AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 1999
Registration No. 333-75673
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COPELCO CAPITAL FUNDING LLC 99-B
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(Exact name of registrant as specified in its charter)
DELAWARE 6799 PENDING
- ---------------------------- ------------------------- -------------------
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
COPELCO CAPITAL FUNDING LLC 99-B
700 EAST GATE DRIVE
MOUNT LAUREL, NEW JERSEY 08054-5404
(609) 231-9600
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(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
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(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. |_|
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
===========================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering aggregate offering Amount of
securities to be registered registered price per unit(1) price(1) registration fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A-1 Lease-Backed Notes... $121,000,000.00 100% 100% $33,638
- -----------------------------------------------------------------------------------------------------------
Class A-2 Lease-Backed Notes... $41,000,000.00 100% 100% $11,398
- -----------------------------------------------------------------------------------------------------------
Class A-3 Lease-Backed Notes... $189,000,000.00 100% 100% $52,542
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Class A-4 Lease-Backed Notes... $157,000,000.00 100% 100% $43,646
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Class B Lease-Backed Notes..... $13,000,000.00 100% 100% $3,614
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Class C Lease-Backed Notes..... $13,000,000.00 100% 100% $3,614
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Class D Lease-Backed Notes..... $19,000,000.00 100% 100% $5,282
===========================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
</TABLE>
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.
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<PAGE>
COPELCO CAPITAL FUNDING LLC 99-B
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>
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* Not Applicable
<PAGE>
(SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 1999)
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$536,810,010
COPELCO CAPITAL FUNDING LLC 99-B, ISSUER
COPELCO CAPITAL, INC., SERVICER
SERIES 1999-B
LEASE-BACKED NOTES
THE ISSUER WILL ISSUE --
o Seven Classes of notes which are to be offered by this
prospectus; and
o Class E Lease-Backed Notes, which are not offered by this
prospectus but serve as credit support to the notes offered
by this prospectus;
THE NOTES --
o Are backed by a pledge of assets of the issuer. The assets
of the issuer securing the notes will include a pool of
copier, computer, healthcare and commercial and industrial
equipment leases, and all of its interest in the equipment
underlying the leases;
o Receive distributions beginning on November 18, 1999;
o Represent debt obligations of Copelco Capital Funding LLC
99-B; and
o Currently have no trading market.
<TABLE>
<CAPTION>
INITIAL RATINGS
------------------------
APPROXIMATE UNDERWRITING INITIAL PUBLIC
ISSUANCE AMOUNT DISCOUNT INTEREST RATE OFFERING PRICE MOODY'S DCR S&P
--------------- -------- ------------- -------------- ------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-1 Notes $117,815,671 ___% ___% ___% P-1 D-1+ A-1+
Class A-2 Notes $ 38,141,764 ___% ___% ___% Aaa AAA AAA
Class A-3 Notes $186,470,846 ___% ___% ___% Aaa AAA AAA
Class A-4 Notes $154,827,308 ___% ___% ___% Aaa AAA AAA
Class B Notes $ 11,301,263 ___% ___% ___% Aa2 AA AA
Class C Notes $ 11,301,263 ___% ___% ___% A2 A A
Class D Notes $ 16,951,895 ___% ___% ___% Baa2 BBB BBB
</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.
- ----------------------SIDE-BAR-----------------------------------
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 are only secured by the assets of the issuer. The notes
are not debt obligations of any other person. The notes will not
be insured or guaranteed by any governmental agency or
instrumentality.
- -----------------------------------------------------------------
FIRST UNION CAPITAL MARKETS CORP. BANC ONE CAPITAL MARKETS, INC.
The date of this Prospectus is September __, 1999
- ---------------------------RED HERRING LANGUAGE--------------------------------
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 is not permitted.
- -------------------------------------------------------------------------------
<PAGE>
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.
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. If given or made, the information or representations must not be
relied upon. We are stating this information as of the date of this prospectus.
TABLE OF CONTENTS
Page
----
Prospectus Summary............................................................3
Issuer........................................................................3
Manager.......................................................................3
Servicer......................................................................3
Trustee.......................................................................3
The Pledged Assets............................................................3
Leases........................................................................3
Cut-off Date..................................................................3
Payment Date..................................................................4
Determination Date............................................................4
Record Date...................................................................4
Issuance Date.................................................................4
Denominations.................................................................4
Priority of Distributions.....................................................4
Reserve Account...............................................................5
Optional Redemption...........................................................5
Final Scheduled Payment Date..................................................5
Federal Income Tax Consequences...............................................5
ERISA Considerations..........................................................5
Ratings.......................................................................5
Risk Factors..................................................................6
Use of Proceeds..............................................................11
The Series Pool..............................................................11
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..........................................43
Security for the Notes.......................................................49
The Indenture Trustee........................................................49
Certain Legal Matters Affecting a Lessee's Rights and Obligations...........49
Material Federal Income Tax Consequences.....................................50
ERISA Considerations.........................................................54
Underwriting.................................................................55
Experts......................................................................56
Legal Matters................................................................56
Rating of the Notes..........................................................57
Index of Terms...............................................................62
2
<PAGE>
PROSPECTUS SUMMARY
o 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.
o 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-B
The issuer will issue the notes offered by this prospectus in book-entry form
through the facilities of The Depository Trust Company.
ISSUER
o Copelco Capital Funding LLC 99-B. The address of the issuer is 700 East
Gate Drive, Mt. Laurel, NJ 08054.
o The issuer will be a limited liability company formed under the laws of the
State of Delaware.
MANAGER
The issuer will be managed by Copelco Manager, Inc. The address of the manager
is 700 East Gate Drive, Mt. Laurel, NJ 08054.
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
o On or about September 21, 1999, Copelco Capital, Inc. will contribute to
the issuer a pool of leases and the related equipment. Payments on the
notes will be made from payments on these leases.
o The leases will include copier, computer, healthcare and commercial and
industrial equipment leases. As of August 31, 1999, copiers make up
approximately 44.56% of the total original equipment cost of the leased
equipment in this pool.
o The lessees under the leases are primarily hospitals, non-hospital medical
facilities, physicians, and businesses.
o 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.
o 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 _____%.
o We will pay the notes from payments on the leases. Noteholders should not
rely on the sale of leased equipment for payments on the notes.
CUT-OFF DATE
The close of business on August 31, 1999.
3
<PAGE>
PAYMENT DATE
The 18th day of each month if the 18th is a business day. If the eighteenth is
not a business day, the payment date will be the following day that is a
business day. The first payment date will be November 18, 1999.
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 September 21, 1999.
DENOMINATIONS
The issuer will issue the notes 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 issuer will distribute the amounts received on the leases and
any other collections available as property of the issuer as follows:
Interest Distributions
On each payment date, the issuer will pay interest at the applicable interest
rate that accrued during the prior interest accrual period.
Principal Distributions
On each payment date, the issuer will pay principal in reduction of the
outstanding principal balance of the notes.
Principal payments will be an amount usually equal to the decrease in the
principal value of the leases between determination dates. The issuer will pay
principal in the following priority:
o to the Class A-1 noteholders only, until the principal amount on the Class
A-1 Notes has been reduced to zero, the full amount in the decrease in the
principal value of the leases;
o when the Class A-1 Notes have been paid in full:
o to the Class A-2 noteholders, until the principal amount on the Class
A-2 Notes has been reduced to zero, an amount approximately equal to
84.8389% of the decrease in the principal value of the leases;
o 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 approximately equal to 84.8389% of the
decrease in the principal value of the leases;
o 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 approximately equal to 84.8389% of the
decrease in the principal value of the leases;
o to the Class B noteholders, an amount approximately equal to 2.5268%
of the decrease in the principal value of the leases;
o to the Class C noteholders, an amount approximately equal to 2.5268%
of the decrease in the principal value of the leases;
o to the Class D noteholders, an amount approximately equal to 3.7903%
of the decrease in the principal value of the leases;
o to the Class E noteholders, an amount approximately equal to 3.4744%
of the decrease in the principal value of the leases.
4
<PAGE>
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
The trustee will hold the reserve account. The servicer will deposit collections
received from the leases into the reserve account on any payment date after
interest and principal payments on the notes have been made. The servicer will
continue to make such deposits until the balance in the reserve account is at
the lesser of 1% of the principal value of the leases at the cut-off date and
the outstanding principal amount of the notes. The issuer will use funds in the
reserve account to pay shortfalls in amounts due to the noteholders.
OPTIONAL REDEMPTION
The issuer may, on any payment date, redeem the notes when the total lease
principal balance of the performing leases is less than or equal to 10% of the
total principal value of the leases as of the cut-off date. If a redemption
occurs, the issuer will pay you 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 issuer will pay the
outstanding principal amount of the notes in full on the following payment
dates:
Class A-1 October 2000
Class A-2 June 2001
Class A-3 December 2002
Class A-4 December 2004
Class B July 2005
Class C August 2005
Class D September 2005
Class E August 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:
o Dewey Ballantine LLP, special tax counsel to the issuer and counsel to the
underwriters, is of the opinion that the notes will be treated as debt and
the issuer will not be treated as an association (or a publicly traded
partnership) taxable as a corporation. By your acceptance of a note, you
agree to treat the notes as debt.
o Interest on the notes will be taxable as ordinary income when received by a
holder on the cash method of accounting and when accrued by a holder on the
accrual method of accounting.
o Dewey Ballantine LLP has prepared the discussion under "Material Federal
Income Tax Consequences" and is of the opinion that such discussion
accurately states all material federal income tax consequences of the
purchase, ownership and disposition of the Offered Notes to their original
purchaser.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money market
funds under rule 2a-7 under the Investment Company Act of 1940, as amended.
ERISA CONSIDERATIONS
Subject to the important considerations described under "ERISA Considerations"
in this prospectus, pension, profit-sharing and other employee benefit plans may
purchase notes. 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
o The issuer will not issue the notes offered by this prospectus unless they
have been assigned the ratings set forth on the cover page of this
prospectus. The Class E Notes will be rated "BB+" by Duff and Phelps Credit
Rating Co.
o You must not assume that the ratings will not be lowered, qualified or
withdrawn by the rating agencies.
5
<PAGE>
RISK FACTORS
<TABLE>
<S> <C>
You should carefully consider, among other things, the following risk factors
before deciding to invest in the notes offered by this prospectus.
YOU MAY NOT BE ABLE TO SELL YOUR NOTES If no public market develops, as a noteholder, you may not be able to
liquidate your investment in the notes prior to maturity. There is
currently no public market for the notes. The issuer offers 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.
PREPAYMENTS AND RELATED REINVESTMENT RISK MAY
REDUCE YIELD TO NOTEHOLDERS In the case of notes purchased at a discount, you should consider the risk
that slower than anticipated rates of prepayments could result in an actual
yield that is less than the anticipated yield. Conversely, you should
consider that in the case of notes purchased at a premium, the risk that
faster than the anticipated rate of prepayments could result in an actual
yield that is less than the anticipated yield.
Be aware that you bear the risk of reinvesting unscheduled distributions
resulting from prepayments of the notes.
The rate of payment of principal is unpredictable because the 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:
o prepayments permitted by the servicer;
o payments as a result of leases which are defaulted;
o payments as a result of leases accelerated by the servicer;
o payments due to loss, theft, destruction or other casualty; and
o payments upon repurchases by Copelco Capital, Inc. on account of a
breach of certain representations and warranties.
Copelco Capital, Inc. may elect 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.
CERTAIN SECURITY INTERESTS ARE NOT PERFECTED
AND OTHER CREDITORS MAY HAVE RIGHTS TO THE
EQUIPMENT In the event the issuer has insufficient assets available to pay the notes,
the issuer may sell the equipment upon a lease default in order to meet
payments on the notes. The lack of a perfected security interest in certain
equipment may adversely affect the ability of the issuer to recoup any
moneys on such equipment following a lease default. This could reduce the
funds available to pay the notes.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Prior to September 1, 1999, Copelco Capital, Inc. filed Uniform
Commercial Code financing statements against lessees with respect to
equipment with an original equipment cost equal to or more than $25,000.
Financing statements with respect to approximately 64.83% of the
statistical discounted present value of the leases have been filed. In
addition, the indenture and the assignment and servicing agreement will
require certain Uniform Commercial Code financing statements with
respect to such equipment to be filed in favor of the trustee against
the issuer and Copelco Capital, Inc.
Copelco Capital, Inc. did 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 35.17% of the
statistical discounted present value of the leases. Other creditors of
the related lessees may acquire rights in the equipment superior to
those of the issuer or the trustee. In such cases, security interests in
the equipment will also not be perfected in favor of the issuer 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 the issuer 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 the issuer or the
trustee.
STATE LAW AND OTHER FACTORS MAY IMPEDE RECOVERY
EFFORTS AND AFFECT THE ABILITY OF ISSUER
TO RECOUP THE FULL AMOUNT DUE ON THE LEASES The application of state law requirements may limit recoveries on
equipment. State laws impose requirements and restrictions relating to
foreclosure sales and obtaining deficiency judgments following such sales.
In the event that the issuer must rely on repossession and sale of
equipment to recover losses on non-performing leases, the issuer may not
recoup the full amount due because of the application of those requirements
and restrictions.
Additional factors that may affect the ability of the issuer to recoup the
full amount due on a lease include:
o the failure to file financing statements to perfect the issuer's
security interest in the equipment against a lessee;
o depreciation;
o obsolescence;
o damage or loss of any item of equipment; and
o 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.
INSOLVENCY OF COPELCO CAPITAL, INC. MAY REDUCE In some circumstances, a bankruptcy of Copelco Capital, Inc. may reduce
PAYMENTS TO NOTEHOLDERS payments to noteholders. Copelco Capital, Inc. believes that each
contribution of the leases should be treated as an absolute and
unconditional assignment.
However, in the event of an insolvency of Copelco Capital, Inc., a court
or bankruptcy trustee could attempt to -
</TABLE>
7
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<TABLE>
<S> <C>
o recharacterize the contribution of the related leases by Copelco
Capital, Inc. to the issuer as a loan to Copelco Capital, Inc from the
issuer, secured by a pledge of such leases; or
o consolidate the assets of the issuer with those of Copelco
Capital, Inc. since Copelco Capital, Inc. will own all of the
membership interests in the issuer.
If the recharacterization were successful, the bankruptcy trustee could
repudiate the leases that are operating leases and all obligations relating
to such operating leases. 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. Consequently, you could lose the right to future payments and
you might incur reinvestment losses on amounts recovered. Thus, you will
not receive your anticipated principal and interest on the notes.
Although Copelco Capital, Inc. believes that the contribution of the
leases should be treated as an absolute and unconditional assignment,
for accounting purposes the leases will be treated as assets of Copelco
Capital, Inc. on the tax return for its consolidated group. Such
treatment of the assets might increase the risk of recharacterization of
the transfer to the issuer as a financing.
NO RECOURSE AGAINST THE AFFILIATES OF COPELCO
CAPITAL LLC 99-B There is no recourse against any affiliates of the issuer. The notes
represent debt of the issuer secured primarily by the 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 the issuer. The issuer 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 LEASES MAY
ADVERSELY AFFECT THE LEASES Adverse economic conditions or other factors particularly affecting any
state or region where a high concentration of leases is located could
adversely affect the performance on the leases. As of the cut-off date,
approximately 18.30%, 6.27%, 13.95%, 7.83% and 5.71% of the leases (based
on the statistical discounted present value of the leases) were located in
California, Florida, New York, Texas and New Jersey, respectively. No other
state accounts for more than 5% of 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.
COMMINGLING OF FUNDS WITH COPELCO CAPITAL, INC.
MAY RESULT IN REDUCED OR DELAYED PAYMENTS
TO NOTEHOLDERS Should bankruptcy or reorganization proceedings be commenced with respect
to the servicer, any funds held by the servicer and not transferred to the
collection account may not be available to noteholders. Under the
Indenture, the servicer is required to deposit all periodic lease payments,
payments resulting from loss, theft or other casualty and payments as a
result of early termination received after the cut-off date to the
collection account. The servicer must deposit such amounts within two
business days of receipt of those payments. If the funds are not
transferred to the trustee, in the event of bankruptcy or insolvency of the
servicer, this could result in delayed or reduced payments to you.
</TABLE>
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<TABLE>
<S> <C>
DEFAULT OR INSOLVENCY OF LESSEES MAY REDUCE
PAYMENTS TO NOTEHOLDERS To the extent lessees default on the leases, including through insolvency,
lease payments will decrease and, accordingly, funds available for payment
to you, as a noteholder, will be reduced.
RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE The servicer is faced with the task of 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.
TECHNOLOGICAL OBSOLESCENCE OF COPIERS MAY
REDUCE VALUE OF COLLATERAL If technological advances relating to copiers causes the leased copiers to
become obsolete, the value of these copiers will decrease. This will reduce
the amount of monies recoverable should the servicer sell the copiers
following a lease default. Leases on copiers represent 44.04% by
statistical discounted present value of the total pool of leases as of the
cut-off date. As such, you may not recoup the full amount due to you if
payments on the notes become dependent upon the proceeds from the sale of
these obsolete copiers.
THE ADDITION AND SUBSTITUTION OF LEASES MAY
ADVERSELY AFFECT CASHFLOW AND MAY DECREASE
THE YIELD ON THE NOTES If a significant number of leases are added or replaced, this could affect
the rate at which funds are distributed on the notes and decrease the yield
to noteholders. The Assignment and Servicing Agreement permits Copelco
Capital, Inc., under certain circumstances, to substitute or add certain
qualifying leases. The addition or substitution of leases may include
leases that possess different payment due dates and installment amounts
than its predecessor lease. It may also include leases with maturity dates
that are different from the maturity dates of its predecessor lease.
Copelco Capital, Inc. may only add or substitute leases that meet certain
qualifying characteristics and conditions. The ability of Copelco Capital,
Inc. to acquire such leases is dependent upon its ability to originate a
sufficient amount of leases that meet the specified eligibility criteria.
This may be affected by a variety of social and economic factors, including
interest rates, unemployment levels, the rate of inflation and public
perception of economic conditions generally. As such, the addition or
substitution of leases could change the concentration of leases from the
current characteristics of the pool described as of the cut-off date. This
may increase the geographic concentration or equipment concentration of
certain leases. Consequently, any adverse economic or social factors that
particularly affect a certain geographic area or a certain type of
equipment may adversely affect the performance of the leases.
</TABLE>
9
<PAGE>
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 62 in this
prospectus.
10
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be distributed to the
owner of Copelco Capital Funding LLC 99-B (the "Issuer"). The distribution will
occur after the contribution from Copelco Capital, Inc. ("Copelco Capital" or
the "Servicer") of the pool of copier, computer, healthcare and commercial and
industrial 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 close of business on September 21, 1999 (the
"Issuance Date"), the Notes will be secured by a pool (the "Series Pool") that
includes 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. Copelco Capital
will not contribute and will retain payments on the Leases due during September
1999 to the Issuer. On the Issuance Date, an amount equal to interest which will
accrue on the Notes from the Issuance Date to October 18, 1999 will be deposited
in the Collection Account. The actual principal value of the Leases on 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-B.
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. As
of August 31, 1999 (the "Cut-Off Date"), using the Statistical Discount Rate,
the weighted average original term of the Series Pool is 52.70 months and the
weighted average remaining term of the Series Pool is 47.69 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).
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.
11
<PAGE>
"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. Copelco Capital, Inc. will represent and warrant that, as
of the Cut-Off Date, none of the Leases are Non-Performing Leases.
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 85 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 issuer is not aware of any trends or
changes relating to the data in the following tables that would be expected to
impact the future performance of the pool of leases. In the tables below, the
sum of any column may not equal the total due to rounding.
THE PLEDGED ASSETS. The assets pledged to secure the Notes (the "Pledged
Assets") will consist of a pool of copier, computer, healthcare and commercial
and industrial 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>
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE AGGREGATE
PERCENTAGE OF DISCOUNTED DISCOUNTED ORIGINAL ORIGINAL
NUMBER OF PRESENT VALUE PRESENT VALUE EQUIPMENT EQUIPMENT
STATE NUMBER OF LEASES LEASES OF LEASES OF LEASES COST COST
----- ---------------- ------ --------- --------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Alabama 182 0.62% $ 6,679,912 1.18% $ 7,655,214 1.25%
Alaska 23 0.08 415,801 0.07 471,096 0.08
Arizona 428 1.46 8,927,425 1.58 9,767,948 1.59
Arkansas 71 0.24 2,673,955 0.47 3,050,874 0.50
California 5,715 19.47 103,396,108 18.30 110,522,221 17.99
Colorado 753 2.57 10,577,078 1.87 11,390,550 1.85
Connecticut 575 1.96 7,903,588 1.40 9,054,562 1.47
Delaware 49 0.17 574,170 0.10 613,545 0.10
District of Columbia 150 0.51 3,240,667 0.57 3,507,276 0.57
Florida 1,713 5.84 35,438,004 6.27 37,603,039 6.12
Georgia 899 3.06 19,383,381 3.43 20,657,232 3.36
Hawaii 33 0.11 378,384 0.07 383,636 0.06
Idaho 63 0.21 948,169 0.17 1,012,856 0.16
Illinois 1,484 5.06 22,819,669 4.04 24,777,951 4.03
Indiana 406 1.38 7,003,995 1.24 7,920,492 1.29
Iowa 73 0.25 1,590,149 0.28 1,846,164 0.30
Kansas 94 0.32 2,289,889 0.41 2,418,952 0.39
Kentucky 127 0.43 3,370,187 0.60 3,703,913 0.60
Louisiana 279 0.95 5,359,135 0.95 5,388,380 0.88
Maine 288 0.98 4,146,383 0.73 4,502,324 0.73
Maryland 342 1.17 6,972,374 1.23 7,372,191 1.20
Massachusetts 863 2.94 14,694,779 2.60 16,348,598 2.66
Michigan 285 0.97 7,009,683 1.24 7,914,139 1.29
Minnesota 121 0.41 4,871,551 0.86 6,011,373 0.98
Mississippi 71 0.24 2,873,044 0.51 3,380,365 0.55
Missouri 258 0.88 4,738,412 0.84 4,974,411 0.81
Montana 40 0.14 695,284 0.12 740,541 0.12
Nebraska 98 0.33 1,599,996 0.28 1,722,545 0.28
Nevada 295 1.01 5,475,376 0.97 5,722,477 0.93
New Hampshire 234 0.80 2,418,193 0.43 2,650,525 0.43
New Jersey 1,519 5.18 32,283,075 5.71 35,968,029 5.86
New Mexico 90 0.31 2,184,792 0.39 2,420,926 0.39
New York 4,577 15.60 78,837,191 13.95 87,195,725 14.20
North Carolina 451 1.54 10,046,924 1.78 10,912,155 1.78
North Dakota 5 0.02 29,050 0.01 37,322 0.01
Ohio 745 2.54 17,755,067 3.14 19,321,000 3.15
Oklahoma 141 0.48 5,133,159 0.91 5,547,873 0.90
Oregon 380 1.29 7,467,469 1.32 8,311,855 1.35
Pennsylvania 969 3.30 26,364,581 4.67 28,148,160 4.58
Puerto Rico 17 0.06 547,190 0.10 607,201 0.10
Rhode Island 193 0.66 3,595,569 0.64 3,874,095 0.63
South Carolina 225 0.77 4,032,836 0.71 4,169,825 0.68
South Dakota 10 0.03 116,342 0.02 115,870 0.02
Tennessee 172 0.59 4,375,130 0.77 4,689,729 0.76
Texas 2,310 7.87 44,271,827 7.83 47,497,685 7.73
Utah 180 0.61 3,538,371 0.63 3,683,853 0.60
Vermont 21 0.07 303,073 0.05 301,491 0.05
Virginia 435 1.48 7,017,357 1.24 7,469,662 1.22
Washington 627 2.14 12,275,368 2.17 13,694,595 2.23
West Virginia 81 0.28 2,184,413 0.39 2,302,040 0.37
Wisconsin 173 0.59 4,003,431 0.71 4,611,748 0.75
Wyoming 14 0.05 236,211 0.04 247,498 0.04
- -------------------------------------------------------------------------------------------------------------------------------
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY LEASE BALANCE
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE AGGREGATE
PERCENTAGE OF DISCOUNTED DISCOUNTED ORIGINAL ORIGINAL
STATISTICAL DISCOUNTED NUMBER OF NUMBER OF PRESENT VALUE PRESENT VALUE EQUIPMENT EQUIPMENT
PRESENT VALUE OF THE LEASES LEASES LEASES OF LEASES OF LEASES COST COST
--------------------------- ------ ------ --------- --------- ---- ----
<C> <C> <C> <C> <C> <C> <C> <C>
$ 0.01 - 5,000.00 9,031 30.77% $ 26,941,273 4.77% $ 30,435,587 4.96%
5,000.01 - 10,000.00 7,088 24.15 51,526,484 9.12 56,905,950 9.26
10,000.01 - 15,000.00 4,052 13.81 49,837,323 8.82 54,823,501 8.93
15,000.01 - 20,000.00 2,629 8.96 45,585,661 8.07 49,545,829 8.07
20,000.01 - 25,000.00 1,601 5.46 35,723,543 6.32 38,548,619 6.28
25,000.01 - 30,000.00 1,076 3.67 29,386,687 5.20 31,323,508 5.10
30,000.01 - 35,000.00 702 2.39 22,680,553 4.01 24,182,191 3.94
35,000.01 - 40,000.00 553 1.88 20,679,595 3.66 22,140,037 3.60
40,000.01 - 45,000.00 388 1.32 16,450,623 2.91 17,586,258 2.86
45,000.01 - 50,000.00 277 0.94 13,149,195 2.33 13,979,079 2.28
50,000.01 - 60,000.00 464 1.58 25,294,404 4.48 26,520,857 4.32
60,000.01 - 70,000.00 307 1.05 19,930,602 3.53 21,137,697 3.44
70,000.01 - 80,000.00 233 0.79 17,390,873 3.08 18,166,937 2.96
80,000.01 - 90,000.00 172 0.59 14,530,149 2.57 14,788,686 2.41
90,000.01 - 100,000.00 125 0.43 11,884,762 2.10 12,796,857 2.08
100,000.01 - 125,000.00 182 0.62 20,247,287 3.58 21,981,156 3.58
125,000.01 - 150,000.00 105 0.36 14,333,852 2.54 15,381,414 2.50
150,000.01 - 175,000.00 88 0.30 14,360,617 2.54 15,890,851 2.59
175,000.01 - 200,000.00 46 0.16 8,633,416 1.53 9,472,002 1.54
200,000.01 - 300,000.00 95 0.32 23,068,526 4.08 25,402,840 4.14
300,000.01 - 400,000.00 53 0.18 18,174,664 3.22 20,172,207 3.28
400,000.01 - 500,000.00 25 0.09 11,193,339 1.98 12,582,652 2.05
500,000.01 - 600,000.00 10 0.03 5,219,486 0.92 5,924,298 0.96
600,000.01 - 700,000.00 9 0.03 5,817,914 1.03 6,232,574 1.01
700,000.01 - 800,000.00 1 0.00 739,523 0.13 846,685 0.14
800,000.01 - 900,000.00 7 0.02 6,029,240 1.07 6,956,762 1.13
900,000.01 - 1,000,000.00 8 0.03 7,477,275 1.32 8,426,461 1.37
1,000,000.01 - 1,500,000.00 16 0.05 20,505,206 3.63 22,163,499 3.61
1,500,000.01 - 2,000,000.00 2 0.01 3,388,054 0.60 4,442,035 0.72
greater than 2,000,000.00 2 0.01 4,883,043 0.86 5,456,697 0.89
- ------------------------------------------------------------------------------------------------------------------------------
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF LEASES BY REMAINING TERM TO MATURITY
PERCENTAGE OF
STATISTICAL PERCENTAGE OF
STATISTICAL DISCOUNTED AGGREGATE
REMAINING TERM NUMBER OF PERCENTAGE OF DISCOUNTED PRESENT VALUE PRESENT VALUE OF AGGREGATE ORIGINAL ORIGINAL
(MONTHS) LEASES NUMBER OF LEASES OF LEASES LEASES EQUIPMENT COST EQUIPMENT COST
-------- ------ ---------------- --------- ------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 457 1.56% $ 3,652,736 0.65% $ 4,623,633 0.75%
13 - 24 1,096 3.73 12,847,843 2.27 15,833,722 2.58
25 - 36 13,198 44.97 147,834,081 26.16 169,157,015 27.54
37 - 48 4,200 14.31 77,765,971 13.76 85,005,274 13.84
49 - 60 10,002 34.08 288,060,417 50.98 304,288,567 49.54
61 - 72 255 0.87 18,104,507 3.20 18,402,993 3.00
73 - 84 137 0.47 16,421,757 2.91 16,538,150 2.69
85 - 96 2 0.01 375,856 0.07 364,373 0.06
- -------------------------------------------------------------------------------------------------------------------------------
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY ORIGINAL TERM TO MATURITY
PERCENTAGE OF
STATISTICAL STATISTICAL PERCENTAGE OF
DISCOUNTED DISCOUNTED AGGREGATE
ORIGINAL TERM NUMBER OF PERCENTAGE OF PRESENT VALUE PRESENT VALUE OF AGGREGATE ORIGINAL ORIGINAL
(MONTHS) LEASES NUMBER OF LEASES OF LEASES LEASES EQUIPMENT COST EQUIPMENT COST
-------- ------ ---------------- --------- ------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 157 0.53% $ 1,395,574 0.25% $ 1,788,543 0.29%
13 - 24 653 2.23 8,031,734 1.42 9,779,564 1.59
25 - 36 2,929 9.98 47,128,745 8.34 52,942,043 8.62
37 - 48 12,256 41.76 133,807,666 23.68 153,386,570 24.97
49 - 60 5,901 20.11 166,826,479 29.52 177,936,595 28.97
61 - 72 7,286 24.83 187,208,566 33.13 197,668,965 32.18
73 - 84 146 0.50 16,538,281 2.93 16,703,776 2.72
85 - 96 19 0.06 4,126,124 0.73 4,007,669 0.65
- -------------------------------------------------------------------------------------------------------------------------------
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
PERCENTAGE OF
STATISTICAL PERCENTAGE OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE OF DISCOUNTED PRESENT PRESENT VALUE OF AGGREGATE ORIGINAL ORIGINAL
LEASE TYPE NUMBER OF LEASES NUMBER OF LEASES VALUE OF LEASES LEASES EQUIPMENT COST EQUIPMENT COST
---------- ---------------- ---------------- --------------- ------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Finance Lease 28,877 98.40% $541,947,849 95.91% $582,572,403 94.85%
Operating Lease 470 1.60 23,115,321 4.09 31,641,323 5.15
- ---------------------------------------------------------------------------------------------------------------------------------
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
PERCENTAGE OF
STATISTICAL PERCENTAGE OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE OF DISCOUNTED PRESENT PRESENT VALUE OF AGGREGATE ORIGINAL ORIGINAL
PURCHASE OPTION NUMBER OF LEASES NUMBER OF LEASES VALUE OF LEASES LEASES EQUIPMENT COST EQUIPMENT COST
- ---------------- ---------------- ---------------- --------------- ------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Fair Market Value 19,027 65.89% $258,960,419 47.78% $288,775,010 49.57%
Fixed Purchase Option 2,729 9.45 74,882,031 13.82 80,762,248 13.86
Nominal Buyout 7,121 24.66 208,105,399 38.40 213,035,146 36.57
- ---------------------------------------------------------------------------------------------------------------------------------
Total 28,877 100.00% $541,947,849 100.00% $582,572,403 100.00%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF LEASES BY DELINQUENCIES
PERCENTAGE OF
STATISTICAL PERCENTAGE OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE OF DISCOUNTED PRESENT PRESENT VALUE OF AGGREGATE ORIGINAL ORIGINAL
DAYS DELINQUENT NUMBER OF LEASES NUMBER OF LEASES VALUE OF LEASES LEASES EQUIPMENT COST EQUIPMENT COST
- ---------------- ---------------- ---------------- --------------- ------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
0 - 29 28,655 97.64% $556,133,690 98.42% $604,435,295 98.41%
30 - 59 692 2.36 8,929,479 1.58 9,778,432 1.59
- -----------------------------------------------------------------------------------------------------------------------------------
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY ORIGINATING GROUPS
PERCENTAGE OF
STATISTICAL PERCENTAGE OF
STATISTICAL DISCOUNTED AGGREGATE
NUMBER PERCENTAGE OF DISCOUNTED PRESENT PRESENT VALUE OF AGGREGATE ORIGINAL ORIGINAL
ORIGINATING GROUPS OF LEASES NUMBER OF LEASES VALUE OF LEASES LEASES EQUIPMENT COST EQUIPMENT COST
- ------------------ ---------------- ---------------- --------------- ------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Business Technology 24,385 83.09% $354,396,236 62.72% $380,840,878 62.00%
Healthcare 3,453 11.77 138,979,425 24.60 147,370,365 23.99
Commercial and
Industrial 1,509 5.14 71,687,508 12.69 86,002,484 14.00
- -------------------------------------------------------------------------------- --------------------------------------------------
Total 29,347 100.00% $565,063,169 1 00.00% $614,213,726 100.00%
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
PERCENTAGE OF
STATISTICAL
STATISTICAL DISCOUNTED
PERCENTAGE OF DISCOUNTED PRESENT PRESENT VALUE OF
EQUIPMENT TYPE NUMBER OF LEASES NUMBER OF LEASES VALUE OF LEASES LEASES
- ------------------ ---------------- ---------------- --------------- ------
<S> <C> <C> <C> <C>
Anesthesia Equipment 4 0.01% $ 229,523 0.04%
Automated Chemistry Systems 68 0.23 4,820,926 0.85
Automated Hematology Systems 106 0.36 2,398,572 0.42
Automated Test Equipment 3 0.01 108,530 0.02
Automobile Shop Equipment 12 0.04 196,208 0.03
Automobiles 1 0.00 175,155 0.03
Carts, Stretchers, Wheel Chairs 75 0.26 1,349,780 0.24
Cash Registers, Point of Sale 119 0.41 2,618,872 0.46
Cobalt and X-Ray Therapy Equipment 1 0.00 28,218 0.00
Communication Equipment 8 0.03 227,430 0.04
Computer 1,881 6.41 36,298,961 6.42
Computer Systems--Drs & Hosp 298 1.02 9,436,965 1.67
Construction Equipment 51 0.17 2,250,835 0.40
Copier 19,271 65.67 248,826,977 44.04
Dental Operatory Equipment 676 2.30 17,002,678 3.01
Digital Cameras 1 0.00 15,449 0.00
Document Imaging Equipment 234 0.80 4,195,140 0.74
ECG (EKG) and Defibrillators 25 0.09 262,640 0.05
EEG 1 0.00 13,375 0.00
Electrical Generators 1 0.00 41,545 0.01
Electronics Production Equipment 122 0.42 30,200,254 5.34
Environmental Control Equipment 1 0.00 68,581 0.01
Fabrication Equipment 9 0.03 333,697 0.06
Facsimile 1,304 4.44 4,556,552 0.81
Fire Protection Equipment 1 0.00 43,024 0.01
Food Processing Equipment 11 0.04 402,359 0.07
Food Refrigeration Equipment 3 0.01 105,256 0.02
Furniture and Fixtures 37 0.13 1,440,543 0.25
Gamma Cameras 28 0.10 8,474,398 1.50
Heating & Air Conditioning Equipment 2 0.01 30,308 0.01
Holter Monitors 8 0.03 75,690 0.01
Hosp Beds; Elec. Stryker FRMS, Burn Beds 13 0.04 142,683 0.03
Industrial Laboratory Equipment 1 0.00 36,212 0.01
Industrial Production Equipment 5 0.02 126,029 0.02
Laminating Devices 2 0.01 36,280 0.01
Lasers 23 0.08 1,677,021 0.30
Laundry Equipment 5 0.02 197,951 0.04
Lift Trucks 1 0.00 12,810 0.00
Lithotripters and Dialysis Equipment 2 0.01 663,876 0.12
Machine Tools 11 0.04 639,006 0.11
Mailing Equipment 29 0.10 276,755 0.05
Mammography 7 0.02 550,087 0.10
Materials Handling Equipment 1,348 4.59 35,234,824 6.24
MBL X-Ray Systems; C-arm; IMG I 1 0.00 104,204 0.02
<CAPTION>
PERCENTAGE OF
AGGREGATE
AGGREGATE ORIGINAL ORIGINAL
EQUIPMENT TYPE EQUIPMENT COST EQUIPMENT COST
- ------------------ -------------- --------------
<S> <C> <C>
Anesthesia Equipment $ 238,084 0.04%
Automated Chemistry Systems 5,151,915 0.84
Automated Hematology Systems 2,551,222 0.42
Automated Test Equipment 100,792 0.02
Automobile Shop Equipment 179,979 0.03
Automobiles 191,558 0.03
Carts, Stretchers, Wheel Chairs 1,327,616 0.22
Cash Registers, Point of Sale 2,745,174 0.45
Cobalt and X-Ray Therapy Equipment 24,698 0.00
Communication Equipment 214,647 0.03
Computer 37,623,802 6.13
Computer Systems--Drs & Hosp 9,829,275 1.60
Construction Equipment 2,250,315 0.37
Copier 273,672,277 44.56
Dental Operatory Equipment 17,064,048 2.78
Digital Cameras 14,400 0.00
Document Imaging Equipment 4,614,187 0.75
ECG (EKG) and Defibrillators 279,692 0.05
EEG 12,817 0.00
Electrical Generators 33,475 0.01
Electronics Production Equipment 36,659,514 5.97
Environmental Control Equipment 60,750 0.01
Fabrication Equipment 326,570 0.05
Facsimile 5,153,791 0.84
Fire Protection Equipment 40,638 0.01
Food Processing Equipment 398,717 0.06
Food Refrigeration Equipment 95,989 0.02
Furniture and Fixtures 1,404,042 0.23
Gamma Cameras 9,605,647 1.56
Heating & Air Conditioning Equipment 28,735 0.00
Holter Monitors 79,175 0.01
Hosp Beds; Elec. Stryker FRMS, Burn Beds 139,933 0.02
Industrial Laboratory Equipment 34,141 0.01
Industrial Production Equipment 120,750 0.02
Laminating Devices 41,614 0.01
Lasers 1,816,471 0.30
Laundry Equipment 187,379 0.03
Lift Trucks 14,500 0.00
Lithotripters and Dialysis Equipment 727,900 0.12
Machine Tools 647,426 0.11
Mailing Equipment 278,071 0.05
Mammography 593,804 0.10
Materials Handling Equipment 42,664,105 6.95
MBL X-Ray Systems; C-arm; IMG I 107,000 0.02
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
PERCENTAGE OF
STATISTICAL
STATISTICAL DISCOUNTED
PERCENTAGE OF DISCOUNTED PRESENT PRESENT VALUE OF
EQUIPMENT TYPE NUMBER OF LEASES NUMBER OF LEASES VALUE OF LEASES LEASES
- ------------------ ---------------- ---------------- --------------- ------
<S> <C> <C> <C> <C>
Medical Equipment 5 0.02 161,250 0.03
Misc. Commercial & Industrial Equipment 320 1.09 13,280,828 2.35
Miscellaneous Hospital Equipment 235 0.80 27,660,123 4.90
Misc. Lab Eqp. (Pthlgy, Gas, Chrmts) 4 0.01 64,836 0.01
Misc. Vet Eqp. Cages, Scales, Tables 1 0.00 48,674 0.01
Misc. X-Ray Eqp. (Tnks, Driers,Tbl) 8 0.03 428,942 0.08
Miscellaneous 608 2.07 25,674,575 4.54
MRI Systems 4 0.01 2,435,006 0.43
Misc. Eqp.-Golf Carts, Lawn Care 2 0.01 47,507 0.01
Office Furniture 30 0.10 953,238 0.17
Operating Microscopes 2 0.01 312,123 0.06
Opthlmc Diag Eqp (Slit Lamps,Tonometers) 96 0.33 2,177,268 0.39
Opt Eqp; Lens Grinding, Resurfacing 40 0.14 1,260,109 0.22
Packaging Equipment 135 0.46 5,458,976 0.97
Patient Monitoring Systems 89 0.30 2,148,090 0.38
Phone, TV, Comm Equipment 26 0.09 499,825 0.09
Photo Equipment 3 0.01 61,222 0.01
Phys Misc Medical Eqp & Exam Tables 747 2.55 18,994,292 3.36
Phys Office Furn, Fixtures & Phones 10 0.03 167,167 0.03
Pollution Control Equipment 1 0.00 39,648 0.01
Printing Equipment 298 1.02 17,008,375 3.01
Processing Equipment 6 0.02 347,867 0.06
Pulse Oximetry Equipment 1 0.00 37,788 0.01
Radiographic Flouroscopic Systems 1 0.00 925,800 0.16
Respiratory Therapy Equipment 507 1.73 13,387,390 2.37
Restaurant, Hotel & Motel Equipment 42 0.14 1,445,669 0.26
Scanners 3 0.01 125,789 0.02
Security Systems 15 0.05 286,608 0.05
Standard Printers 10 0.03 258,683 0.05
Standard X-Ray Systems 21 0.07 838,605 0.15
Surgical Eqp; Scopes, Electrosurgical 4 0.01 76,032 0.01
Telephone 87 0.30 3,133,399 0.55
Telex 2 0.01 5,249 0.00
Textile Equipment 3 0.01 189,493 0.03
Trash Compactors and Bailers 2 0.01 22,978 0.00
Typewriters 1 0.00 1,563 0.00
Ultrasounds 77 0.26 6,338,724 1.12
Vending Machines 1 0.00 10,404 0.00
Word Processors 1 0.00 24,371 0.00
Working Capital 88 0.30 2,784,523 0.49
X-Ray Spec Systems; Angiography 1 0.00 13,979 0.00
- ------------------------------------------------------------------------------------------------------------------------
Total 29,347 100.00% $565,063,169 100.00%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PERCENTAGE OF
AGGREGATE
AGGREGATE ORIGINAL ORIGINAL
EQUIPMENT TYPE EQUIPMENT COST EQUIPMENT COST
- ------------------ -------------- --------------
<S> <C> <C>
Medical Equipment 151,567 0.02
Misc. Commercial & Industrial Equipment 12,446,948 2.03
Miscellaneous Hospital Equipment 28,782,390 4.69
Misc. Lab Eqp. (Pthlgy, Gas, Chrmts) 66,444 0.01
Misc. Vet Eqp. Cages, Scales, Tables 56,850 0.01
Misc. X-Ray Eqp. (Tnks, Driers,Tbl) 478,560 0.08
Miscellaneous 25,870,934 4.21
MRI Systems 2,742,031 0.45
Misc. Eqp.-Golf Carts, Lawn Care 46,166 0.01
Office Furniture 932,997 0.15
Operating Microscopes 488,184 0.08
Opthlmc Diag Eqp (Slit Lamps,Tonometers) 2,395,023 0.39
Opt Eqp; Lens Grinding, Resurfacing 1,348,284 0.22
Packaging Equipment 6,216,777 1.01
Patient Monitoring Systems 2,237,242 0.36
Phone, TV, Comm Equipment 512,348 0.08
Photo Equipment 49,127 0.01
Phys Misc Medical Eqp & Exam Tables 20,203,403 3.29
Phys Office Furn, Fixtures & Phones 163,195 0.03
Pollution Control Equipment 35,896 0.01
Printing Equipment 17,836,610 2.90
Processing Equipment 337,779 0.05
Pulse Oximetry Equipment 36,585 0.01
Radiographic Flouroscopic Systems 1,005,000 0.16
Respiratory Therapy Equipment 13,953,993 2.27
Restaurant, Hotel & Motel Equipment 1,306,683 0.21
Scanners 132,527 0.02
Security Systems 286,026 0.05
Standard Printers 300,352 0.05
Standard X-Ray Systems 871,106 0.14
Surgical Eqp; Scopes, Electrosurgical 78,353 0.01
Telephone 3,233,493 0.53
Telex 5,633 0.00
Textile Equipment 171,035 0.03
Trash Compactors and Bailers 22,270 0.00
Typewriters 1,730 0.00
Ultrasounds 7,249,970 1.18
Vending Machines 10,000 0.00
Word Processors 21,085 0.00
Working Capital 2,766,832 0.45
X-Ray Spec Systems; Angiography 15,670 0.00
- ---------------------------------------------------------------------------------
Total $614,213,726 100.00%
- ---------------------------------------------------------------------------------
</TABLE>
1 The following abbreviations used in this table have the following meanings:
"Eqp." -- Equipment
"Misc." -- Miscellaneous
17
<PAGE>
CASH FLOW OF THE RECEIVABLES. The following shows the scheduled cashflows
from the lease contracts.
COLLECTION PERIOD SCHEDULED CASHFLOW
----------------- ------------------
October 1999.......................................... $14,790,929.11
November 1999......................................... 15,025,822.92
December 1999......................................... 14,971,956.17
January 2000.......................................... 15,051,039.06
February 2000......................................... 15,288,560.66
March 2000............................................ 15,247,838.89
April 2000............................................ 15,244,860.92
May 2000.............................................. 15,279,086.65
June 2000............................................. 15,066,019.57
July 2000............................................. 15,088,955.96
August 2000........................................... 15,015,982.19
September 2000........................................ 14,859,653.86
October 2000.......................................... 14,815,721.58
November 2000......................................... 14,871,000.11
December 2000......................................... 14,721,157.14
January 2001.......................................... 14,697,163.86
February 2001......................................... 14,782,158.55
March 2001............................................ 14,663,809.73
April 2001............................................ 14,562,836.71
May 2001.............................................. 14,649,551.98
June 2001............................................. 14,375,308.93
July 2001............................................. 14,469,361.84
August 2001........................................... 14,351,575.56
September 2001........................................ 14,101,243.83
October 2001.......................................... 14,120,770.91
November 2001......................................... 14,164,300.16
December 2001......................................... 13,947,556.39
January 2002.......................................... 13,774,356.86
February 2002......................................... 13,647,171.64
March 2002............................................ 12,955,925.94
April 2002............................................ 12,207,305.56
May 2002.............................................. 11,670,682.44
June 2002............................................. 10,801,415.50
July 2002............................................. 10,235,915.03
August 2002........................................... 9,693,862.24
September 2002........................................ 8,919,727.30
October 2002.......................................... 8,885,606.36
November 2002......................................... 8,911,607.80
December 2002......................................... 8,734,739.31
January 2003.......................................... 9,314,969.60
February 2003......................................... 8,467,411.35
March 2003............................................ 8,243,668.29
April 2003............................................ 8,012,217.27
May 2003.............................................. 7,795,676.95
June 2003............................................. 7,493,620.66
July 2003............................................. 7,260,587.36
August 2003........................................... 7,051,006.19
September 2003........................................ 6,856,506.33
October 2003.......................................... 6,853,063.93
November 2003......................................... 6,826,738.67
December 2003......................................... 6,608,596.79
January 2004.......................................... 6,308,610.41
February 2004......................................... 5,722,088.39
18
<PAGE>
COLLECTION PERIOD SCHEDULED CASHFLOW
----------------- ------------------
March 2004............................................ 5,052,948.14
April 2004............................................ 4,203,515.93
May 2004.............................................. 3,421,624.72
June 2004............................................. 2,557,398.92
July 2004............................................. 1,772,806.34
August 2004........................................... 1,106,641.89
September 2004........................................ 662,612.34
October 2004.......................................... 586,698.07
November 2004......................................... 549,404.96
December 2004......................................... 494,579.79
January 2005.......................................... 466,437.36
February 2005......................................... 455,009.71
March 2005............................................ 394,943.03
April 2005............................................ 358,402.72
May 2005.............................................. 367,374.26
June 2005............................................. 332,560.88
July 2005............................................. 314,679.06
August 2005........................................... 357,652.11
September 2005........................................ 278,144.62
October 2005.......................................... 278,144.62
November 2005......................................... 277,200.89
December 2005......................................... 256,661.28
January 2006.......................................... 215,712.63
February 2006......................................... 207,814.73
March 2006............................................ 179,785.89
April 2006............................................ 207,448.74
May 2006.............................................. 100,011.60
June 2006............................................. 84,499.82
July 2006............................................. 43,568.85
August 2006........................................... 8,825.43
September 2006........................................ 5,487.90
October 2006.......................................... 5,487.90
November 2006......................................... 4,512.90
December 2006......................................... 4,512.90
January 2007.......................................... 4,512.90
February 2007......................................... 4,512.90
March 2007............................................ 4,512.90
April 2007............................................ 4,512.90
May 2007.............................................. 4,512.90
June 2007............................................. 0.00
19
<PAGE>
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.
<TABLE>
<CAPTION>
HISTORICAL DELINQUENCY EXPERIENCE
COPELCO CAPITAL COMBINED PORTFOLIO
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Receivables
Balance (1) $2,390,956,121 $2,110,428,632 $1,732,009,721 $1,503,055,810
- ---------------------------------------------------------------------------------------------------------------
No. of Delinquent
Days
30-59 days 48,341,807 2.02% 47,444,381 2.25% 38,610,259 2.23% 34,481,668 2.29%
60-89 days 14,057,263 0.59% 13,152,258 0.62% 11,999,057 0.69% 8,136,578 0.54%
90 days+ 12,430,557 0.52% 5,244,005 0.25% 10,437,965 0.60% 7,587,972 0.50%
- ---------------------------------------------------------------------------------------------------------------
Total Delinquencies $74,829,627 3.13% $65,840,644 3.12% $61,047,281 3.52% $50,206,218 3.34%
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C> <C> <C>
Total Receivables
Balance (1) $1,238,424,241 $1,000,488,313
- ------------------------------------------------------------------
No. of Delinquent
Days
30-59 days 26,255,335 2.12% 14,846,559 1.48%
60-89 days 4,976,920 0.40% 3,971,389 0.40%
90 days+ 6,703,063 0.54% 6,748,827 0.67%
- ------------------------------------------------------------------
Total Delinquencies $ $37,935,318 3.06% $25,566,775 2.56%
(1) The Total Receivables Balance is equal to the aggregate future rent owing
on the leases.
<CAPTION>
BUSINESS TECHNOLOGY GROUP
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Receivables
Balance (1) $1,434,334,308 $1,213,803,856 $ 964,765,984 $ 812,719,952
- ------------------------------------------------------------------------------------------------------------
No. of Delinquent
Days
30-59 days 30,920,358 2.16% 25,605,251 2.11% 21,036,692 2.18% 24,072,598 2.96%
60-89 days 9,942,586 0.69% 8,054,059 0.66% 5,451,379 0.57% 5,249,429 0.65%
90 days+ 8,432,821 0.59% 4,157,517 0.34% 6,432,173 0.67% 4,940,285 0.61%
- ------------------------------------------------------------------------------------------------------------
Total Delinquencies $49,295,765 3.44% $37,816,827 3.12% $32,920,244 3.41% $34,262,311 4.22%
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C> <C> <C>
Total Receivables
Balance (1) $ 669,800,055 $ 543,197,213
- -------------------------------------------------------------------
No. of Delinquent
Days
30-59 days 18,298,832 2.73% 8,636,836 1.59%
60-89 days 3,492,843 0.52% 2,281,428 0.42%
90 days+ 4,867,482 0.73% 3,096,224 0.57%
- -------------------------------------------------------------------
Total Delinquencies $26,659,157 3.98% $14,014,488 2.58%
(1) The Total Receivables Balance is equal to the aggregate future rent owing
on the leases.
<CAPTION>
HEALTHCARE AND COMMERCIAL & INDUSTRIAL GROUP
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Receivables
Balance (1) $ 956,621,813 $ 896,624,776 $ 767,243,737 $ 690,335,858
- --------------------------------------------------------------------------------------------------------------
No. of Delinquent
Days
30-59 days 17,421,449 1.82% 21,839,130 2.44% 17,573,567 2.29% 10,409,069 1.51%
60-89 days 4,114,677 0.43% 5,098,199 0.57% 6,547,678 0.85% 2,887,149 0.42%
90 days+ 3,997,736 0.42% 1,086,488 0.12% 4,005,792 0.52% 2,647,688 0.38%
- --------------------------------------------------------------------------------------------------------------
Total Delinquencies $25,533,862 2.67% $28,023,817 3.13% $28,127,037 3.67% $15,943,906 2.31%
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C> <C> <C>
Total Receivables
Balance (1) $ 568,624,186 $ 457,291,099
- -----------------------------------------------------------------
No. of Delinquent
Days
30-59 days 7,956,503 1.40% 6,209,732 1.36%
60-89 days 1,484,077 0.26% 1,689,961 0.37%
90 days+ 1,835,581 0.32% 3,652,603 0.80%
- -----------------------------------------------------------------
Total Delinquencies $11,276,161 1.98% $11,552,287 2.53%
(1) The Total Receivables Balance is equal to the aggregate future rent owing
on the leases.
</TABLE>
20
<PAGE>
HISTORICAL DEFAULT EXPERIENCE. All accounts assessed over 92 days past due
automatically become non-accruing accounts. Any subsequent recoveries offset net
losses. General charge-off information for Leases in the Origination Groups that
are owned and serviced by Copelco Capital for the period January 1, 1993 to June
30, 1999 is set forth below.
<TABLE>
<CAPTION>
HISTORICAL CHARGE-OFF EXPERIENCE
(DOLLARS IN THOUSANDS)
COPELCO CAPITAL COMBINED PORTFOLIO
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $ 2,250,692 $ 1,921,219 $ 1,617,532 $ 1,370,740 $ 1,119,456 $ 868,431
- --------------------------------------------------------------------------------------------------------------------------------
Net Losses $ 15,976 $ 32,477 $ 22,138 $ 15,713 $ 11,457 $ 10,328
Net Losses as a %
of Avg. Receivables 1.42% (2) 1.69% 1.37% 1.15% 1.02% 1.19%
(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
<CAPTION>
BUSINESS TECHNOLOGY GROUP
(DOLLARS IN THOUSANDS)
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $ 1,324,069 $ 1,089,285 $ 888,742 $ 741,260 $ 606,499 $ 464,518
- ---------------------------------------------------------------------------------------------------------------------------------
Net Losses $ 11,854 $ 22,789 $ 16,295 $ 13,386 $ 9,969 $ 7,415
Net Losses as a %
of Avg. Receivables 1.79% (2) 2.09% 1.83% 1.81% 1.64% 1.60%
(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
<CAPTION>
HEALTHCARE AND COMMERCIAL & INDUSTRIAL GROUP
(DOLLARS IN THOUSANDS)
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $ 926,623 $ 831,934 $ 728,790 $ 629,480 $ 512,958 $ 403,913
- ---------------------------------------------------------------------------------------------------------------------------------
Net Losses $ 4,122 $ 9,688 $ 5,843 $ 2,327 $ 1,488 $ 2,913
Net Losses as a %
of Avg. Receivables 0.89% (2) 1.16% 0.80% 0.37% 0.29% 0.72%
</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.
21
<PAGE>
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 62.72%, 24.60% and
12.69%, 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 two distinct business
units: the Manufacturing Technology 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 Material Handling Group,
established in 1998, provides retail equipment leasing and financing
specifically for vendors and manufacturers in the material handling industry.
The Material Handling Group, established in 1998, provides equipment leasing and
financing tailored to meet the specific needs of the material handling industry.
Headquartered in Portland, Oregon, the group has strategically located material
handling finance experts throughout the United States who understand the needs
of both distributors and end-users. These experts work closely with customers to
provided tailored leasing and financing programs for forklifts, aerial work
platforms, cranes and allied equipment.
As of June 30, 1999, Copelco Capital had total assets of $3,222,972,000,
total liabilities of $3,015,293,000, shareholder's equity of $207, 679,000, and,
for the six months ended June 30, 1999, total revenues and net income of
$172,385,000 and $16,212,000, respectively. As of December 31, 1998, Copelco
Capital had total assets of $2,856,553,000 compared with $2,083,256,000 as of
December 31, 1997, total liabilities of $2,664,553,000 compared with
$1,927,558,000 as of December 31, 1997, shareholder's equity of $191,970,000
compared with $155,698,000 as of December 31, 1997 and total revenues and net
income of $312,040,000 and $35,658,000, respectively, for the year ended
December 31, 1998, compared with $253,787,000 and $32,137,000, respectively, for
the year ended December 31, 1997.
22
<PAGE>
Since 1986, Copelco Capital and its predecessors have participated in 37
equipment lease securitizations involving the issuance of in excess of $4.3
billion in securities. Copelco Capital and its predecessors performed all
servicing functions in each of these prior transactions, 13 of which remain
outstanding.
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
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or equal to $50,000. Copelco Capital requires individual physicians to meet the
same criteria and credit scores as a physician group.
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
provides 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
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generally obtained for the guarantors. Potential lessees should generally have
been in business for at least two years and a minimum of two trade references
are required.
The Business Technology 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, 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.
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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 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.
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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 May 31, 2007, or, to the extent the final payment on such Lease is due
subsequent to May 31, 2007, 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, as Transferor (in such
capacity, the "Transferor") will enter into an agreement (the "Assignment and
Servicing Agreement") with Copelco Capital Funding LLC 99-B 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 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-B 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 18th day of the month day ("Payment Date" if the 18th is a
business day, or the next business day if the 18th is not a business day, 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.
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THE ISSUER
GENERAL. Copelco Capital Funding LLC 99-B is a bankruptcy remote, 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 owner 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 to only such activities that relate to the
leases and lease receivables.
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 September 1, 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.
- -------------------------------------------------------------------------------
Name Age Position
- -------------------------------------------------------------------------------
Robert J. Lemenze, Jr. 39 President, Chief Operating Officer, Director
John Hakemian 58 Director
Nicholas Antonaccio 50 Vice President - Finance
Takeshi Okumura 49 Director
Stephen W. Shippie 47 Vice President
Spencer Lempert 52 Secretary
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 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.
Takeshi Okumura has served as Director since being elected on May 5, 1999.
For the last six months, Mr. Okumura has served as the Vice President and
General Manager of the Finance Division and Treasurer of Itochu International
and, prior to that, as General Manager of the Project Finance Department of
Itochu International.
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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"), and _____% Class A-4 Lease-Backed
Notes (the "Class A-4 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 360 days and the actual number of days in such
interest accrual period, payable on the eighteenth 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 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.
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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," 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 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
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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.
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
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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 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
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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(f)).
INITIAL PRINCIPAL AMOUNT. Approximately $117,815,671 for the Class A-1
Notes (the "Class A-1 Initial Principal Amount"), approximately $38,141,764 for
the Class A-2 Notes (the "Class A-2 Initial Principal Amount"), approximately
$186,470,846 for the Class A-3 Notes (the "Class A-3 Initial Principal Amount"),
approximately $154,827,308 for the Class A-4 Notes (the "Class A-4 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"),
approximately $11,301,263 for the Class B Notes (the "Class B Initial Principal
Amount"), approximately $11,301,263 for the Class C Notes (the "Class C Initial
Principal Amount"), approximately $16,951,895 for the Class D Notes (the "Class
D Initial Principal Amount") and approximately $15,539,237 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 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 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 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,
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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 7.68% (the "Statistical Discount
Rate"), provided that, it is assumed (since such payments will be retained by
Copelco Capital) that payments due on the Leases in September 1999 will be zero.
The Statistical Discounted Present Value of the Leases as of the Cut-Off Date is
$565,063,169 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 $-----------.
EXPECTED MATURITY; STATED MATURITY. The expected maturity dates with
respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes are the Payment Dates in August 2000, December 2000, June 2002 and October
2003, respectively. The expected maturity dates with respect to the Class B
Notes, Class C Notes and Class D Notes is the Payment Date in October 2003. The
stated maturity date with respect to the Class A-1 Notes is the Payment Date in
October 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 June 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 December 2002 (the "Class A-3 Stated Maturity
Date"), the stated maturity date with respect to the Class A-4 Notes is the
Payment Date in December 2004 (the "Class A-4 Stated Maturity Date"), the stated
maturity date with respect to the Class B Notes is the Payment Date in July 2005
(the "Class B Stated Maturity Date"), the stated maturity date with respect to
the Class C Notes is the Payment Date in August 2005 (the "Class C Stated
Maturity Date") and the stated maturity date with respect to the Class D Notes
is the Payment Date in September 2005 (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. The expected maturity
and stated maturity with respect to the Class E Notes are October 2003 and
August 2007, respectively. If the Class A-1 Notes have not been paid in full on
or before the September 2000 Payment Date, the Payment Date for the Class A-1
Notes in October 2000 will be October 10, 2000.
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 eighteenth day of
each month (or if such day is not a business day, the next succeeding business
day), commencing on November 18, 1999, to holders of record on the last business
day preceding a payment date, or, if the notes are definitive notes, the last
business day of the month preceding a payment date (each, a "Record Date"). See
"Description of the Notes--Distributions on Notes."
INTEREST PAYMENTS. On each Payment Date, the interest due (the "Interest
Payments") with respect to the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class
D Notes and the Class E Notes since the last Payment Date will be the interest
that has accrued on such Notes since the last Payment Date (or in the case of
the first Payment Date, 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 B Notes, the Class C
Notes, the Class D Notes and the Class E Notes, respectively, after giving
effect to payments of principal to the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the Class A-4 Noteholders, the Class B
Noteholders, the Class C Noteholders, the Class D Noteholders and the Class E
Noteholders, respectively, on the preceding Payment Date. See "Description of
the Notes--General" and "Distributions on Notes."
PRINCIPAL PAYMENTS. For each Payment Date, each of the Class A Noteholders,
the Class B Noteholders, the Class C Noteholders, the Class D Noteholders and
the Class E Noteholders will be entitled to receive payments of principal
("Principal Payments"), to the extent funds are available therefor, in the
priorities set forth in the Indenture and described herein below and under
"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
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Class A Principal Payment, then (iii) to the Class A-3 Noteholders only, until
the Outstanding Principal Amount on the Class A-3 Notes has been reduced to
zero, the Class A Principal Payment and (iv) to the Class A-4 Noteholders, until
the Outstanding Principal Amount on the Class A-4 Notes has been reduced to
zero, the Class A Principal Payment, (b) to the Class B Noteholders, the Class B
Principal Payment, (c) to the Class C Noteholders, the Class C Principal
Payment, (d) to the Class D Noteholders, the Class D Principal Payment, (e) to
the Class E Noteholders, the Class E Principal Payment and (f) to the extent
that the Class B Floor exceeds the Class B Target Investor Principal Amount, the
Class C Floor exceeds the Class C Target Investor Principal Amount, the Class D
Floor exceeds the Class D Target Investor Principal Amount and/or the Class E
Floor exceeds the Class E Target Investor Principal Amount, Additional Principal
(defined below) shall be distributed, sequentially, as an additional principal
payment on the Class A-1 Notes, 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 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) Monthly Principal Amount 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) with respect to any Payment
Date on which all or a portion of the Class A-1 Notes remain outstanding after
giving effect to payments on such Payment Date, the Monthly Principal Amount; or
b) on the Payment Date on which the Outstanding Principal Amount of the Class
A-1 Notes is reduced to zero, the sum of (1) the amount necessary to reduce the
Outstanding Principal Amount of the Class A-1 Notes to zero and (2) the amount
necessary to reduce the sum of the Outstanding Principal Amount of the Class A-2
Notes, Class A-3 Notes, and Class A-4 Notes to the Class A Target Investor
Principal Amount; or c) on any subsequent Payment Date, the amount necessary to
reduce the sum of the Outstanding Principal Amount of the Class A-2 Notes, Class
A-3 Notes, and Class A-4 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 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.
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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 84.8389%. The
"Class B Percentage" will be equal approximately to 2.5268%. The "Class C
Percentage" will be equal approximately to 2.5268%. The "Class D Percentage"
will be equal approximately to 3.7903%. The "Class E Percentage" will be equal
approximately to 3.4744%.
The "Class B Floor" with respect to each Payment Date means (a) 3.25% 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) 2.20% of
the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the
sum of the Outstanding Principal Amount of the Class D Notes, the Outstanding
Principal Amount of the Class E Notes, and the Overcollateralization Balance as
of the immediately preceding Payment Date after giving effect to all principal
payments made on that day, minus (d) the amount on deposit in the Reserve
Account after giving effect to withdrawals to be made on such Payment Date;
provided, however, that if the Outstanding Principal Amount of the Class B Notes
is less than or equal to the Class B Floor on such Payment Date, the Class C
Floor will equal the Outstanding Principal Amount of the Class C Notes utilized
in the calculation of the Class B Floor for such Payment Date.
The "Class D Floor" with respect to each Payment Date means (a) 1.80% of
the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the
sum of the Outstanding Principal Amount of the Class E Notes, and the
Overcollateralization Balance as of the immediately preceding Payment Date after
giving effect to all principal payments made on that day, minus (d) the amount
on deposit in the Reserve Account after giving effect to withdrawals to be made
on such Payment Date; provided, however, that if the Outstanding 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) 1.20% of
the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the
Overcollateralization Balance as of the immediately preceding Payment Date after
giving effect to all principal payments made on that day, minus (d) the amount
on deposit in the Reserve Account after giving effect to withdrawals to be made
on such Payment Date; provided, however, that if the Outstanding
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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 "Monthly Principal Amount" is an amount equal to the difference between
(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 and (b) the Discounted Present
Value of the Performing Leases as of the related Determination 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 Monthly Principal Amount 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 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"):
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(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").
The Issuer will issue the Residual Notes (as defined below)
contemporaneously with the Notes. The Residual Notes will have no rights with
respect to Available Funds. On any Payment Date, Residual Realizations shall be
directed by the Trustee to the holders of the Residual Notes in accordance with
the Indenture. The Noteholders will not have any right to any Residual
Realizations under any circumstance and neither the Residual Notes nor the
Residual Realizations will provide credit enhancement for the Notes.
"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).
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
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"Available Reserve Amount") and such deficiency; provided that in the event
payments on the Leases may not be used to make payments on the Notes due to the
bankruptcy of Copelco Capital, amounts in the Reserve Account may only be used
to make interest payments on the Notes and principal payments at Stated Maturity
of the Notes. 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)).
If on any Payment Date, the aggregate amounts on deposit in the Collection
Account and the Reserve Account are greater than or equal to the sum of (i) the
aggregate outstanding principal balance of the Class A Notes, Class B Notes,
Class C Notes, Class D Notes and Class E Notes, (ii) the accrued and unpaid
Interest Payments, (iii) the accrued and unpaid Servicing Fee and (iv) the
unreimbursed Servicer Advances, the amount on deposit in the Reserve Account
will be deposited in the Collection Account and applied to pay in full the Class
A Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes. (Section
3.05(b))
DISTRIBUTIONS ON NOTES. Payments on the Notes will commence on November 18,
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
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)):
(i) to pay the Servicing Fee;
(ii) to reimburse unreimbursed Servicer Advances (as defined herein)
in respect of a prior Payment Date;
(iii) to make Interest Payments, owing on the Class A Notes
concurrently to the Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and Class A-4 Noteholders;
(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;
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(vii) to make Interest Payments on the Class E Notes;
(viii) to make the Class A Principal Payment to (i) the Class A-1
Noteholders only, until the Outstanding Principal Amount on the Class A-1
Notes is reduced to zero, then (ii) to the Class A-2 Noteholders only,
until the Outstanding Principal Amount on the Class A-2 Notes is reduced to
zero, then (iii) to the Class A-3 Noteholders only, until the Outstanding
Principal Amount on the Class A-3 Notes is reduced to zero, and (iv) to the
Class A-4 Noteholders, until the Outstanding Principal Amount on the Class
A-4 Notes is reduced to zero;
(ix) to make the Class B Principal Payment to the Class B Noteholders;
(x) to make the Class C Principal Payment to the Class C Noteholders;
(xi) to make the Class D Principal Payment to the Class D Noteholders;
(xii) to make 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, 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;
(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.
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 10% 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).
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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, and Class A-4 Notes pro rata to the date of
payment thereof, including (to the extent permitted by applicable law)
interest on any overdue installment of interest and principal from the
maturity of such installment to the date of payment thereof at the
rate per annum equal to the Class A-1 Interest Rate, Class A-2
Interest Rate, Class A-3 Interest Rate, and Class A-4 Interest Rate
respectively, second to the payment of all accrued and unpaid interest
on the Outstanding Principal Amount of the Class B Notes to the date
of payment thereof, including (to the extent permitted by applicable
law) interest on any overdue installment of interest and principal
from the maturity of such installment to the date of payment thereof
at the rate per annum equal to the Class B Interest Rate, third, to
the payment of all accrued and unpaid interest on the Outstanding
Principal Amount of the Class C Notes to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of
such installment to the date of payment thereof at the rate per annum
equal to the Class C Interest Rate, fourth, to the payment of all
accrued and unpaid interest on the Outstanding Principal Amount of the
Class D Notes to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the
date of payment thereof at the rate per annum equal to the Class D
Interest Rate, fifth to the payment of all accrued and unpaid interest
on the Outstanding Principal Amount of the Class E Notes to the date
of payment thereof, including (to the extent permitted by applicable
law) interest on any overdue installment of interest and principal
from the maturity of such installment to the date of payment thereof
at the rate per annum equal to the Class E Interest Rate, sixth to the
payment of the Outstanding Principal Amount of the Class A-1 Notes,
seventh, to the payment of the Outstanding Principal Amount of the
Class A-2 Notes, Class A-3 Notes, and Class A-4 Notes pro rata to the
date of payment thereof, eighth, to the payment of the Outstanding
Principal Amount of the Class B Notes to the date of payment thereof,
ninth, to the payment of the Outstanding Principal Amount of the Class
C Notes, tenth, to the payment of the Outstanding Principal Amount of
the Class D Notes, eleventh, to the payment of the Outstanding
Principal Amount of the Class E 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;
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
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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 power conferred on the Trustee (Sections 6.12). 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 if it would result in
the reduction or withdrawal of the then current ratings of the outstanding Notes
and no such modification may be made without the consent of the holder of each
outstanding note affected thereby if it would (a) change the fixed maturity of
any Note, or the principal amount or interest amount payable thereof, or change
the priority of payment thereof or reduce the interest rate or the principal
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
the suit for the enforcement of any such payment on or after the maturity
thereof; or (b) reduce the above-stated percentage of Notes, without the consent
of the holders of all Notes then outstanding under such Indenture or (c) modify
any of Section 9.02 of the Indenture except to increase any percentage or
fraction set forth therein or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
outstanding note affected thereby; or (d) modify or alter the provisions of the
proviso to the definition of the term "Outstanding" in the Indenture; or (e)
permit the creation of any lien ranking prior to or on a parity with the lien of
the Indenture with respect to any part of the Pledged Assets or, except as
provided in the Indenture, terminate the lien of the Indenture on any property
at any time subject to the Indenture or deprive any Noteholder of the Security
afforded by the lien of the 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;
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(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 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 Warranty Lease or an
Adjusted Lease, Copelco Capital will have the option to substitute for the
terminated lease 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. 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
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Additional Leases will be at least equal to those of the terminated Leases
through the term of such terminated Leases. In the event that an Early Lease
Termination is allowed by Copelco Capital and a Substitute Lease is not
provided, the amount prepaid will be equal to at least the Discounted Present
Value of the terminated Lease, plus any delinquent payments.
The effective yield to holders of the Notes will depend upon, among other
things, the amount of and rate at which principal is paid to such Noteholders.
The after-tax yield to Noteholders may be affected by lags between the time
interest income accrues to Noteholders and the time the related interest income
is received by the Noteholders.
The following chart sets forth the percentage of the Initial Statistical
Principal Amount (as defined below) 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
and Class E Notes which would be outstanding on the Payment Dates set forth
below assuming a Conditional Prepayment Rate ("CPR") of 0%, 6%, 12% and 18%,
respectively, and were calculated using the Statistical Discount Rate. The
"Initial Statistical 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
and Class E Notes is $117,815,671, $38,141,764, $186,470,846, $154,827,308,
$11,301,263, $11,301,263, $16,951,895 and $15,539,237, respectively. The
"Statistical Class Percentage" for the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes is equal to 84.8389%, 2.5268%, 2.5268%,
3.7903% and 3.4744%, respectively. 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
Statistical 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 September 21, 1999 and the first Payment
Date is November 18, 1999. The following charts were created using the
Statistical Class Percentage related to the Statistical Initial Principal
Amounts of the respective class.
44
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
- ---------------------------------------------------------------------------------------------------------------------------
0% CPR
- ---------------------------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 90.52 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 80.77 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 71.01 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 61.12 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 50.96 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 40.78 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 30.53 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 18, 2000 20.18 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 18, 2000 9.95 100.00 100.00 100.00 100.00 100.00 100.00 100.00
August 18, 2000 0.00 99.06 100.00 100.00 99.91 99.91 99.91 99.91
September 18, 2000 0.00 72.02 100.00 100.00 97.19 97.19 97.19 97.19
October 18, 2000 0.00 45.15 100.00 100.00 94.49 94.49 94.49 94.49
November 18, 2000 0.00 18.21 100.00 100.00 91.78 91.78 91.78 91.78
December 18, 2000 0.00 0.00 98.15 100.00 89.04 89.04 89.04 89.04
January 18, 2001 0.00 0.00 92.62 100.00 86.32 86.32 86.32 86.32
February 18, 2001 0.00 0.00 87.05 100.00 83.59 83.59 83.59 83.59
March 18, 2001 0.00 0.00 81.42 100.00 80.82 80.82 80.82 80.82
April 18, 2001 0.00 0.00 75.80 100.00 78.05 78.05 78.05 78.05
May 18, 2001 0.00 0.00 70.19 100.00 75.30 75.30 75.30 75.30
June 18, 2001 0.00 0.00 64.50 100.00 72.50 72.50 72.50 72.50
July 18, 2001 0.00 0.00 58.91 100.00 69.75 69.75 69.75 69.75
August 18, 2001 0.00 0.00 53.23 100.00 66.96 66.96 66.96 66.96
September 18, 2001 0.00 0.00 47.58 100.00 64.18 64.18 64.18 64.18
October 18, 2001 0.00 0.00 42.00 100.00 61.44 61.44 61.44 61.44
November 18, 2001 0.00 0.00 36.37 100.00 58.68 58.68 58.68 58.68
December 18, 2001 0.00 0.00 30.69 100.00 55.89 55.89 55.89 55.89
January 18, 2002 0.00 0.00 25.07 100.00 53.13 53.13 53.13 53.13
February 18, 2002 0.00 0.00 19.50 100.00 50.39 50.39 50.39 50.39
March 18, 2002 0.00 0.00 13.95 100.00 47.66 47.66 47.66 47.66
April 18, 2002 0.00 0.00 8.67 100.00 45.07 45.07 45.07 45.07
May 18, 2002 0.00 0.00 3.70 100.00 42.62 42.62 42.62 42.62
June 18, 2002 0.00 0.00 0.00 98.74 40.29 40.29 40.29 40.29
July 18, 2002 0.00 0.00 0.00 93.45 38.13 38.13 38.13 38.13
August 18, 2002 0.00 0.00 0.00 88.44 36.09 36.09 36.09 36.09
September 18, 2002 0.00 0.00 0.00 83.69 34.15 34.15 34.15 34.15
October 18, 2002 0.00 0.00 0.00 79.34 32.37 32.37 32.37 32.37
November 18, 2002 0.00 0.00 0.00 74.98 30.59 30.59 30.59 30.59
December 18, 2002 0.00 0.00 0.00 70.58 28.80 28.80 28.80 28.80
January 18, 2003 0.00 0.00 0.00 66.24 27.03 27.03 27.03 27.03
February 18, 2003 0.00 0.00 0.00 61.56 25.12 25.12 25.12 25.12
March 18, 2003 0.00 0.00 0.00 57.31 23.39 23.39 23.39 23.39
April 18, 2003 0.00 0.00 0.00 53.16 21.69 21.69 21.69 21.69
May 18, 2003 0.00 0.00 0.00 49.11 20.04 20.04 20.04 20.04
June 18, 2003 0.00 0.00 0.00 45.16 18.43 18.43 18.43 18.43
July 18, 2003 0.00 0.00 0.00 40.66 18.43 18.43 18.43 18.43
August 18, 2003 0.00 0.00 0.00 36.28 18.43 18.43 18.43 18.43
September 18, 2003 0.00 0.00 0.00 32.01 18.43 18.43 18.43 18.43
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.54 1.10 2.00 3.60 2.57 2.57 2.57 2.57
To Maturity: 0.54 1.10 2.00 3.69 2.71 2.72 2.74 2.74
</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 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.
45
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
- ---------------------------------------------------------------------------------------------------------------------------
6% CPR
- ---------------------------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 88.10 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 76.05 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 64.09 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 52.12 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 40.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 27.97 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 15.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 18, 2000 4.03 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 18, 2000 0.00 79.79 100.00 100.00 97.97 97.97 97.97 97.97
August 18, 2000 0.00 49.11 100.00 100.00 94.88 94.88 94.88 94.88
September 18, 2000 0.00 18.70 100.00 100.00 91.83 91.83 91.83 91.83
October 18, 2000 0.00 0.00 97.70 100.00 88.82 88.82 88.82 88.82
November 18, 2000 0.00 0.00 91.62 100.00 85.83 85.83 85.83 85.83
December 18, 2000 0.00 0.00 85.54 100.00 82.84 82.84 82.84 82.84
January 18, 2001 0.00 0.00 79.54 100.00 79.89 79.89 79.89 79.89
February 18, 2001 0.00 0.00 73.59 100.00 76.97 76.97 76.97 76.97
March 18, 2001 0.00 0.00 67.62 100.00 74.03 74.03 74.03 74.03
April 18, 2001 0.00 0.00 61.72 100.00 71.14 71.14 71.14 71.14
May 18, 2001 0.00 0.00 55.89 100.00 68.27 68.27 68.27 68.27
June 18, 2001 0.00 0.00 50.05 100.00 65.40 65.40 65.40 65.40
July 18, 2001 0.00 0.00 44.34 100.00 62.60 62.60 62.60 62.60
August 18, 2001 0.00 0.00 38.62 100.00 59.78 59.78 59.78 59.78
September 18, 2001 0.00 0.00 32.97 100.00 57.01 57.01 57.01 57.01
October 18, 2001 0.00 0.00 27.44 100.00 54.29 54.29 54.29 54.29
November 18, 2001 0.00 0.00 21.93 100.00 51.58 51.58 51.58 51.58
December 18, 2001 0.00 0.00 16.42 100.00 48.88 48.88 48.88 48.88
January 18, 2002 0.00 0.00 11.02 100.00 46.22 46.22 46.22 46.22
February 18, 2002 0.00 0.00 5.71 100.00 43.61 43.61 43.61 43.61
March 18, 2002 0.00 0.00 0.48 100.00 41.04 41.04 41.04 41.04
April 18, 2002 0.00 0.00 0.00 94.62 38.61 38.61 38.61 38.61
May 18, 2002 0.00 0.00 0.00 89.03 36.33 36.33 36.33 36.33
June 18, 2002 0.00 0.00 0.00 83.72 34.16 34.16 34.16 34.16
July 18, 2002 0.00 0.00 0.00 78.83 32.16 32.16 32.16 32.16
August 18, 2002 0.00 0.00 0.00 74.22 30.28 30.28 30.28 30.28
September 18, 2002 0.00 0.00 0.00 69.87 28.51 28.51 28.51 28.51
October 18, 2002 0.00 0.00 0.00 65.90 26.89 26.89 26.89 26.89
November 18, 2002 0.00 0.00 0.00 61.96 25.28 25.28 25.28 25.28
December 18, 2002 0.00 0.00 0.00 58.02 23.67 23.67 23.67 23.67
January 18, 2003 0.00 0.00 0.00 54.17 22.11 22.11 22.11 22.11
February 18, 2003 0.00 0.00 0.00 50.09 20.44 20.44 20.44 20.44
March 18, 2003 0.00 0.00 0.00 46.39 18.93 18.93 18.93 18.93
April 18, 2003 0.00 0.00 0.00 42.25 17.85 18.93 18.93 18.93
May 18, 2003 0.00 0.00 0.00 38.17 17.85 18.93 18.93 18.93
June 18, 2003 0.00 0.00 0.00 34.21 17.85 18.93 18.93 18.93
July 18, 2003 0.00 0.00 0.00 30.42 17.85 18.93 18.93 18.93
August 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
September 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.47 0.95 1.79 3.38 2.37 2.37 2.37 2.37
To Maturity: 0.47 0.95 1.79 3.49 2.51 2.53 2.55 2.55
</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 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.
46
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
- ---------------------------------------------------------------------------------------------------------------------------
12% CPR
- ---------------------------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 85.53 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 71.07 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 56.84 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 42.73 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 28.63 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 14.75 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 1.05 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 18, 2000 0.00 67.30 100.00 100.00 96.71 96.71 96.71 96.71
July 18, 2000 0.00 32.75 100.00 100.00 93.24 93.24 93.24 93.24
August 18, 2000 0.00 0.00 99.72 100.00 89.81 89.81 89.81 89.81
September 18, 2000 0.00 0.00 92.86 100.00 86.44 86.44 86.44 86.44
October 18, 2000 0.00 0.00 86.16 100.00 83.15 83.15 83.15 83.15
November 18, 2000 0.00 0.00 79.57 100.00 79.91 79.91 79.91 79.91
December 18, 2000 0.00 0.00 73.05 100.00 76.70 76.70 76.70 76.70
January 18, 2001 0.00 0.00 66.68 100.00 73.57 73.57 73.57 73.57
February 18, 2001 0.00 0.00 60.40 100.00 70.49 70.49 70.49 70.49
March 18, 2001 0.00 0.00 54.18 100.00 67.43 67.43 67.43 67.43
April 18, 2001 0.00 0.00 48.08 100.00 64.43 64.43 64.43 64.43
May 18, 2001 0.00 0.00 42.11 100.00 61.50 61.50 61.50 61.50
June 18, 2001 0.00 0.00 36.19 100.00 58.59 58.59 58.59 58.59
July 18, 2001 0.00 0.00 30.46 100.00 55.77 55.77 55.77 55.77
August 18, 2001 0.00 0.00 24.76 100.00 52.97 52.97 52.97 52.97
September 18, 2001 0.00 0.00 19.19 100.00 50.24 50.24 50.24 50.24
October 18, 2001 0.00 0.00 13.79 100.00 47.58 47.58 47.58 47.58
November 18, 2001 0.00 0.00 8.45 100.00 44.96 44.96 44.96 44.96
December 18, 2001 0.00 0.00 3.18 100.00 42.37 42.37 42.37 42.37
January 18, 2002 0.00 0.00 0.00 97.65 39.85 39.85 39.85 39.85
February 18, 2002 0.00 0.00 0.00 91.64 37.39 37.39 37.39 37.39
March 18, 2002 0.00 0.00 0.00 85.76 34.99 34.99 34.99 34.99
April 18, 2002 0.00 0.00 0.00 80.23 32.74 32.74 32.74 32.74
May 18, 2002 0.00 0.00 0.00 75.08 30.64 30.64 30.64 30.64
June 18, 2002 0.00 0.00 0.00 70.21 28.65 28.65 28.65 28.65
July 18, 2002 0.00 0.00 0.00 65.75 26.83 26.83 26.83 26.83
August 18, 2002 0.00 0.00 0.00 61.57 25.12 25.12 25.12 25.12
September 18, 2002 0.00 0.00 0.00 57.64 23.52 23.52 23.52 23.52
October 18, 2002 0.00 0.00 0.00 54.07 22.06 22.06 22.06 22.06
November 18, 2002 0.00 0.00 0.00 50.55 20.63 20.63 20.63 20.63
December 18, 2002 0.00 0.00 0.00 47.08 19.21 19.21 19.21 19.21
January 18, 2003 0.00 0.00 0.00 43.72 17.84 17.84 17.84 17.84
February 18, 2003 0.00 0.00 0.00 39.57 17.84 17.84 17.84 17.84
March 18, 2003 0.00 0.00 0.00 35.84 17.84 17.84 17.84 17.84
April 18, 2003 0.00 0.00 0.00 32.25 17.84 17.84 17.84 17.84
May 18, 2003 0.00 0.00 0.00 28.80 17.84 17.84 17.84 17.84
June 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
August 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
September 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.41 0.83 1.61 3.17 2.18 2.18 2.18 2.18
To Maturity: 0.41 0.83 1.61 3.28 2.34 2.35 2.36 2.36
</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 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.
47
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
- ---------------------------------------------------------------------------------------------------------------------------
18% CPR
- ---------------------------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 82.80 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 65.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 49.20 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 32.91 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 16.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 1.06 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 0.00 62.51 100.00 100.00 96.23 96.23 96.23 96.23
June 18, 2000 0.00 23.06 100.00 100.00 92.27 92.27 92.27 92.27
July 18, 2000 0.00 0.00 96.91 100.00 88.43 88.43 88.43 88.43
August 18, 2000 0.00 0.00 89.27 100.00 84.68 84.68 84.68 84.68
September 18, 2000 0.00 0.00 81.84 100.00 81.02 81.02 81.02 81.02
October 18, 2000 0.00 0.00 74.63 100.00 77.48 77.48 77.48 77.48
November 18, 2000 0.00 0.00 67.60 100.00 74.02 74.02 74.02 74.02
December 18, 2000 0.00 0.00 60.71 100.00 70.64 70.64 70.64 70.64
January 18, 2001 0.00 0.00 54.03 100.00 67.36 67.36 67.36 67.36
February 18, 2001 0.00 0.00 47.51 100.00 64.15 64.15 64.15 64.15
March 18, 2001 0.00 0.00 41.11 100.00 61.01 61.01 61.01 61.01
April 18, 2001 0.00 0.00 34.91 100.00 57.96 57.96 57.96 57.96
May 18, 2001 0.00 0.00 28.88 100.00 54.99 54.99 54.99 54.99
June 18, 2001 0.00 0.00 22.96 100.00 52.09 52.09 52.09 52.09
July 18, 2001 0.00 0.00 17.26 100.00 49.29 49.29 49.29 49.29
August 18, 2001 0.00 0.00 11.67 100.00 46.54 46.54 46.54 46.54
September 18, 2001 0.00 0.00 6.25 100.00 43.88 43.88 43.88 43.88
October 18, 2001 0.00 0.00 1.04 100.00 41.31 41.31 41.31 41.31
November 18, 2001 0.00 0.00 0.00 95.11 38.81 38.81 38.81 38.81
December 18, 2001 0.00 0.00 0.00 89.10 36.36 36.36 36.36 36.36
January 18, 2002 0.00 0.00 0.00 83.31 33.99 33.99 33.99 33.99
February 18, 2002 0.00 0.00 0.00 77.72 31.71 31.71 31.71 31.71
March 18, 2002 0.00 0.00 0.00 72.30 29.50 29.50 29.50 29.50
April 18, 2002 0.00 0.00 0.00 67.25 27.44 27.44 27.44 27.44
May 18, 2002 0.00 0.00 0.00 62.56 25.53 25.53 25.53 25.53
June 18, 2002 0.00 0.00 0.00 58.16 23.73 23.73 23.73 23.73
July 18, 2002 0.00 0.00 0.00 54.15 22.09 22.09 22.09 22.09
August 18, 2002 0.00 0.00 0.00 50.40 20.57 20.57 20.57 20.57
September 18, 2002 0.00 0.00 0.00 46.91 19.14 19.14 19.14 19.14
October 18, 2002 0.00 0.00 0.00 43.75 17.85 17.85 17.85 17.85
November 18, 2002 0.00 0.00 0.00 40.11 17.85 17.85 17.85 17.85
December 18, 2002 0.00 0.00 0.00 36.56 17.85 17.85 17.85 17.85
January 18, 2003 0.00 0.00 0.00 33.15 17.85 17.85 17.85 17.85
February 18, 2003 0.00 0.00 0.00 29.63 17.85 17.85 17.85 17.85
March 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
April 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
May 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
August 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
September 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.37 0.73 1.44 2.94 1.99 1.99 1.99 1.99
To Maturity: 0.37 0.73 1.44 3.07 2.17 2.19 2.20 2.20
</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 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.
48
<PAGE>
SECURITY FOR THE NOTES
GENERAL. Repayment of the Notes will be secured by (a) a first priority
security interest in the underlying Leases perfected both by filing UCC
financing statements against the Issuer and Copelco Capital and by taking
possession of the respective Lease documents, (b) a security interest in the
related Equipment owned by the Issuer and an assignment of the Issuer's security
interest in such Equipment subject to Leases which contain a nominal purchase
option upon expiration or other terms which may be deemed to effectively vest
ownership of the Equipment in the Lessee ("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 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
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Leases. Copelco Capital will warrant that each of the contribution of the Leases
from 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 ss.ss. 101-1330 (the "Bankruptcy Code"), and
related laws may interfere with, delay or eliminate the ability of Copelco
Capital or the Issuer to enforce its rights under the Leases.
In the case of operating leases, the Bankruptcy Code grants to the
bankruptcy trustee or the debtor-in-possession a right to elect to assume or
reject any executory contract or unexpired lease. Any rejection of such a lease
or contract constitutes a breach of such lease or contract, entitling the
nonbreaching party to a claim for damages for breach of contract. The net
proceeds from any resulting judgment would be deposited by the Servicer into the
Collection Account and allocated to the Noteholders as more fully described
herein. Upon the bankruptcy of a Lessee, if the bankruptcy trustee or
debtor-in-possession elected to reject a Lease, the flow of scheduled payments
to Noteholders would cease. In the event that, as a result of the bankruptcy of
a Lessee, the Servicer is prevented from collecting scheduled payments with
respect to Leases and such Leases become Non-Performing Leases, no recourse
would be available against Copelco Capital (except for misrepresentation or
breach of warranty) and the Noteholders could suffer a loss with respect to the
Notes. Similarly, upon the bankruptcy of the Issuer, if the bankruptcy trustee
or debtor-in-possession elected to reject a Lease, the flow of Lease payments to
the Issuer and the Noteholders would cease. As noted above, however, the Issuer
has been structured so that the filing of a bankruptcy petition with respect to
it is unlikely. See "The Issuer."
These UCC and bankruptcy provisions, in addition to the possible decrease
in value of a repossessed item of Equipment, may limit the amount realized on
the sale of Equipment to less than the amount due on the related Lease.
NON-PETITION. Pursuant to the Indenture, the Trustee and the holders of the
Residual Notes will agree not to institute, cooperate with or encourage others
to institute against the Issuer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under the Bankruptcy
Code or any state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Residual Notes or the Indenture until the expiration
of one year and one day (or if a preference period of the applicable
jurisdiction is longer, the applicable preference period under that bankruptcy
or similar law) from the date on which all of the Notes are paid in full.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion sets forth 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.
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The discussion that follows, and the opinion set forth below of Dewey
Ballantine LLP, special tax counsel to the Issuer ("Tax Counsel"), are based on
the provisions of the Internal Revenue Code of 1986, as amended (the "Code") and
treasury regulations promulgated thereunder as in effect on the date hereof and
on existing judicial and administrative interpretations thereof. These
authorities are subject to change and to differing interpretations, which could
apply retroactively. The opinion of Tax Counsel is not binding on the courts or
the Internal Revenue Service (the "IRS"). Potential investors should consult
their own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of the
Offered Notes.
Tax Counsel has prepared the following discussion and is of the opinion
that such discussion is correct in all material respects.
CHARACTERIZATION OF THE OFFERED NOTES AS INDEBTEDNESS. In the opinion of
Tax Counsel, although no transaction closely comparable to that contemplated
herein has been the subject of any treasury regulation, revenue ruling or
judicial decision, based on the application of existing law to the facts as set
forth in the applicable agreements, the Offered Notes will be treated 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 net 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.
TAX CHARACTERIZATION OF THE ISSUER. Tax counsel is of the opinion that,
assuming compliance with the terms of the Limited Liability Company Agreement
and related documents, the Issuer will not be treated as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
If the Issuer were taxable as a corporation for federal income tax
purposes, the Issuer would be subject to corporate income tax on its taxable
income. Any such corporate income tax could materially reduce cash available to
make payments on the 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
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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.
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 or 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 steps described below to obtain an exemption
or reduced tax rate.
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The IRS recently issued final withholding regulations (the "New
Regulations"), which make certain modifications to withholding, backup
withholding and information reporting rules. The New Regulations attempt to
unify certification requirements and modify certain reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000. Taxpayers should begin compliance with the New Regulations immediately,
although the old rules will remain in effect until the New Regulations take
effect. Prospective investors are urged to consult their own tax advisors
regarding the New Regulations.
Exemption for Non-U.S. Persons. Under the old rules, 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 (Certificate of
Foreign Status). Under the New Regulations, a non-U.S. Person may claim
beneficial owner status by filing Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding). The old Form W-8 is valid
until the earlier of (i) three years beginning on the date that the form is
signed, or (ii) December 31, 2000. The new Form W-8BEN is valid for a period of
three years beginning on the date that the form is signed. If the information
shown on Form W-8 or Form W-8BEN changes, a new Form W-8 or Form W-8BEN must be
filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income. Under the
old rules, 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). Under the New Regulations, a Non-U.S. Person may claim an
exemption from U.S. withholding on income effectively connected with the conduct
of a trade or business in the United States by filing Form W-8ECI (Certificate
of Foreign Person's Claim for Exemption From Withholding on Income Effectively
Connected With the Conduct of a Trade or Business in the United States). The old
Form 4224 is valid until the earlier of (i) one year beginning on the date that
the form is signed, or (ii) December 31, 2000. The new Form W-8ECI is valid for
a period of three years beginning on the date that the form is signed.
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries. Under the old rules, 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 Certificate). 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. Under the New Regulations, a Non-U.S. Person may claim treaty
benefits by filing Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding). The old Form 1001 is valid until the
earlier of (i) three years beginning on the date that the form is signed, or
(ii) December 31, 2000. The new Form W-8BEN is valid for a period of three years
beginning on the date that the form is signed.
Exemption for U.S. Persons. 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. Under the old rules, a
Noteholder or 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). The New Regulations revise the
procedures that withholding agents and payees must follow to comply with, or to
establish an exemption from, withholding for payments made after December 31,
2000. Each Non-U.S. Noteholder should consult its own tax advisor regarding
compliance with these procedures under the New Regulations.
The New Regulations also generally will require, in the case of notes or
exchange notes held by a foreign partnership, that (1) beneficial owner
certification be provided by the partners rather than the foreign partnership,
and (2) the partnership provide certain information, including a United States
taxpayer identification number. A look-through rule will apply in the case of
tiered partnerships. In addition, the New Regulations may require that a
Non-U.S. Noteholder, including, in the case of a foreign partnership, the
partners thereof, obtain a United States taxpayer identification number and make
certain certifications if the Non-U.S. Noteholder wishes to claim exemption
from, or a reduced rate of, withholding under an income tax treaty. Each
Non-U.S. Noteholder should consult its own tax advisor regarding the application
to such holder of the New Regulations.
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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 plans subject thereto (each, a "Benefit
Plan") and persons who are "parties in interest," within the meaning of ERISA,
or "disqualified persons," within the meaning of the Code. Certain transactions
involving the purchase, holding or transfer of the Offered Notes might be deemed
to constitute prohibited transactions under ERISA and the Code if assets of the
Issuer were deemed to be assets of a Benefit Plan. Under regulations issued by
the United States Department of Labor set forth in 29 C.F.R. ss. 2510.3-101 (the
"Plan Asset Regulations"), the assets of the Issuer would be treated as plan
assets of a Benefit Plan for 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 were 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
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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
Benefit 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 Benefit Plan consult with counsel regarding the
consequences under ERISA and the Code 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 First Union Capital Markets Corp. ("First Union")
and Banc One Capital Markets, Inc. ("Banc One," and together with First Union,
the "Underwriters") each severally has agreed to purchase the principal amount
of the Offered Notes set forth below:
FIRST UNION PRINCIPAL BANC ONE
AMOUNT PRINCIPAL AMOUNT TOTALS
--------------------- -------------------- -------------
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 $ $ $
--------------------- -------------------- -------------
Totals $ $ $
The Issuer has been advised by Underwriters that the several Underwriters
propose initially to offer the Notes to the public at the respective 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 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 B Note,
_____% per Class C Note and _____% per Class D Note. After the public offering,
the public offering price and such concessions may be changed.
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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.
The Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Offered Notes in accordance with Regulation M under the Securities Exchange
Act of 1934 (the "Exchange Act"). Over-allotment transactions involve syndicate
sales in excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the Offered Notes so long as
the stabilizing bids do not exceed a specified maximum. Syndicate covering
transaction involve purchase of the Offered Notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim a selling concession from a
syndicate member when the Offered Notes originally sold by such syndicate member
are purchased in a syndicate covering transaction. Such over-allotment
transactions, stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Offered Notes to be higher than they
would otherwise be in the absence of such transactions. The Seller and the
Underwriters do not represent that the Underwriters will engage in any such
transactions. Such transactions, once commenced, may be discontinued without
notice at any time.
First Union 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-B as of September 8,
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.
56
<PAGE>
RATING OF THE 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 "A-1+", that the Class A-2, A-3, and
A-4 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 Rating Co. ("DCR")
and Standard and Poors Ratings Group ("S&P"), respectively (each a "Rating
Agency"). With respect to the Class E Notes, they will rated at least "BB+" by
DCR.
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.
57
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report 54
Balance Sheet of the Issuer as of September 8, 1999 55
Notes to Balance Sheet 56
58
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Copelco Capital Funding LLC 99-B:
We have audited the accompanying balance sheet of Copelco Capital Funding LLC
99-B (a wholly owned subsidiary of Copelco Capital, Inc.) as of September 8,
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-B as
of September 8, 1999, in conformity with generally accepted accounting
principles.
KPMG LLP
September 10, 1999
New York, New York
59
<PAGE>
COPELCO CAPITAL FUNDING LLC 99-B
(a wholly owned subsidiary of Copelco Capital, Inc.)
Balance Sheet
September 8, 1999
Assets
------
Cash $1,000
- ---- ------
$1,000
======
Stockholder's Equity
Stockholder's Equity
Common Stock (authorized 1,000 shares, $1 par $ 100
value, issued and outstanding 100 shares)
Additional paid-in capital 900
------
$1,000
======
See accompanying notes to balance sheet.
60
<PAGE>
COPELCO CAPITAL FUNDING LLC 99-B
(a wholly owned subsidiary of Copelco Capital, Inc.)
Notes to Balance Sheet
September 8, 1999
(1) Organization
Copelco Capital Funding LLC 99-B, a wholly owned subsidiary of Copelco
Capital, Inc. (Copelco Capital), was incorporated in the State of
Delaware.
Copelco Capital Funding LLC 99-B was organized to engage exclusively in
the following business and financial activities: to acquire equipment
described in the related equipment lease contracts 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-B 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-B.
61
<PAGE>
INDEX OF TERMS
--------------
TERM PAGE(S)
- ---- -------
Additional Lease...........................................................26
Additional Principal.......................................................35
Adjusted Lease.............................................................26
Assignment and Servicing Agreement.........................................27
Available Funds............................................................37
Available Funds Shortfall..................................................38
Available Reserve Amount...................................................39
Bankruptcy Code............................................................50
Benefit Plan...............................................................54
Booked Residual Value......................................................27
Casualty...................................................................37
Casualty Payment...........................................................37
Cede.......................................................................30
CEDEL......................................................................30
CedelParticipants..........................................................31
Class A Initial Principal Amount...........................................33
Class A Noteholders........................................................30
Class A Notes..............................................................29
Class A Percentage.........................................................36
Class A Target Investor Principal Amount...................................35
Class A-1 Initial Principal Amount.........................................33
Class A-1 Interest Rate....................................................29
Class A-1 Noteholders......................................................30
Class A-1 Notes............................................................29
Class A-1 Stated Maturity Date.............................................34
Class A-2 Initial Principal Amount.........................................33
Class A-2 Interest Rate....................................................29
Class A-2 Noteholders......................................................30
Class A-2 Notes............................................................29
Class A-2 Stated Maturity Date.............................................34
Class A-3 Initial Principal Amount.........................................33
Class A-3 Interest Rate....................................................29
Class A-3 Noteholders......................................................30
Class A-3 Notes............................................................29
Class A-3 Stated Maturity Date.............................................34
Class A-4 Initial Principal Amount.........................................33
Class A-4 Interest Rate....................................................29
Class A-4 Noteholders......................................................30
Class A-4 Notes............................................................29
Class A-4 Stated Maturity Date.............................................34
Class B Floor..............................................................36
Class B Initial Principal Amount...........................................33
Class B Interest Rate......................................................29
Class B Noteholders........................................................30
Class B Notes..............................................................29
Class B Percentage.........................................................36
Class B Principal Payment..................................................35
Class B Stated Maturity Date...............................................34
Class B Target Investor Principal Amount...................................35
Class C Floor..............................................................36
62
<PAGE>
Class C Initial Principal Amount...........................................33
Class C Interest Rate......................................................29
Class C Noteholders........................................................30
Class C Notes..............................................................29
Class C Percentage.........................................................36
Class C Principal Payment..................................................35
Class C Stated Maturity Date...............................................34
Class C Target Investor Principal Amount...................................36
Class D Floor..............................................................36
Class D Initial Principal Amount...........................................33
Class D Interest Rate......................................................29
Class D Noteholders........................................................30
Class D Notes..............................................................29
Class D Percentage.........................................................36
Class D Principal Payment..................................................35
Class D Stated Maturity Date...............................................34
Class D Target Investor Principal Amount...................................36
Class E Floor..............................................................36
Class E Initial Principal Amount...........................................33
Class E Interest Rate......................................................29
Class E Notes..............................................................29
Class E Percentage.........................................................36
Class E Principal Payment..................................................35
Class Floors...............................................................36
Class R-1 Notes............................................................41
Class R-2 Notes............................................................41
clearing agency............................................................30
clearing corporation.......................................................30
Code.......................................................................51
Collection Account.........................................................37
Cooperative................................................................31
Copelco Capital............................................................11
Copelco Credit.............................................................22
Copelco Financial..........................................................22
Copelco Leasing............................................................22
Cost per Copy..............................................................23
CPR .......................................................................44
Cumulative Loss Amount.....................................................37
Cut-Off Date...............................................................11
DCR .......................................................................57
Definitive Notes...........................................................32
Depositaries...............................................................30
Determination Date.........................................................34
Discount Rate..............................................................33
Discounted Present Value of the Leases.....................................33
Discounted Present Value of the Performing Leases..........................33
DTC .......................................................................30
DTC Services...............................................................32
Due Period.................................................................34
Dun & Bradstreet...........................................................25
Early Lease Termination....................................................26
Eligible Account...........................................................37
Equipment..................................................................11
Equipment Financing Portion................................................23
ERISA......................................................................54
Euroclear..................................................................30
63
<PAGE>
Euroclear Operator.........................................................31
Euroclear Participants.....................................................31
Events of Default..........................................................40
Excess Copy Charge.........................................................23
Fee Per Scan Charges.......................................................24
First Union................................................................55
Fixed Payment..............................................................23
Group......................................................................22
HILL.......................................................................23
Holders....................................................................33
Indenture..................................................................29
Indirect Participants......................................................30
Industry...................................................................32
Initial Principal Amount...................................................29
Initial Statistical Principal Amount.......................................44
Interest Accrual Period....................................................34
Interest Payments..........................................................34
Interest Rate..............................................................29
IRS .......................................................................51
Issuance Date..............................................................11
Issuer.....................................................................11
Lease Contracts............................................................11
Lease Payment..............................................................37
Lease Receivables..........................................................11
Leases.....................................................................11
Lessee.....................................................................11
Lessees....................................................................11
Maintenance Charge.........................................................23
Manager....................................................................28
Monthly Principal Amount...................................................37
Moody's....................................................................57
Nominal Buy-Out Leases.....................................................49
Non-Performing Leases......................................................33
Non-U.S. Person............................................................54
Notes......................................................................29
Offered Noteholders........................................................30
Offered Notes..............................................................29
OID .......................................................................51
Origination Groups.........................................................11
Outstanding Principal Amount...............................................39
Outstanding Principal Amounts..............................................34
Overcollateralization Balance..............................................37
Participants...............................................................30
Payment Date...............................................................27
PILL.......................................................................23
Plan Asset Regulations.....................................................54
Pledged Assets.............................................................12
Principal Payments.........................................................34
PTCE.......................................................................54
Rating Agency..............................................................57
Record Date................................................................34
Required Payments..........................................................38
Required Reserve Amount....................................................39
Reserve Account............................................................38
Residual Casualty Payments.................................................38
Residual Notes.........................................................38, 41
64
<PAGE>
Residual Prepayments.......................................................38
Residual Realizations......................................................38
Residual Warranty Payments.................................................38
S&P .......................................................................57
SBU .......................................................................22
Series Pool................................................................11
Servicer...................................................................11
Servicer Advance...........................................................40
Servicer Events of Default.................................................42
Servicing Fee..............................................................27
Statistical Class Percentage...............................................44
Statistical Discount Rate..................................................34
Statistical Discounted Present Value of the Leases.........................33
Substitute Lease...........................................................26
SYSTEMS....................................................................32
Tax Counsel................................................................51
Termination Payment........................................................37
Terms and Conditions.......................................................32
Trustee....................................................................27
U.S. Person................................................................54
Underwriters...............................................................55
Underwriting Agreement.....................................................55
Vendor.....................................................................23
Warranty Lease.........................................................26, 27
65
<PAGE>
================================================================================
$536,810,010
Copelco Capital
Funding LLC 99-B
------------------
P R O S P E C T U S
------------------
FIRST UNION CAPITAL MARKETS CORP.
BANC ONE CAPITAL MARKETS, INC.
Dated September __, 1999
Until 90 days after the date of this prospectus, all dealers
that effect transactions in the notes offered by this
Prospectus, whether or not participating in this offering, may
be required to deliver a 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.
$117,815,671_____% Class A-1
Lease-Backed Notes
$38,141,764_____% Class A-2
Lease-Backed Notes
$186,470,846 _____% Class A-3
Lease-Backed Notes
$154,827,308 _____% Class A-4
Lease-Backed Notes
$11,301,263 _____% Class B
Lease-Backed Notes
$11,301,263 _____% Class C
Lease-Backed Notes
$16,951,895 _____% Class D
Lease-Backed Notes
================================================================================
<PAGE>
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
Registration Fee................................... $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
===========
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.
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.
II-1
<PAGE>
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).
(b) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(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 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-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Mount Laurel, State of
New Jersey, on September 13, 1999.
COPELCO CAPITAL FUNDING LLC 99-B,
Registrant
By: COPELCO MANAGER, INC.
as Manager of the Registrant
By: /s/ ROBERT J. LEMENZE, JR.
----------------------------------
Name: Robert J. Lemenze, Jr.
Title: President, Chief Operating Officer
Each person whose signature appears below constitutes and appoints ^
Nicholas Antonaccio as his/her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him/her in his/her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Form S-1 and to file the same,
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto such attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
such attorney-in-fact and agent or his substitute may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form S-1 has been signed by the following persons
in the capacities indicated on the dates indicated below.
Signature Title Date
--------- ----- ----
/s/ ROBERT J. LEMENZE, JR. President and Chief September 13, 1999
- ---------------------------- Operating Officer Director
Robert J. Lemenze, Jr.
/s/ JOHN HAKEMIAN Director September 13, 1999
- ----------------------------
John Hakemian
/s/ TAKESHI OKUMURA Director September 13, 1999
- ----------------------------
Takeshi Okumura
II-3
COPELCO CAPITAL FUNDING LLC 99-B
$__________ - ____% Class A-1 Lease-Backed Notes, Series 1999-B
$__________ - ____% Class A-2 Lease-Backed Notes, Series 1999-B
$__________ - ____% Class A-3 Lease-Backed Notes, Series 1999-B
$__________ - ____% Class A-4 Lease-Backed Notes, Series 1999-B
$__________ - ____% Class B Lease-Backed Notes, Series 1999-B
$__________ - ____% Class C Lease-Backed Notes, Series 1999-B
$__________ - ____% Class D Lease-Backed Notes, Series 1999-B
September __, 1999
UNDERWRITING AGREEMENT
FIRST UNION CAPITAL MARKETS
One First Union Capital Markets Corp., TW-9
Charlotte, North Carolina 28288-0610,
as Representative for the Underwriters
Ladies and Gentlemen:
Copelco Capital Funding LLC 99-B, 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-B (the "Class A-1 Notes"); $__________
(the "Class A-2 Initial Principal Amount") of ____% Class A-2 Lease-Backed
Notes, Series 1999-B (the "Class A-2 Notes"); $__________ (the "Class A-3
Initial Principal Amount") of ____% Class A-3 Lease-Backed Notes, Series 1999-B
(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-B (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-B (the "Class B
Notes"); $__________ (the "Class C Initial Principal Amount") of ____% Class C
Lease-Backed Notes, Series 1999-B (the "Class C Notes"); $__________ (the "Class
D Initial Principal Amount") of ____% Class D Lease-Backed Notes, Series 1999-B
(the "Class D Notes"; together with the Class A Notes, the Class B Notes and the
Class C
<PAGE>
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") of ____%
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 September 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 A 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>
"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 First Union Capital Markets Corp. and ________.
"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
September __, 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
3
<PAGE>
of DTC 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. 333-75673), 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. Such
Registration Statement has been declared effective. 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 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; the
statements in "Description of the Notes" in the Final Prospectus, to the
extent they constitute a summary of the
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Notes, the Indenture and the Assignment and Servicing Agreement,
constitute a fair and accurate summary thereof; provided, however, that
the Issuer makes no representations or warranties as to the Underwriting
Information.
(iii) This Agreement has been duly authorized, executed and
delivered by the Issuer and constitutes a legal, valid and binding
agreement of the Issuer enforceable in accordance with its terms, except
that the provisions hereof relating to indemnification of the Underwriters
may be subject to limitations of public policy.
(iv) Each of the Indenture and the 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").
(viii) The Indenture, when executed and delivered, will have been
duly qualified under the Trust Indenture Act of 1939.
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(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 Indenture and the Assignment and Servicing Agreement have been duly
authorized, and this Agreement constitutes, and when executed and
delivered, the Indenture and 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
provisions hereof relating to indemnification of the Underwriters may be
subject to limitations of public policy and each of the Indenture and the
Assignment and Servicing Agreement conforms in all material respects to
the description thereof contained in the Prospectus.
(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, 1998 and the period ended March 31, 1999.
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 March 31,
1999.
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(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 prior to the
Closing Date.
(vi) KPMG LLP 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 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.
(c) The Underwriters severally and not jointly will represent and
agree that:
(i) 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;
(ii) 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
(iii) 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.
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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 the holders of the Offered Notes (the "Offered Noteholders") and to the
Underwriters an earnings statement or statements of the Issuer which will
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act.
(d) The Issuer will furnish to the Underwriters and counsel for the
Underwriters, without charge, 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
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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 Rating Agencies,
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 within any required time period.
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 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
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(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 any other contracts to which the Issuer or Copelco is a party or by
which either of them is bound; (vi) there is no legal or governmental proceeding
pending or, to the best of my knowledge, threatened against the Issuer or
Copelco 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,
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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,
enforceability of the Transaction Documents and the Notes, certain securities
law issues, perfection, federal taxes, and other related matters as the
Underwriters may require.
(d) At the Execution Time and at the Issuance Date, KMPG LLP 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 "___", "___",
and "______", that the Class A-2, A-3, and A-4 notes be rated at least "___",
"___", and "______", that the Class B Notes be rated at least "___", "___", and
"_____", that the Class C Notes be rated at least "___", "___", and "_____", and
that the Class D Notes be rated at least "___", "___", and "___" by Moody's
Investors Service, Inc., Duff & Phelps Credit Ratings Co., and Standard and
Poors Rating Group, a division of McGraw-Hill Companies, Inc, respectively,
which ratings shall not have been reduced or withdrawn as evidenced by the
Officer's Certificate referred to in Section 6(b).
(f) Counsel to the Trustee shall have delivered a favorable opinion
(subject to customary and usual exceptions), dated the Issuance Date, as the
case may be, and satisfactory in form and substance to the Underwriters and
counsel for the Underwriters and to the Issuer and Copelco and their counsel
with respect to, or to the effect that: (i) the due incorporation and valid
existence of the Trustee, (ii) the due authorization, execution and delivery by
the Trustee of the Indenture, (iii) the Indenture is the legal, valid and
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 your special counsel shall have
received such other information, certificates and documents as you or they may
reasonably request.
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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 Section 6
have not been met, or (y) the Underwriters terminate the engagement pursuant to
Section 10 or because any conditions precedent in Section 6 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(d);
(iii) filing fees in connection with the transactions contemplated
hereby, including, but not limited to, the Commission;
(iv) reasonable fees and expenses of Dewey Ballantine LLP;
(v) Trustee's fees and fees of counsel to the Trustee;
(vi) the costs and expenses of printing the Registration Statement
and the Prospectus;
(vii) the costs of printing or reproducing this Agreement, the Blue
Sky Survey and any other documents in connection with the offer, sale and
delivery of the Offered Notes;
(viii) all expenses in connection with the qualification of the
Offered Notes under state securities laws as provided in section 4(a)(vi),
including the fees and disbursements of counsel in connection with the
Blue Sky Survey;
(ix) the cost of preparing the Offered Notes;
(x) the cost or expenses of any transfer agent or registrar; and
(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.
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(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 are 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, liability or action 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 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
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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 second and sixth paragraph 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 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
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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 is required to be filed pursuant to Rule 424 with a
copy of its Derived Information (defined below) for filing with the Commission.
(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 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).
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(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 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 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,
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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.
(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.
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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.
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 One International
Boulevard, Mahwah, New Jersey 07430, 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,
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Class C Notes or Class D Notes, as the case may be, which it is obligated to
purchase hereunder (the "Defaulted Notes"), the remaining Underwriter(s) (the
"Non-Defaulting Underwriter(s)") shall have the right, but not the obligation,
within one (1) Business Day thereafter, to make arrangements to purchase all,
but not less than all, of the Defaulted Notes upon the terms herein set forth;
if, however, the Non-Defaulting Underwriter(s) shall not have completed such
arrangements within such one (1) Business Day period, then this Agreement shall
terminate without liability on the part of the Non-Defaulting Underwriter(s).
No action taken pursuant to this Section 13 shall relieve the
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, any of the Non-Defaulting Underwriters or the
Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
Section 14. Entire Agreement. This Agreement and the documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.
Section 15. Governing Law.
(a) THIS AGREEMENT IS TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE ISSUER AND COPELCO HEREBY SUBMIT TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 11 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U. S. MAILS, POSTAGE
PREPAID. THE ISSUER AND COPELCO HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO 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
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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 among the Underwriters, the Issuer
and Copelco.
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Very truly yours,
COPELCO CAPITAL, INC.
By: _____________________________
Name: Nicholas Antonaccio
Title: Vice President, Chief
Financial Officer & Treasurer
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
as manager
By: _____________________________
Name: Stephen W. Shippie
Title: Vice President
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
FIRST UNION CAPITAL MARKETS CORP.
as Representative of the Underwriters
By: ___________________________________
Name:
Title:
[Signature Page to the Underwriting Agreement]
<PAGE>
SCHEDULE A
The Class A Notes, Class B Notes, Class C Notes and Class D Notes will be
purchased by Prudential Securities Incorporated and First Union Capital Markets
Corp. in the following amounts:
Prudential First Union
Securities Capital Markets
Incorporated Corp. Principal Underwriting
Principal Amount Amount Discount
---------------- --------------- -------------
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 $ $
Totals $ $
<PAGE>
SCHEDULE B
CERTIFICATE OF FORMATION
OF
COPELCO CAPITAL FUNDING LLC 99-B
1. The name of the limited liability company is Copelco Capital Funding LLC 99-B
(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 the date hereof.
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-B this 31st day of March, 1999.
Kerry Spittel
--------------------
Authorized Signatory
LIMITED LIABILITY COMPANY AGREEMENT
OF
COPELCO CAPITAL FUNDING LLC 99-B
This Limited Liability Company Agreement, dated as of May 20, 1999, is
adopted by Copelco Capital, Inc., a Delaware corporation as the sole member
("COPELCO"), and Copelco Manager, Inc., a Delaware corporation ("Copelco
Manager"), acting as the initial manager (the "Manager").
WHEREAS, Copelco desires to form a limited liability company and engage
Manager to manage the limited liability company pursuant to the terms hereof and
Manager desires to be so engaged;
NOW, THEREFORE, Copelco and the Manager in consideration of the mutual
covenants set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, hereby covenant and
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINED TERMS.
"ACT" means the Delaware Limited Liability Company Act, Delaware Code Title
6, Sections 18-101 ET SEQ., as amended from time to time.
"AFFILIATE" when used with respect to a Person shall mean any other Person
controlling, controlled by, or under common control with, such Person.
"AGREEMENT" shall mean this Limited Liability Company Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"ASSOCIATE" shall mean, with respect to the definition of Independent
Person, (1) a corporation or organization of which such Independent Person is an
officer, director, member or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (2)
any trust or other estate in which an Independent Person serves as trustee or in
a similar capacity, or (3) any relative or spouse of an Independent Person, or
any relative of such spouse, who has the same home as an Independent Person.
"CAPITAL CONTRIBUTIONS" shall mean the amount of cash and the fair market
value of property (as determined by the Manager and net of any liabilities to
which such property is subject or which is deemed assumed by the Company)
contributed to the Company by the Member (or the predecessor holder of the
Interest of the Member).
"COMPANY" shall mean the limited liability company formed hereby.
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"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 Member
in accordance with this Agreement or the effective date of dissolution in
accordance with the Act.
"INDEMNIFIED PARTY" means the Member, the Manager, any officer, agent,
shareholder, director, employee or incorporator of the Member or the Manager, or
any officer, manager, employee, organizer or agent of the Company.
"INDENTURE" shall mean that certain Indenture dated as of [__________]
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 the Member: (i) the entry of
a decree or order by a court or agency for a receiver or liquidator for the
Member, in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of the
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 the 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 the Member or of or relating to substantially all
of the Member's property; or (iii) the Member shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations.
"INTEREST" shall mean the Member's 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 Member pursuant to SECTION 5.1 as the manager) of the Company.
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"MEMBER" shall initially mean Copelco.
"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.
"ASSIGNMENT AND SERVICING AGREEMENT" shall mean that certain assignment and
servicing agreement dated as of [___________] between COPELCO and the Company.
"SECRETARY" means the Secretary of State of Delaware.
"TRUSTEE" shall mean [_______________________________], as Trustee under
the Indenture.
ARTICLE II
DEFINITIONS
Section 2.1. FORMATION OF LIMITED LIABILITY COMPANY. The Member has
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. Copelco shall be, and hereby is, admitted
as the sole member of the Company, and its Interest in the Company shall be, and
hereby is, authorized and issued. The Company is authorized to issue 1000
Membership Interests of which 100 such units have been issued to COPELCO. 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 Member from pledging its Membership Interests to the Trustee.
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Section 2.2. COMPANY NAME AND PRINCIPAL OFFICE. The name of the Company
shall be "COPELCO CAPITAL Funding LLC 99-B". 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 Member may determine.
Section 2.3. OFFICE OF AND AGENT FOR SERVICE OF PROCESS. The registered
office of the Company in Delaware shall be maintained at Corporation Service
Company, 1013 Centre Road, Wilmington, Delaware 19805-1297. The Company's agent
for service of process at such address shall be Corporation Service Company. The
Manager shall have the power and the authority, and is hereby authorized and
empowered to change, at any time and from time to time, the location of such
registered office and/or such registered agent upon compliance with the Act.
Section 2.4. TERM. The Company has been formed and shall commence on the
date the Certificate of Formation was filed with the Secretary, namely [NICOLE
TO OBTAIN DATE]. 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;
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(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 or any 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 Member, 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 MEMBER AND THE MANAGER. The addresses of the
Member and the Manager are set forth in EXHIBIT A.
Section 2.7. EXCLUSIVITY. No Person may be admitted to the Company as an
additional or substitute member, except as expressly set forth in this
Agreement.
Section 2.8. TAX CHARACTERIZATION. It is the intention of the parties
hereto that, for income and franchise tax purposes, the Company shall be
disregarded as a taxable entity separate from COPELCO. The Company shall not
elect, for income or franchise tax purposes, to be treated as a corporation.
ARTICLE III
CAPITAL CONTRIBUTIONS
Section 3.1. CONTRIBUTIONS. The Member shall contribute concurrently with
the execution of this Agreement or has already contributed such amount as is
represented by the property described in EXHIBIT B as its Capital Contribution
to the Company. Such contribution is an absolute transfer and assignment of such
property to the Company, without recourse or warranty. The Manager has not made
and shall not make any Capital Contributions to the Company.
Section 3.2. ADDITIONAL CONTRIBUTIONS. The Member shall have no obligation
to make additional contributions after the date hereof, but may elect to do so
from time to time.
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ARTICLE IV
DISTRIBUTIONS
Section 4.1. DISTRIBUTIONS OF NET CASH FLOW. Distributions of Net Cash Flow
shall be made to the Member by the Manager at such times and in such amounts as
determined by the Manager, provided such distributions are not prohibited by any
agreement to which the Company is a party or the Act.
Section 4.2. EXPENSES OF THE COMPANY. The Company shall pay all costs and
expenses incurred in connection with the Company's affairs (or shall reimburse
the Manager for having incurred any such out-of-pocket expenses), including,
without limitation, all expenses of conducting the business of the Company. The
obligation to pay such costs and expenses shall be limited to the available
assets of the Company.
ARTICLE V
MANAGEMENT
Section 5.1. MANAGER. (a) The Member shall appoint the Manager and hereby
appoints the Copelco Manager as the initial Manager.
(b) The Manager, without the approval or authorization of the 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 Member, 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
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Section 5.3. REMOVAL. Any Manager may be removed with or without cause by
the Member 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 Member and shall be reimbursed by
the Company for any reasonable out-of-pocket expenses incurred by the Manager on
behalf of the Company.
Section 5.5. LIMITATION ON ACTIONS. Notwithstanding any other provision of
this Agreement and, to the fullest extent permitted by law, any provision of law
that otherwise so empowers the Manager, the Manager shall not have the power or
authority, and shall not be authorized or empowered, without the prior written
unanimous consent of all of the directors of the Manager and the prior written
consent of the Member, and any consent of any third party required under any
agreement(s) referred to in SECTION 2.5, to cause the Company to do any of the
following:
(a) engage in any business or activity, including, without limitation, the
incurrence of any indebtedness, other than as 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
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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 Member 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 MEMBER AND THE MANAGER
Section 6.1. LIABILITY OF THE MEMBER AND THE MANAGER. Neither the Member
nor the Manager shall be personally liable for any of the debts, liabilities,
contracts or other obligations of the Company solely by reason of being the
Member or the Manager of the Company.
8
<PAGE>
Section 6.2. NO MANAGEMENT RESPONSIBILITY. The Member shall not take part
in the management of the business or the affairs, or transact any business for,
the Company, except to the extent that its approval or consent is expressly
required under this Agreement for the taking of any actions by or on behalf of
the Company.
Section 6.3. NO AUTHORITY TO ACT. The Member shall not have the authority
to act on behalf of or bind the Company.
ARTICLE VII
INDEMNIFICATION
Section 7.1. EXCULPATION AND INDEMNIFICATION OF THE MEMBER 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;
(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.
9
<PAGE>
ARTICLE VIII
TRANSFERABILITY OF MEMBER'S INTERESTS
Section 8.1 RESTRICTION ON TRANSFER. The Member may not sell or otherwise
transfer its Interest unless such transfer is: (i) involuntary, (ii) by
operation of law, (iii) is not prohibited by any agreement referred to in
SECTION 2.5 hereof or (iv) is expressly permitted pursuant to Section 2.1
hereof.
Section 8.2. TRANSFER FOR SECURITY. Except (i) as otherwise permitted
pursuant to Section 2.1 hereof, or (ii) as permitted by or in compliance with
the provisions of the agreements referred to in SECTION 2.5, the Member may not
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 Member as provided in
SECTION 5.5. Neither the Member acting alone or the Member acting with the
consent of less than all of the directors of the Manager 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 Member, the Company shall continue and
shall not dissolve, but Copelco Financial Services Group, Inc., or any other
entity designated by Copelco Financial Services Group, Inc., shall, effective
immediately prior to the happening of such event, be admitted as the Member of
the Company, but shall not have any Membership Interest or any portion thereof.
The Manager shall not have the power or authority to dissolve the Company
pursuant to Section 18-801(b) of the Act.
10
<PAGE>
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 Member. In so doing, a full accounting of the assets and liabilities of
the Company shall be taken and the Company's assets shall be distributed as
promptly as possible as hereinafter provided:
(a) to the payment (or the making of reasonable provision for the
payment) of such debts and liabilities of the Company (or reserves
therefor), including any necessary expenses of liquidation, except any
debts, liabilities and loans that may be due to the Member, in the order of
priority as provided by law; and
(b) to the payment (or the making of reasonable provision for the
payment) of any debts and liabilities that may be due to the Member and to
the payment (or the making of reasonable provision for the payment) of the
unpaid principal balance and the interest accrued thereon on loans, if any,
made by the Member to the Company.
All of the assets of the Company shall be distributed on dissolution.
ARTICLE X
POWER OF ATTORNEY
Section 10.1. MANAGER AS ATTORNEY-IN-FACT. Subject, at all times and in all
cases to the provisions of Section 5.5, the Member hereby makes, constitutes,
and appoints the Manager, with full power of substitution and resubstitution,
its true and lawful attorneys-in-fact for it and in its name, place, and stead
and for its use and benefit, 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
Member in accordance with the terms of this Agreement; (c) all certificates of
cancellation and other instruments which the Manager deems necessary in its
reasonable discretion to effect the dissolution and termination of the Company
pursuant to the terms of this Agreement; and (d) any other instrument which is
now or may hereafter be required by law to be filed on behalf of the Company or
is deemed necessary by the Manager in its reasonable discretion to carry out
fully the provisions of this Agreement in accordance with its terms. The Member
authorizes such attorney-in-fact to take any further action which such
attorney-in-fact shall reasonably consider necessary in connection with any of
the foregoing, hereby giving such attorney-in-fact full power and authority to
do and perform each and every act or thing whatsoever requisite or advisable to
be done in connection with the foregoing as fully as the Member might or could
do personally, and hereby ratifying and confirming all that any such
attorneys-in-fact shall lawfully do or cause to be done by virtue thereof or
hereof.
11
<PAGE>
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
Member executing any agreement, certificate, instrument or other document
with the signature of a duly authorized officer of such attorneys-in-fact
for such Member; and
(c) shall not be affected by and shall survive the bankruptcy,
insolvency, dissolution, disability, incapacity or cessation of existence
of the Member and shall survive the delivery of an assignment by the Member
of its interest in the Company, except that where an assignee of the Member
is admitted as a substituted Member, the power of attorney shall survive
the delivery of such assignment for the sole purpose of enabling all such
attorney-in-fact to effect such substitution.
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 Member and the Manager; provided, however, that (i) this
Section 11.2 and Sections 5.1, 5.2 and 5.5 may not be amended; and (ii) notice
of any such amendment will be provided to Standard and Poors Structured Finance
25 Broadway, 15th Floor, New York, New York 10004, Attn: Asset Backed
Surveillance Department within a reasonable time after such amendment has been
executed.
Section 11.3. HEADINGS. The headings of the various Articles and Sections
herein are for the convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
Section 11.4. SEVERABILITY. If any one or more of the provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
provisions or terms shall be deemed severable from the remaining provisions or
terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
SECTION 11.5. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.6. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
12
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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 Member
By:
----------------------------------
Nicholas Antonaccio
Senior Vice President, Chief
Financial Officer and Treasurer
COPELCO MANAGER, INC.,
as the Manager
By:
----------------------------------
Stephen Shippie
Vice President
13
<PAGE>
EXHIBIT A
ADDRESSES OF THE MEMBER AND THE MANAGER
Copelco Capital, Inc., as Member
One International Boulevard
Mahwah, New Jersey 07430
Copelco Manager, Inc., as the Manager
700 East Gate Drive
Mt. Laurel, New Jersey 08054
14
<PAGE>
EXHIBIT "B"
CAPITAL CONTRIBUTION OF MEMBER
COPELCO CAPITAL, INC.: ............................................ $1000.00
15
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
COPELCO CAPITAL FUNDING LLC 99-B,
Issuer
MANUFACTURERS AND TRADERS TRUST COMPANY,
Trustee
and
COPELCO CAPITAL, INC.,
Servicer
----------------------
INDENTURE
Dated as of September 1, 1999
----------------------
$__________in aggregate principal amount of
Receivables Notes, and $__________ in aggregate
principal amount of Class R Notes, Series 1999-B,
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>
COPELCO CAPITAL FUNDING LLC 99-B
Reconciliation and Tie between the Indenture
dated as of September 1, 1999 and the
Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
ss.310 (a)(1).................... ss.7.08
(a)(2).................... 7.08
(a)(3).................... Not Applicable
(a)(4).................... Not Applicable
(b)....................... 7.08; 7.09; 6.07; 1.05; 1.06
(c)....................... Not Applicable
311 (a)....................... 7.14
(b)....................... 7.14
312 (a)....................... 2.11
(b)....................... 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
v
<PAGE>
INDENTURE
This INDENTURE dated as of September 1, 1999, is among COPELCO CAPITAL
FUNDING LLC 99-B, 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-B, 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, Class A-3 Notes and
Class A-4 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:
<PAGE>
For and in consideration of the premises and the purchase of the Notes by
the holders thereof, it is mutually covenanted and agreed, for the benefit of
all Noteholders, as follows:
GRANTING CLAUSE
The 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 Purchase 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 Purchase 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.
2
<PAGE>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. General Definitions.
Except as otherwise specified or as the context may otherwise require, the
following terms have the meanings set forth below for all purposes of this
Indenture, and the definitions of such terms are applicable to the singular as
well as to the plural forms 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
Receivables 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 September 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,
3
<PAGE>
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 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.
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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.
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 ________ 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 _______ 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: $________.
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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 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.
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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.
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
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Class B Notes to the greater of the Class B Target Investor Principal Amount and
the Class B Floor.
Class B Target Investor Principal Amount: with respect to each
Payment Date, an amount equal to the product of (a) the Class B Percentage and
(b) the Discounted Present Value of the Performing Leases as of the related
Determination Date.
Class C 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.
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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 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 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 Definitive 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
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Date; provided, however, that if the Outstanding Principal Amount of the Class D
Notes is less than or equal to the Class D Floor on such Payment Date, the Class
E Floor will equal the Outstanding Principal Amount of the Class E Notes
utilized in the calculation of the Class D Floor for such Payment Date.
Class E Note Interest Rate: 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 Noteholder: at any time, any Person in whose name a Class R
Note is registered in the Note Register.
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: $_______.
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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.
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
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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 opening of business on _________, 1999.
DCR: Duff & Phelps Credit Rating Co, and any such successor.
Default: any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
Definitive Note: a definitive, fully registered Note issued pursuant
to Section 2.07.
Delinquent Lease: as of any Determination Date, any Lease (other
than a Lease which became a Non-Performing Lease prior to such Determination
Date) with respect to which the Lessee has not paid all Lease Payments then due.
Depository Agreement: the letter of representations, between the
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.
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Discounted Present Value of the Delinquent Leases: with respect to
any Payment Date or Determination Date, the Discounted Present Value of the
Leases that are not Non-Performing Leases as to which a Lease Payment, or any
portion thereof, was 63 or more days overdue as of the last day of the Due
Period immediately preceding such Payment Date.
Discounted Present Value of the Performing Leases: the Discounted
Present Value of the Leases, reduced by the 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 S&P, and to the extent rated by DCR,
DCR;
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(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 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 S&P and, to
the extent rated by DCR, DCR 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 ___ by Moody's and
"AAAm" or "AAA-G" by S&P;
(f) demand notes payable on demand issued by an institution rated
"___" by Moody's and "A-1+" by S&P, and to the extent rated by DCR, "__"
by DCR at the time of such investment;
(g) funding agreements or guaranteed investment contracts provided
by issuers rated "P-1" by Moody's and "A-1+" by S&P (and to the extent
rated by DCR, "___" by DCR 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 S&P, DCR and
Moody's.
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.
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Financing Statement: as defined in Section 12 of the Assignment and
Servicing Agreement.
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 ___% 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: ____, 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 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 a 30-day month and a
360-day year.
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Interest Payments: as defined in Section 2.01(c).
Issuance Date: September ___, 1999.
Issuer: the Person named as the "Issuer" in the first paragraph of
this agreement.
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 Purchase 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 beginning 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.
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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 Service, 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.
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Other Lease Payments: all payments on or in respect of leases which
are not Lease Payments, Lease Delinquency Payments, Casualty Payments,
Termination 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.
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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 18th 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 First Union.
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, S&P and Moody's.
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Receivable Assets: all Granted Assets, but excluding Residual
Realizations and amounts in the Liquidity Reserve Account.
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: (i) From the Cut-Off Date until
__________, $_______ and thereafter, (ii) if the outstanding principal balance
of the Class R-1 Notes is greater than $_______, then the Required Liquidity
Reserve Amount shall equal $_________ and if the outstanding principal balance
of the Class R-1 Notes is less than or equal to $_________, then the Required
Liquidity Reserve Amount shall equal $__________.
Required Payment: as defined in Section 3.05(b).
Required Reserve Amount: shall equal the lesser of (a) ____% of the
Discounted Present Value of the Leases 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 Assets: the Residual Realizations and amounts on deposit in
the Liquidity Reserve Account.
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 beginning 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.
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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 beginning 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 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
Realizations shall not include the ongoing cashflows of a newly negotiated lease
that Copelco originates after repurchasing or substituting such predecessor
Lease from the Issuer.
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 Trustee Fee: as defined in Section 7.07.
Residual Warranty Payments: at any date of determination with
respect to a Warranty Lease, means the excess of (a) the Lease Purchase 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 beginning 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.
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.
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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.
S&P: Standard & Poors Rating Group, a division of McGraw Hill
Companies, Inc.
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"), the stated maturity date with
respect to the Class R-1 Notes is ________ (the "Class R-1 Stated Maturity
Date") and the stated maturity date with respect to the Class R-2 Notes is
_________ (the "Class R-2 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, the
Class E Stated Maturity Date and the Class R-1 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.
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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.
Trustee Fee: as defined in Section 7.07.
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 First Union Capital Markets Corp. ("First Union").
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
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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' 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
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Trustee's right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Section 7.01(a)(ii).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default or Servicer Event
of Default is a condition precedent to the taking of any action by the Trustee
at the request or direction of the 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
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be done by the Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
(d) By accepting the Notes issued pursuant to this Indenture, each
Noteholder irrevocably appoints the Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of
such Noteholder to effect and enforce the rights of such Noteholder and
the revisions pursuant hereto for the benefit of such Noteholder; provided
that nothing contained in this Section 1.04(d) shall be deemed to confer
upon the Trustee any duty or power to vote on behalf of the Noteholders
with respect to any matter on which the Noteholders have a right to vote
pursuant to the terms of this Indenture.
SECTION 1.05. Notices, etc., to Trustee, Servicer, 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 One International Boulevard, Mahwah, NJ
07430, 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, Suite 3800, Chicago, Illinois 60603, Attention:
Asset-Backed Securities Group--Equipment Leases, to Standard & Poors Rating
Group, a division of McGraw Hill Companies, Inc., 55 Water Street, New York, NY
10041, Attention: Asset-
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Backed Surveillance Group, and to Moody's Investors Service, Inc., 99 Church
Street, New York, New York 10007, Attention: ABS Monitoring Department.
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.
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SECTION 1.10. Legal Holidays.
In any case where any Payment Date or the Stated Maturity or any
other date on which principal of or interest on any Note is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) such payment need not be made on such date, but may
be made on the next succeeding Business 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.
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ARTICLE II
THE NOTES
SECTION 2.01. General Provisions.
(a) The Notes shall consist of $________ principal amount of Class
A-1 Notes, $________ principal amount of Class A-2 Notes, $________ principal
amount of Class A-3 Notes, $________ principal amount of Class A-4 Notes,
$_________ principal amount of Class B Notes, $_______ principal amount of Class
C Notes, $_______principal amount of Class D Notes, $________ principal amount
of Class E Notes, $_________ principal amount of Class R-1 Notes, and
$________principal amount of Class R-2 Notes and the forms thereof and of the
Trustee's certificate of authentication shall be in substantially the forms set
forth in Exhibit A hereto, with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by this
Indenture.
The aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is limited to $_________ 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
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A-4 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class R-1, and the Class R-2 Notes will be the interest that has
accrued on the respective Notes since the last Payment Date or, in the case of
the first Payment Date, since the Issuance Date, at the Class A-1 Interest Rate,
Class A-2 Interest Rate, Class A-3 Interest Rate, Class A-4 Interest Rate, Class
B Interest Rate, Class C Interest Rate, Class D Interest Rate, Class E Interest
Rate, Class R-1 Interest Rate and Class R-2 Interest Rate respectively, applied
to the then Outstanding Principal Amounts of the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, the Class C Notes, Class
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 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.
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(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 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.
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(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 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
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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 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
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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
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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, 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
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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.
(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.
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(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 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
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("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;
(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 Note Owners.
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
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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 Note Owners, Class R-1
Note Owners or Class R-2 Note Owners 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 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
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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. 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
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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 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.
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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 the
Collection Account and the Reserve Account in the name of the Trustee for the
benefit of the Receivable Noteholders to the extent of their interests therein
as provided in this Indenture and in the Assignment and Servicing Agreement
which accounts shall be Eligible Accounts maintained at the Corporate Trust
Office. On or before the Issuance Date, the Trustee shall establish the Residual
Account and the Liquidity Reserve Account in the name of the Trustee for the
benefit of the Class R Noteholders to the extent of their interests therein as
provided in this Indenture and in the Assignment and Servicing Agreement, which
accounts shall be Eligible Accounts maintained at the Corporate Trust Office.
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.
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(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 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;
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(ii) any certificate or other instrument evidencing such investment
shall be delivered directly to the Trustee or its agent and the Trustee shall
have sole possession of such instrument, and all income on such investment; and
(iii) the proceeds of any sale of an investment shall be remitted by
the purchaser thereof directly to the Trustee for deposit in the account in
which such investment was held.
(h) If any amounts are needed for disbursement from the Trust
Accounts and sufficient uninvested funds are not collected and available therein
to make such disbursement, in the absence of a Trust Order or Servicer Order for
the liquidation of investments held therein in an amount sufficient to provide
the required funds, the Trustee shall select and cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such accounts.
(i) The Trustee shall not in any way be held liable by reason of any
insufficiency in the Trust Accounts resulting from losses on investments made in
accordance with the provisions of this Section 3.01 (but the institution serving
as Trustee shall at all times remain liable for its own debt obligations, if
any, constituting part of such investments). The Trustee shall not be liable for
any investment made by it in accordance with this Section 3.01 on the grounds
that it could have made a more favorable investment or a more favorable
selection for sale of an investment.
SECTION 3.02. Collection of Moneys.
(a) On or before the Issuance Date, the Servicer shall designate an
address for the receipt directly from Lessees of all Lease Payments, Casualty
Payments and Termination Payments on or in respect of each Lease (which payments
may be aggregated by the Lessee paying the same with Other Lease Payments and
which designated address may be the same designated address to which such 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 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, withdraw from the Collection Account any amounts
in the Collection Account which the Servicer advises the Trustee are 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.
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(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:
(i) Lease Payments (net of any Excess Copy Charges, Maintenance
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 received on delinquent Lease payments not
advanced by the Servicer;
(iv) proceeds (other than Residual Warranty Payments) from purchases
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
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;
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(ii) to pay the Trustee Fee;
(iii) to reimburse unreimbursed Servicer Advances in respect of a
prior Payment Date;
(iv) 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;
(v) to make Interest Payments on the Class B Notes;
(vi) to make Interest Payments on the Class C Notes;
(vii) to make Interest Payments on the Class D Notes;
(viii) to make Interest Payments on the Class E Notes;
(ix) 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 only, until the Outstanding Principal Amount on the Class A-4 Notes
is reduced to zero;
(x) to pay the Class B Principal Payment to the Class B Noteholders;
(xi) to pay the Class C Principal Payment to the Class C
Noteholders;
(xii) to pay the Class D Principal Payment to the Class D
Noteholders;
(xiii) to pay the Class E Principal Payment to the Class E
Noteholders;
(xiv) 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;
(xv) 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
(xvi) to the Issuer, the balance, if any.
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(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.
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 pay the Residual Trustee Fee;
(iii) to reimburse unreimbursed Residual Servicer Advances in
respect of a prior Payment Date;
(iv) to make Interest Payments on the Class R-1 Notes;
(v) to make Interest Payments on the Class R-2 Notes;
(vi) 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;
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(vii) to pay principal on the Class R-1 Notes until such time as the
Outstanding Class R-1 Principal Amount is reduced to zero;
(viii) 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
(ix) 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).
(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
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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 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
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(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 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
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Three and in Article Four of this Indenture. The Trustee shall be entitled to
rely in good faith on such information or calculations in the performance of its
duties hereunder (i) unless and until a Responsible Officer of the Trustee has
actual knowledge, or is advised by any Noteholder (either in writing or orally
with prompt written or telecopied confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information.
ARTICLE IV
RELEASE OF LEASES AND EQUIPMENT
SECTION 4.01. Release of Equipment.
Subject to the satisfaction of the provisions of Section 4.02, the
Trustee shall release Equipment from the Lien of the Indenture upon the
occurrence of any of the following events: (a) the sale of such Equipment
pursuant to Section 4.03(b) of the 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 Purchase 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 Purchase 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 Purchase 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.
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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.
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.
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ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in making of Principal Payments at the Stated Maturity
of the relevant 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
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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 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.
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(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.
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.
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SECTION 6.05. Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the holders of the Notes in respect of which such judgment has been recovered.
SECTION 6.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
following an Event of Default, and any moneys that may then be held (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,
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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 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 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;
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:
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(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;
(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
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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.
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.
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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.
(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:
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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;
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
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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 been paid. The Trustee may from time to time,
upon directions in accordance with Section 6.12, postpone any public sale by
public announcement made at the time and place of such sale. For any public sale
of the Trust Estate, the Trustee shall have provided each Noteholder with notice
of such sale at least two weeks in advance of such sale which notice shall
specify the date, time and location of such sale.
(b) To the extent permitted by applicable law, the Trustee shall not
in any private sale sell to a third party the Trust Estate, or any portion
thereof unless,
(i) until such time as the conditions specified in Sections
10.01(a)(i) and (ii) have been satisfied in full, the holders of 66-2/3% of the
then Outstanding Principal Amount of each Class of the Notes voting separately
consent to or direct the Trustee in writing to make such sale; or
(ii) the proceeds of such sale would be not less than the sum of all
amounts due to the Trustee hereunder and the entire unpaid principal amount of
the Notes and interest due or to become due thereon in accordance with Section
6.06 on the Payment Date next succeeding the date of such sale.
The foregoing provisions shall not preclude or limit the ability of the Trustee
to purchase all or any portion of the Trust Estate at a private sale.
(c) In connection with a sale of all or any portion of the Trust
Estate:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale may hold,
retain, and possess and dispose of such property, without further
accountability, and any Noteholder may, in paying the purchase money therefore,
deliver in lieu of cash any Outstanding Notes or claims for interest thereon for
credit in the amount that shall, upon distribution of the net proceeds of such
sale, be payable thereon, and the Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Noteholders
after being appropriately stamped to show such partial payment;
(ii) the Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Trust Estate in
connection with a sale thereof;
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(iii) the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the 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.
(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:
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(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved, subject to
Section 7.03(f) hereof, that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Noteholders in accordance with Section 6.12 relating to the
time, method, and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture; and
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 7.02. Notice of Defaults or Events of Default.
Within two Business Days after a Responsible Officer obtaining
knowledge of the occurrence of any Default or Event of Default hereunder, the
Trustee shall transmit, by certified mail return receipt requested, hand
delivery or overnight courier, to all Noteholders, as their names and 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
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omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel as to legal matters and the
written advice of any such counsel selected by the Trustee with due care shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, note,
debenture, other evidence of indebtedness, 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.
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SECTION 7.07. Compensation, Reimbursement, etc.
(a) The amount of the "Trustee Fee" which the Trustee shall be
entitled to receive on each Payment Date following the issuance of the
Receivables Notes shall be determined by multiplying the (i) Discounted Present
Value of Performing Leases as of the prior Payment Date times (ii) one-twelfth
of ____%. The amount of the "Residual Trustee Fee" which the Trustee 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
____%.
(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.
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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.
(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
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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.
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.
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(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. Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(i) The Notes shall be authenticated and delivered and all rights,
powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised, solely by
the Trustee.
(ii) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Trustee or
by the Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate trustee,
except to the extent that, under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee.
(iii) 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.
(iv) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee or any other such trustee
hereunder and the Trustee shall not be personally liable by reason of any act or
omission of any co-trustee or other such separate trustee hereunder selected by
the Trustee with due care or appointed in accordance with directions to the
Trustee pursuant to Section 6.12.
(v) Any Act of Noteholders delivered to the Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
SECTION 7.13. Acceptance by Trustee.
The Trustee hereby acknowledges the conveyance of the Granted Assets
and the receipt of the Leases and the other Granted Assets granted by the Issuer
hereunder and declares that the Trustee, through a custodian, will hold such
Leases and
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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.
SECTION 7.15. Reports by Trustee to Noteholders.
To the extent required by the Trust Indenture Act, within 60 days
after each [June 18] of each year, following the date of this Indenture
beginning [June 18, 2000], 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
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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.
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.
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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.
(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 limited liability company 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, and (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.
(d) The Issuer will be qualified to do business in all states where
the failure to do so would have a material adverse effect on the noteholders.
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;
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(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 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,
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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;
(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.
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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.
SECTION 8.10. Payment of 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.
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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 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;
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(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 or
result in the reduction or withdrawal of the then current ratings of the
outstanding Notes.
(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 Indenture; provided, that no supplemental indenture
shall be entered into if it would result in the reduction or withdrawal of the
then current ratings of the outstanding Notes and 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
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(v) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust Estate or,
except as provided in Sections 4.01 or 4.02, terminate the lien of this
Indenture on any property at any time subject hereto or deprive any Noteholder
of the security afforded by the lien of this Indenture.
(b) The Trustee shall promptly deliver to each Noteholder and each
Rating Agency a copy of any supplemental indenture entered into pursuant to
Section 9.02(a).
SECTION 9.03. Execution of Supplemental Indentures.
In executing any supplemental indenture (a) pursuant to Article 9.01
of this Indenture or (b) pursuant to Section 9.02 of this Indenture without the
consent of each holder of the Notes to the execution of the same, the Trustee
shall be entitled to receive, and (subject to Section 7.01) shall be, fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any supplemental
indenture which affects the Trustee's own rights, duties, projections, or
immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes, and every
Noteholder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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.
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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
(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.
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(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.
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. Location of Leases.
The Servicer shall 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.
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SECTION 11.04. 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 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 11.06. Nonpetition.
The Trustee, by entering into this Indenture, and each Noteholder,
by accepting a Note, hereby covenants and agrees that it will not at any time
institute against the Issuer, or cooperate with or encourage others to or join
in any institution against the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes or this Indenture until the expiration of one
year and one day (or if a preference period of the applicable jurisdiction is
longer, the applicable preference period under that bankruptcy or similar law)
from the date the Notes are paid in full.
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In addition, each Noteholder, by accepting a Note, and the Trustee,
by entering into this Indenture, hereby covenants and agrees that no claim may
be brought against the Issuer, its directors, officers or shareholders, with
respect to any assets collateralizing any other debt obligation of the Issuer.
SECTION 11.07. Income Tax Characterization.
The parties hereto agree that it is their mutual intent that, for
all applicable tax purposes, the Notes will constitute indebtedness and that for
all applicable tax purposes, accordingly, the Issuer will be treated as sole and
exclusive owner of the Granted Assets. Further, each party hereto and each
Noteholder (by receiving and holding a Note), hereby covenants to every other
party hereto and to every other Noteholder to treat the Notes as indebtedness
for all applicable tax purposes in all tax filings, reports and returns and
otherwise, and further covenants that neither it nor any of its Affiliates will
take, or participate in the taking of or permit to be taken, any action that is
inconsistent with the treatment of the Notes as indebtedness for tax purposes.
All successors and assigns of the parties hereto shall be bound by the
provisions hereof.
SECTION 11.08. Non-Recourse.
Except as otherwise provided in Section 6.06, (i) the Receivable
Noteholders shall not at any time have any recourse on the Receivable Notes or
under this Indenture against the Issuer (other than the Receivable Assets) and
(ii) the Class R Noteholders shall not at any time have any recourse on the
Class R Notes or under this Indenture against the Issuer (other than the
Residual Assets).
SECTION 11.09. Subordination of Interests of Noteholders.
(a) Notwithstanding any term of this Indenture, but except as
provided in Section 6.06 hereof, the Issuer and the Trustee agree and, by its
holding of a Receivable Note, each Receivable Noteholder will be deemed to agree
that, to the extent the Receivable Noteholders are deemed to have any interest
or claim to any assets of the Issuer other than the Receivable Assets including,
but not limited to, amounts deposited into the Collection Account pursuant to
Section 3.03, such Receivable Noteholder's claim or interest shall be
subordinate to the claims or rights of such other debtholders to those assets.
In addition, each Noteholder agrees that this agreement to subordinate its claim
or interest constitutes a subordination agreement for purposes of Section 510(a)
of the Bankruptcy Code.
(b) Notwithstanding any term of this Indenture, the Issuer and the
Trustee agree and, by its holding of a Class R Note, each Class R Noteholder
will be deemed to agree that, to the extent that the Class R Noteholders are
deemed to have any interest or claim to any assets of the Issuer other than
Residual Assets including, but not limited to, amounts deposited into the
Residual Account pursuant to Section 3.04 and the Liquidity Reserve Account
pursuant to Section 3.06, such Class R Noteholder's claim or
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interest shall be subordinate to the claims or rights of such other debtholders
to those assets. In addition, each Noteholder agrees that this agreement to
subordinate its claim or interest constitutes a subordination agreement for
purposes of Section 510(a) of the Bankruptcy Code.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and witnessed, all as of the day and year first above written.
COPELCO CAPITAL FUNDING LLC 99-B,
as Issuer
By: COPELCO MANAGER, INC.
By:__________________________________
Name: Stephen W. Shippie
Title: Vice President
MANUFACTURERS AND TRADERS TRUST COMPANY, as
Trustee
By:__________________________________
Name: Russell T. Whitley
Title: Assistant Vice President
COPELCO CAPITAL, INC., as Servicer
By:__________________________________
Name: Nicholas Antonaccio
Title: Senior Vice President, Chief Financial
Officer & Treasurer
Signature Page to the Indenture
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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-B
____% CLASS A-1 LEASE-BACKED NOTE, SERIES 1999-B
CUSIP NO. ________
No. R-1 $_______
Copelco Capital Funding LLC 99-B, a limited liability company duly
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of ______________________ ($________), payable in
monthly installments beginning on October 18, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance at the rate of ____% per annum, until the full amount of principal
hereof is otherwise paid or made available for payment and shall be computed on
the basis of a year of 360 days and the actual number of days in the period
since the last Payment Date or with respect to the October 1999 Payment Date,
since ____, 1999.
Principal and interest on this Class A-1 Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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>
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 the Payment Date in
________, 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-B" (herein called the "Class A-1 Notes") limited in aggregate
principal amount of $_______, issued under the Indenture, dated as of September
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.
By accepting this Class A-1 Note, the Holder covenants and agrees
that it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
A-1-2
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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 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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
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-B
____% CLASS A-2 LEASE-BACKED NOTE, SERIES 1999-B
CUSIP NO. _______
No. R-1 $_______
Copelco Capital Funding LLC 99-B, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of __________________________ ($________), payable in
monthly installments beginning on October 18, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance, at the rate of ____% per annum, until the full amount of principal
hereof is otherwise paid or made available for payment and shall be computed on
the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class A-2 Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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>
The Stated Maturity of the Class A-2 Notes is the Payment Date in
________, 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 Issuer designated as its "____% Class A-2 Lease-Backed Notes,
Series 1999-B" (herein called the "Class A-2 Notes") limited in aggregate
principal amount of $_______, issued under the Indenture, dated as of September
1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital
Funding LLC 99-B, 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.
By accepting this Class A-2 Note, the Holder covenants and agrees
that it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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
A-2-2
<PAGE>
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.
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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
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-B
____% CLASS A-3 LEASE-BACKED NOTE, SERIES 1999-B
CUSIP NO. _______
No. R-1 $_________
Copelco Capital Funding LLC 99-B, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of __________________________ ($________), payable in
monthly installments beginning on October 18, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance, at the rate of ____% per annum, until the full amount of principal
hereof is otherwise paid or made available for payment and shall be computed on
the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class A-3 Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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>
The Stated Maturity of the Class A-3 Notes is the Payment Date in
________, 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 Issuer designated as its "____% Class A-3 Lease-Backed Notes,
Series 1999-B" (herein called the "Class A-3 Notes") limited in aggregate
principal amount of $________, issued under the Indenture, dated as of September
1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital
Funding LLC 99-B, 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.
By accepting this Class A-3 Note, the Holder covenants and agrees
that it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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
A-3-2
<PAGE>
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.
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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
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-B
____% CLASS A-4 LEASE-BACKED NOTE, SERIES 1999-B
CUSIP NO. __________
No. R-1 $_________
Copelco Capital Funding LLC 99-B, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _________________________ ($_______), payable in
monthly installments beginning on October 18, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance, at the rate of ____% per annum, until the full amount of principal
hereof is otherwise paid or made available for payment and shall be computed on
the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class A-4 Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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>
The Stated Maturity of the Class A-4 Notes is the Payment Date in
_________, 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 Issuer designated as its "____% Class A-4 Lease-Backed Notes,
Series 1999-B" (herein called the "Class A-4 Notes") limited in aggregate
principal amount of $_________, issued under the Indenture, dated as of
September 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco
Capital Funding LLC 99-B, 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.
By accepting this Class A-4 Note, the Holder covenants and agrees
that it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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
A-4-2
<PAGE>
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.
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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
B-5
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-B
___% CLASS B LEASE-BACKED NOTE, SERIES 1999-B
CUSIP NO. ________
No. R-1 $________
Copelco Capital Funding LLC 99-B, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of ______________________ ($________), payable in
monthly installments beginning on October 18, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance, at the rate of ___ per annum, until the full amount of principal
hereof is otherwise paid or made available for payment and shall be computed on
the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class B Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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>
The Stated Maturity of the Class B Notes is the Payment Date in
_______, 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-B"
(herein called the "Class B Notes") limited in aggregate principal amount of
$________, issued under the Indenture, dated as of September 1, 1999 (herein
called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-B, 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.
By accepting this Class B Note, the Holder covenants and agrees that
it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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,
B-2
<PAGE>
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 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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
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-B
____% CLASS C LEASE-BACKED NOTE, SERIES 1999-B
CUSIP NO. ________
No. R-1 $________
Copelco Capital Funding LLC 99-B, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of ________________________ ($_______), payable in
monthly installments beginning on October 18, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance, at the rate of ____% per annum, until the full amount of principal
hereof is otherwise paid or made available for payment and shall be computed on
the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class A-2 Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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>
The Stated Maturity of the Class C Notes is the Payment Date in
________, 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-B"
(herein called the "Class C Notes") limited in aggregate principal amount of
$________, issued under the Indenture, dated as of September 1, 1999 (herein
called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-B, 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.
By accepting this Class C Note, the Holder covenants and agrees that
it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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,
C-2
<PAGE>
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 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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
D-5
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-B
____% CLASS D LEASE-BACKED NOTE, SERIES 1999-B
CUSIP NO. ________
No. R-1 $_______
Copelco Capital Funding LLC 99-B, a limited liability company
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of ________________ ($_______), payable in monthly
installments beginning on October 18, 1999, in accordance with the Indenture.
Interest will accrue on the unpaid principal hereof from the date of issuance,
at the rate of ____% per annum, until the full amount of principal hereof is
otherwise paid or made available for payment and shall be computed on the basis
of twelve 30-day months and a year of 360 days.
Principal and interest on this Class D Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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>
The Stated Maturity of the Class D Notes is the Payment Date in
________, 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-B"
(herein called the "Class D Notes") limited in aggregate principal amount of
$________, issued under the Indenture, dated as of September 1, 1999 (herein
called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-B, 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.
By accepting this Class D Note, the Holder covenants and agrees that
it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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,
D-2
<PAGE>
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 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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
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-B
____% CLASS E LEASE-BACKED NOTE
CUSIP No. ________
No. R-1 $________
Copelco Capital Funding LLC 99-B, a limited liability company duly
organized and existing under the laws of Delaware (herein called the "Issuer",
which term
<PAGE>
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay __________________________, or registered
assigns, the principal sum of ___________________________________ ($_______),
payable in monthly installments beginning on October 18, 1999, in accordance
with the Indenture. Interest will accrue on the unpaid principal hereof from the
date of issuance, at the rate of ____% per annum, until the full amount of
principal hereof is otherwise paid or made available for payment and shall be
computed on the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class E Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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-B" (herein called the "Class E Notes"), limited in aggregate principal
amount of $________, issued under the Indenture, dated as of September 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>
By accepting this Class E Note, the Holder covenants and agrees that
it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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.
E-3
<PAGE>
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.
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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
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>
COPELCO CAPITAL FUNDING LLC 99-B
____% CLASS R-1 RESIDUAL LEASE-BACKED NOTE
CUSIP No. _______
No. R-1 $_______
Copelco Capital Funding LLC 99-B, a limited liability company duly
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of, ________________________ ($________), payable in
monthly installments beginning on October 18, 1999, in accordance with the
Indenture. Interest will accrue on the unpaid principal hereof from the date of
issuance, at the rate of ____% per annum, until the full amount of principal
hereof is otherwise paid or made available for payment and shall be computed on
the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class R-1 Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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-B" (herein called the "Class R-1 Notes"), limited in aggregate principal
amount of $________, issued under the Indenture, dated as of September 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 R-1 Notes are authenticated and
R-1-2
<PAGE>
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.
By accepting this Class R-1 Note, the Holder covenants and agrees
that it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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
R-1-3
<PAGE>
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 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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
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>
COPELCO CAPITAL FUNDING LLC 99-B
____% CLASS R-2 RESIDUAL LEASE-BACKED NOTE
CUSIP No. ________
No. R-1 $_________
Copelco Capital Funding LLC 99-B, a limited liability company duly
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of _____________________________, ($________),
payable in monthly installments beginning on October 18, 1999, in accordance
with the Indenture. Interest will accrue on the unpaid principal hereof from the
date of issuance, at the rate of ____% per annum, until the full amount of
principal hereof is otherwise paid or made available for payment and shall be
computed on the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class R-2 Note shall be paid on the
18th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing October 18, 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-B" (herein called the "Class R-2 Notes"), limited in aggregate principal
amount of $_______, issued under the Indenture, dated as of September 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 R-2 Notes are authenticated and
R-2-2
<PAGE>
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.
By accepting this Class R-2 Note, the Holder covenants and agrees
that it will not at any time institute against the Issuer, or cooperate with or
encourage others to join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes or this Indenture until
the expiration of one year and one day (or, if a preference period of the
applicable jurisdiction is longer, the applicable preference period under that
bankruptcy or similar law) from the date the Notes are paid in full.
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
R-2-3
<PAGE>
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 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>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ____, 1999
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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>
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>
EXHIBIT B
FORM OF
INVESTOR'S LETTER
(Date)
Copelco Capital Funding LLC 99-B
700 East Gate Drive
Mount Laurel, New Jersey 08110
FIRST UNION CAPITAL MARKETS
One First Union Capital Markets Corp., TW-9
Charlotte, NC 28288-0610
Ladies and Gentlemen:
We propose to purchase $_________ in original aggregate principal
amount of Copelco Capital Funding LLC 99-B _____% Class E R-1 R-2 Lease-Backed
Notes, Series 1999-B, (the "Notes"). The Notes were issued pursuant to an
Indenture (the "Indenture"), dated as of June 1, 1999, among Copelco Capital
Funding LLC 99-B, 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-B and the parties to the Placement Agent
Agreement.
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") or registered or
qualified under any state securities or "Blue Sky" laws and are being sold to us
in a transaction that is exempt from the registration requirements of the
Securities Act and the registration or qualification requirements of such state
laws.
2. We are (Check one):
(a) a "Qualified Institutional Buyer" (as defined in Rule
144A under the Securities Act), in the case of a transfer
of Certificates to be made in reliance on Rule 144A.
(b) an institutional investor that has such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of an
investment in the Notes and is able to bear the economic
risk of investment in the Notes.
<PAGE>
(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>
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>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION...... ........................................ 3
SECTION 1.01. General Definitions.................................. 3
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....................................... 28
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 Note Owners................ 38
SECTION 2.07. Definitive Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class R Notes............. 39
SECTION 2.08. Payment of Interest and Principal; Rights
Preserved.......................................... 40
SECTION 2.09. Persons Deemed Owners................................ 41
SECTION 2.10. Cancellation......................................... 41
SECTION 2.11. Noteholder Lists..................................... 41
SECTION 2.12. Treasury Securities.................................. 41
ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION AND APPLICATION
OF MONEYS; REPORTS........................................ 42
SECTION 3.01. Trust Accounts; Investments by Trustee............... 42
SECTION 3.02. Collection of Moneys................................. 44
<PAGE>
SECTION 3.03. Collection Account; Payments......................... 45
SECTION 3.04. The Residual Account; Payments....................... 47
SECTION 3.05. The Reserve Account.................................. 48
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............................... 52
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...................................... 53
SECTION 6.01. Events of Default.................................... 53
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.............................................. 56
SECTION 6.06. Application of Money Collected....................... 56
SECTION 6.07. Limitation on Suits.................................. 57
SECTION 6.08. Unconditional Right of Noteholders to Receive
Principal and Interest............................. 58
SECTION 6.09. Restoration of Rights and Remedies................... 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..................... 60
SECTION 6.14. Undertaking for Costs................................ 61
SECTION 6.15. Waiver of Stay or Extension Laws..................... 61
SECTION 6.16. Sale of Trust Estate................................. 62
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
ii
<PAGE>
SECTION 7.07. Compensation, Reimbursement, etc..................... 66
SECTION 7.08. Corporate Trustee Required; Eligibility.............. 66
SECTION 7.09. Resignation and Removal; Appointment of
Successor.......................................... 67
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
SECTION 7.13. Acceptance by Trustee................................ 69
SECTION 7.14. Preferential Collection of Claims Against the
Issuer............................................. 70
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................................... 74
SECTION 8.09. Information as to Issuer............................. 75
SECTION 8.10. Payment of Taxes..................................... 75
SECTION 8.11. Indemnification...................................... 75
SECTION 8.12. Commission Reports; Reports to Trustee; Reports
to Noteholders..................................... 76
ARTICLE IX SUPPLEMENTAL INDENTURES.......................................... 76
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.......................................... 76
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders........................................ 77
SECTION 9.03. Execution of Supplemental Indentures................. 78
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........................................ 79
SECTION 10.01. Satisfaction and Discharge of Indenture.............. 79
SECTION 10.02. Application of Trust Money........................... 80
iii
<PAGE>
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. Location of Leases................................... 80
SECTION 11.04. Officers' Certificate and Opinion of Counsel as
to Conditions Precedent............................ 81
SECTION 11.05. Statements Required in Certificate or Opinion........ 81
SECTION 11.06. Nonpetition.......................................... 81
SECTION 11.07. Income Tax Characterization.......................... 82
SECTION 11.08. Non-Recourse......................................... 82
SECTION 11.09. Subordination of Interests of Noteholders............ 82
SCHEDULES
SCHEDULE 1 Leases
EXHIBITS
EXHIBIT A Forms of Notes and Form of Trustee's Certificate of
Authentication
EXHIBIT B Form of Investor Letter
iv
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK 10019-6092
TELEPHONE 212 259-8000 FACSIMILE 212 259-6333
September __, 1999
Copelco Capital Funding LLC 99-B
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
Re: Copelco Capital Funding LLC 99-B
Registration Statement on Form S-1
(File No. 333-75673)
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding LLC
99-B, 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-B, Class A-2 Lease-Backed Notes, Series 1999-B, Class A-3 Lease-Backed
Notes, Series 1999-B, Class A-4 Lease-Backed Notes, Series 1999-B, Class B
Lease-Backed Notes, Series 1999-B, Class C Lease-Backed Notes, Series 1999-B and
Class D Lease-Backed Notes, Series 1999-B (the "Offered Notes") to be issued
pursuant to the Indenture dated on or about September 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.
<PAGE>
We are admitted to the Bar of the State of New York and we express
no opinion as to the laws of any other jurisdiction except as to matters that
are governed by Federal law or the laws of the State of New York. All opinions
expressed herein are based on laws, regulations and policy guidelines currently
in force and may be affected by future regulations.
Based upon the foregoing, we are of the opinion that when the
Indenture has been duly authorized by the 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
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE (212) 259-8000 FACSIMILE (212) 259-6333
September __, 1999
Copelco Capital Funding LLC 99-B
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
Re: Copelco Capital Funding LLC 99-B
Registration Statement on Form S-1
(File No. 333-75673)
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding LLC
99-B, 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-B Class A-1 Lease-Backed Notes, Series 1999-B, Class
A-2 Lease-Backed Notes, Series 1999-B, Class A-3 Lease-Backed Notes, Series
1999-B, Class A-4 Lease-Backed Notes, Series 1999-B, Class B Lease-Backed Notes,
Series 1999-B, Class C Lease-Backed Notes, Series 1999-B, and Class D
Lease-Backed Notes Series 1999-B (collectively, the "Notes").
In addition, assuming (i) the Indenture dated as of September 1,
1999 among Copelco Capital Funding LLC 99-B, 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:
o the Notes will be characterized as indebtedness for federal income
tax purposes; and
o subject to the assumptions and limitations described therein, the
discussion under the heading "Material Federal Income Tax
Considerations" in the
<PAGE>
prospectus contained in the Registration Statement sets forth all
the material federal income tax consequences to the original
purchasers of the Notes and is accurate in all material respects.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this opinion, we do not concede that we are
experts within the meaning of the Act or the rules and regulations therewith, or
that this consent is required by Section 7 of the Act.
Very truly yours,
DEWEY BALLANTINE LLP
2
================================================================================
COPELCO CAPITAL, INC.,
TRANSFEROR AND SERVICER
AND
COPELCO CAPITAL FUNDING LLC 99-B
ISSUER
-------------------------
ASSIGNMENT AND SERVICING AGREEMENT
Dated as of September 1, 1999
-------------------------
================================================================================
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF COPELCO CAPITAL
FUNDING LLC 99-B 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 SEPTEMBER 1, 1999, FOR THE BENEFIT OF THE PERSONS REFERRED
TO THEREIN.
<PAGE>
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 Capital Contribution of Leases......................................2
1.02 Capital Contribution of Equipment...................................2
1.03 Contribution of Leases; Grant of Security Interest..................2
1.04 Servicer to Act as Custodian........................................3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR..................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>
3.04 Costs of Servicing; Servicing Fee; Administrative Expenses.........17
3.05 Other Transactions.................................................17
SECTION 4. SERVICER ADVANCES AND TRANSFEROR'S SUPPORT.......................17
4.01 Late Lease Payments................................................17
4.02 Early Termination Leases...........................................18
4.03 Indemnification....................................................18
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.............................................24
6.06 Inspection.........................................................25
6.07 Servicer Records...................................................25
SECTION 7. THE TRANSFEROR...................................................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..................................................27
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..............................31
9.01 Substitution and Addition..........................................31
9.02 Procedure..........................................................33
9.03 Objection and Purchase.............................................34
9.04 Transferor's and Servicer's Subsequent Obligations.................34
ii
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SECTION 10. ASSIGNMENT......................................................34
10.01 Assignment to Trustee.............................................34
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..........................................35
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.....................................................42
14.03 Successors and Assigns............................................42
14.04 Modification......................................................43
14.05 No Proceedings....................................................43
14.06 Notices...........................................................43
14.07 Counterparts......................................................43
14.08 Nonpetition Covenant..............................................43
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
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ASSIGNMENT AND SERVICING AGREEMENT
This ASSIGNMENT AND SERVICING AGREEMENT is made and dated as of September
1, 1999, by and between COPELCO CAPITAL FUNDING LLC 99-B, a Delaware limited
liability company, as issuer hereunder (the "Issuer") and COPELCO CAPITAL, INC.,
a Delaware corporation, as originator and transferor 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-B in the aggregate principal amount of
$__________ (the "Class A-1 Notes"), one class of _____% Class A-2 Lease-Backed
Notes, Series 1999-B in the aggregate principal amount of $__________ (the
"Class A-2 Notes"), one class of _____% Class A-3 Lease-Backed Notes, Series
1999-B in the aggregate principal amount of $__________ (the "Class A-3 Notes"),
one class of _____% Class A-4 Lease-Backed Notes, Series 1999-B 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-B (the "Class B
Notes"), in the aggregate principal amount of $__________, one class of _____%
Class C Lease-Backed Notes, Series 1999-B, in the aggregate principal amount of
$__________ (the "Class C Notes"), one class of _____% Class D Leased-Backed
Notes, Series 1999-B in the aggregate principal amount of $__________ (the
"Class D Notes"), one class of _____% Class E Lease-Backed Notes, Series 1999-B,
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-B in the aggregate principal amount of $__________ (the "Class R-1
Notes") and one class of _____% Class R-2 Residual Notes, Series 1999-B 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 a distribution to the Transferor.
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.
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A G R E E M E N T S
SECTION 1. CAPITAL CONTRIBUTION
1.01 Capital 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 of Equipment.
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 Contribution 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 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
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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 1.04 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.
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
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, 1998 and December 31,
1997 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 March 31, 1999 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.
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(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
March 31, 1999 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, (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 due
inquiry) of any challenge, dispute or claim by or against the Lessee under or
affecting any
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Lease or of the bankruptcy or insolvency of any such Lessee and (iv) is
assignable. 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) As of the Cut-Off Date, each Lease hereunder is not a Non-Performing
Lease.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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).
(k) 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
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transaction contemplated hereby, which other indenture provides that the lien
thereof on such master lease extends only to such master lease insofar as it
relates to lease schedules which are not part of the Trust Estate).
(l) 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.
(m) 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.
(n) 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.
(o) 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.
(p) No Lease was originated in or is subject to the laws of any
jurisdiction whose laws would make any of the transfers thereof under this
Assignment and Servicing Agreement unlawful.
(q) All parties to each Lease had all requisite authority and capacity to
execute such Lease.
(r) None of the Leases is a consumer lease and each Lessee has accepted the
Equipment leased to it.
(s) The Booked Residual Value of the Equipment as of the Cut-Off Date
equals $___________.
(t) As of the Cut-Off Date, the final lease payment on each Lease was due
and payable on or prior to __________.
(u) Each Lease agreement is "chattel paper" within the meaning of The
Uniform Commercial Code in the states of New York and New Jersey.
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(v) As of the Cut-Off date, no more than 2% of the Leases are Leases not
originated by the Transferor.
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
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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.
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
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any subsidiary knows of any proposed additional tax assessment against it in any
material amount nor of any basis therefor.
(b) The provisions for taxes on the books of the 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.
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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.
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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
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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
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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
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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.
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(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.
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(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%.
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.
SECTION 4. SERVICER ADVANCES AND TRANSFEROR'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.
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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 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")
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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.
(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
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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 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,
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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, Termination
Payment or Residual Realizations, and (iii) identifying the lease or leases to
which such amounts relate.
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5.02 Annual Independent Public Accountant's Report.
The Servicer shall cause a firm of independent public accountants (who may
also render other services to the Servicer or to the 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, 25 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 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
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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:
(1) a consolidated balance sheet of the Servicer (or its parent) and
its consolidated subsidiaries, at the end of that year, and
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(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.
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
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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 inspect
the servicing operations and discuss the servicing operations of the Servicer
with any of its officers or employees all at such reasonable times and as often
as may be reasonably requested for the purpose of reviewing 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 TRANSFEROR
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 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.
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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;
(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
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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 the servicing operations and discuss the servicing operations of the
Transferor with any of its officers or employees, all at such reasonable times
and as often as may be reasonably requested for the purpose of reviewing its
performance as a Servicer 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
contributions of Leases and Equipment pursuant to this Agreement.
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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
contributed the Leases and 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;
(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
purchases
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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 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.
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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 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, Moody's 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
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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 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:
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(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 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.
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(vi) such Additional Lease or Substitute Lease was originated in the
Healthcare Group, the Commercial and Industrial Group and the Business
Technology Group 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 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 as a
contribution to capital 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
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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.
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.
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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
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
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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.
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.
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Casualty Payment - any payment pursuant to a Lease on account of the loss,
theft, condemnation, governmental taking, destruction, or damage beyond repair
of any item of Equipment subject thereto which results, in accordance with the
terms of the Lease, in a reduction in the number or amount of any future Lease
Payments due thereunder or in the termination of the Lessee's obligation to make
future Lease Payments thereunder.
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-B.
Class A-2 Notes - the Issuer's _____% Class A-2 Lease-Backed Notes, Series
1999-B.
Class A-3 Notes - the Issuer's _____% Class A-3 Lease-Backed Notes, Series
1999-B.
Class A-4 Notes - the Issuer's _____% Class A-4 Lease-Backed Notes, Series
1999-B.
Class B Notes - the Issuer's _____% Class B Lease-Backed Notes, Series
1999-B.
Class C Notes - the Issuer's _____% Class C Lease-Backed Notes, Series
1999-B.
Class D Notes - the Issuer's _____% Class D Lease-Backed Notes, Series
1999-B.
Class E Notes - the Issuer's _____% Class E Lease-Backed Notes, Series
1999-B.
Class R Notes - the Issuer's Class R-1 Notes and Class R-2 Notes.
Class R-1 Notes - the Issuer's _____% Class R-1 Lease-Backed Notes, Series
1999-B.
Class R-2 Notes - the Issuer's _____% Class R-2 Lease-Backed Notes, Series
1999-B.
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 - opening of business on _______, 1999.
Delinquent Lease - Section 1.01 of the Indenture.
Determination Date - Section 1.01 of the Indenture.
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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.
Indemnified Party - Section 4.03 hereof.
Indenture - the Indenture dated as of September 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-B, 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.
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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 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 beginning 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 - each lessee under a Lease.
Lien - means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics liens, and any liens
that attach to a Lease by operation of law.
Liquidity Reserve Account - Section 1.01 of the Indenture.
Maintenance Charges - Section 1.01 of the Indenture.
Nominal Buy-Out Lease - each Lease identified on Exhibit A hereto as having
an estimated residual value of $10 or less in the column under the-heading
"RESIDUAL".
Non-Performing Lease - Section 1.01 of the Indenture.
Nonrecoverable Advance - any advance made or to be made by the Servicer
pursuant to Section 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
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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 18th 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 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 and Poor's Ratings Group, 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.
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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.
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, the Servicer and First Union Capital Markets Corp., as
representative of the underwriters for the purchase and sale of the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes.
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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.
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.
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14.04 Modification.
The terms of this Assignment and Servicing Agreement shall not be waived,
modified or amended without (a) the written consent of the party against whom
such waiver, modification or amendment is claimed, (b) the Trustee (acting upon
the instructions of the holders of 66-2/3% of the then aggregate unpaid
Outstanding Principal Amount of the Notes) and (c) the Rating Agencies
confirming that such modification, waiver or amendment will not result in a
withdrawal or downgrade of the then current ratings 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.
14.08 Nonpetition Covenant.
The Transferor, by entering into this Assignment and Servicing Agreement,
hereby covenants and agrees that it will not at any time institute against the
Issuer or cooperate with or encourage others to or join in any action against
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings, under any federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes or the related Indenture until the expiration of one year and one day (or
if a preference period of a jurisdiction is longer, the applicable preference
period under that bankruptcy or similar law) from the date the Notes are paid in
full.
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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: Nicholas Antonaccio
Title: Vice President, Chief Financial
Officer & Treasurer
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.,
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: Russell T. Whitley
Title: Assistant Vice President
[Signature Page to the Assignment and Servicing Agreement]
<PAGE>
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
[On file with Trustee]
A-1
<PAGE>
INTER-COMPANY LOAN NOTE
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS PROMISSORY NOTE ON THE PART OF
COPELCO CAPITAL FUNDING LLC 99-B 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.
$____________ September __, 1999
COPELCO CAPITAL, INC., a Delaware corporation (the "Maker"), with its
principal office at One International Boulevard, Mahwah, NJ 07430-0631, FOR
VALUE RECEIVED, hereby promises to pay to the order of Copelco Capital Funding
LLC 99-B, a Delaware limited liability company or its assignee (the "Payee"),
for its account, the principal sum of __________________________________________
($____________) (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 September 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>
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
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<PAGE>
EXHIBIT C
FORM OF RECEIVABLES SERVICING REPORT
Line
1 TRANSACTION CASH FLOW - SEE COMPUTER DETAIL
1/1 Beginning Net Present Value
1/2 Less:
- current month
1/3 Add: Actual Interest Payment (Weighted Avg. A, B & C notes)
1/4 Add: 0.75% Servicing Component
1/5 Less: Current month Nonperforming
1/5a Less: Warranty Leases
1/6 Less: Amounts on Early Terminations
1/7 Add: Amounts due to Substitutions
1/8 Add: Amounts due to Additional leases (Prepaid leases)
1/9 Ending Net Present Value
2 OVERDUE LEASE PAYMENTS - SEE COMPUTER DETAIL
2/1 Beginning Balance
2/2 (Memo) Overdue Payments Received
2/3 Less: Reimbursed Per This Report
2/4 Less: Past Dues on Disqualified Leases - Early Terminations
2/5 Less: Past Dues on Disqualified Leases - Nonperforming and Warranty
2/6 Add: Last Month's Current Payments that became Past due
2/7 Add: Received on Replacements Leases
2/8 (MEMO) Net New Advances
2/9 Ending Balance
3 RESIDUAL
3/1 Beginning Availability
3/2 Less: Amount Used
3/3 Ending Maximum Availability
3/4 (Memo) Amount Realized
3/5 LTD Residuals of Nonperforming, Warranty, and Prepaid leases substituted
3/6 LTD Residuals of Substitutions
4 COLLECTION ACCOUNT-ADVANCE LEASE PAYMENTS
4/1 Beginning Balance
4/2 Less: Applied to Current from Prepaid
4/3 Less: Advance on Disqualified Leases
4/4 Add: Received This Month
4/5 Add: Received on Replacement Leases
4/6 Ending Balance
C-1
<PAGE>
5 RESIDUAL EVENT CALCULATION
5/1 Delinquency condition exist (payments over 62 days performing leases only)
5/2 Overdue payments and PV on leases over 62 but less than 122 days
5/3 PV of performing leases
5/4 Delinquency Rate Current Month
5/5 Second Preceding Month
5/6 Third Preceding Month
5/7 Average
5/8 Residual Realization >100% (Yes/No)
5/9 Copelco Capital as Servicer (Yes/No)
6 CASH RESERVE ACCOUNT
6/1 Beginning Balance
6/2 Less: New Obligations: Total Shortfall (B9)
6/3 Plus: Interest earned on Cash Reserve Acct.
6/4 Ending Balance
6/5 ___% of Outstanding Note Value
6/6 Lesser of __% of $__________ and Outstanding Note Value
6/7 Target Cash Reserve (Greater of 6/5 & 6/6)
6/8 Cash Reserve Release (6/4-6/7)
6/9 Ending Balance Cash Reserve Account
7 RESIDUAL ACCOUNT
7/1 Beginning Balance
7/2 Plus Current Month Addition
7/3 Less Disbursements
7/4 Ending Balance
8 NONPERFORMING LEASES
8/1 Beginning Balance of Nonperforming Leases
8/2 Plus Current Month Additions
8/3 Plus Past Due Payments on Nonperforming Leases
8/4 Less Current Month Recoveries
8/5 Ending Balance
CASH RECEIPTS
Line
A/1 Regular monthly payments
A/2 Overdue payments
A/3 Overdue Payments due on Early Termination and Termed Out Leases (From
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>
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 Beginning Class B Note Balance
C/24a Class B Note Value Target (__% of 1/9)
C/24b Class B Note Value Floor (__% of $__________ + Cum. Losses-C/12-6/4)
C/25 Class B Principal Paid
C/26 Ending Class B Note Balance C/27 Beginning Class C Note Balance
C/28a Class C Note Value Target (__% of 1/9)
C/28b Class C Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/29 Class C Principal Paid
C-3
<PAGE>
C/30 Ending Class C Note Balance
C/31 Beginning Class D Note Balance
C/32 Class D Note Value Target (__% of 1/9)
C/33 Class D Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/34 Class D Principal Paid
C/35 Ending Class D Note Balance
C/36 Beginning Class E Note Balance
C/37 Class E Note Value Target (__% of 1/9)
C/38 Class E Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/39 Class E Principal Paid
C/40 Ending Class E Note Balance
C/41 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
COPELCO CAPITAL FUNDING TRUST 1999-B
__________ _____% CLASS E LEASE-BACKED NOTES
__________ _____% CLASS R-1 LEASE RESIDUAL BACKED NOTES
__________ _____% CLASS R-2 LEASE RESIDUAL BACKED NOTES
SERIES 1999-B
PLACEMENT AGENT AGREEMENT
September __, 1999
First Union Capital Markets Corp.
One First Union Center, TW-9
Charlotte, North Carolina 282888
Ladies and Gentlemen:
Copelco Capital Funding LLC 99-B, 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, Series 1999-B (the
"Class E Notes"), $__________ of _____% Class R-1 Lease Residual Backed Notes,
Series 1999-B (the "Class R-1 Notes") and $__________ of _____% Class R-2 Lease
Residual Backed Notes, Series 1999-B (the "Class R-2 Notes;" collectively with
the Class R-1 Notes, the "Class R Notes;" and collectively with the Class E
Notes, the "Notes"). The Notes will be issued on September __, 1999 or such
other date as we shall mutually agree upon (the "Closing Date") pursuant to an
Indenture, dated as of September 1, 1999 (the "Indenture"), among 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-B (the "Class A-1
Notes"), $___________ aggregate principal amount of the Issuer's _____% Class
A-2 Lease-Backed Notes, Series 1999-B (the "Class A-2 Notes"), $___________
aggregate principal amount of the Issuer's _____% Class A-3 Lease-Backed Notes,
Series 1999-B (the "Class A-3 Notes"),
<PAGE>
$___________aggregate principal amount of the Issuer's _____% Class A-4
Lease-Backed Notes, Series 1999-B (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"), $__________ of the _____% Class B Lease-Backed Notes, Series 1999-B
(the "Class B Notes"), $__________ of the _____% Class C Lease-Backed Notes,
Series 1999-B (the "Class C Notes") and $__________ of the _____% Class D
Lease-Backed Notes, Series 1999-B. 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 September
__, 1999 (the "Prospectus") relating to such public offering is incorporated by
reference 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 a firm commitment
basis and subject to 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
September __, 1999
2
<PAGE>
relating to the Class E Notes and a copy of a Private Placement Memorandum
dated September __, 1999 related to the Class R Notes (collectively, as
supplemented and amended, the "Private Placement Memorandum") relating to
the Notes. The Private Placement Memorandum does not, as of its date, and
as of the date hereof and the Closing Date 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
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 and each of the Indenture
and the Assignment and Servicing Agreement conforms in all material
respects to the description thereof contained in the Private Placement
Memorandum.
(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 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 and conform in all
material respects to the description thereof contained in the Private
Placement Memorandum.
(v) The issue 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.
3
<PAGE>
(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").
(vii) The Indenture, when executed and delivered, will have been duly
qualified under the Trust Indenture Act of 1939.
(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 and the Indenture have been duly
authorized, executed and delivered, and this Agreement constitutes, and
when executed and delivered, the Assignment and Servicing Agreement and the
Indenture 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 and each of the Indenture and the
Assignment and Servicing Agreement conforms in all material respects to the
description thereof contained in the Private Placement Memorandum.
(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, 1998 and the period ended March 31, 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 March 31, 1999.
4
<PAGE>
(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 prior to the Closing
Date.
(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
(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, as amended (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.
(v) The Placement Agent represents and agrees that it has not offered
or sold, and will not offer or sell, any Notes constituting part of its
allotment, except (i) to "qualified institutional buyers" as defined in
Rule 144A under the 1933 Act or (ii) to
5
<PAGE>
institutional "accredited investors" as defined in Rule 501(a)(1),(2),(3)
or (7) under the 1933 Act.
(vi) The Placement Agent represents and agrees that it will (i)
deliver to each initial purchaser of the Notes, at or prior to the related
confirmation of sale, a copy of the Private Placement Memorandum, as then
amended or supplemented, and (ii) if definitive notes have been issued to
an initial purchaser of the Notes, receive a representation letter from
each such purchaser substantially in the form of Exhibit B to the
Indenture.
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 or its counsel reasonably objects.
(b) If, at any time when the 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.
(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
6
<PAGE>
required to register the Notes under any such jurisdiction 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 Rating Agencies, 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 within any required time period.
Section 6. CONDITIONS OF PLACEMENT AGENT'S 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 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 threatening of any proceeding for that purpose.
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(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 any other contracts to which the Issuer or Copelco is party or by
which either of them is bound; (vi) there is no legal or governmental proceeding
pending or, to the best of my knowledge, threatened 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 Prospectus (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 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 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. 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,
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enforceability of the Transaction Documents and the Notes, certain securities
law issues, perfection, federal tax, and other related matters as the Placement
Agent may require.
(d) On the date hereof and at the Closing Date, KPMG LLP 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 "___" by Duff & Phelps
Credit Rating Co. ("DCR") and "___" by Standard & Poors Rating Group ("S&P"),
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 "___" by Moody's Investors Service, Inc. ("Moody's"),
"___" by DCR and "___" by S&P, 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 "___" by Moody's, "___" by
DCR and "___" by S&P, 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.
(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 because the conditions set forth in Section 6
have not been met, or (y) the Placement Agent terminates the engagement pursuant
to Section 10 or because any conditions precedent in Section 6 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's 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:
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(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, S&P 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) Reasonable fees and expenses of Dewey Ballantine LLP;
(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 cost of preparing the 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 Placement Agent in the event of the
Placement Agent's 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
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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 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, claim 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 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 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 second and sixth
paragraph 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 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
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indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that representation of such
indemnified party and the indemnifying party may be inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them, the indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. It is understood that the indemnifying party
shall, in connection with any such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys together with appropriate local counsel at
any time from all indemnified parties not having actual or potential differing
interests with any other indemnified party. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to appoint
counsel to defend such action and approval by the indemnified party of such
counsel, the indemnifying party will not be liable for any settlement entered
into without its consent and will not be liable to such indemnified party under
this Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii). Notwithstanding the immediately preceding sentence and the first
sentence of this paragraph, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(d) 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
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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;
(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
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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 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.
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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 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
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Agreement, or to such other address as you may designate in writing to the
Issuer and Copelco, if to Copelco, addressed to Copelco at One International
Boulevard, Mahwah, New Jersey 07430 or if to the Issuer, addressed to the Issuer
at 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, 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.
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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.
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Very truly yours,
COPELCO CAPITAL, INC.
By:
----------------------------------------------
Name: Nicholas Antonaccio
Title: Vice President, Chief Financial Officer
& Treasurer
COPELCO CAPITAL FUNDING LLC 99-B
By: COPELCO MANAGER, INC.
as Manager
By:
----------------------------------------------
Name: Stephen W. Shippie
Title: Vice President
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
FIRST UNION CAPITAL MARKETS CORP.
By:
------------------------------
Name:
Title:
[Signature Page to the Placement Agent Agreement]
18
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Copelco Capital Funding LLC 99-B:
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
September 13, 1999
================================================================================
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-B
---------------------------------------------------
(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-B
CLASS A-2 LEASE-BACKED NOTES, SERIES 1999-B
CLASS A-3 LEASE-BACKED NOTES, SERIES 1999-B
CLASS A-4 LEASE-BACKED NOTES, SERIES 1999-B
CLASS B LEASE-BACKED NOTES, SERIES 1999-B
CLASS C LEASE-BACKED NOTES, SERIES 1999-B
CLASS D LEASE-BACKED NOTES, SERIES 1999-B
(Title of indenture securities)
================================================================================
<PAGE>
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>
ITEM 16. LIST OF EXHIBITS
Exhibit 1. Organization Certificate of the Trustee as now in
effect.*
Exhibit 2. Certificate of Authority of the Trustee to commence
business (contained in Exhibit 1).
Exhibit 3. Authorization of the Trustee to exercise corporate trust
powers (contained in Exhibit 1).
Exhibit 4. Existing By-Laws of the Trustee.*
Exhibit 5. Not Applicable.
Exhibit 6. Consent of the Trustee.*
Exhibit 7. Report of Condition of the Trustee.*
Exhibit 8. Not Applicable.
Exhibit 9. Not Applicable.
- ----------
* Filed Herewith
2
<PAGE>
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 ____ day of September, 1999.
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ RUSSELL T. WHITLEY
--------------------------------------
Russell T. Whitley
Assistant Vice President
3
<PAGE>
EXHIBIT 1
ORGANIZATION CERTIFICATE OF THE TRUSTEE
RESTATED ORGANIZATION CERTIFICATE
OF
MANUFACTURERS AND TRADERS TRUST COMPANY
UNDER SECTION 8007 OF THE BANKING LAW
DATED: May 18, 1992
FILER: Richard A. Lammert, Esq.
Senior Vice President, General Counsel and Secretary
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14240
Exhibit 1, Page 1
<PAGE>
RESTATED ORGANIZATION CERTIFICATE
OF
MANUFACTURERS AND TRADERS TRUST COMPANY
UNDER SECTION 8007 OF THE BANKING LAW
The undersigned, being, respectively, the Chairman of the Board, President
and Chief Executive Officer and the Senior Vice President, General Counsel and
Secretary of MANUFACTURERS AND TRADERS TRUST COMPANY, pursuant to Section 8007
of the Banking Law of the State of New York, do hereby restate, certify and set
forth as follows:
(1) The name of the corporation is MANUFACTURERS AND TRADERS TRUST COMPANY.
The name under which the corporation was originally incorporated was The
Fidelity Trust and Guaranty Company of Buffalo.
(2) The organization certificate of the corporation was filed in the Office
of the Superintendent of Banks of the State of New York on September 13, 1892,
and in the Office of the Clerk of Erie County, New York on September 14, 1892,
and the certificate of authorization of the Superintendent of Banks of the State
of New York was issued on June 27, 1893.
A first restated organization certificate of the corporation was approved
and filed in the Office of the Superintendent of Banks of the State of New York
on August 6, 1954. Such restated organization certificate was amended from time
to time thereafter.
A second restated organization certificate of the corporation was approved
and filed in the Office of the Superintendent of Banks of the State of New York
on February 26, 1991.
(3) The restated organization certificate is hereby further amended to
effect an amendment authorized by Section 8001 of the Banking Law in order to
increase the corporation's capital stock to $200,000,000 and to increase the par
value of all authorized shares, whether issued or unissued, to $40. In order to
effect such amendment, Article 3 of the corporation's organization certificate
is hereby amended in its entirety to read as follows:
"3. The amount of the corporation's capital stock is $200,000,000. The
number of shares into which such capital stock shall be divided is
5,000,000 common shares of the par value of $40 per share."
(4) The text of the corporation's organization certificate, as amended
heretofore, is hereby restated without further change to read as hereinafter set
forth in full:
Exhibit 1, Page 2
<PAGE>
"ORGANIZATION CERTIFICATE
OF
MANUFACTURERS AND TRADERS TRUST COMPANY
1. The name by which the said corporation shall be known is MANUFACTURERS
AND TRADERS TRUST COMPANY.
2. The place where the principal office of the corporation is to be located
is the City of Buffalo, County of Erie and State of New York.
3. The amount of the corporation's capital stock is $200,000,000. The
number of shares into which such capital stock shall be divided is 5,000,000
common shares of the par value of $40 per share.
4. The number of directors which the corporation shall have shall be not
less than seven (7) nor more than thirty (30).
5. The term of existence of the corporation shall be perpetual.
6. The corporation shall exercise the fiduciary powers conferred by Section
100 of the Banking Law, as amended from time to time, in addition to the other
powers conferred upon banks and trust companies pursuant to the Banking Law or
other applicable law."
----------
(5) This restatement of the organization certificate was authorized
pursuant to Section 6015 of the Banking Law by the written consent, setting
forth the action taken, of the holder of all of the outstanding shares entitled
to vote thereon.
IN WITNESS WHEREOF, the undersigned have hereunto signed this Restated
Organization Certificate on May 18, 1992.
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /S/ ROBERT G. WILMERS
------------------------------------
Robert G. Wilmers
Chairman of the Board, President
and Chief Executive Officer
By: /S/ RICHARD A. LAMMERT
------------------------------------
Richard A. Lammert
Senior Vice President, General Counsel
and Secretary
Exhibit 1, Page 3
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF ERIE )
Robert G. Wilmers and Richard A. Lammert, being first duly sworn, depose
and say that they are, respectively, the Chairman of the Board, President and
Chief Executive Officer and Senior Vice President, General Counsel and Secretary
of MANUFACTURERS AND TRADERS TRUST COMPANY, that they have read the foregoing
certificate and know the contents thereof and that the statements therein
contained are trust.
/S/ ROBERT G. WILMERS
--------------------------------------
Robert G. Wilmers
/S/ RICHARD A. LAMMERT
--------------------------------------
Richard A. Lammert
Sworn to before me the 18th day of May, 1992.
/S/ MARY ELLEN SMITH
- -------------------------------
Notary Public
Mary Ellen Smith
Notary Public, State of New York
No. 4991329
Qualified in Erie County
Commission Expires February 3, 1994
Exhibit 1, Page 4
<PAGE>
EXHIBIT 4
BYLAWS OF THE TRUSTEE
BY-LAWS
of
MANUFACTURERS AND TRADERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING: The Annual Meeting of the Corporation, for the
election of directors and for transaction of such other business as may be set
forth in the notice of meeting, shall be held at the principal office of the
Corporation or at such other place in the City of Buffalo, New York at 10:30
a.m. in the forenoon on the third Tuesday of March in each year, or on such date
and at such time as the Board of Directors shall determine.
SECTION 2. SPECIAL MEETINGS: Special meetings of the stockholders may be
called to be held at the principal office of the Corporation or elsewhere within
the State of New York at any time by the Board of Directors or the Chairman of
the Board or the President, and shall be called by the Chairman of the Board or
the President or the Secretary or an Assistant Secretary at the request in
writing of five or more members of the Board of Directors, or at the request in
writing of the holders of record of at least 25% of the outstanding shares of
the Corporation entitled to vote. Such request shall state the purpose or
purposes for which the meeting is to be called.
SECTION 3. NOTICE OF MEETINGS: Written notice of each meeting of the
stockholders shall be given by depositing in the United States mail, postage
prepaid, not less than 10 nor more than 50 days before such meeting, a copy of
the notice of such meeting directed to each stockholder of record entitled to
vote at the meeting, at his address as it appears on the record of stockholders,
or, if he shall have filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address, then directed to
him at such other address. The notice shall state the place, date and hour of
the meeting, the purpose or purposes for which the meeting is called and, unless
it is the annual meeting, indicate that the notice is being issued by or at the
direction of the person or persons calling the meeting. If action is proposed to
be taken at any meeting which would, if taken, entitle dissenting stockholders
to receive payment for their shares, the notice shall include a statement of
that purpose and to that effect. At each meeting of stockholders only such
business may be transacted which is related to the purpose or purposes set forth
in the notice of meeting.
SECTION 4. WAIVER OF NOTICE: Whenever under any provisions of these
by-laws, the organization certificate, the terms of any agreement or instrument,
or law, the Corporation or the Board of Directors or any committee thereof is
authorized to take any action after notice to any person or persons or after the
lapse of a prescribed period of time, such action may be taken without notice
and without the lapse of such period of time, if at any time before or after
such action is completed the person or persons entitled to such notice or
entitled to participate in the action to be taken or, in the case of a
stockholder, by his attorney-in-fact, submit a signed waiver of notice of such
requirements. The attendance of any stockholder at any meeting, in person or by
proxy, without protesting prior to the conclusion the lack of notice of such
meeting, shall constitute a waiver of notice by him.
SECTION 5. PROCEDURE: At every meeting of stockholders the order of
business and all other matters of procedure may be determined by the person
presiding at the meeting.
SECTION 6. LIST OF STOCKHOLDERS: A list of stockholders as of the record
date, certified by the officer of the Corporation responsible for its
preparation or by a transfer agent, shall be produced at any meeting of
stockholders upon the request thereat or prior thereto of any stockholder. If
the right to vote at any meeting is challenged, the inspectors of election, or
person presiding thereat, shall require such list of stockholders to be produced
as evidence of the right of the persons challenged to vote at such meeting, and
all persons who appear from such list to be stockholders entitled to vote
thereat may vote at such meeting.
Exhibit 4, Page 1
<PAGE>
SECTION 7. QUORUM: At all meetings of the stockholders of the Corporation a
quorum must be present for the transaction of business and, except as otherwise
provided by law, a quorum shall consist of the holders of record of not less
than a majority of the outstanding shares of the Corporation entitled to vote
thereat, present either in person or by proxy. When a quorum is once present to
organize a meeting of the stockholders, it is not broken by the subsequent
withdrawal of any stockholders.
SECTION 8. ADJOURNMENTS: The stockholders entitled to vote who are present
in person or by proxy at any meeting of stockholders, whether or not a quorum
shall be present or represented at the meeting, shall have power by a majority
vote to adjourn the meeting from time to time without further notice other than
announcement at the meeting. At any adjourned meeting at which a quorum shall be
present in person or by proxy any business may be transacted that might have
been transacted on the original date of the meeting, and the stockholders
entitled to vote at the meeting on the original date (whether or not they were
present thereat), and no others, shall be entitled to vote at such adjourned
meeting.
SECTION 9. VOTING; PROXIES: Each stockholder of record entitled to vote
shall be entitled at every meeting of stockholders of the Corporation to one
vote for each share of stock having voting power standing in his name on the
record of stockholders on the record date fixed pursuant to Section 3 of Article
VI of these by-laws. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent without a meeting may do so either
in person or by proxy appointed by instrument executed in writing by such
stockholder or his duly authorized attorney-in-fact and delivered to the
secretary of the meeting. No director, officer, clerk, teller or bookkeeper of
the Corporation shall act as proxy at any meeting. No proxy shall be valid after
the expiration of 11 months from the date of its execution unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
stockholder executing it except as otherwise provided by law. Directors elected
at any meeting of the stockholders shall be elected by a plurality of the votes
cast. All other corporate action to be taken by vote of the stockholders shall,
except as otherwise provided by law or these by-laws, be authorized by a
majority of the votes cast. The vote for directors shall be by ballot, but
otherwise the vote upon any question before a meeting shall not be by ballot
unless the person presiding at such meeting shall so direct or any stockholder,
present in person or by proxy and entitled to vote thereon, shall so demand.
SECTION 10. APPOINTMENT OF INSPECTORS OF ELECTION: The Board of Directors
may, in advance of any meeting of the stockholders, appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed in advance of the meeting, the person presiding at such meeting
may, and on the request of any stockholder entitled to vote thereat shall,
appoint one or more inspectors. In case any inspector appointed fails to appear
or act, the vacancy may be filled by appointment made by the Board of Directors
in advance of the meeting or at the meeting by the person presiding thereat. No
director, officer or candidate for the office of director of the Corporation
shall be eligible to act as an inspector of an election of directors of the
Corporation. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
SECTION 11. DUTIES OF INSPECTORS OF ELECTION: The inspectors of election
shall determine the number of shares outstanding and entitled to vote, the
shares represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders.
ARTICLE II
DIRECTORS
SECTION 1. NUMBER AND QUALIFICATIONS: The number of directors of the
Corporation shall be not less than seven (7) nor more than twenty-five (25),
with the exact number to be fixed from time to time by resolution of a majority
of the directors, provided that the number of directors shall not be reduced so
as to shorten the term of any director at the time in office. If the number of
directors be increased at any time, within the limits above set forth, the
vacancy or vacancies in the board arising from such increase shall be filled as
provided in Section 4 of this Article II. Each such vacancy, and each reduction
in the number of directors, shall be reported to the Superintendent of Banks in
Exhibit 4, Page 2
<PAGE>
the manner prescribed by law. All of the directors shall be of full age, and all
except three of them shall be citizens of the United States, and at least
one-third of them shall be citizens and residents of the State of New York and
at least three-fourths of them shall be citizens and residents of the State of
New York or a contiguous state, at the time of their election and during their
continuance in office, unless otherwise permitted by law. No more than one-third
of the directors shall be active officers or employees of the Corporation. Every
director shall be a stockholder of the Corporation or of any company owning more
than 80% of the capital stock of such Corporation, owning in his own right, free
from pledge, lien or charge, shares of capital stock of such Corporation or of
such company, at least ten (10) in number and having an aggregate par value of
at least $1,000.
SECTION 2. ELECTION AND TENURE OF OFFICE: Except as otherwise provided by
law or these by- laws, each director of the Corporation shall be elected at an
annual meeting of the stockholders or at any meeting of the stockholders held in
lieu of such annual meeting, which meeting, for the purposes of these by-laws,
shall be deemed the annual meeting, and shall hold office until the next annual
meeting of stockholders and until his successor has been elected and qualified.
Each person who shall be elected a director of the Corporation shall, before
participating in any manner as a director of the Corporation, qualify in the
manner prescribed by law and take and subscribe the oath prescribed by law.
SECTION 3. RESIGNATION: Any director of the Corporation may resign at any
time by giving his resignation to the Chairman of the Board or the President or
the Secretary. Such resignation shall take effect at the time specified therein;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 4. VACANCIES: Except as hereinafter provided, all vacancies in the
office of director shall be filled by election by the stockholders entitled to
vote at any meeting of the stockholders notice of which shall have referred to
the proposed election. Vacancies not exceeding one-third of the entire board may
be filled by the affirmative vote of a majority of the directors then in office,
and the directors so elected shall hold office for the balance of the unexpired
term; or two vacancies may, with the consent of the Superintendent of Banks of
the State of New York, be left unfilled until the next annual election. Each
vacancy in the office of director and each election by the Board of Directors to
fill any such vacancy shall be reported to the Superintendent of Banks in the
manner provided by law.
SECTION 5. DIRECTORS' FEES: Directors, including salaried officers of the
Corporation who are directors, may receive a fee for their services as directors
and traveling and other out-of-pocket expenses incurred in attending any regular
or special meeting of the board. The fee may be a fixed sum for attending each
meeting of the Board of Directors or a fixed sum paid monthly, quarterly, or
semiannually, irrespective of the number of meetings attended or not attended.
The amount of the fee and the basis on which it shall be paid shall be
determined by resolution of the Board of Directors. Nothing herein contained
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation for such services.
SECTION 6. MEETINGS OF DIRECTORS: A regular meeting of the Board of
Directors shall be held at least once in each month. The first meeting of the
Board of Directors after each annual meeting of the stockholders shall be held
immediately after the adjournment of such annual meeting and shall constitute
the regular meeting of the Board of Directors for the month in which such first
meeting is held. No notice of such first meeting shall be necessary. The Board
of Directors may, at any time and from time to time, by resolution designate the
place, date and hour for the holding of a regular meeting but, in the absence of
any such designation, regular meetings of the Board of Directors shall be held
at the principal office of the Corporation in the City of Buffalo, New York, at
11:30 o'clock a.m., on the Thursday following the first Tuesday of each month.
If that day be a legal holiday in any month, the meeting shall be held at the
same hour on the next following business day, other than Saturday. No notice
need be given of such regular meetings except such notice as these by-laws or
the Board of Directors by resolution may require. Special meetings of the Board
of Directors shall be held at such times and at such places as the Board of
Directors or the Chairman of the Board or, in his absence, the President, may
determine, and shall also be held upon the request of any 4 directors made in
writing to the Chairman of the Board or the President.
SECTION 7. NOTICE OF SPECIAL MEETINGS OF THE BOARD OF DIRECTORS: Notice of
each special meeting of the Board of Directors stating the time and place
thereof, shall be given by the Chairman of the Board, the President, the
Secretary, or an Assistant Secretary, or by any member of the board to each
member of the board not less than 3 days before the meeting by depositing the
same in the United States mail, postage prepaid, addressed to each member of
Exhibit 4, Page 3
<PAGE>
the board at his residence or usual place of business, or not less than 1 day
before the meeting by telephoning or by delivering the same to each member of
the board personally, or by sending the same by telegraph to his residence or
usual place of business. Notice of a meeting need not be given to any director
who submits a signed waiver of notice whether before or after the meeting, or
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him. The notice of any special meeting of
the Board of Directors need not specify the purpose or purposes for which the
meeting is called, except as provided in Article IX of these by-laws.
SECTION 8. QUORUM: At all meetings of the Board of Directors, except as
otherwise provided by law or these by-laws, a quorum shall be required for the
transaction of business and shall consist of not less than one-third of the
entire board, and the vote of a majority of the directors present shall decide
any question which may come before the meeting. A majority of the directors
present at any meeting, although less than a quorum, may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present.
SECTION 9. MEETINGS BY CONFERENCE TELEPHONE: Any one or more members of the
Board of Directors or any committee thereof may participate in a meeting of such
board or committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation in a meeting by such means shall constitute
presence in person at such meeting.
SECTION 10. PROCEDURE: The order of business and all other matters of
procedure at every meeting of directors may be determined by the person
presiding at the meeting.
ARTICLE III
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE: The Board of Directors shall, by resolution
adopted by a majority of the entire board, designate from among its members an
Executive Committee consisting of five or more directors. The Board of Directors
may designate one or more directors as alternate members of the Executive
Committee, who may replace any absent member or members of the Executive
Committee at any meeting thereof. In the interim between meetings of the Board
of Directors, the Executive Committee shall have all the authority of the Board
of Directors except as otherwise provided by law. All acts done and powers and
authority conferred by the Executive Committee from time to time within the
scope of its authority shall be, and may be deemed to be, and may be certified
as being, the act and under the authority of the Board of Directors. The
Chairman of the Board, or the President in the absence of the Chairman of the
Board, shall preside at all meetings of the Executive Committee. The Executive
Committee shall elect from its members a chairman to preside at any meeting of
the Executive Committee at which the Chairman of the Board and the President
shall be absent. Four members of the Executive Committee shall constitute a
quorum for the transaction of business.
SECTION 2. EXAMINING COMMITTEE: The Board of Directors shall, by resolution
adopted by a majority of the entire board, designate from among its members an
Examining Committee consisting of not less than 3 directors to examine fully the
books, papers and affairs of the Corporation, and the loans and discounts
thereof, as provided by law. The Examining Committee shall have the power to
employ such assistants as it may deem necessary to enable it to perform its
duties.
SECTION 3. OTHER COMMITTEES: The Board of Directors may from time to time,
by resolution or resolutions, appoint or provide for one or more other
committees consisting of such directors, officers, or other persons as the board
may determine. Each committee, to the extent provided in said resolution or
resolutions, shall have such powers and functions in the management of the
Corporation as may be lawfully delegated by the Board of Directors in the
interim between meetings of the board. Each committee shall have such name as
may be provided from time to time in said resolution or resolutions, and shall
serve at the pleasure of the Board of Directors.
SECTION 4. MINUTES OF MEETINGS OF COMMITTEES: The Executive Committee, the
Examining Committee, and each other committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors at the next meeting
thereof, or as soon thereafter as may be practicable under the circumstances.
Exhibit 4, Page 4
<PAGE>
SECTION 5. FEES TO MEMBERS OF COMMITTEES: Members of committees, including
salaried officers of the Corporation who are members of committees, may receive
a fee for their services as members of committees and traveling and other
out-of-pocket expenses incurred in attending any regular or special meeting of a
committee. The fee may be a fixed sum for attending each committee meeting or a
fixed sum paid monthly, quarterly, or semiannually, irrespective of the number
of meetings attended or not attended. The amount of the fee and the basis on
which it shall be paid shall be determined by resolution of the Board of
Directors. Nothing herein contained shall preclude any member of a committee
from serving the Corporation in any other capacity and receiving compensation
for such services.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS: The Board of Directors shall annually, at the first
meeting of the board after the Annual Meeting of Stockholders, elect from its
own number a Chairman of the Board and a President who may be one and the same
person, and appoint or elect one or more Vice Presidents, a Secretary, a
Treasurer, and an Auditor. The Chief Executive Officer shall be either the
Chairman of the Board or the President, as designated by the Board of Directors.
The Board of Directors, or the Executive Committee, may also from time to time
elect or appoint such additional officers as it may determine, including
(without limitation as to title or number) one or more Trust Officers, Assistant
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and Assistant
Auditors.
SECTION 2. TERM OF OFFICE: The Chairman of the Board, the President, each
Vice President, the Secretary, the Treasurer, and the Auditor shall, unless
otherwise determined by the Board of Directors, hold office until the first
meeting of the board following the next annual meeting of stockholders and until
their successors have been elected and qualified. Each additional officer
appointed or elected by the Board of Directors, or by the Executive Committee,
shall hold office for such term as shall be determined from time to time by the
Board of Directors or the Executive Committee. Any officer, however, may be
removed at any time by the Board of Directors, or his authority suspended by the
Board of Directors, with or without cause. If the office of any officer becomes
vacant for any reason, the Board of Directors shall have the power to fill such
vacancy.
SECTION 3. THE CHIEF EXECUTIVE OFFICER: The Chief Executive Officer shall,
under control of the Board of Directors and the Executive Committee, have the
general management of the Corporation's affairs and shall exercise general
supervision over all activities of the Corporation. The Chief Executive Officer
shall have the power to appoint or hire, to remove, and to determine the
compensation of, all employees of the Corporation who are not officers.
SECTION 4. THE CHAIRMAN OF THE BOARD: The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors and
shall be entitled to vote upon all questions. If he is not the Chief Executive
Officer, the Chairman of the Board shall perform such additional duties and be
vested with such additional powers as shall be assigned to him from time to time
by the Board of Directors, the Executive Committee or the Chief Executive
Officer, and in the absence or incapacity of the Chief Executive Officer shall
have the powers and exercise the duties of that officer.
SECTION 5. THE PRESIDENT: The President, subject to the control and
direction of the Board of Directors, shall have immediate supervision over the
business, affairs, and properties of the Corporation, shall have and exercise
general authority with respect thereto, shall perform all duties and exercise
all powers generally incident to his office and shall perform such additional
duties and be vested with such additional powers as shall be assigned to him
from time to time by the Board of Directors, the Executive Committee, and if he
is not the Chief Executive Officer, by such officer. In the absence or
incapacity of the Chairman of the Board he shall have the powers and exercise
the duties of that officer, including the powers of Chief Executive Officer if
the Chairman of the Board is the Chief Executive Officer.
SECTION 6. THE VICE PRESIDENTS: The Vice Presidents shall have such powers
and perform such duties as may be assigned to them respectively by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President.
Any one or more of the Vice Presidents may be designated by the Board of
Directors as "Executive Vice President," "Senior Vice President," or "Assistant
to the President," or by such other title or titles as the Board of
Exhibit 4, Page 5
<PAGE>
Directors may determine. In the absence or incapacity of both the Chairman of
the Board and the President, the Vice Presidents shall exercise the powers and
perform the duties of those officers in such order of precedence as shall be
determined by the Board of Directors, the Executive Committee, the Chairman of
the Board or the President.
SECTION 7. THE SECRETARY AND ASSISTANT SECRETARIES: The Secretary shall
issue notices of all meetings of stockholders, the Board of Directors and the
Executive Committee, where notices of such meetings are required by law or these
by-laws. He shall attend all meetings of stockholders, the Board of Directors
and the Executive Committee and keep the minutes thereof in proper books
provided for that purpose. He shall affix the corporate seal to and sign such
instruments as require the seal and his signature and shall perform such other
duties as usually pertain to his office or as are properly required of him by
the Board of Directors, the Chairman of the Board or the President.
The Assistant Secretaries may, in the absence or disability of the
Secretary or at his request, perform the duties and exercise the powers of the
Secretary, and shall perform such other duties as the Board of Directors, the
Chairman of the Board or the President shall prescribe.
SECTION 8. THE TREASURER AND ASSISTANT TREASURERS: The Treasurer shall keep
permanent records of the assets and liabilities and of all matters and
transactions bearing upon the financial affairs of the Corporation. He shall,
whenever required by the Board of Directors, present a statement of the business
of the Corporation, a balance sheet thereof as of the end of the last preceding
month or such other date as may be so required. He shall make and sign such
reports, statements and instruments as may be required of him by the Board of
Directors or the President or by law and shall perform such other duties as
usually pertain to his office or as are properly required of him by the Board of
Directors, the Chairman of the Board or the President.
The Assistant Treasurers may, in the absence or disability of the Treasurer
or at his request, perform the duties and exercise the powers of the Treasurer,
and shall perform such other duties as the Board of Directors, the Chairman of
the Board or the President shall prescribe.
SECTION 9. THE AUDITOR: The Auditor shall be responsible to the Chairman of
the Board, the President and, through the directors' Examining Committee, to the
Board of Directors for the safety of all operations and for the systems of
internal audits and protective controls; he shall perform such other duties as
the Chairman of the Board or the President may prescribe and shall make such
examinations and reports as may be required by the directors' Examining
Committee. He shall have the duty to report to the Chairman of the Board and the
President on all matters concerning the safety of the operations of the
Corporation which he deems advisable or which the Chairman of the Board or the
President may request. In addition, the Auditor shall have the duty of reporting
independently of all officers of the Corporation to the directors' Examining
Committee whenever he deems it necessary or desirable to do so, but in any event
not less often than annually on all matters concerning the safety of the
operations of the Corporation.
The Assistant Auditors may, in the absence or disability of the Auditor, or
at his request, perform the duties and exercise the powers of the Auditor, and
shall perform such other duties as the Board of Directors, the Chairman of the
Board or the President shall prescribe.
SECTION 10. OTHER OFFICERS: All other officers that may be elected or
appointed by the Board of Directors or the Executive Committee shall exercise
such powers and perform such duties as the Board of Directors, the Executive
Committee, the Chairman of the Board or the President shall prescribe.
SECTION 11. OFFICERS HOLDING TWO OR MORE OFFICES: Any two or more offices
may be held by the same person, except the offices of President and Secretary.
No officer shall execute or verify any instrument in more than one capacity if
such instrument be required by law or otherwise to be executed or verified by
any two or more officers.
SECTION 12. DUTIES OF OFFICERS MAY BE DELEGATED: In case of the absence or
disability of any officer of the Corporation, or in case of a vacancy in any
office or for any other reason that the Board of Directors, the Chairman of the
Board or the President may deem sufficient, the Board of Directors, the Chairman
of the Board or the President, except as otherwise provided by law or these
by-laws, may delegate, for the time being, the powers or duties of any officer
to any other officer or to any director.
Exhibit 4, Page 6
<PAGE>
SECTION 13. COMPENSATION OF OFFICERS: The Board of Directors shall
determine the compensation to be paid to the Chairman of the Board and the
President, respectively, and it may also determine the compensation to be paid
to any or all of the other officers of the Corporation. In the event and to the
extent that the Board of the Directors shall not exercise such discretionary
power the compensation to be paid to the other officers shall be determined by
the Chief Executive Officer.
SECTION 14. SPECIAL POWERS: The Chairman of the Board, the President, any
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer and any Trust Officer shall each have power and
authority:
To sign, countersign, certify, issue, assign, endorse, transfer and/or
deliver notes, checks, drafts, bills of exchange, certificates of deposit,
acceptances, letters of credit, advices for the transfer or payment of
funds, orders for the sale and for delivery of securities, guarantees of
signatures, and all other instruments, documents and writings in connection
with the business of the Corporation in its corporate or in any trust or
fiduciary capacity;
To sign the name of the Corporation and affix its seal, or cause the
same to be affixed, to deeds, mortgages, satisfactions, assignments,
releases, proxies, powers of attorney, trust agreements, and all other
instruments, documents or papers necessary for the conduct of the business
of the Corporation, either in its corporate capacity or in any trust or
fiduciary capacity;
To endorse, sell, assign, transfer and deliver any stocks, bonds,
mortgages, notes, certificates of interest, certificates of indebtedness,
certificates of deposit and any evidences of indebtedness or of any rights
or privileges which now are or may hereafter be held by or stand in the
name of the Corporation, either in its corporate capacity, or in any
fiduciary or trust capacity, and to execute proxies, powers of attorney or
other authority with respect thereto;
To accept on behalf of the Corporation any guardianship, receivership,
executorship or any general or special trust specified in the Banking Law
of the State of New York;
To authenticate or certificate any bonds, debentures, notes, or other
instruments issued under or in connection with any mortgage, deed of trust
or other agreement or instrument under which the Corporation is acting as
trustee or in any other fiduciary capacity;
To sign, execute and deliver certificates, reports, checks, orders,
receipts, certificates of deposit, interim certificates, and other
documents in connection with its duties and activities as registrar,
transfer agent, disbursing agent, fiscal agent, depositary, or in any other
corporate fiduciary capacity.
The powers and authority above conferred may at any time be modified,
changed, extended or revoked, and may be conferred in whole or in part on other
officers and employees by the Board of Directors or the Executive Committee.
SECTION 15. BONDS: The Board of Directors may require any officer, agent or
employee of the Corporation to give a bond to the Corporation, conditional upon
the faithful performance of his duties, with one or more sureties and in such
amount as may be satisfactory to the Board of Directors.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. RIGHT OF INDEMNIFICATION: Each director and officer of the
Corporation, whether or not then in office, each director and officer of a
subsidiary of the Corporation, whether or not then in office, and any person
whose testator or intestate was such a director or officer, shall be indemnified
by the Corporation for the defense of, or in connection with, any threatened,
pending or completed actions or proceedings and appeals therein, whether civil,
criminal, governmental, administrative or investigative, in accordance with and
to the fullest extent permitted by the Banking Law of the State of New York or
other applicable law, as such law now exists or may hereafter be amended;
provided, however, that the Corporation shall provide indemnification in
connection with an action or proceeding (or part thereof) initiated by such a
director or officer only if such action or proceeding (or part thereof) was
authorized by the Board of Directors.
Exhibit 4, Page 7
<PAGE>
SECTION 2. ADVANCEMENT OF EXPENSES: Expenses incurred by a director or
officer in connection with any action or proceeding as to which indemnification
may be given under Section 1 of this Article V may be paid by the Corporation in
advance of the final disposition of such action or proceeding upon (a) receipt
of an undertaking by or on behalf of such director or officer to repay such
advancement in the event that such director or officer is ultimately found not
to be entitled to indemnification as authorized by this Article V and (b)
approval by the Board of Directors acting by a quorum consisting of directors
who are not parties to such action or proceeding or, if such a quorum is not
obtainable, then approval by stockholders. To the extent permitted by law, the
Board of Directors or, if applicable, the stockholders, shall not be required
under this Section 2, to find that the director or officer has met the
applicable standard of conduct provided by law for indemnification in connection
with such action or proceeding.
SECTION 3. AVAILABILITY AND INTERPRETATION: To the extent permitted under
applicable law, the rights of indemnification and to the advancement of expenses
provided in this Article V (a) shall be available with respect to events
occurring prior to the adoption of this Article V, (b) shall continue to exist
after any recision or restrictive amendment of this Article V with respect to
events occurring prior to such recision or amendment, (c) may be interpreted on
the basis of applicable law in effect at the time of the occurrence of the event
or events giving rise to the action or proceeding, or on the basis of applicable
law in effect at the time such rights are claimed, and (d) are in the nature of
contract rights which may be enforced in any court of competent jurisdiction as
if the Corporation and the director or officer for whom such rights are sought
were parties to a separate written agreement.
SECTION 4. OTHER RIGHTS: The rights of indemnification and to the
advancement of expenses provided in this Article V shall not be deemed exclusive
of any other rights to which any such director, officer or other person may now
or hereafter be otherwise entitled whether contained in the organization
certificate, these by-laws, a resolution of stockholders, a resolution of the
Board of Directors, or an agreement providing such indemnification, the creation
of such other rights being hereby expressly authorized. Without limiting the
generality of the foregoing, the rights of indemnification and to the
advancement of expenses provided in this Article V shall not be deemed exclusive
of any rights, pursuant to statute or otherwise, of any such director, officer
or other person in any such action or proceeding to have assessed or allowed in
his or her favor, against the Corporation or otherwise, his or her costs and
expenses incurred therein or in connection therewith or any part thereof.
SECTION 5. SEVERABILITY: If this Article V or any part hereof shall be held
unenforceable in any respect by a court of competent jurisdiction, it shall be
deemed modified to the minimum extent necessary to make it enforceable, and the
remainder of this Article V shall remain fully enforceable.
ARTICLE VI
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK: The shares of stock of the Corporation
shall be represented by certificates which shall be numbered and shall be
entered in the books of the Corporation as they are issued. Each stock
certificate shall when issued state the name of the person or persons to whom
issued and the number of shares and shall be signed by the Chairman of the Board
or the President or a Vice President and by the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, and shall be sealed with
the seal of the Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of its issue. No certificate of stock shall be valid
until countersigned by a transfer agent if the Corporation has a transfer agent,
or until registered by a registrar, if the Corporation has a registrar.
Exhibit 4, Page 8
<PAGE>
SECTION 2. TRANSFERS OF SHARES: Shares of stock shall be transferable on
the books of the Corporation by the holder thereof, in person or by duly
authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed. The Corporation shall be entitled
to treat the holder of record of any share or shares of stock as the owner
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, save as
specifically provided by the laws of the State of New York. The Board of
Directors, to the extent permitted by law, shall have power and authority to
make all such rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates of stock and may appoint one or
more transfer agents and registrars of the stock of the Corporation.
SECTION 3. FIXING OF RECORD DATE: The Board of Directors may fix, in
advance, a day and hour not more than 50 days before the date on which any
meeting of stockholders is to be held, as the time as of which stockholders
entitled to notice of and to vote at such meeting and at all adjournments
thereof shall be determined; and, in the event such record date and time is
fixed by the Board of Directors, no one other than the holders of record on such
date and time of stock entitled to notice of or to vote at such meeting shall be
entitled to notice of or to vote at such meeting or any adjournment thereof. If
a record date and time shall not be fixed by the Board of Directors for the
determination of stockholders entitled to notice of and to vote at any meeting
of stockholders, stockholders of record at the close of business on the day next
preceding the day on which notice of such meeting is given, and no others, shall
be entitled to notice of and to vote at such meeting or any adjournment thereof.
The Board of Directors may fix, in advance, a day and hour, not exceeding 50
days preceding the date fixed for the payment of a dividend of any kind or the
allotment of any rights, as the record time for the determination of the
stockholders entitled to receive any such dividend or rights, and in such case
only stockholders of record at the time so fixed shall be entitled to receive
such dividend or rights.
SECTION 4. RECORD OF STOCKHOLDERS: The Corporation shall keep at its office
in the State of New York, or at the office of its transfer agent or registrar in
this state, a record containing the names and addresses of all stockholders, the
number and class of shares held by each and the dates when they respectively
became the owner of record thereof.
SECTION 5. LOST STOCK CERTIFICATES: The holder of any certificate
representing shares of stock of the Corporation shall immediately notify the
Corporation of any mutilation, loss or destruction thereof, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such holder upon the surrender
of the mutilated certificate, or, in case of loss or destruction of the
certificate, upon satisfactory proof of such loss or destruction and the deposit
of indemnity by way of bond or otherwise in such form and amount and with such
sureties or security as the Board of Directors may require to protect the
Corporation against loss or liability by reason of the issuance of such new
certificates; but the Board of Directors may in its discretion refuse to issue
such new certificates save upon the order of the court having jurisdiction in
such matters.
ARTICLE VII
CORPORATE SEAL
SECTION 1. FORM OF SEAL: The seal of the Corporation shall be circular in
form, with the words "Manufacturers and Traders Trust Company" in the margin
thereof, and the numerals "1856" and the word "seal" and the numerals "1892" in
the center thereof. The seal on any corporate obligation for the payment of
money may be facsimile.
ARTICLE VIII
EMERGENCY OPERATIONS
Whenever the provisions of Article 7 of the New York State Defense
Emergency Act (L. 1961, c. 654) become operative by reason of an "acute
emergency," as defined in said Act, the following provision shall also become
operative:
Exhibit 4, Page 9
<PAGE>
1. If the Chief Executive Officer of the Corporation shall not be
available, his powers and authority shall vest in and may be exercised by other
officers of the Corporation in the following order:
a. The Chairman of the Board;
b. The President;
c. The Executive Vice Presidents in the order of seniority determined
by length of service;
d. The Senior Vice Presidents in the order of seniority determined by
length of service;
e. A Vice President selected from and by those Vice Presidents who
shall be available.
2. The directors and acting directors present at any meeting held as
provided by statute may by resolution alter the foregoing order of succession or
designate the person from among the foregoing group who shall act as Chief
Executive Officer; provided, however, that the directors and acting directors
shall have no power to remove any officer or to fill any vacancy on a permanent
basis or to cause the Corporation to enter into any contract of employment for a
term of over one year.
3. The directors and acting directors shall take such action as counsel may
advise in order that the normal operations of the Corporation shall be restored
as promptly as practicable.
ARTICLE IX
AMENDMENTS
SECTION 1. PROCEDURE FOR AMENDING BY-LAWS: These by-laws may be added to,
amended or repealed at any meeting of stockholders notice of which shall have
referred to the proposed action, by the vote of the holders of record of a
majority of the outstanding shares of the Corporation entitled to vote, or at
any meeting of the Board of Directors notice of which shall have referred to the
proposed action, by the vote of a majority of the Board of Directors; provided,
however, that if any by-law regulating an impending election of directors is
adopted or amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of stockholders for the election of
directors the by-law so adopted or amended or repealed, together with a concise
statement of the changes made.
Exhibit 4, Page 10
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Manufacturers and Traders Trust Company hereby consents, in accordance with
the provisions of Section 321(b) of the Trust Indenture Act of 1939, that
reports of examinations by federal, state, territorial and district authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon its request therefor.
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ RUSSELL T. WHITLEY
-----------------------------------
Russell T. Whitley
Assistant Vice President
Exhibit 6, Page 1
<PAGE>
EXHIBIT 7
REPORT OF CONDITION OF THE TRUSTEE
MANUFACTURERS AND TRADERS TRUST COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
Dollars in thousands March 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Cash and due from banks ..................................... $ 403,322
Money-market assets ......................................... 958,415
Investment securities
Available for sale (cost: $1,778,196) .............. 1,775,511
Held to maturity (market value: $87,714) ........... 84,813
Other (market value: $111,976) ..................... 111,976
-----------
Total investment securities ............... 1,972,300
-----------
Loan and leases, net of unearned discount ................... 15,289,148
Allowance for possible credit losses ........................ (301,976)
-----------
Loan and leases, net ............................... 14,987,172
Other assets ................................................ 1,390,376
------------
Total assets ....................................... $19,711,585
===========
LIABILITIES
Deposits
Non-interest-bearing ............................... $ 1,870,706
Interest-bearing ................................... 12,127,958
-----------
Total deposits ............................ 13,998,664
Short-term borrowings ....................................... 1,719,517
Accrued interest and other liabilities ...................... 688,966
Long-term borrowings ........................................ 1,397,657
-----------
Total liabilities .................................. 17,804,804
-----------
STOCKHOLDER'S EQUITY ........................................... 1,906,781
-----------
Total liabilities and stockholder's equity ......... $19,711,585
===========
Exhibit 7, Page 1
