate and supplement to Exhibit A pursuant to Section
9.02(a) shall be conclusive evidence, without further act or deed, that during
the immediately preceding Lease Payment Period (i) the Transferor contributed to
the Issuer pursuant to Section 9.01 hereof all of the Transferor's right, title
and interest in and to the Substitute Leases and Additional Leases identified in
such supplement and the related rights described in Section 9.01 hereof, (ii)
the Transferor transferred to the Issuer, as a contribution to capital, all of
the Transferor's right, title and interest in and to the Equipment subject to
such Substitute Leases (to the extent of the Transferor's interest in such
Equipment, including the Transferor's security interest in any Equipment which
is not owned by the Transferor), and (iii) the Issuer assigned and transferred
to the Transferor, without representation or warranty, all of the Issuer'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 Issuer's interest in such Equipment, including the
Issuer's security interest in any Equipment which is not owned by the Issuer).
The Transferor 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 Issuer pursuant to Section 9.01 hereof and the
Issuer shall promptly request the Trustee to deliver to the Transferor the
original executed counterpart of each Predecessor Lease for which substitution
has been made pursuant to Section 11.01 hereof.
9.03 Objection and Purchase.
If any holder of the Notes objects to any substitution of
Leases within ten days of receipt of the Servicer's monthly report providing
notice thereof pursuant to Section 5.01 above, on the grounds either that any
Substitute Lease or Additional Lease is not an Eligible Lease within the meaning
of the definition thereof or that such substitution or addition is otherwise not
permitted under the provisions of Section 9.01 hereof, the Transferor 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 Transferor shall be required to purchase such Lease in
accordance with the provisions of Section 4.04 hereof.
9.04 Transferor's and Servicer's Subsequent Obligations.
Upon any substitution of Leases in accordance with the
provisions of this Section 9, the Transferor's and the Servicer's obligations
hereunder with respect to the Predecessor Lease shall cease but the Transferor
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.
34
<PAGE> 39
SECTION 10. ASSIGNMENT
10.01 Assignment to Trustee.
It is understood that this Assignment and Servicing Agreement
and all rights of the Issuer hereunder will be assigned by the Issuer 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 Transferor and the Servicer hereby
expressly agrees to each such assignment and agrees that all of its duties,
obligations, representations and warranties hereunder shall be for the benefit
of, and may be enforced by, the Trustee, the holders from time to time of the
Notes, and any successor to or assignee of any thereof.
10.02 Assignment by Transferor or Servicer.
None of the respective rights or obligations of the Transferor
and the Servicer hereunder may be assigned without the prior written consent of
the Issuer and the Trustee (acting upon the instructions of the holders of
66-2/3% of the then aggregate unpaid Outstanding Principal Amount of the Notes);
provided, that nothing herein shall preclude the Servicer from performing its
duties hereunder through the use of agents to the extent that such use is
consistent with the Servicer's business practices in dealing with leases and
equipment for its own account.
SECTION 11. NATURE OF OBLIGATIONS AND SECURITY THEREFOR
11.01 Obligations Absolute.
The obligations of the Transferor hereunder, and the rights of
the Trustee, as assignee of the Issuer, in and to all amounts payable by the
Transferor 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 Transferor may have against the
Servicer, the Issuer, 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 Assignment and Servicing Agreement terminate, or the
respective obligations of the Issuer, the Transferor 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 Issuer, the
Transferor 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 Issuer 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 Issuer, the Servicer, the
Trustee, or any holder of the Notes to the Transferor or any other Person or by
reason of any insolvency, bankruptcy, or similar proceedings by or against the
Transferor, the Servicer, the Issuer, 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 Transferor hereunder and all amounts
payable by the Transferor 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
35
<PAGE> 40
obligation to perform or pay the same shall be terminated or limited pursuant to
the express provisions of this Assignment and Servicing Agreement.
11.02 Security for Obligations.
As security for the full and timely performance by the
Transferor and the Servicer of each of its obligations hereunder, and by the
Issuer of each of its obligations hereunder and under the Notes and the
Indenture, the Transferor 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
Transferor 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 Transferor.
11.03 Further Assurances; Financing Statements.
Each of the Transferor 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 Issuer 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 Issuer 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, each of the Transferor 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
Issuer or the Trustee may request to protect and preserve the assignments and
security interests granted by this Agreement with respect to the Leases.
SECTION 12. DEFINITIONS
As used in this Assignment 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 Issuer from the
Transferor with all or a portion of the proceeds of an Early Termination Lease
that has been prepaid in full pursuant to Section 9 hereof.
36
<PAGE> 41
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 Transferor as of the Cut-Off Date in the
case of the initial Leases, and as of the date of substitution in the case of a
Substitute Lease.
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 Issuer's Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes.
Class A-1 Notes - the Issuer's ______% Class A-1 Lease-Backed
Notes, Series 1999-A.
Class A-2 Notes - the Issuer's _____% Class A-2 Lease-Backed
Notes, Series 1999-A.
Class A-3 Notes - the Issuer's ______% Class A-3 Lease-Backed
Notes, Series 1999-A.
Class A-4 Notes - the Issuer's ______% Class A-4 Lease-Backed
Notes, Series 1999-A.
Class B Notes - the Issuer's ______% Class B Lease-Backed
Notes, Series 1999-A.
Class C Notes - the Issuer's ______% Class C Lease-Backed
Notes, Series 1999-A.
Class D Notes - the Issuer's ______% Class D Lease-Backed
Notes, Series 1999-A.
Class E Notes - the Issuer's ______% Class E Lease-Backed
Notes, Series 1999-A.
Class R Notes - the Issuer's Class R-1 Notes and Class R-2
Notes.
37
<PAGE> 42
Class R-1 Notes - the Issuer's _____% Class R-1 Lease-Backed
Notes, Series 1999-A.
Class R-2 Notes - the Issuer's _____% Class R-2 Lease-Backed
Notes, Series 1999-A.
Code - the Internal Revenue Code of 1986, as amended.
Collection Account - Section 1.01 of the Indenture.
Corporate Trust Office - Section 1.01 of the Indenture.
Cut-Off Date - close of business on January 31, 1999.
Delinquent Lease - Section 1.01 of the Indenture.
Determination Date - Section 1.01 of the Indenture.
Discounted Present Value of the Leases - Section 1.01 of the
Indenture.
Early Termination Lease - a lease which has been 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 Issuer'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 Issuer 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.
38
<PAGE> 43
Indemnified Party - Section 4.03 hereof.
Indenture - the Indenture dated as of March 1, 1999, among the
Issuer, the Trustee and the Servicer, as the same may be supplemented, modified
or amended from time to time in accordance with the terms thereof.
Inter-Company Loans - Section 13.01 hereof.
Issuance Date - _________, 1999.
Issuer - Copelco Capital Funding LLC 99-1, a Delaware limited
liability company.
Lease - each separate lease agreement and each lease schedule
or supplement (and each master lease agreement insofar as the same relates to
any such schedule or supplement) described on Exhibit A hereto, as the same may
be amended or modified from time to time in accordance with the provisions
hereof and thereof.
Lease Delinquency Payment - Section 1.01 of the Indenture.
Lease Payment - Section 1.01 of the Indenture.
Lease Payment Period - with respect to any Payment Date and
the Determination Date with respect thereto, the calendar month prior to the
month in which such Payment Date and Determination Date occur.
Lease Receivables - with respect to any Lease, all amounts
owing by the Lessee thereunder.
Lease Purchase 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 the next scheduled monthly payment on such Lease
and 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.
39
<PAGE> 44
Nonrecoverable Advance - any advance made or to be made by the
Servicer pursuant to Section 4.01 hereof which, in the good faith judgment of
the Servicer, will ultimately not be recoverable by the Servicer under the terms
of this Assignment 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 Transferor 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 Transferor
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 Issuance Date.
Other Lease Payments - Section 1.01 of the Indenture.
Outstanding Principal Amount - Section 1.01 of the Indenture.
PBGC - the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
Payment Date - the 20th day of each calendar month (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 company, trust (including any
beneficiary thereof) or unincorporated organization, or a government or agency
or political subdivision thereof.
Prime Rate - the Manufacturers and Traders Trust Company prime
lending rate.
Private Placement Memoranda - each 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
40
<PAGE> 45
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., Moody's Investors' Service, Inc.
or Duff & Phelps Credit Rating Co.
Receivable Notes - Section 1.01 of the Indenture.
Registration Statement - the registration statement (File No.
333-69983) 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 Transferor within the meaning of Section
414(c) of the Internal Revenue Code of 1986, as amended, or of Section 4001(b)
of ERISA.
Reportable Event - any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, a withdrawal from a Pension Plan
described in Section 4063 of ERISA, or a cessation of operations described in
Section 4062(e) of ERISA.
Reserve Account - Section 1.01 of the Indenture.
Residual Account - Section 1.01 of the Indenture.
Residual Realization - Section 1.01 of the Indenture.
Residual Servicing Fee - Section 3.04(a) hereof.
Servicer - the corporation so identified in the first
paragraph of this Assignment and Servicing Agreement and any successor thereto
in accordance with the provisions hereof.
Servicer Event of Default - Section 10.01 hereof.
Servicing Fee - Section 3.04(a) hereof.
Servicing Report - Section 5.01(b) hereof.
Similar Transaction Amount - Section 1.01 of the Indenture.
Similar Transaction Payments - Section 1.01 of the Indenture.
Substitute Lease - Section 9.01(a) hereof.
Stated Maturity - Section 1.01 of the Indenture.
41
<PAGE> 46
Termination Payment - Section 1.01 of the Indenture.
Transaction Payment Amount - Section 1.01 of the Indenture.
Transferor - the corporation so identified in the first
paragraph of this Assignment and Servicing Agreement and any successor thereto
in accordance with the provisions hereof.
Trust Estate - Section 1.01 of the Indenture. Trustee -
Manufacturers and Traders Trust Company, and any successor thereto, as trustee
under the Indenture.
Underwriting Agreement - the Underwriting Agreement dated
________, 1999 among the Issuer, Transferor 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.
SECTION 13. INTER-COMPANY LOANS
13.01 Inter-Company Loans.
With the contribution of the Leases, the Issuer has acquired
the right to hold and apply in accordance with the provisions of certain of the
Leases, security deposits. The Issuer may from time to time, to the extent
permitted by law, lend such security deposits and any amounts disbursed to the
Issuer pursuant to Sections 3.04(b), 3.05(b) or 6.06 of the Indenture to the
Transferor (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 Issuer
and the Transferor may agree.
SECTION 14. MISCELLANEOUS
14.01 Continuing Obligations.
This Assignment 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.
42
<PAGE> 47
14.02 GOVERNING LAW.
THIS ASSIGNMENT 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 ASSIGNMENT AND
SERVICING AGREEMENT IS DEEMED INVALID, IT SHALL NOT AFFECT THE BALANCE OF THIS
ASSIGNMENT AND SERVICING AGREEMENT.
14.03 Successors and Assigns.
This Assignment and Servicing Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the Issuer, the
Transferor, the Servicer and the Trustee and shall inure to the benefit of the
successors and assigns of the holders, from time to time, of the Notes.
14.04 Modification.
The terms of this Assignment and Servicing Agreement shall not
be waived, modified or amended without the written consent of the party against
whom such waiver, modification or amendment is claimed and, in any case, the
Trustee (acting upon the instructions of the holders of 66-2/3% of the then
aggregate unpaid Outstanding Principal Amount of the Notes).
14.05 No Proceedings.
The Transferor and the Servicer, each hereby agree that it
will not, directly or indirectly, institute, or cause to be instituted, against
the Issuer any proceeding of the 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.
14.06 Notices.
All notices and other communications given in connection with
this Assignment 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 Transferor, 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 Issuer, the Servicer and the Trustee and
the holders of the Notes, to such addresses as are provided pursuant to Sections
1.05 and 1.06 of the Indenture or to such other address as either party may
specify to the other from time to time in accordance with this Section 14.06.
14.07 Counterparts.
This Assignment and Servicing Agreement may be executed in any
number of counterparts, each counterpart constituting an original, but all
together constituting only one Agreement.
43
<PAGE> 48
14.08 Nonpetition Covenant.
The Transferor shall not petition or otherwise invoke the
process of any Governmental Authority for the purpose of commencing or
sustaining a case against the Issuer 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 Issuer or any
substantial part of its respective property, or ordering the winding up or
liquidation of the affairs of the Issuer. Neither the Transferor shall petition
or otherwise invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Issuer 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
Issuer or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of the Issuer.
44
<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Servicing Agreement as of the date and year first written above.
COPELCO CAPITAL, INC., as
Transferor and Servicer
By: __________________________________
Name:
Title:
COPELCO CAPITAL FUNDING LLC 99-1
By: [COPELCO CAPITAL FUNDING CORP. XI,]
as manager
By: ______________________________
Name: STEPHEN W. SHIPPIE
Title: VICE PRESIDENT
The undersigned hereby acknowledges
receipt of a copy of the foregoing
Assignment 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:
Title:
[Signature Page to the Assignment and Servicing Agreement]
<PAGE> 50
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
A-1
<PAGE> 51
INTER-COMPANY LOAN NOTE
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS PROMISSORY NOTE ON THE PART OF
COPELCO CAPITAL FUNDING LLC 99-1 HAS BEEN ASSIGNED TO AND IS SUBJECT TO A
SECURITY INTEREST IN FAVOR OF MANUFACTURERS AND TRADERS TRUST COMPANY, AS
TRUSTEE, UNDER AN INDENTURE DATED AS OF _________, 1999, FOR THE BENEFIT OF THE
PERSONS REFERRED TO THEREIN.
$______________ ____________, 1999
COPELCO CAPITAL, INC., a Delaware corporation (the "Maker"),
with its principal office at One International Boulevard, Mahwah, NJ 07430-0631,
FOR VALUE RECEIVED, hereby promises to pay to the order of Copelco Capital
Funding LLC 99-1, a Delaware limited liability company or its assignee (the
"Payee"), for its account, the principal sum ______________________________
($___________) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Payee to the Maker under the
Assignment 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 Assignment and Servicing
Agreement dated as of March 1, 1999, between the Maker and the Payee (the
"Assignment Agreement"). Capitalized terms used in this Note have the respective
meanings assigned to them in the Assignment Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
COPELCO CAPITAL, INC.
By _________________________________
<PAGE> 52
SCHEDULE OF LOANS
This Note evidences demand Loans made under the
within-described Assignment 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:
Principal Amount Unpaid
Amount of Interest Paid or Principal Notation
Date Loan Rate Prepaid Amount Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 53
EXHIBIT C
FORM OF RECEIVABLES SERVICING REPORT
Line
1 Transaction Cash Flow - see computer detail
1/1 Beginning Net Present Value
1/2 Less:
- 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> 54
5 Residual Event Calculation
5/1 Delinquency condition exist (payments over 62 days performing leases
only)
5/2 Overdue payments and PV on leases over 62 but less than 122 days
5/3 PV of performing leases
5/4 Delinquency Rate Current Month
5/5 Second Preceding Month
5/6 Third Preceding Month
5/7 Average
5/8 Residual Realization > 100% (Yes/No)
5/9 Copelco Capital as Servicer (Yes/No)
6 Cash Reserve Account
6/1 Beginning Balance
6/2 Less: New Obligations: Total Shortfall (B9)
6/3 Plus: Interest earned on Cash Reserve Acct.
6/4 Ending Balance
6/5 ___% of Outstanding Note Value
6/6 Lesser of __% of $__________ and Outstanding Note Value
6/7 Target Cash Reserve (Greater of 6/5 & 6/6)
6/8 Cash Reserve Release (6/4-6/7)
6/9 Ending Balance Cash Reserve Account
7 Residual Account
7/1 Beginning Balance
7/2 Plus Current Month Addition
7/3 Less Disbursements
7/4 Ending Balance
8 Nonperforming Leases
8/1 Beginning Balance of Nonperforming Leases
8/2 Plus Current Month Additions
8/3 Plus Past Due Payments on Nonperforming Leases
8/4 Less Current Month Recoveries
8/5 Ending Balance
Cash Receipts
Line
A/1 Regular monthly payments
A/2 Overdue payments
A/3 Overdue Payments due on Early Termination and Termed Out Leases (From
Transferor)
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> 55
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> 56
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> 1
COPELCO CAPITAL FUNDING TRUST 1999-A
_____% CLASS E LEASE-BACKED NOTES
____% CLASS R-1 LEASE RESIDUAL BACKED NOTES
____% CLASS R-2 LEASE RESIDUAL BACKED NOTES
SERIES 1999-A
PLACEMENT AGENT AGREEMENT
February __, 1999
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza, 14th Floor
New York, New York 10292-2014
Ladies and Gentlemen:
Copelco Capital Funding LLC 99-1, a limited liability company 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 __________, 1999 or such other date
as we shall mutually agree upon (the "Closing Date") pursuant to an Indenture,
dated as of March 1, 1999 (the "Indenture"), between the Issuer, Manufacturers
and Traders Trust Company (the "Trustee") and Copelco, as servicer. 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, manufacturing 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 1999-A (the "Class A-1 Notes"), $__________ aggregate
principal amount of the Issuer's ____% Class A-2 Lease-Backed Notes, Series
1999-A (the "Class A-2 Notes"), $___________ aggregate principal amount of the
Issuer's ____% Class A-3 Lease-Backed Notes, Series 1999-A (the "Class A-3
Notes"), $___________ aggregate principal amount of the Issuer's ____% Class A-4
Lease-Backed Notes, Series 1999-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")
$___________ of the ____% Class B
<PAGE> 2
Lease-Backed Notes, Series 1999-A (the "Class B Notes") $___________ of the
____% Class C Lease-Backed Notes, Series 1999-A (the "Class C Notes") and
$___________ of the ____% Class D Leased-Backed Notes Series 1999-A (the "Class
D Notes"). The Class A Notes, the Class B Notes, the Class C Notes and the Class
D Notes are being sold in a public offering and are not included in this private
placement. A copy of the Prospectus dated ___________ (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
Private Placement Agreement (the "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 LLP, 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 Trustee. 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 Closing 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
_______, 1999 relating to the Class E Notes and a copy of a Private
Placement Memorandum dated _______, 1999 related to the Class R Notes
(collectively, as supplemented and amended, the "Private Placement
Memorandum") relating to the Notes. The Private Placement Memorandum
2
<PAGE> 3
does not, as of 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 Assignment 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 issuance and sale of the Notes and the performance of
this Agreement, the Indenture and the Assignment and Servicing Agreement by
the Issuer will not (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) 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. As used herein, "Adverse Claim"
means a lien, pledge, security interest or other charge or encumbrance.
(vi) The Issuer is not, and will not, as of the Closing Date, be
an "investment company" under the Investment Company Act of 1940, as amended
(the "1940 Act").
(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 Assignment and Servicing Agreement has been duly authorized,
executed and delivered, and this Agreement constitutes, and when executed
and delivered, the Assignment and
3
<PAGE> 4
Servicing Agreement will constitute, 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 not
(A) 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) 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 Assignment 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, 1997 and the period ended September 30, 1998. Except
as set forth in or contemplated in the Private Placement Memorandum, there
has been no material adverse change in the condition (financial or
otherwise) of the Copelco Entities since September 30, 1998.
(v) Any taxes, fees and other governmental charges arising from
the execution and delivery of this Agreement, the Assignment 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 Assignment 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 contemplated by this Agreement, the Assignment 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 Assignment and Servicing Agreement or the Indenture
4
<PAGE> 5
(as applicable) or (B) the validity or enforceability of this Agreement, the
Assignment and Servicing Agreement, the Indenture or the Notes.
(d) 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 Securities Act of 1933 (the "1933 Act"), in reliance upon the exemption
provided in Section 4(2) of the 1933 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 Private
Placement 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 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) Each of the Issuer and Copelco will promptly advise the Placement
Agent of the receipt by any of them 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 Private Placement Memorandum to
which the Placement Agent reasonably objects.
(b) If, at any time when a Private Placement Memorandum relating to
the Notes is to be delivered to a potential Purchaser, any event occurs as a
result of which the Private Placement 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 Private Placement 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.
5
<PAGE> 6
(c) Each of the Issuer and Copelco understands that pursuant to this
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. Each of the Issuer and Copelco will provide to you and such
Purchaser all such documents and opportunities to meet with officials of Copelco
or the Issuer 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 you such information as will
satisfy the provisions of Rule 144A under the 1933 Act in order to effect
resales of the Notes pursuant thereto.
(d) Copelco and the Issuer will furnish to you, so long as delivery of
a placement memorandum is desired by you, as many copies of the Private
Placement Memorandum relating to the Notes and any supplement thereto as you may
reasonably request.
(e) Copelco and the Issuer will take all reasonable actions requested
by you to arrange for the qualification of the Notes for sale under the laws of
the jurisdictions within the United States as you may designate and will
maintain such qualifications in effect as 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 1933 Act in connection therewith if the Issuer
shall be required to qualify as a foreign corporation doing business in any such
jurisdiction.
(f) For so long as the Notes are outstanding, the Issuer and Copelco
shall deliver to you by first-class mail 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 you 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 Agent' 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
Assignment 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 Vice 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
Assignment and Servicing Agreement are true and correct in all material
respects at and as of the date of such Officer's
6
<PAGE> 7
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
Assignment 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 Private Placement 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) with respect to Copelco
and the Issuer, 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 Assignment 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
Assignment and Servicing Agreement and the Indenture, as applicable, by the
Issuer and Copelco; (iii) each of this Agreement, the Assignment 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 Assignment 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 Private Placement 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 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
7
<PAGE> 8
Copelco to the Issuer as a pledge of collateral rather than as a sale or
absolute assignment, the Assignment and Servicing Agreement and accompanying
documentation creates a valid security interest in the Leases and the Equipment
(or interests therein) under applicable 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 and 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
Closing Date, with respect to the validity of the Notes, the Private Placement
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 Class E Notes shall have been rated at least BB by Duff &
Phelps Credit Rating Co. ("DCR") and Fitch IBCA, Inc. ("Fitch"), respectively,
which rating shall not have been reduced or withdrawn as evidenced by the
Officer's Certificate referred to in Section 6(b). The Class R-1 Notes shall
have been rated at least AAA by Moody's Investors Service, Inc. ("Moody's"),
DCR, and Fitch, respectively, which rating shall not have been reduced or
withdrawn as evidenced by the Officer's Certificate referred to in Section 6(b).
The Class R-2 Notes shall have been rated at least BBB by DCR and Fitch,
respectively, which ratings shall not have been reduced or withdrawn as
evidenced by the Officer's Certificate referred to in Section 6(b).
(f) Counsel to the Trustee shall have delivered a favorable opinion
(subject to customary and usual exceptions), dated the 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.
8
<PAGE> 9
(h) The issuance and sale of the Class A Notes, the Class B Notes, the
Class C Notes and the Class D Notes shall have occurred.
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 ____% of the initial principal amount of the
Class E Notes, ____% of the initial principal amount of the Class R-1 Notes, and
____% of the initial principal amount of the Class R-2 Notes. 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, Fitch and Moody's 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;
9
<PAGE> 10
(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 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 the 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 the Placement Agent, each of the Placement Agent's officers and
directors, and each person, if any, who controls the Placement Agent within the
meaning of Section 15 of the 1933 Act from and against any and all losses,
claims, damages or liabilities, joint or several, to which the Placement Agent
or any such controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or is based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in any Private Placement
Memorandum, or any amendment or supplement thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in the light of the circumstances under
which they were made, not misleading, and will promptly reimburse the Placement
Agent and each such controlling person for any legal or other expenses
reasonably incurred by such Placement Agent or such controlling person in
connection with investigating, preparing to defend or defending, or appearing as
a third party witness in connection with, any such loss, action, damage,
liability or claim as such expenses are incurred; 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. The foregoing
indemnity agreement is in addition to any liability which each of the Issuer and
Copelco may otherwise have to you or any person who controls you.
(b) The Placement Agent agrees 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 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) an untrue statement or alleged
untrue statement of a material fact contained in the Private Placement
Memorandum, or any amendment or supplement thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in the light of the circumstances under
which they were made, 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
10
<PAGE> 11
on behalf of such Placement Agent expressly for use therein and provided that
such written information was not based upon Company-Provided Information (as
defined herein); 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 loss, claim, damage, liability or action as
such expenses are incurred. 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. The foregoing indemnity agreement is in addition to any
liability which you may otherwise have to each of the Issuer and Copelco.
(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 claim of 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
11
<PAGE> 12
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) You agree to deliver to the Issuer or Copelco no later than the
date on which the Prospectus Supplement is required to be filed pursuant to Rule
424 with a copy of its Derived Information (defined below).
(e) You agree, assuming all Company-Provided Information (defined
below) is accurate and complete in all material respects, to indemnify and hold
harmless the Issuer and Copelco against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of a material fact contained in the Derived Information provided by you, 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, in the light of the circumstances under which they were
made, not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by him, her or it in connection
with investigating or defending or preparing to defend any such loss, claim,
damage, liability or action as such expenses are incurred. Your obligations
under this Section 8(e) shall be in addition to any liability which you may
otherwise have.
(f) Each of the Issuer and Copelco agrees to indemnify and hold
harmless the Placement Agent, each of the Placement Agent's officers and
directors and each person who controls the Placement Agent within the meaning of
Section 15 of the 1933 Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of a material fact contained in the Company-Provided Information provided by the
Issuer or Copelco, 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, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred.
Your obligation under this Section 8(f) shall be in addition to any liability
which you may otherwise have.
The procedures set forth in Section 8(c) shall be equally applicable to
Sections 8(e) and 8(f).
(g) For purposes of this Section 8, the term Derived Information means
such portion, if any, of the information delivered to the Issuer or Copelco by
the Placement Agent pursuant to Section 8(d) as:
(i) is not contained in the Private Placement Memorandum without
taking into account information incorporated therein by reference;
12
<PAGE> 13
(ii) does not constitute Company-Provided Information; and
(iii) is of the type of information defined as Collateral Term
Sheets, Structural Term Sheets or Computational Materials (as such terms are
interpreted in the No-Action Letters).
"Company-Provided Information" means any computer tape furnished to the
Placement Agent by the Company concerning the Leases or any other information
furnished by the Company to the Placement Agent that is relied on or is
reasonably anticipated by the parties hereto to be relied on by the Placement
Agent in the course of the Placement Agent's preparation of its Derived
Information or the written information to be included in the Private Placement
Memorandum by the Placement Agent as set forth in Section 8(b) herein.
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall
have the respective meanings assigned to them in the February 13, 1995 letter
(the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, were
publicly available February 17, 1995). The term "Collateral Term Sheet" as used
herein includes any subsequent Collateral Term Sheet that reflects a substantive
change in the information presented. The term "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter (the "Kidder letter" and
together with the PSA Letter, the "No-Action Letters") of Brown & Wood on behalf
of Kidder, Peabody & Co., Inc. (which letter, and the SEC staff's response
thereto, were publicly available May 20, 1994).
(h) 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, in lieu of indemnifying such indemnified
party, 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 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 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 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 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
13
<PAGE> 14
subsection (h) 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 (h). 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
(h) 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 (h), the
Placement Agent shall not be required to contribute any amount in excess of the
fee paid to the Placement Agent pursuant to Section 7 hereof. No person guilty
of fraudulent misrepresentation (within the meaning of Section 10(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(i) 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 1933 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 1933 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.
(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 in your absolute
discretion at any time upon the giving of notice at any time prior to the
Closing Date: (i) if there has been 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
14
<PAGE> 15
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
without the written consent of the Placement Agent, except in accordance with
law.
(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 or the Issuer addressed to Copelco or the
Issuer at East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey
08054-5400 or to such other address as Copelco or the Issuer may have designated
in writing to you.
Section 12. Successors. This Agreement will inure to the benefit of and
be binding upon the Issuer and Copelco and their successors and assigns and the
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,
15
<PAGE> 16
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.
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: NICHOLAS ANTONACCIO
Title: VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND
TREASURER
COPELCO CAPITAL FUNDING LLC 99-1
By:_____________________________________,
as Manager
By:_____________________________________
Name:
Title:
16
<PAGE> 17
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
PRUDENTIAL SECURITIES INCORPORATED,
By:______________________________
Name:
Title:
[SIGNATURE PAGE TO THE PLACEMENT AGENT AGREEMENT]
17
<PAGE> 1
EXHIBIT
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Copelco Capital Funding LLC 99-1:
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the Registration Statement.
KPMG LLP
New York, New York
March 1, 1999
2
<PAGE> 1
EXHIBIT
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 LLC 99-1
(Exact name of obligor as specified in its charter)
DELAWARE
(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 1999-A
CLASS A-2 LEASE-BACKED NOTES, SERIES 1999-A
CLASS A-3 LEASE-BACKED NOTES, SERIES 1999-A
CLASS A-4 LEASE-BACKED NOTES, SERIES 1999-A
CLASS A-5 LEASE-BACKED NOTES, SERIES 1999-A
CLASS B LEASE-BACKED NOTES, SERIES 1999-A
CLASS C LEASE-BACKED NOTES, SERIES 1999-A
CLASS D LEASE-BACKED NOTES, SERIES 1999-A
(Title of indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) 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]
1
<PAGE> 3
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 1st day of March, 1999.
MANUFACTURERS AND TRADERS TRUST COMPANY
By: _______________________________
Russell T. Whitley
Assistant Vice President
2
<PAGE> 4
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> <C> <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>
G-1
<PAGE> 1
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
$[139,000,000] [TBD]% Class A-1 Lease-Backed Notes, Series 1999-A
$[ 95,000,000] [TBD]% Class A-2 Lease-Backed Notes, Series 1999-A
$[110,000,000] [TBD]% Class A-3 Lease-Backed Notes, Series 1999-A
$[ 90,000,000] [TBD]% Class A-4 Lease-Backed Notes, Series 1999-A
$[ 75,613,000] [TBD]% Class A-5 Lease-Backed Notes, Series 1999-A
$[ 13,029,000] [TBD]% Class B Lease-Backed Notes, Series 1999-A
$[ 10,134,000] [TBD]% Class C Lease-Backed Notes, Series 1999-A
$[ 15,925,000] [TBD]% Class D Lease-Backed Notes, Series 1999-A
The analysis in this report is accurate to the best of PSI's knowledge and is
based on information provided by the Issuer. PSI makes no representations as to
the accuracy of such information provided to it by the Issuer. All assumptions
and information in this report reflect PSI's judgment as of this date and are
subject to change. All analyses are based on certain assumptions noted herein
and different assumptions could yield substantially different results. You are
cautioned that there is no universally accepted method for analyzing financial
instruments. You should review the assumptions; there may be differences between
these assumptions and your actual business practices. Further, PSI does not
guarantee any results and there is no guarantee as to the liquidity of the
instruments involved in this analysis. The decision to adopt any strategy
remains your responsibility. PSI (or any of its affiliates) or their officers,
directors, analysts or employees may have positions in securities, commodities
or derivative instruments thereon referred to herein, and may, as principal or
agent, buy or sell such securities, commodities or derivative instruments. In
addition, PSI may make a market in the securities referred to herein. Neither
the information nor the assumptions reflected herein shall be construed to be,
or constitute, an offer to sell or buy or a solicitation of an offer to sell or
buy any securities, commodities or derivative instruments mentioned herein. No
sale of any securities, commodities or derivative instruments should be
consummated without the purchaser first having received a Prospectus. Finally,
PSI has not addressed the legal, accounting and tax implications of the analysis
with respect to you, and PSI strongly urges you to seek advice from your
counsel, accountant and tax advisor.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 2
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
PRICING INFORMATION
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3 Class A-4
<S> <C> <C> <C> <C>
Approximate
Face Amount: [$139,000,000] [$95,000,000] [$110,000,000] [$90,000,000]
Exp. Ratings
(Moody's/Fitch/Duff): [P-1/F1+,AAA/D-1+] [Aaa/AAA/AAA] [Aaa/AAA/AAA] [Aaa/AAA/AAA]
Coupon: [TBD] [TBD] [TBD] [TBD]
Approximate
Price: [TBD] [TBD] [TBD] [TBD]
Yield: [TBD] [TBD] [TBD] [TBD]
Spread: [TBD] bps [TBD] bps [TBD] bps [TBD] bps
Exp. Avg Life
to 5% Call: [0.440] yrs [1.257] yrs [2.071] yrs [3.010] yrs
Exp. Avg Life
to Maturity: [0.440] yrs [1.257] yrs [2.071] yrs [3.010] yrs
1st Prin Payment: [0.100] yrs [0.850] yrs [1.600] yrs [2.517] yrs
Exp. Maturity
to 5% Call: [0.850] yrs [1.600] yrs [2.517] yrs [3.600] yrs
Exp. Maturity: [01/15/00] [10/15/00] [09/15/01] [10/15/02]
Stated Maturity: [03/15/00] [10/15/01] [09/15/02] [10/15/03]
Pricing Speed: [0% CPR] [0% CPR] [0% CPR] [0% CPR]
Pricing Date: [TBD] [TBD] [TBD] [TBD]
Expected
Settle Date: [03/09/99] [03/09/99] [03/09/99] [03/09/99]
1st Pmt Date: [04/15/99] [04/15/99] [04/15/99] [04/15/99]
Cut-Off Date
(Opening of Business): [02/01/99] [02/01/99] [02/01/99] [02/01/99]
Dated Date: [TBD] [TBD] [TBD] [TBD]
Pmt Delay: [0] days [0] days [0] days [0] days
Int Pmt: [Actual/360] 30/360 30/360 30/360
Pmt Terms: Monthly Monthly Monthly Monthly
Distribution: Public Public Public Public
Offering Offering Offering Offering
ERISA Eligibility: Yes Yes Yes Yes
Settlement: Book Entry Book Entry Book Entry Book Entry
(DTC) (DTC) (DTC) (DTC)
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 3
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
PRICING INFORMATION
<TABLE>
<CAPTION>
Class A-5 Class B Class C Class D
<S> <C> <C> <C> <C>
Approximate
Face Amount: [$75,613,000] [$13,029,000] [$10,134,000] [$15,925,000]
Exp. Ratings
(Moody's/Fitch/Duff): [Aaa/AAA/AAA] [Aa2/AA/AA] [A2/A/A] [Baa2/BBB/BBB]
Coupon: [TBD] [TBD] [TBD] [TBD]
Approximate
Price: [TBD] [TBD] [TBD] [TBD]
Yield: [TBD] [TBD] [TBD] [TBD]
Spread: [TBD] bps [TBD] bps [TBD] bps [TBD] bps
Exp. Avg Life
to 5% Call: [4.072] yrs [2.514] yrs [2.514] yrs [2.519] yrs
Exp. Avg Life
to Maturity: [4.118] yrs [2.571] yrs [2.583] yrs [2.627] yrs
1st Prin Payment: [3.600] yrs [0.850] yrs [0.850] yrs [0.850] yrs
Exp. Maturity
to 5% Call: [4.350] yrs [4.350] yrs [4.350] yrs [4.350] yrs
Exp. Maturity: [12/15/03] [01/15/04] [02/15/04] [06/15/04]
Stated Maturity: [01/15/07] [01/15/07] [01/15/07] [01/15/07]
Pricing Speed: [0% CPR] [0% CPR] [0% CPR] [0% CPR]
Pricing Date: [TBD] [TBD] [TBD] [TBD]
Expected
Settle Date: [03/09/99] [03/09/99] [03/09/99] [03/09/99]
1st Pmt Date: [04/15/99] [04/15/99] [04/15/99] [04/15/99]
Cut-Off Date
(Opening of Business): [02/01/99] [02/01/99] [02/01/99] [02/01/99]
Dated Date: [TBD] [TBD] [TBD] [TBD]
Pmt Delay: [0] days [0] days [0] days [0] days
Int Pmt: 30/360 30/360 30/360 30/360
Pmt Terms: Monthly Monthly Monthly Monthly
Distribution: Public Public Public Public
Offering Offering Offering Offering
ERISA Eligibility: Yes Yes Yes Yes
Settlement: Book Entry Book Entry Book Entry Book Entry
(DTC) (DTC) (DTC) (DTC)
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 4
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
COMPANY OVERVIEW
COPELCO FINANCIAL SERVICES GROUP is a diversified finance company with
operations in equipment leasing as well as consumer finance. Since its founding,
Copelco Financial has followed a basic growth plan of building a financial
services company which meets the needs of particular markets and sub-markets.
Copelco Financial's founder and current Chief Executive Officer, Mr. Ian Berg,
has been in the leasing business for over 28 years and has turned Copelco
Financial into one of the most successful private specialty finance companies in
America.
COPELCO CAPITAL, INC. is Copelco Financial's flagship subsidiary. Copelco
Capital is a leading issuer of equipment lease-backed securities and one of the
largest independent small-ticket equipment lessors in the United States. Copelco
Capital has three strategic business units. The largest is the BUSINESS
TECHNOLOGY GROUP. This Group leases small-ticket equipment, primarily
photocopiers and computers, to businesses and business owners throughout the
U.S. and Canada through multiple manufacturer, vendor and dealer programs. The
Business Technology Group (and its predecessor strategic business units) have
originated leases that have been included in 17 prior asset securitizations
representing approximately $1.4 billion in total issuance. As of September 30,
1998, the Business Technology Group's portfolio totaled $1.355 billion which is
approximately 58% of Copelco Capital's total portfolio. The HEALTHCARE GROUP
provides a diversified range of leasing services for financing healthcare
equipment. This Group also operates 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. As of September 30, 1998, the
Healthcare Group's portfolio totaled $747 million which is approximately 32% of
Copelco Capital's total portfolio. The Healthcare Group has originated leases
subject to 18 prior securitizations representing approximately $1.2 billion in
issuance. Finally, the COMMERCIAL AND INDUSTRIAL GROUP primarily leases
equipment to the electronics manufacturing service industry such as printed
circuit board assembly and test equipment. As of September 30, 1998, the
Commercial and Industrial Group's portfolio totaled $220 million which is
approximately 10.00% of Copelco Capital's total portfolio. The last two domestic
equipment lease securitizations have been comprised of collateral from all three
groups. These two securitizations totaled $1.25 billion which was made up of
approximately 60% of collateral from the Business Technology Group, 30% from the
Healthcare Group and 10% from the Commercial and Industrial Group.
HIGHLIGHTS
- - COPELCO CAPITAL, AND ITS PREDECESSORS, HAVE BEEN IN THE LEASING
BUSINESS FOR OVER 26 YEARS.
- - SENIOR MANAGEMENT (TOP SIX OFFICERS) AT COPELCO CAPITAL HAVE AN AVERAGE
OF 26 YEARS OF EXPERIENCE IN THE LEASING BUSINESS.
- - 38 SECURITIZATIONS COMPLETED TO DATE FOR OVER $3.8 BILLION IN LEASES
WITH APPROXIMATELY $2 BILLION REPAID TO BONDHOLDERS TO DATE.
- - LEADER IN SPECIALTY FINANCE TECHNOLOGY WITH INTERNET BASED LEASING
SYSTEM AND NEW STATE OF THE ART SERVICING FACILITY.
- - STABLE DELINQUENCY HISTORY OF 2% TO 4% OVER 30 DAYS PAST DUE OVER A
PERIOD OF SIX YEARS.
- - ANNUAL NET LOSSES AS A PERCENTAGE OF AVERAGE RECEIVABLES OUTSTANDING
ARE CONSISTENTLY BELOW 1.75% OVER THE LAST SIX YEARS.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 5
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
FINANCIAL HIGHLIGHTS. Selected financial information (all in millions) of
Copelco Capital is set forth below.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, December 31,
1998 1997
----------------- ------------
(MM) (MM)
<S> <C> <C>
Total Assets 2,525.4 2,083.3
Cash and Cash Equivalents 112.6 71.3
Restricted Cash 47.5 45.2
Net Investment in Direct Financing Leases 2,157.1 1,784.3
Other 208.2 182.4
Total Liabilities 2,342.9 1,927.6
Total Shareholders Equity 182.6 155.7
Total Revenues 217.7 253.8
Net Income (Before Taxes) 44.9 54.8
- -some totals may not add up due to rounding
</TABLE>
HISTORICAL DELINQUENCY INFORMATION. Delinquency information for Copelco Capital
is set forth below.
<TABLE>
<CAPTION>
September 30, December 31, December 31, December 31, December 31, December 31,
1998 1997 1996 1995 1994 1993
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ (000s) % $ (000s) % $ (000s) % $ (000s) % $ (000s) % $ (000s) %
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Receivables
Balance(1) 2,000,113 1,732,010 1,503.56 1,238,424 1,000,488 736,374
- -----------------------------------------------------------------------------------------------------------------------------------
No. of Delinquent Days
30-59 Days 43,824 2.19% 38,610 2.23% 34,682 2.29% 26,255 2.12% 14,847 1.48% 9,184 1.25%
60-89 Days 16,739 0.84% 11,999 0.69% 8,137 0.54% 4,977 0.40% 3,971 0.40% 1,887 0.26%
90 Days + 5,720 0.29% 10,438 0.60% 7,588 0.50% 5,703 0.54% 6,749 0.67% 5,099 0.69%
- -----------------------------------------------------------------------------------------------------------------------------------
Total Delinquency 66,283 3.31% 61,047 3.52% 50,206 3.34% 37,935 3.06% 25,567 2.56% 16,170 2.20%
</TABLE>
HISTORICAL CHARGE-OFF EXPERIENCE. Charge-off information for leases that are
owned and serviced by Copelco Capital for the period January 1, 1993 to
September 30, 1998 is set forth below.
<TABLE>
<CAPTION>
Year Ended December 31
Nine Months Ended ----------------------------------------------------------------
September 30, 1998 1997 1996 1995 1994 1993
------------------ ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding(1) (000s) $1,866,061 $1,617,532 $1,370,740 $1,119,456 $868,431 $649,278
Net Losses (000s) $21,476 $22,147 $15,713 $11,457 $10,328 $8,842
Net Loss as a Percentage of
Average Receivables 1.53%(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 Receivable or
Balance is equal to the aggregate future rent owing on the leases.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 6
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
Title of Securities: Copelco Capital Funding LLC 99-1, Lease-Backed Notes,
Series 1999-A, Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, Class A-5
Notes(collectively, the "Class A Notes"), Class B
Notes, Class C Notes, Class D Notes and Class E Notes
(the Class A Notes, Class B Notes, Class C Notes and
Class D Notes collectively, the "Offered Notes,
together with the Class E Notes the "Notes" or the
"Receivable Notes").
Securities Offered: [$509,613,000] Class A Notes equal to [88.00]% of the
aggregate discounted contract balance of the contract
payments sold to the Issuer at closing (the "ADCB").
[$13,029,000] [TBD]% Class B Notes, equal to [2.25]%
of the ADCB
[$10,134,000] [TBD]% Class C Notes, equal to [1.75]%
of the ADCB
[$15,925,000] [TBD]% Class D Notes, equal to [2.75]%
of the ADCB
The Class E Notes are not being offered hereby.
Distribution and Form: Public Offering. The Offered Notes will be available
in Book-Entry Form through DTC, CEDEL or Euroclear.
Discount Rate: The contract payments are discounted at [TBD]%. The
Discount Rate is equal to the sum of (a) the weighted
average Coupon Rate of the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes,
the Class A-5 Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes each
weighted by (i) the initial principal balance of each
Class of Notes, as applicable, and (ii) the weighted
average life of each Class of Notes under a zero
prepayment and no loss scenario, as applicable, and
(b) the Servicing Fee of [75] bps.
Collateral: The Transaction is collateralized by a pool of
healthcare, manufacturing and business equipment
lease contracts, including payments due thereunder
and an interest in the related leased equipment
transferred to the Issuer (the "Leases").
Related Transaction: The leases and equipment will be sold to the Issuer
that will issue two Series of Notes. One Series, the
Notes described herein, will be repaid by scheduled
lease payments and payments received from recoveries
on any defaulted leases. The Noteholders of this
series will not be entitled to residual realizations
on leases that do not default. The second Series, the
"Residual Notes", will be privately placed and repaid
by amounts collected on the leases and equipment
after all scheduled payments have been made.
Issuer: Copelco Capital Funding LLC 99-1, a Delaware limited
liability company, bankruptcy-remote, special purpose
corporation wholly-owned by Copelco Capital, Inc.,
the Servicer for the transaction.
Servicer/Copelco
Capital, Inc. Copelco Capital, Inc.
Servicing Fee: [75] bps
Trustee: [Manufacturers and Traders Trust Company]
Lead Manager: Prudential Securities Incorporated
Co-Manager: First Union Capital Markets Corp.
Structure: Senior/subordinated with tranched Classes and Reserve
Account. After Class A-1 has been reduced to zero,
Classes A,B,C,D and E receive pro-rata principal
payments subject to certain targets and floors
further described herein. Within Class A, the
tranches A-2, A-3, A-4 and A-5 are paid sequentially.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 7
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
Cut-Off Date: Opening of Business on [February 1, 1999]
Pricing Date: [TBD]
Settlement Date: [March 9, 1999]
Prepayment Speed: [0]% CPR
Payment Date: The 15th day of each month (or if any such date is
not a business day, on the first business day
thereafter), commencing on [April 15, 1999].
Determination Date: The 5th day prior to each Payment Date
Interest Accrual
Period: With respect to any Payment Date, interest on the
Notes will accrue during the period from the Payment
Date in the immediately preceding month (or in the
case of the first Payment Date, from the Settlement
Date) to the day immediately preceding the related
Payment Date. Interest on the Class A-1 Notes will be
calculated based on the actual number of days that
have elapsed during the related accrual period on a
360-day year basis and interest on all the other
Notes will be calculated based on a 360-day year
consisting of twelve 30-day months.
Exp. Ratings:
<TABLE>
<CAPTION>
Moody's Fitch IBCA Duff & Phelps
------- ---------- -------------
<S> <C> <C> <C>
Class A-1 Notes -- P-1 F1+/AAA D-1+
Class A-2 Notes -- Aaa AAA AAA
Class A-3 Notes -- Aaa AAA AAA
Class A-4 Notes -- Aaa AAA AAA
Class A-5 Notes -- Aaa AAA AAA
Class B Notes -- Aa2 AA AA
Class C Notes -- A2 A A
Class D Notes -- Baa2 BBB BBB
</TABLE>
Substitution: The Seller shall have the right to reinvest proceeds
generated through lessee prepayments or equipment
upgrades in new leases. The Seller shall also have
the right to provide substitute leases for leases
that have become Non-Performing leases (more than 123
days delinquent or determined by the Servicer to be
uncollectible). Such substitution may not exceed 10%
of the Discounted Present Value of the Leases as of
the Cut-Off Date.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 8
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
Flow of Funds: On each Payment Date distributions will be made by
the Trustee according to the following priority:
(i) Servicing Fee;
(ii) To reimburse the Servicer for any
unreimbursed Servicer Advances;
(iii) Class A interest (current and overdue) paid
to Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 on a pro rata basis;
(iv) Class B interest (current and overdue);
(v) Class C interest (current and overdue);
(vi) Class D interest (current and overdue);
(vii) Class E interest (current and overdue);
(viii) Class A Principal (current and overdue) paid
to (a) Class A-1 only, until outstanding
principal balance on the Class A-1 Notes is
reduced to zero, (b) to Class A-2 only,
until outstanding principal balance on the
Class A-2 Notes is reduced to zero, (c) to
Class A-3 only, until outstanding principal
balance on the Class A-3 Notes is reduced to
zero; (d) to Class A-4 only, until
outstanding principal balance on the Class
A-4 Notes is reduced to zero; (e) to Class
A-5 only, until outstanding principal
balance on the Class A-5 Notes is reduced to
zero;
(ix) Class B Principal (overdue and current);
(x) Class C Principal (overdue and current);
(xi) Class D Principal (overdue and current);
(xii) Class E Principal (overdue and current);
(xiii) Any remaining principal, if any, to Classes
A,B,C,D and E until the outstanding
principal balance on each Class is reduced
to zero in the order of priority as
described above;
(xiv) To the Reserve Account, the Reserve Account
Deposit Amount;
(xv) To the Issuer, the remaining amount to the
extent of Available Funds.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 9
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
Principal Distribution: All Classes will receive principal based on the
respective class' "Target Investor Principal Amount"
which is defined as the product of (i) such Class'
Target Percentage and (ii) the Discounted Present
Value of the Performing Leases as of the related
Determination Date subject to certain floors further
described herein.
Class Percentages: The Class Target Percentages for the Class' A, B, C,
D and E Notes are 84.21%, 2.96%, 2.30%, 3.62% and
3.95% respectively.
None of the Notes (other than the Class A-1 Notes)
will receive any principal payments while the Class
A-1 Notes are outstanding.
Class A Principal: The "Class A Principal" shall equal (a) while the
Class A-1 Notes are outstanding, (i) on all Payment
Dates prior to the March 2000 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 March 2000 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 B Principal: On each Payment Date, after the Class A-1 Notes have
been reduced to zero, the Class B Notes will receive
the amounts necessary to reduce the Outstanding
Principal Amount on the Class B Notes to the greater
of the Target Investor Principal Amount and the Class
B Floor.
Class C Principal: On each Payment Date, after the Class A-1 Notes have
been reduced to zero, the Class C Notes will receive
the amounts necessary to reduce the Outstanding
Principal Amount on the Class C Notes to the greater
of the Target Investor Principal Amount and the Class
C Floor.
Class D Principal: On each Payment Date, after the Class A-1 Notes have
been reduced to zero, the Class D Notes will receive
the amounts necessary to reduce the Outstanding
Principal Amount on the Class D Notes to the greater
of the Target Investor Principal Amount and the Class
D Floor.
Class E Principal: On each Payment Date, after the Class A-1 Notes have
been reduced to zero, the Class E Notes will receive
the amounts necessary to reduce the Outstanding
Principal Amount on the Class E Notes to the greater
of the Target Investor Principal Amount and the Class
E Floor.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 10
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
Class Floors: With respect to Classes B, C, D, E and any Payment
Date, the Class Floor is equal to (a) such Class'
Floor Percentage of the ADCB 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 balance of all Notes subordinate to that
Class 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.
Floor Percentages: The Floor percentages for the Class B, C, D and E
Notes are 2.7%, 2.2%, 1.8% and 1.2%, respectively.
Available Funds: Funds received prior to the related Determination
Date will be available for distribution by the
Trustee on each Payment Date and will include:
(i) Lease Payments,
(ii) Recoveries from Non-Performing Leases to the
extent not substituted,
(iii) Late charges received on delinquent Lease
payments not advanced by the Servicer,
(iv) Warranty Payments,
(v) Casualty Payments,
(vi) Early Termination Payments,
(vii) Servicer Advances, and
(viii) Investment earnings on funds deposited in
the Collection Account and Reserve Account.
Note: Warranty payments, casualty payments and
early termination payments available to the
Noteholders will not exceed the ADCB of the
warranty, casualty or early termination
lease.
Events of Default: The Receivable Notes and Residual Notes are subject
to the following Events of Default:
(i) Default in making Interest Payments when
such become due and payable; or
(ii) Default in making Principal Payments at
Stated Maturity; or
(iii) Insolvency or bankruptcy events relating to
the Issuer.
Upon the occurrence of an Event of Default with
respect to the Receivable Notes, the collateral
(excluding the Liquidity Reserve Account) may be sold
and the Class R Notes will only receive proceeds of
such sale after repayment of interest and principal
in full on the Receivable Notes.
In the Event of a Default with respect to the
Residual Notes, the Residual Realizations may be sold
and paid to the Residual Notes.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 11
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
Credit Enhancement
Subordination: Class A: The Class B Notes, Class C Notes, Class D
Notes, Class E Notes and the Issuer's first
loss piece are subordinate to the Class A
Notes. In addition, a Reserve Account will
be available, as described below.
Class B: The Class C Notes, Class D Notes, Class E
Notes and the Issuer's first loss piece are
subordinate to the Class B Notes. In
addition, a Reserve Account will be
available, as described below.
Class C: The Class D Notes, Class E Notes and the
Issuer's first loss piece are subordinate to
the Class C Notes. In addition, a Reserve
Account will be available, as described
below.
Class D: The Class E Notes and the Issuer's first
loss piece are subordinate to the Class D
Notes. In addition, a Reserve Account will
be available, as described below.
Reserve Account: If there exists a shortfall between the Available
Funds and interest or principal due on the Notes for
any Payment Date, amounts on deposit in the Reserve
Account will be available to make up for any
shortfall in Available Funds to the Notes in the
order of priority specified in "Flow of Funds". The
Reserve Account will be funded at Closing in an
amount equal to 1% of the ADCB of the Leases as of
the Cut-Off Date (the "Initial Required Reserve
Amount"). Thereafter, additional deposits from
Available Funds will be made to the Reserve Account
to the extent that the Reserve Account is less than
the Required Reserve Amount.
The Required Reserve Amount equals the lesser of (a)
1.0% of the ADCB of the leases as of the Cut-Off Date
and (b) the outstanding balance of the Notes. Amounts
on deposit in the Reserve account in excess of the
Required Reserve Amount will be disbursed to the
Issuer.
Optional Redemption
By Issuer: 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.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 12
PRELIMINARY BACKGROUND INFORMATION FOR
COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER)
LEASE-BACKED NOTES, SERIES 1999-A
Tax Status: The Class A Notes, the Class B Notes and the Class C
Notes will be characterized as debt for federal
income tax purposes. The Class D Notes will be
characterized as debt or as interests in a
partnership. Please see the Prospectus for a full
description of the tax characterization of the Notes.
ERISA
Eligible: The acquisition of Notes by an employee benefit plan
is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or the provisions
of Section 4975 of the Code (a "Plan"), and is
permissible if the proposed acquisition qualifies for
a statutory or administrative exemption. If the
proposed acquisition does not qualify for an
exemption, such acquisition could result in a
prohibited transaction under ERISA or Section 4975 of
the Code. If, by virtue of such acquisition, assets
held by the Issuer and pledged to the Trustee were
deemed to be assets of the Plan, the Issuer or other
parties may be considered to be a fiduciary with
respect to any Plan. Therefore, the acquisition and
transfer of the Notes are subject to certain
restrictions.
The Indenture provides that each prospective initial
Noteholder acquiring Notes, each prospective
transferee acquiring the Notes, and each prospective
owner (or transferee thereof) of a beneficial
interest in the Notes (each a "Prospective Owner")
will be deemed to have represented and warranted to
the Seller, the Servicer, the Issuer, the Trustee and
any successor Servicer that either (1) the
Prospective Owner is not a Plan and the Prospective
Owner is not directly or indirectly acquiring the
Notes on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of
a Plan, or (2) the proposed acquisition or transfer
will qualify for a statutory or administrative
prohibited transaction exemption under ERISA and the
Code and will not give rise to a transaction
described in Section 406 of ERISA or Section
4975(e)(l) of the Code for which a statutory or
administrative exemption is unavailable. See "ERISA
Considerations" in the Prospectus.
Prospectus: The Offered Notes are being offered pursuant to a
Prospectus. Complete information with respect to the
Offered Notes and the Collateral is contained in the
Prospectus. The foregoing is qualified in its
entirety by the information appearing in the
Prospectus. To the extent that the foregoing is
inconsistent with the Prospectus, the Prospectus
shall govern in all respects. Sales of the Offered
Notes may not be consummated unless the purchaser has
received the Prospectus.
Further Information: Banking: Robert Schwartz (212-778-4638),
Shelby Carvalho (212-778-4127),
Naveen Bhalla (212-778-7448)
Trading: Greg Richter or Rob Karr (212-778-2741)
FSG: John Mawe (212-778-1166),
Frank Lee (212-778-2612)
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 13
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $139,000,000.00
COUPON: TBD
ORIGINAL BALANCE: $139,000,000.00
Copelco99
BOND A-1 BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 5.838 5.885 5.933 5.982 6.031
99-24+ 5.801 5.845 5.890 5.936 5.982
99-25 5.764 5.805 5.847 5.890 5.933
99-25+ 5.727 5.765 5.804 5.844 5.883
99-26 5.689 5.725 5.761 5.798 5.834
99-26+ 5.652 5.685 5.718 5.752 5.785
99-27 5.615 5.645 5.675 5.705 5.736
99-27+ 5.578 5.605 5.632 5.659 5.687
99-28 5.541 5.564 5.589 5.613 5.638
99-28+ 5.504 5.524 5.546 5.567 5.588
99-29 5.467 5.484 5.503 5.521 5.539
99-29+ 5.430 5.444 5.460 5.475 5.490
99-30 5.393 5.404 5.417 5.429 5.441
99-30+ 5.356 5.365 5.374 5.384 5.392
99-31 5.319 5.325 5.331 5.338 5.343
99-31+ 5.282 5.285 5.288 5.292 5.294
100-00 5.245 5.245 5.246 5.246 5.245
100-00+ 5.208 5.205 5.203 5.200 5.196
100-01 5.171 5.165 5.160 5.154 5.147
100-01+ 5.134 5.125 5.117 5.108 5.099
100-02 5.097 5.085 5.074 5.063 5.050
100-02+ 5.060 5.045 5.032 5.017 5.001
100-03 5.024 5.006 4.989 4.971 4.952
100-03+ 4.987 4.966 4.946 4.925 4.903
100-04 4.950 4.926 4.903 4.880 4.854
100-04+ 4.913 4.886 4.861 4.834 4.806
100-05 4.876 4.847 4.818 4.788 4.757
100-05+ 4.839 4.807 4.776 4.743 4.708
100-06 4.803 4.767 4.733 4.697 4.659
100-06+ 4.766 4.727 4.690 4.651 4.611
100-07 4.729 4.688 4.648 4.606 4.562
100-07+ 4.692 4.648 4.605 4.560 4.513
First Payment 0.100 0.100 0.100 0.100 0.100
Average Life 0.440 0.407 0.378 0.353 0.330
Last Payment 0.850 0.850 0.767 0.683 0.683
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 14
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $95,000,000.00
COUPON: TBD
ORIGINAL BALANCE: $95,000,000.00
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
YIELD TABLE DATE: 03/09/99
Copelco99
BOND A-2 BE-YIELD TABLE
PREPAYMENT SPEED
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 5.857 5.872 5.888 5.904 5.922
99-24+ 5.844 5.858 5.873 5.888 5.904
99-25 5.830 5.843 5.857 5.872 5.887
99-25+ 5.817 5.829 5.842 5.856 5.870
99-26 5.804 5.815 5.827 5.839 5.852
99-26+ 5.791 5.801 5.812 5.823 5.835
99-27 5.777 5.787 5.797 5.807 5.818
99-27+ 5.764 5.772 5.781 5.791 5.800
99-28 5.751 5.758 5.766 5.775 5.783
99-28+ 5.738 5.744 5.751 5.758 5.766
99-29 5.724 5.730 5.736 5.742 5.749
99-29+ 5.711 5.716 5.721 5.726 5.731
99-30 5.698 5.702 5.706 5.710 5.714
99-30+ 5.685 5.687 5.690 5.694 5.697
99-31 5.671 5.673 5.675 5.677 5.679
99-31+ 5.658 5.659 5.660 5.661 5.662
100-00 5.645 5.645 5.645 5.645 5.645
100-00+ 5.632 5.631 5.630 5.629 5.628
100-01 5.619 5.617 5.615 5.613 5.610
100-01+ 5.605 5.603 5.600 5.597 5.593
100-02 5.592 5.588 5.584 5.580 5.576
100-02+ 5.579 5.574 5.569 5.564 5.559
100-03 5.566 5.560 5.554 5.548 5.542
100-03+ 5.553 5.546 5.539 5.532 5.524
100-04 5.539 5.532 5.524 5.516 5.507
100-04+ 5.526 5.518 5.509 5.500 5.490
100-05 5.513 5.504 5.494 5.483 5.473
100-05+ 5.500 5.490 5.479 5.467 5.456
100-06 5.487 5.476 5.464 5.451 5.438
100-06+ 5.474 5.461 5.449 5.435 5.421
100-07 5.460 5.447 5.433 5.419 5.404
100-07+ 5.447 5.433 5.418 5.403 5.387
First Payment 0.850 0.850 0.767 0.683 0.683
Average Life 1.257 1.172 1.092 1.020 0.955
Last Payment 1.600 1.517 1.433 1.350 1.267
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 15
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $110,000,000.00
COUPON: TBD
ORIGINAL BALANCE: $110,000,000.00
Copelco99
BOND A-3 BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 5.971 5.978 5.985 5.993 6.001
99-24+ 5.963 5.969 5.976 5.983 5.991
99-25 5.955 5.961 5.967 5.974 5.981
99-25+ 5.947 5.952 5.958 5.964 5.971
99-26 5.938 5.943 5.949 5.954 5.960
99-26+ 5.930 5.935 5.940 5.945 5.950
99-27 5.922 5.926 5.931 5.935 5.940
99-27+ 5.914 5.917 5.921 5.926 5.930
99-28 5.906 5.909 5.912 5.916 5.920
99-28+ 5.897 5.900 5.903 5.907 5.910
99-29 5.889 5.892 5.894 5.897 5.900
99-29+ 5.881 5.883 5.885 5.887 5.890
99-30 5.873 5.874 5.876 5.878 5.880
99-30+ 5.864 5.866 5.867 5.868 5.870
99-31 5.856 5.857 5.858 5.859 5.860
99-31+ 5.848 5.848 5.849 5.849 5.850
100-00 5.840 5.840 5.840 5.840 5.840
100-00+ 5.831 5.831 5.831 5.830 5.830
100-01 5.823 5.822 5.821 5.821 5.820
100-01+ 5.815 5.814 5.812 5.811 5.809
100-02 5.807 5.805 5.803 5.801 5.799
100-02+ 5.799 5.796 5.794 5.792 5.789
100-03 5.790 5.788 5.785 5.782 5.779
100-03+ 5.782 5.779 5.776 5.773 5.769
100-04 5.774 5.771 5.767 5.763 5.759
100-04+ 5.766 5.762 5.758 5.754 5.749
100-05 5.757 5.753 5.749 5.744 5.739
100-05+ 5.749 5.745 5.740 5.735 5.729
100-06 5.741 5.736 5.731 5.725 5.719
100-06+ 5.733 5.728 5.722 5.716 5.709
100-07 5.725 5.719 5.713 5.706 5.699
100-07+ 5.716 5.710 5.704 5.697 5.689
First Payment 1.600 1.517 1.433 1.350 1.267
Average Life 2.071 1.966 1.865 1.768 1.675
Last Payment 2.517 2.433 2.350 2.183 2.100
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 16
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $90,000,000.00
COUPON: TBD
ORIGINAL BALANCE: $90,000,000.00
Copelco99
BOND A-4 BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 6.051 6.054 6.058 6.062 6.066
99-24+ 6.045 6.048 6.052 6.056 6.059
99-25 6.039 6.042 6.045 6.049 6.053
99-25+ 6.033 6.036 6.039 6.042 6.046
99-26 6.027 6.030 6.033 6.036 6.039
99-26+ 6.022 6.024 6.027 6.029 6.032
99-27 6.016 6.018 6.020 6.023 6.025
99-27+ 6.010 6.012 6.014 6.016 6.019
99-28 6.004 6.006 6.008 6.010 6.012
99-28+ 5.998 6.000 6.001 6.003 6.005
99-29 5.992 5.994 5.995 5.997 5.998
99-29+ 5.987 5.988 5.989 5.990 5.991
99-30 5.981 5.982 5.983 5.984 5.985
99-30+ 5.975 5.976 5.976 5.977 5.978
99-31 5.969 5.970 5.970 5.971 5.971
99-31+ 5.963 5.964 5.964 5.964 5.964
100-00 5.958 5.958 5.958 5.958 5.958
100-00+ 5.952 5.951 5.951 5.951 5.951
100-01 5.946 5.945 5.945 5.944 5.944
100-01+ 5.940 5.939 5.939 5.938 5.937
100-02 5.934 5.933 5.932 5.931 5.930
100-02+ 5.928 5.927 5.926 5.925 5.924
100-03 5.923 5.921 5.920 5.918 5.917
100-03+ 5.917 5.915 5.914 5.912 5.910
100-04 5.911 5.909 5.907 5.905 5.903
100-04+ 5.905 5.903 5.901 5.899 5.897
100-05 5.899 5.897 5.895 5.892 5.890
100-05+ 5.894 5.891 5.889 5.886 5.883
100-06 5.888 5.885 5.882 5.879 5.876
100-06+ 5.882 5.879 5.876 5.873 5.869
100-07 5.876 5.873 5.870 5.866 5.863
100-07+ 5.870 5.867 5.864 5.860 5.856
First Payment 2.517 2.433 2.350 2.183 2.100
Average Life 3.010 2.890 2.774 2.660 2.550
Last Payment 3.600 3.433 3.350 3.267 3.100
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 17
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $75,613,000.00
COUPON: TBD
ORIGINAL BALANCE: $75,613,000.00
Copelco99
BOND A-5 BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
** TO CALL **
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 6.126 6.128 6.129 6.130 6.132
99-24+ 6.122 6.123 6.124 6.126 6.127
99-25 6.117 6.118 6.119 6.121 6.123
99-25+ 6.113 6.114 6.115 6.116 6.118
99-26 6.108 6.109 6.110 6.111 6.113
99-26+ 6.104 6.105 6.106 6.107 6.108
99-27 6.099 6.100 6.101 6.102 6.103
99-27+ 6.095 6.096 6.096 6.097 6.098
99-28 6.090 6.091 6.092 6.093 6.094
99-28+ 6.086 6.087 6.087 6.088 6.089
99-29 6.082 6.082 6.083 6.083 6.084
99-29+ 6.077 6.078 6.078 6.078 6.079
99-30 6.073 6.073 6.073 6.074 6.074
99-30+ 6.068 6.069 6.069 6.069 6.069
99-31 6.064 6.064 6.064 6.064 6.065
99-31+ 6.059 6.059 6.060 6.060 6.060
100-00 6.055 6.055 6.055 6.055 6.055
100-00+ 6.050 6.050 6.050 6.050 6.050
100-01 6.046 6.046 6.046 6.045 6.045
100-01+ 6.042 6.041 6.041 6.041 6.040
100-02 6.037 6.037 6.036 6.036 6.036
100-02+ 6.033 6.032 6.032 6.031 6.031
100-03 6.028 6.028 6.027 6.027 6.026
100-03+ 6.024 6.023 6.023 6.022 6.021
100-04 6.019 6.019 6.018 6.017 6.016
100-04+ 6.015 6.014 6.014 6.013 6.012
100-05 6.011 6.010 6.009 6.008 6.007
100-05+ 6.006 6.005 6.004 6.003 6.002
100-06 6.002 6.001 6.000 5.998 5.997
100-06+ 5.997 5.996 5.995 5.994 5.992
100-07 5.993 5.992 5.991 5.989 5.987
100-07+ 5.988 5.987 5.986 5.984 5.983
First Payment 3.600 3.433 3.350 3.267 3.100
Average Life 4.072 3.984 3.912 3.816 3.715
Last Payment 4.350 4.267 4.267 4.183 4.100
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 18
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $75,613,000.00
COUPON: TBD
ORIGINAL BALANCE: $75,613,000.00
Copelco99
BOND A-5 BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
YIELD TABLE DATE: 03/09/99
**TO MATURITY**
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 6.125 6.127 6.128 6.130 6.131
99-24+ 6.121 6.122 6.123 6.125 6.126
99-25 6.117 6.118 6.119 6.120 6.122
99-25+ 6.112 6.113 6.114 6.116 6.117
99-26 6.108 6.109 6.110 6.111 6.112
99-26+ 6.103 6.104 6.105 6.106 6.107
99-27 6.099 6.100 6.101 6.102 6.103
99-27+ 6.095 6.095 6.096 6.097 6.098
99-28 6.090 6.091 6.091 6.092 6.093
99-28+ 6.086 6.086 6.087 6.088 6.088
99-29 6.081 6.082 6.082 6.083 6.084
99-29+ 6.077 6.077 6.078 6.078 6.079
99-30 6.073 6.073 6.073 6.074 6.074
99-30+ 6.068 6.068 6.069 6.069 6.069
99-31 6.064 6.064 6.064 6.064 6.064
99-31+ 6.059 6.059 6.059 6.060 6.060
100-00 6.055 6.055 6.055 6.055 6.055
100-00+ 6.051 6.050 6.050 6.050 6.050
100-01 6.046 6.046 6.046 6.046 6.045
100-01+ 6.042 6.041 6.041 6.041 6.041
100-02 6.037 6.037 6.037 6.036 6.036
100-02+ 6.033 6.033 6.032 6.032 6.031
100-03 6.029 6.028 6.028 6.027 6.026
100-03+ 6.024 6.024 6.023 6.022 6.022
100-04 6.020 6.019 6.018 6.018 6.017
100-04+ 6.015 6.015 6.014 6.013 6.012
100-05 6.011 6.010 6.009 6.008 6.007
100-05+ 6.007 6.006 6.005 6.004 6.003
100-06 6.002 6.001 6.000 5.999 5.998
100-06+ 5.998 5.997 5.996 5.994 5.993
100-07 5.993 5.992 5.991 5.990 5.988
100-07+ 5.989 5.988 5.987 5.985 5.984
First Payment 3.600 3.433 3.350 3.267 3.100
Average Life 4.118 4.039 3.953 3.864 3.768
Last Payment 4.767 4.683 4.683 4.600 4.600
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 19
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $13,029,000.00
COUPON: TBD
ORIGINAL BALANCE: $13,029,000.00
Copelco99
BOND B BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
** TO CALL **
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 6.238 6.243 6.247 6.252 6.257
99-24+ 6.231 6.236 6.239 6.244 6.248
99-25 6.224 6.228 6.232 6.236 6.240
99-25+ 6.217 6.221 6.224 6.228 6.232
99-26 6.210 6.214 6.217 6.220 6.224
99-26+ 6.203 6.206 6.209 6.212 6.216
99-27 6.196 6.199 6.202 6.205 6.208
99-27+ 6.189 6.192 6.194 6.197 6.200
99-28 6.182 6.185 6.187 6.189 6.192
99-28+ 6.175 6.177 6.179 6.181 6.183
99-29 6.169 6.170 6.172 6.173 6.175
99-29+ 6.162 6.163 6.164 6.166 6.167
99-30 6.155 6.156 6.157 6.158 6.159
99-30+ 6.148 6.148 6.149 6.150 6.151
99-31 6.141 6.141 6.142 6.142 6.143
99-31+ 6.134 6.134 6.134 6.134 6.135
100-00 6.127 6.127 6.127 6.127 6.127
100-00+ 6.120 6.119 6.119 6.119 6.119
100-01 6.113 6.112 6.112 6.111 6.110
100-01+ 6.106 6.105 6.104 6.103 6.102
100-02 6.099 6.098 6.097 6.095 6.094
100-02+ 6.092 6.090 6.089 6.088 6.086
100-03 6.085 6.083 6.082 6.080 6.078
100-03+ 6.078 6.076 6.074 6.072 6.070
100-04 6.071 6.069 6.067 6.064 6.062
100-04+ 6.064 6.061 6.059 6.057 6.054
100-05 6.057 6.054 6.052 6.049 6.046
100-05+ 6.050 6.047 6.044 6.041 6.038
100-06 6.043 6.040 6.037 6.033 6.029
100-06+ 6.036 6.033 6.029 6.025 6.021
100-07 6.029 6.025 6.022 6.018 6.013
100-07+ 6.022 6.018 6.014 6.010 6.005
First Payment 0.850 0.850 0.767 0.683 0.683
Average Life 2.514 2.414 2.331 2.235 2.142
Last Payment 4.350 4.267 4.267 4.183 4.100
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 20
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $13,029,000.00
COUPON: TBD
ORIGINAL BALANCE: $13,029,000.00
Copelco99
BOND B BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
YIELD TABLE DATE: 03/09/99
**TO MATURITY**
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 6.236 6.240 6.244 6.249 6.253
99-24+ 6.229 6.233 6.237 6.241 6.245
99-25 6.223 6.226 6.230 6.233 6.238
99-25+ 6.216 6.219 6.222 6.226 6.230
99-26 6.209 6.212 6.215 6.218 6.222
99-26+ 6.202 6.205 6.207 6.211 6.214
99-27 6.195 6.198 6.200 6.203 6.206
99-27+ 6.188 6.191 6.193 6.195 6.198
99-28 6.181 6.183 6.185 6.188 6.190
99-28+ 6.175 6.176 6.178 6.180 6.182
99-29 6.168 6.169 6.171 6.172 6.174
99-29+ 6.161 6.162 6.163 6.165 6.166
99-30 6.154 6.155 6.156 6.157 6.158
99-30+ 6.147 6.148 6.149 6.149 6.150
99-31 6.140 6.141 6.141 6.142 6.142
99-31+ 6.133 6.134 6.134 6.134 6.135
100-00 6.127 6.127 6.127 6.127 6.127
100-00+ 6.120 6.120 6.119 6.119 6.119
100-01 6.113 6.112 6.112 6.111 6.111
100-01+ 6.106 6.105 6.105 6.104 6.103
100-02 6.099 6.098 6.097 6.096 6.095
100-02+ 6.092 6.091 6.090 6.089 6.087
100-03 6.086 6.084 6.083 6.081 6.079
100-03+ 6.079 6.077 6.075 6.073 6.071
100-04 6.072 6.070 6.068 6.066 6.063
100-04+ 6.065 6.063 6.061 6.058 6.056
100-05 6.058 6.056 6.053 6.051 6.048
100-05+ 6.051 6.049 6.046 6.043 6.040
100-06 6.045 6.042 6.039 6.035 6.032
100-06+ 6.038 6.035 6.031 6.028 6.024
100-07 6.031 6.027 6.024 6.020 6.016
100-07+ 6.024 6.020 6.017 6.013 6.008
First Payment 0.850 0.850 0.767 0.683 0.683
Average Life 2.571 2.476 2.389 2.296 2.209
Last Payment 4.850 4.767 4.683 4.683 4.600
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 21
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $10,134,000.00
COUPON: TBD
ORIGINAL BALANCE: $10,134,000.00
Copelco99
BOND C BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
** TO CALL **
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 6.439 6.443 6.447 6.452 6.457
99-24+ 6.432 6.436 6.440 6.444 6.449
99-25 6.425 6.428 6.432 6.436 6.441
99-25+ 6.418 6.421 6.425 6.428 6.432
99-26 6.411 6.414 6.417 6.421 6.424
99-26+ 6.404 6.407 6.409 6.413 6.416
99-27 6.397 6.399 6.402 6.405 6.408
99-27+ 6.390 6.392 6.394 6.397 6.400
99-28 6.383 6.385 6.387 6.389 6.392
99-28+ 6.376 6.378 6.379 6.381 6.384
99-29 6.369 6.370 6.372 6.374 6.375
99-29+ 6.362 6.363 6.364 6.366 6.367
99-30 6.355 6.356 6.357 6.358 6.359
99-30+ 6.348 6.348 6.349 6.350 6.351
99-31 6.341 6.341 6.342 6.342 6.343
99-31+ 6.334 6.334 6.334 6.334 6.335
100-00 6.327 6.327 6.327 6.327 6.327
100-00+ 6.320 6.319 6.319 6.319 6.319
100-01 6.313 6.312 6.312 6.311 6.310
100-01+ 6.306 6.305 6.304 6.303 6.302
100-02 6.299 6.298 6.297 6.295 6.294
100-02+ 6.292 6.290 6.289 6.288 6.286
100-03 6.285 6.283 6.282 6.280 6.278
100-03+ 6.278 6.276 6.274 6.272 6.270
100-04 6.271 6.269 6.267 6.264 6.262
100-04+ 6.264 6.261 6.259 6.256 6.254
100-05 6.257 6.254 6.252 6.249 6.245
100-05+ 6.250 6.247 6.244 6.241 6.237
100-06 6.243 6.240 6.237 6.233 6.229
100-06+ 6.236 6.232 6.229 6.225 6.221
100-07 6.229 6.225 6.222 6.217 6.213
100-07+ 6.222 6.218 6.214 6.210 6.205
First Payment 0.850 0.850 0.767 0.683 0.683
Average Life 2.514 2.418 2.331 2.235 2.146
Last Payment 4.350 4.267 4.267 4.183 4.100
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 22
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $10,134,000.00
COUPON: TBD
ORIGINAL BALANCE: $10,134,000.00
Copelco99
BOND C BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
YIELD TABLE DATE: 03/09/99
**TO MATURITY**
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 6.436 6.440 6.444 6.449 6.453
99-24+ 6.430 6.433 6.437 6.441 6.445
99-25 6.423 6.426 6.430 6.434 6.437
99-25+ 6.416 6.419 6.422 6.426 6.430
99-26 6.409 6.412 6.415 6.418 6.422
99-26+ 6.402 6.405 6.407 6.411 6.414
99-27 6.395 6.398 6.400 6.403 6.406
99-27+ 6.388 6.390 6.393 6.395 6.398
99-28 6.381 6.383 6.385 6.388 6.390
99-28+ 6.375 6.376 6.378 6.380 6.382
99-29 6.368 6.369 6.371 6.372 6.374
99-29+ 6.361 6.362 6.363 6.365 6.366
99-30 6.354 6.355 6.356 6.357 6.358
99-30+ 6.347 6.348 6.349 6.350 6.350
99-31 6.340 6.341 6.341 6.342 6.342
99-31+ 6.334 6.334 6.334 6.334 6.335
100-00 6.327 6.327 6.327 6.327 6.327
100-00+ 6.320 6.320 6.319 6.319 6.319
100-01 6.313 6.313 6.312 6.311 6.311
100-01+ 6.306 6.305 6.305 6.304 6.303
100-02 6.299 6.298 6.297 6.296 6.295
100-02+ 6.292 6.291 6.290 6.289 6.287
100-03 6.286 6.284 6.283 6.281 6.279
100-03+ 6.279 6.277 6.275 6.273 6.271
100-04 6.272 6.270 6.268 6.266 6.264
100-04+ 6.265 6.263 6.261 6.258 6.256
100-05 6.258 6.256 6.253 6.250 6.248
100-05+ 6.251 6.249 6.246 6.243 6.240
100-06 6.245 6.242 6.239 6.235 6.232
100-06+ 6.238 6.235 6.231 6.228 6.224
100-07 6.231 6.228 6.224 6.220 6.216
100-07+ 6.224 6.221 6.217 6.212 6.208
First Payment 0.850 0.850 0.767 0.683 0.683
Average Life 2.583 2.495 2.400 2.305 2.221
Last Payment 4.933 4.850 4.767 4.767 4.683
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 23
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $15,925,000.00
COUPON: TBD
ORIGINAL BALANCE: $15,925,000.00
Copelco99
BOND D BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
** TO CALL **
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 7.139 7.143 7.147 7.152 7.157
99-24+ 7.132 7.136 7.140 7.144 7.149
99-25 7.125 7.129 7.132 7.136 7.141
99-25+ 7.118 7.121 7.125 7.129 7.132
99-26 7.111 7.114 7.117 7.121 7.124
99-26+ 7.103 7.106 7.109 7.113 7.116
99-27 7.096 7.099 7.102 7.105 7.108
99-27+ 7.089 7.092 7.094 7.097 7.099
99-28 7.082 7.084 7.086 7.089 7.091
99-28+ 7.075 7.077 7.079 7.081 7.083
99-29 7.068 7.070 7.071 7.073 7.075
99-29+ 7.061 7.062 7.064 7.065 7.067
99-30 7.054 7.055 7.056 7.057 7.058
99-30+ 7.047 7.048 7.048 7.049 7.050
99-31 7.040 7.040 7.041 7.041 7.042
99-31+ 7.033 7.033 7.033 7.033 7.034
100-00 7.026 7.025 7.025 7.025 7.025
100-00+ 7.018 7.018 7.018 7.018 7.017
100-01 7.011 7.011 7.010 7.010 7.009
100-01+ 7.004 7.003 7.003 7.002 7.001
100-02 6.997 6.996 6.995 6.994 6.993
100-02+ 6.990 6.989 6.987 6.986 6.984
100-03 6.983 6.981 6.980 6.978 6.976
100-03+ 6.976 6.974 6.972 6.970 6.968
100-04 6.969 6.967 6.965 6.962 6.960
100-04+ 6.962 6.959 6.957 6.954 6.952
100-05 6.955 6.952 6.949 6.946 6.943
100-05+ 6.948 6.945 6.942 6.939 6.935
100-06 6.941 6.937 6.934 6.931 6.927
100-06+ 6.934 6.930 6.927 6.923 6.919
100-07 6.927 6.923 6.919 6.915 6.911
100-07+ 6.920 6.915 6.912 6.907 6.903
First Payment 0.850 0.850 0.767 0.683 0.683
Average Life 2.519 2.418 2.331 2.235 2.150
Last Payment 4.350 4.267 4.267 4.183 4.100
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 24
FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED
- -------------------------- ----------------------------------
CURRENT BALANCE: $15,925,000.00
COUPON: TBD
ORIGINAL BALANCE: $15,925,000.00
Copelco99
BOND D BE-YIELD TABLE
PREPAYMENT SPEED
DATED DATE: 03/09/99
FIRST PAYMENT: 04/15/99
YIELD TABLE DATE: 03/09/99
**TO MATURITY**
<TABLE>
<CAPTION>
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR
<S> <C> <C> <C> <C> <C>
99-24 7.135 7.139 7.144 7.149 7.153
99-24+ 7.128 7.132 7.137 7.141 7.145
99-25 7.121 7.125 7.129 7.133 7.137
99-25+ 7.115 7.118 7.122 7.125 7.129
99-26 7.108 7.111 7.114 7.118 7.121
99-26+ 7.101 7.104 7.107 7.110 7.113
99-27 7.094 7.097 7.099 7.102 7.105
99-27+ 7.087 7.090 7.092 7.095 7.097
99-28 7.080 7.082 7.085 7.087 7.089
99-28+ 7.073 7.075 7.077 7.079 7.081
99-29 7.067 7.068 7.070 7.072 7.073
99-29+ 7.060 7.061 7.062 7.064 7.065
99-30 7.053 7.054 7.055 7.056 7.057
99-30+ 7.046 7.047 7.048 7.049 7.049
99-31 7.039 7.040 7.040 7.041 7.041
99-31+ 7.032 7.033 7.033 7.033 7.033
100-00 7.026 7.025 7.025 7.025 7.025
100-00+ 7.019 7.018 7.018 7.018 7.018
100-01 7.012 7.011 7.011 7.010 7.010
100-01+ 7.005 7.004 7.003 7.002 7.002
100-02 6.998 6.997 6.996 6.995 6.994
100-02+ 6.991 6.990 6.989 6.987 6.986
100-03 6.984 6.983 6.981 6.979 6.978
100-03+ 6.978 6.976 6.974 6.972 6.970
100-04 6.971 6.969 6.966 6.964 6.962
100-04+ 6.964 6.962 6.959 6.956 6.954
100-05 6.957 6.954 6.952 6.949 6.946
100-05+ 6.950 6.947 6.944 6.941 6.938
100-06 6.944 6.940 6.937 6.933 6.930
100-06+ 6.937 6.933 6.930 6.926 6.922
100-07 6.930 6.926 6.922 6.918 6.915
100-07+ 6.923 6.919 6.915 6.910 6.907
First Payment 0.850 0.850 0.767 0.683 0.683
Average Life 2.627 2.521 2.418 2.320 2.243
Last Payment 5.267 5.183 5.017 4.933 4.850
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 25
Exhibit 99.1
COPELCO SUMMARY SHEET
Equipment Leases
Cut-off Date of Tape is 2/11/99
- -------------------------------------------------------------
<TABLE>
<S> <C>
Assumed Discount Rate: 6.75%
Total Number of Contracts: 36,029
Aggregate Discounted Principal Balance: 579,105,376.99
Aggregate Discounted Residual Balance: 45,307,451.43
Aggregate Equipment Cost: 625,601,890.56
- -------------------------------------------------------------
Average Discounted Principal Balance: 16,073.31
Maximum Discounted Principal Balance: 4,449,563.47
Minimum Discounted Principal Balance: 80.07
Average Discounted Residual Balance: 1,257.53
Maximum Discounted Residual Balance: 215,128.67
Minimum Discounted Residual Balance: 0.00
Average Equipment Cost: 17,363.84
Maximum Equipment Cost: 4,560,150.00
Minimum Equipment Cost: 80.00
Weighted Average Original Term: 52.686
Original Term Range: 10 - 88
Weighted Average Age: 5.732
Age Range: 1 - 63
Weighted Average Remaining Term: 46.954
Remaining Term Range: 7 - 82
Aggregate Cash Flow Payments: 660,968,273.68
- -------------------------------------------------------------
</TABLE>
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 26
STATE
<TABLE>
<CAPTION>
STATE COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST
<S> <C> <C> <C> <C> <C> <C>
AK 38 0.105% 629,328.70 0.109% 698,584.49 0.112%
AL 252 0.699% 4,101,671.77 0.708% 4,482,672.28 0.717%
AR 62 0.172% 4,036,402.01 0.697% 3,931,536.13 0.628%
AZ 420 1.166% 8,518,039.36 1.471% 9,363,133.71 1.497%
CA 6,321 17.544% 105,627,694.23 18.240% 113,286,210.11 18.108%
CO 749 2.079% 10,322,675.69 1.783% 11,089,877.23 1.773%
CT 758 2.104% 9,045,712.08 1.562% 9,773,060.27 1.562%
DC 260 0.722% 4,380,171.96 0.756% 4,837,286.73 0.773%
DE 76 0.211% 1,056,181.81 0.182% 1,162,769.43 0.186%
FL 2,003 5.559% 32,029,403.74 5.531% 34,368,582.58 5.494%
GA 989 2.745% 17,933,966.76 3.097% 18,950,301.41 3.029%
HI 52 0.144% 788,053.14 0.136% 817,866.26 0.131%
IA 74 0.205% 1,001,510.12 0.173% 1,067,787.51 0.171%
ID 68 0.189% 599,665.76 0.104% 634,636.74 0.101%
IL 1,499 4.161% 21,695,549.35 3.746% 23,243,596.46 3.715%
IN 433 1.202% 5,763,119.26 0.995% 6,424,314.92 1.027%
KS 139 0.386% 3,962,800.14 0.684% 4,005,123.87 0.640%
KY 201 0.558% 3,349,691.35 0.578% 3,975,821.94 0.636%
LA 1,137 3.156% 10,392,923.89 1.795% 13,007,123.36 2.079%
MA 1,177 3.267% 14,884,810.10 2.570% 15,960,476.12 2.551%
MD 406 1.127% 6,224,124.90 1.075% 6,691,705.12 1.070%
ME 320 0.888% 3,309,967.98 0.572% 3,455,903.69 0.552%
MI 383 1.063% 7,253,190.74 1.252% 8,102,519.49 1.295%
MN 191 0.530% 4,910,196.52 0.848% 5,601,404.94 0.895%
MO 334 0.927% 7,294,605.49 1.260% 7,405,179.69 1.184%
MS 193 0.536% 2,847,752.01 0.492% 2,948,199.35 0.471%
MT 59 0.164% 873,373.40 0.151% 931,235.95 0.149%
NC 666 1.849% 10,415,591.40 1.799% 11,101,323.80 1.775%
ND 4 0.011% 30,102.05 0.005% 33,402.41 0.005%
NE 74 0.205% 1,133,218.89 0.196% 1,227,253.14 0.196%
NH 252 0.699% 3,000,375.37 0.518% 3,255,954.65 0.520%
NJ 1,851 5.138% 27,739,453.31 4.790% 30,175,612.07 4.823%
NM 143 0.397% 5,265,763.44 0.909% 5,911,245.03 0.945%
NV 330 0.916% 4,327,404.63 0.747% 4,590,473.55 0.734%
NY 5,436 15.088% 80,809,149.44 13.954% 88,937,803.48 14.216%
OH 1,014 2.814% 18,326,823.00 3.165% 19,546,904.48 3.124%
OK 189 0.525% 6,153,399.96 1.063% 6,236,443.35 0.997%
OR 358 0.994% 5,455,494.76 0.942% 6,025,066.27 0.963%
PA 1,390 3.858% 23,606,739.24 4.076% 25,285,699.41 4.042%
PR 4 0.011% 352,667.29 0.061% 357,279.64 0.057%
RI 236 0.655% 4,283,473.59 0.740% 4,392,229.47 0.702%
</TABLE>
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 2
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 27
STATE
<TABLE>
<CAPTION>
STATE COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST
<S> <C> <C> <C> <C> <C> <C>
SC 266 0.738% 3,312,135.78 0.572% 3,813,693.83 0.610%
SD 14 0.039% 147,939.72 0.026% 159,060.04 0.025%
TN 280 0.777% 5,055,224.40 0.873% 5,401,918.77 0.863%
TX 2,754 7.644% 47,940,745.52 8.278% 50,919,574.36 8.139%
UT 218 0.605% 3,697,977.33 0.639% 3,883,623.92 0.621%
VA 733 2.034% 9,909,546.40 1.711% 10,917,639.91 1.745%
VT 33 0.092% 426,822.78 0.074% 452,067.84 0.072%
WA 848 2.354% 13,611,079.04 2.350% 14,758,291.37 2.359%
WI 211 0.586% 9,534,673.73 1.646% 10,129,593.02 1.619%
WV 119 0.330% 1,546,068.41 0.267% 1,674,924.47 0.268%
WY 12 0.033% 190,925.27 0.033% 197,902.50 0.032%
TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
</TABLE>
TUESDAY, FEBRUARY 23, 1999 PAGE 2 OF 2
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 28
DISCOUNTED BALANCE
<TABLE>
<CAPTION>
% POOL
COUNT OF DISCOUNTED USING
BALANCE RANGE CONTRACTS % POOL BALANCE BALANCE
<S> <C> <C> <C> <C>
0 (less than) Discounted Balance (less than equal to) 5,000 13,245 36.762% 37,327,809.53 6.446%
5,000 (less than) Discounted Balance (less than equal to) 10,000 9,090 25.230% 65,855,255.63 11.372%
10,000 (less than) Discounted Balance (less than equal to) 15,000 4,850 13.461% 59,483,189.73 10.272%
15,000 (less than) Discounted Balance (less than equal to) 20,000 2,751 7.636% 47,545,164.01 8.210%
20,000 (less than) Discounted Balance (less than equal to) 25,000 1,637 4.544% 36,550,419.35 6.312%
25,000 (less than) Discounted Balance (less than equal to) 30,000 1,032 2.864% 28,210,382.60 4.871%
30,000 (less than) Discounted Balance (less than equal to) 35,000 673 1.868% 21,776,321.12 3.760%
35,000 (less than) Discounted Balance (less than equal to) 40,000 424 1.177% 15,821,223.21 2.732%
40,000 (less than) Discounted Balance (less than equal to) 45,000 344 0.955% 14,543,684.13 2.511%
45,000 (less than) Discounted Balance (less than equal to) 50,000 274 0.760% 12,954,807.26 2.237%
50,000 (less than) Discounted Balance (less than equal to) 60,000 391 1.085% 21,419,472.19 3.699%
60,000 (less than) Discounted Balance (less than equal to) 70,000 281 0.780% 18,155,025.75 3.135%
70,000 (less than) Discounted Balance (less than equal to) 80,000 196 0.544% 14,711,000.53 2.540%
80,000 (less than) Discounted Balance (less than equal to) 90,000 141 0.391% 11,953,617.66 2.064%
90,000 (less than) Discounted Balance (less than equal to) 100,000 93 0.258% 8,843,510.32 1.527%
100,000 (less than) Discounted Balance (less than equal to) 125,000 176 0.488% 19,508,129.01 3.369%
125,000 (less than) Discounted Balance (less than equal to) 150,000 108 0.300% 14,903,495.41 2.574%
150,000 (less than) Discounted Balance (less than equal to) 175,000 60 0.167% 9,627,953.07 1.663%
175,000 (less than) Discounted Balance (less than equal to) 200,000 52 0.144% 9,701,713.75 1.675%
200,000 (less than) Discounted Balance (less than equal to) 300,000 73 0.203% 17,744,491.08 3.064%
300,000 (less than) Discounted Balance (less than equal to) 400,000 45 0.125% 15,594,570.62 2.693%
400,000 (less than) Discounted Balance (less than equal to) 500,000 29 0.080% 12,983,107.75 2.242%
500,000 (less than) Discounted Balance (less than equal to) 600,000 15 0.042% 8,212,540.34 1.418%
600,000 (less than) Discounted Balance (less than equal to) 700,000 13 0.036% 8,732,300.17 1.508%
700,000 (less than) Discounted Balance (less than equal to) 800,000 6 0.017% 4,426,118.94 0.764%
800,000 (less than) Discounted Balance (less than equal to) 900,000 2 0.006% 1,711,244.87 0.295%
900,000 (less than) Discounted Balance (less than equal to) 1,000,000 6 0.017% 5,683,745.42 0.981%
1,000,000 (less than) Discounted Balance (less than equal to) 1,500,000 16 0.044% 18,668,159.85 3.224%
1,500,000 (less than) Discounted Balance (less than equal to) 2,000,000 2 0.006% 3,715,484.23 0.642%
2,000,000 (less than) Discounted Balance 4 0.011% 12,741,439.46 2.200%
TOTALS: 36,029 100.000% 579,105,376.99 100.000%
</TABLE>
<TABLE>
<CAPTION>
SUM OF % POOL
EQUIP USING
BALANCE RANGE COST COST
<S> <C> <C>
0 (less than) Discounted Balance (less than equal to) 5,000 45,732,625.75 7.310%
5,000 (less than) Discounted Balance (less than equal to) 10,000 73,776,533.44 11.793%
10,000 (less than) Discounted Balance (less than equal to) 15,000 65,238,482.06 10.428%
15,000 (less than) Discounted Balance (less than equal to) 20,000 50,980,068.69 8.149%
20,000 (less than) Discounted Balance (less than equal to) 25,000 39,313,580.37 6.284%
25,000 (less than) Discounted Balance (less than equal to) 30,000 30,228,935.61 4.832%
30,000 (less than) Discounted Balance (less than equal to) 35,000 23,235,106.83 3.714%
35,000 (less than) Discounted Balance (less than equal to) 40,000 16,520,678.05 2.641%
40,000 (less than) Discounted Balance (less than equal to) 45,000 15,279,910.17 2.442%
45,000 (less than) Discounted Balance (less than equal to) 50,000 13,913,936.20 2.224%
50,000 (less than) Discounted Balance (less than equal to) 60,000 22,397,259.09 3.580%
60,000 (less than) Discounted Balance (less than equal to) 70,000 19,291,034.06 3.084%
70,000 (less than) Discounted Balance (less than equal to) 80,000 15,789,581.94 2.524%
80,000 (less than) Discounted Balance (less than equal to) 90,000 12,459,756.55 1.992%
90,000 (less than) Discounted Balance (less than equal to) 100,000 9,853,853.68 1.575%
100,000 (less than) Discounted Balance (less than equal to) 125,000 20,591,878.95 3.292%
125,000 (less than) Discounted Balance (less than equal to) 150,000 16,326,784.34 2.610%
150,000 (less than) Discounted Balance (less than equal to) 175,000 10,068,077.44 1.609%
175,000 (less than) Discounted Balance (less than equal to) 200,000 10,474,791.21 1.674%
200,000 (less than) Discounted Balance (less than equal to) 300,000 19,283,108.68 3.082%
300,000 (less than) Discounted Balance (less than equal to) 400,000 16,712,088.23 2.671%
400,000 (less than) Discounted Balance (less than equal to) 500,000 13,708,203.11 2.191%
500,000 (less than) Discounted Balance (less than equal to) 600,000 9,089,861.67 1.453%
600,000 (less than) Discounted Balance (less than equal to) 700,000 8,886,114.23 1.420%
700,000 (less than) Discounted Balance (less than equal to) 800,000 4,782,921.98 0.765%
800,000 (less than) Discounted Balance (less than equal to) 900,000 1,676,079.00 0.268%
900,000 (less than) Discounted Balance (less than equal to) 1,000,000 5,626,494.71 0.899%
1,000,000 (less than) Discounted Balance (less than equal to) 1,500,000 18,936,950.67 3.027%
1,500,000 (less than) Discounted Balance (less than equal to) 2,000,000 3,416,250.00 0.546%
2,000,000 (less than) Discounted Balance 12,010,943.85 1.920%
TOTALS: 625,601,890.56 100.000%
</TABLE>
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 29
REMAINING TERM
<TABLE>
<CAPTION>
% POOL SUM OF % POOL
COUNT OF DISCOUNTED USING EQUIP USING
REMAINING TERM RANGE CONTRACTS % POOL BALANCE BALANCE COST COST
<S> <C> <C> <C> <C> <C> <C>
0 (less than) Remaining Term (less than equal to) 12 1,323 3.672% 7,447,405.73 1.286% 16,248,199.65 2.597%
12 (less than) Remaining Term (less than equal to) 24 2,647 7.347% 18,971,848.45 3.276% 26,935,964.07 4.306%
24 (less than) Remaining Term (less than equal to) 36 16,022 44.470% 152,681,866.61 26.365% 174,022,920.62 27.817%
36 (less than) Remaining Term (less than equal to) 48 5,160 14.322% 82,536,829.93 14.252% 88,426,560.80 14.135%
48 (less than) Remaining Term (less than equal to) 60 10,614 29.460% 281,652,759.58 48.636% 285,871,185.19 45.695%
60 (less than) Remaining Term (less than equal to) 72 207 0.575% 19,182,085.65 3.312% 18,568,395.52 2.968%
72 (less than) Remaining Term (less than equal to) 84 56 0.155% 16,632,581.05 2.872% 15,528,664.71 2.482%
TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
</TABLE>
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 30
ORIGINAL TERM
<TABLE>
<CAPTION>
% POOL SUM OF % POOL
COUNT OF DISCOUNTED USING EQUIP USING
ORIGINAL TERM RANGE CONTRACTS % POOL BALANCE BALANCE COST COST
<S> <C> <C> <C> <C> <C> <C>
0 (less than) Original Term (less than equal to) 12 237 0.658% 2,116,299.09 0.365% 2,705,498.42 0.432%
12 (less than) Original Term (less than equal to) 24 1,095 3.039% 8,900,516.36 1.537% 11,187,095.37 1.788%
24 (less than) Original Term (less than equal to) 36 3,503 9.723% 37,957,386.80 6.554% 45,934,304.61 7.342%
36 (less than) Original Term (less than equal to) 48 15,656 43.454% 144,905,047.84 25.022% 166,226,218.12 26.571%
48 (less than) Original Term (less than equal to) 60 6,484 17.997% 142,977,578.86 24.689% 152,031,550.42 24.302%
60 (less than) Original Term (less than equal to) 72 8,972 24.902% 217,248,058.67 37.514% 223,244,176.41 35.685%
72 (less than) Original Term (less than equal to) 84 72 0.200% 18,716,309.40 3.232% 17,869,682.99 2.856%
84 (less than) Original Term (less than equal to) 96 10 0.028% 6,284,179.97 1.085% 6,403,364.22 1.024%
TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
</TABLE>
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 31
LEASE TYPE
<TABLE>
<CAPTION>
TYPE COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST
<S> <C> <C> <C> <C> <C> <C>
Finance Lease 35,938 99.747% 569,341,250.88 98.314% 612,670,878.20 97.933%
Operating Lease 91 0.253% 9,764,126.12 1.686% 12,931,012.36 2.067%
TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
</TABLE>
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 32
PURCHASE OPTION
<TABLE>
<CAPTION>
PURCHASE OPTION COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST
<S> <C> <C> <C> <C> <C> <C>
Fixed Purchase Option 3,283 9.112% 71,715,198.61 12.384% 79,439,976.44 12.698%
Fair Market Value 24,276 67.379% 307,906,221.51 53.169% 338,334,820.24 54.081%
Nominal Buyout 8,470 23.509% 199,483,956.87 34.447% 207,827,093.88 33.220%
TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
</TABLE>
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 33
EQUIPMENT DESCRIPTION
<TABLE>
<CAPTION>
% POOL SUM OF % POOL
COUNT OF DISCOUNTED USING EQUIP USING
DESCRIPTION CONTRACTS % POOL BALANCE BALANCE COST COST
<S> <C> <C> <C> <C> <C> <C>
* MULTIPLE PRODUCT 141 0.391% 2,553,602.71 0.441% 4,212,218.19 0.673%
ANESTHESIA EQP 13 0.036% 558,211.61 0.096% 784,352.44 0.125%
AUTOMATED CHEMISTRY 168 0.466% 6,721,582.38 1.161% 7,613,215.53 1.217%
AUTOMATED 249 0.691% 5,591,379.54 0.966% 6,072,774.59 0.971%
AUTOMATED TEST 8 0.022% 113,023.46 0.020% 170,741.16 0.027%
AUTOMOBILE SHOP 6 0.017% 92,442.92 0.016% 80,515.00 0.013%
C. T. SYSTEMS 4 0.011% 1,791,003.81 0.309% 2,038,020.70 0.326%
CARTS, STRETCHERS, 56 0.155% 863,385.57 0.149% 902,062.46 0.144%
CASH REGISTERS, POINT 83 0.230% 2,345,494.84 0.405% 2,488,156.83 0.398%
COBALT AND X-RAY 1 0.003% 16,354.80 0.003% 16,500.00 0.003%
COMMUNICATION 22 0.061% 686,218.56 0.118% 719,554.01 0.115%
COMPUTER 2,440 6.772% 28,999,010.90 5.008% 34,413,680.87 5.501%
COMPUTER 579 1.607% 13,829,672.61 2.388% 14,427,473.74 2.306%
CONSTRUCTION 7 0.019% 326,643.70 0.056% 292,638.73 0.047%
COPIER 25,562 70.948% 299,580,916.86 51.732% 323,872,861.44 51.770%
CRANES & DERRICKS 2 0.006% 29,954.26 0.005% 25,800.00 0.004%
DATA PROCESSING 1 0.003% 63,030.75 0.011% 56,085.00 0.009%
DENTAL OPERATORY 477 1.324% 10,782,993.68 1.862% 10,820,841.99 1.730%
DIGITAL CAMERAS 1 0.003% 5,667.88 0.001% 6,213.39 0.001%
Document Imaging Equipment 353 0.980% 6,647,848.43 1.148% 7,128,829.46 1.140%
ECG (EKG) AND 99 0.275% 1,720,973.79 0.297% 1,829,466.76 0.292%
EEG 2 0.006% 24,265.99 0.004% 24,754.00 0.004%
ELECTRONICS 181 0.502% 30,914,636.05 5.338% 36,417,060.37 5.821%
FABRICATION EQUIPMENT 4 0.011% 1,019,672.09 0.176% 1,081,561.72 0.173%
FACSIMILE 1,853 5.143% 6,559,439.96 1.133% 7,389,237.53 1.181%
FOOD PROCESSING 2 0.006% 108,416.80 0.019% 95,834.29 0.015%
FURNITURE AND 14 0.039% 566,965.12 0.098% 543,446.59 0.087%
GAMMA CAMERAS 27 0.075% 4,499,304.47 0.777% 4,982,225.05 0.796%
HEATING & AIR 2 0.006% 29,125.53 0.005% 25,870.00 0.004%
HOLTER MONITORS 39 0.108% 619,056.78 0.107% 648,810.99 0.104%
HOSP BEDS;ELEC,STRYKER 25 0.069% 320,368.91 0.055% 331,594.93 0.053%
</TABLE>
SUNDAY, FEBRUARY 28, 1999 PAGE 1 OF 3
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 34
<TABLE>
<CAPTION>
% POOL SUM OF % POOL
COUNT OF DISCOUNTED USING EQUIP USING
DESCRIPTION CONTRACTS % POOL BALANCE BALANCE COST COST
<S> <C> <C> <C> <C> <C> <C>
Image Setters 1 0.003% 92,509.50 0.016% 121,195.00 0.019%
INDUSTRIAL PRODUCTION 3 0.008% 171,501.38 0.030% 149,531.25 0.024%
Jukeboxes/Storage 2 0.006% 27,817.13 0.005% 28,400.00 0.005%
Laminating Devices 2 0.006% 16,157.08 0.003% 15,626.69 0.002%
LASERS 27 0.075% 1,734,880.74 0.300% 1,921,502.30 0.307%
LAUN,KTCHN,FOOD SRVC 3 0.008% 50,880.81 0.009% 43,485.10 0.007%
LAUNDRY EQUIPMENT 1 0.003% 115,925.91 0.020% 120,000.00 0.019%
LIFT TRUCKS 2 0.006% 21,931.69 0.004% 43,067.22 0.007%
LINEAR ACCELERATORS 1 0.003% 535,390.95 0.092% 960,012.50 0.153%
LITHOTRIPTERS AND 6 0.017% 621,047.95 0.107% 649,049.00 0.104%
MACHINE TOOLS 2 0.006% 245,529.86 0.042% 247,015.00 0.039%
MAILING EQUIPMENT 39 0.108% 407,569.49 0.070% 407,532.91 0.065%
MAMMOGRAPHY 11 0.031% 1,178,601.28 0.204% 1,380,290.54 0.221%
MATERIALS HANDLING 1 0.003% 5,385.47 0.001% 4,858.00 0.001%
MBL X-RAY SYSTMS; 4 0.011% 314,313.59 0.054% 352,376.31 0.056%
MEDICAL EQUIPMENT 11 0.031% 630,771.92 0.109% 622,355.87 0.099%
MICROFILM EQUIPMENT 4 0.011% 76,099.89 0.013% 92,866.12 0.015%
MICROGRAPHICS(MICROFI 2 0.006% 41,509.23 0.007% 41,673.00 0.007%
MISC COMMERCIAL & 84 0.233% 1,528,605.43 0.264% 1,776,955.28 0.284%
MISC HOSP EQP 286 0.794% 61,742,560.58 10.662% 60,451,330.80 9.663%
MISC LAB 7 0.019% 191,352.06 0.033% 184,913.42 0.030%
MISC VET EQP; CAGES, 4 0.011% 36,119.74 0.006% 59,793.00 0.010%
MISC X-RAY 14 0.039% 774,590.25 0.134% 828,802.16 0.132%
MISCELLANEOUS 121 0.336% 1,861,701.66 0.321% 1,879,393.86 0.300%
MRI SYSTEMS 4 0.011% 1,807,076.92 0.312% 2,056,507.07 0.329%
OFFICE FURNITURE 31 0.086% 656,191.69 0.113% 638,707.31 0.102%
OPERATING MICROSCOPES 7 0.019% 139,323.16 0.024% 222,546.31 0.036%
OPHTLMC DIAG EQP(SLIT 150 0.416% 3,198,659.98 0.552% 3,337,217.75 0.533%
OPT EQP;LENS 386 1.071% 4,719,383.80 0.815% 5,215,735.15 0.834%
PACKAGING EQUIPMENT 42 0.117% 1,403,419.91 0.242% 1,602,221.75 0.256%
PATIENT MONITORING 122 0.339% 4,394,101.66 0.759% 4,688,692.91 0.749%
PATIENT ROOM 5 0.014% 34,905.65 0.006% 53,216.45 0.009%
PHONE, TV, COMM EQUIP 18 0.050% 220,405.02 0.038% 225,225.14 0.036%
PHOTO EQUIPMENT 2 0.006% 29,389.25 0.005% 26,395.00 0.004%
</TABLE>
SUNDAY, FEBRUARY 28, 1999 PAGE 2 OF 3
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 35
<TABLE>
<CAPTION>
% POOL SUM OF % POOL
COUNT OF DISCOUNTED USING EQUIP USING
DESCRIPTION CONTRACTS % POOL BALANCE BALANCE COST COST
<S> <C> <C> <C> <C> <C> <C>
PHOTOCOPY EQUIPMENT 3 0.008% 92,409.66 0.016% 104,897.35 0.017%
PHYS MISC MEDICAL EQP 882 2.448% 21,429,056.23 3.700% 22,334,278.53 3.570%
PHYS OFFC FURN, 24 0.067% 434,642.73 0.075% 522,730.49 0.084%
PODIATRY EQUIPMENT 2 0.006% 29,724.97 0.005% 29,650.00 0.005%
PRINTING EQUIPMENT 200 0.555% 6,838,084.06 1.181% 6,776,333.97 1.083%
PROCESSING EQUIPMENT 4 0.011% 208,962.35 0.036% 214,505.00 0.034%
PULSE OXIMETRY 2 0.006% 25,044.27 0.004% 30,235.50 0.005%
RADIOGRAPHIC 3 0.008% 318,084.44 0.055% 336,670.00 0.054%
RESPIRATORY THERAPY 753 2.090% 20,388,913.25 3.521% 22,189,415.91 3.547%
RESTAURANT, HOTEL & 3 0.008% 120,341.03 0.021% 109,170.73 0.017%
SALES TAX-PO 1 0.003% 42,417.87 0.007% 42,325.75 0.007%
Scanners 8 0.022% 140,029.79 0.024% 153,230.85 0.024%
SECURITY SYSTEMS 3 0.008% 37,473.64 0.006% 34,743.67 0.006%
Standard Printers 41 0.114% 580,318.63 0.100% 635,318.14 0.102%
STANDARD TEST AND 1 0.003% 2,554.69 0.000% 2,708.48 0.000%
STANDARD X-RAY 28 0.078% 1,380,892.41 0.238% 1,466,565.70 0.234%
SURGICAL EQP; SCOPES, 9 0.025% 174,476.45 0.030% 171,598.28 0.027%
TELEPHONE 45 0.125% 816,197.09 0.141% 832,829.94 0.133%
TELEX 1 0.003% 8,466.19 0.001% 15,221.00 0.002%
TRANSPORTATION 1 0.003% 5,599.92 0.001% 5,950.00 0.001%
ULTRASOUND 126 0.350% 7,195,679.48 1.243% 7,887,466.31 1.261%
VENDING MACHINES 8 0.022% 102,038.24 0.018% 82,500.00 0.013%
Wide Format Printers 1 0.003% 13,582.83 0.002% 20,034.48 0.003%
WOODWORKING 1 0.003% 26,747.66 0.005% 23,320.00 0.004%
WORKING CAPITAL 51 0.142% 1,461,160.75 0.252% 1,408,745.89 0.225%
X-RAY SPEC PROCDRS 2 0.006% 226,202.96 0.039% 210,556.66 0.034%
TOTALS: 36,029 100.000% 579,105,377 100.000% 625,601,891 100.000%
</TABLE>
SUNDAY, FEBRUARY 28, 1999 PAGE 3 OF 3
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A
DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR
IMMEDIATELY.
<PAGE> 1
EXHIBIT
Independent Auditors' Report
The Board of Directors
Copelco Capital Funding LLC 99-1:
We have audited the accompanying balance sheet of Copelco Capital Funding LLC
99-1 (an indirect wholly owned subsidiary of Copelco Capital, Inc.) as of
February 24, 1999. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit of a balance sheet includes examining, on a test basis, evidence
supporting the amounts and disclosures in that balance sheet. An audit of a
balance sheet also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit of the balance sheet
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Copelco Capital Funding LLC 99-1 as
of February 24, 1999, in conformity with generally accepted accounting
principles.
KPMG LLP
February 24, 1999
New York, New York
3
<PAGE> 2
COPELCO CAPITAL FUNDING LLC 99-1
(an indirect wholly owned subsidiary of Copelco Capital, Inc.)
Balance Sheet
February 24, 1999
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Cash $1,000
------
$1,000
======
Stockholder's Equity
Stockholder's Equity
Common Stock (authorized 1,000 shares, $ 100
$1 par value, issued and outstanding
100 shares)
Additional paid-in capital 900
------
$1,000
======
</TABLE>
See accompanying notes to balance sheet.
4
<PAGE> 3
COPELCO CAPITAL FUNDING LLC 99-1
(an indirect wholly owned subsidiary of Copelco Capital, Inc.)
Notes to Balance Sheet
February 24, 1999
(1) Organization
Copelco Capital Funding LLC 99-1 is an indirect wholly owned subsidiary of
Copelco Capital Inc. (Copelco Capital).
Copelco Funding LLC 99-1 was organized to engage exclusively in the following
business and financial activities: to acquire equipment described in certain
equipment leases and to purchase equipment leases and lease receivables from
Copelco Capital and any of its affiliates; to issue and sell notes
collateralized by any or all of its assets pursuant to one or more indentures
between Copelco Capital Funding LLC 99-1 and an indenture trustee; and 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.
(2) Capital Contribution
Copelco Capital has made an initial capital contribution of $1,000 to Copelco
Capital Funding LLC 99-1.
5
