<PAGE>
As filed with the Securities and Exchange Commission on August 19, 1996
Registration No. 333-07335
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COPELCO CAPITAL FUNDING CORP. II
(Exact name of registrant as specified in its charter)
-------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 6799 22-3261117
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
Copelco Capital Funding Corp. II
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
(609) 231-9600
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------------
Spencer N. Lempert, Esq.
Copelco Capital Funding Corp. II
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
(609) 231-9600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Peter Humphreys, Esq.
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
(212) 259-6730
Approximate Date of Commencement of Proposed Sale to the Public: As
soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /________
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. / /________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum
Title of each class of Amount to be Proposed maximum aggregate offering Amount of
securities to be registered registered offering price per unit(1) price(1) registration fee(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Lease-Backed Notes................ $ 189,000,000 100% $ 189,000,000 $65,182
Class B Lease-Backed Notes................ $ 16,000,000 100% $ 16,000,000 $ 5,518
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
(2) In accordance with Rule 429 under the Securities Act of 1933, the Prospectus
included herein is a combined prospectus which also relates to the Registration
Statement on Form S-3, File No. 33-84148 (the "Prior Registration Statement").
The amount of securities eligible to be sold under the Prior Registration
Statement ($30,664,000 as of August 16, 1996) shall be carried forward to this
Registration Statement. A filing fee in the amount of $87,207.50 was paid with
the prior Registration Statement.
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.
Pursuant to Rule 429 of the General Rules and Regulations Under the
Securities Act of 1933, as amended, this Registration Statement also serves as
Post-Effective Amendment No. 1 to Registration Statement No. 33-84148. The
Prospectus which is a part of this Registration is a combined Prospectus
relating also to Registration Statement No. 33-84148.
<PAGE>
- --------------------------------------------------------------------------------
COPELCO CAPITAL FUNDING CORP. II
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 and Outside Front Forepart of the Registration Statement; Front Cover Page
Cover Page of Prospectus of Prospectus; Cross Reference Sheet
2. Inside Front and Outside Back Cover Pages of the Inside Front Cover and Outside Back Cover Pages of
Prospectus Prospectus; Terms of the Notes; Available Information;
Table of Contents
3. Summary Information; Risk Factors and Ratio of Earnings Prospectus Summary; Risk Factors; Certain Legal
to Fixed Charges Aspects; 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
* Not Applicable
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
PRELIMINARY PROSPECTUS
Subject to Completion, Dated August __, 1996
- --------------------------------------------------------------------------------
$228,855,000 (approximate)
Copelco Capital Funding Corp. II, Issuer
Copelco Capital, Inc., Servicer
$214,736,000 (approximate) _____% Class A Lease-Backed Notes, Series 1996-A
$14,119,000 (approximate) _____% Class B Lease-Backed Notes, Series 1996-A
- --------------------------------------------------------------------------------
Each of the Class A Lease-Backed Notes, Series 1996-A (the "Class A
Notes") and the Class B Notes, Series 1996-A (the "Class B Notes"; and together
with the Class A Notes, the "Offered Notes") will represent debt obligations of
Copelco Capital Funding Corp. II (the "Issuer"), a special-purpose bankruptcy
remote subsidiary of Copelco Capital, Inc. ("Copelco Capital"). The assets of
the Issuer securing the Notes will include a pool of leases, consisting of
primarily copier equipment leases, and all of Copelco's interest in the
equipment underlying the leases. The leases and the related interests in the
equipment were originated or acquired by Copelco Capital as described herein
and sold or contributed by Copelco Capital to the Issuer under a sales and
servicing agreement (the "Sales and Servicing Agreement") by and between
Copelco Capital and the Issuer. Payments of principal and interest to the
holders of the Class A Notes (the "Class A Noteholders") will have the benefit
of limited credit support consisting of the subordination of the Class B Notes
and an additional class of subordinated notes (the "Class C Notes"; and
together with Offered Notes, the "Notes"), funds on deposit in the reserve
account, residual realizations and amounts on deposit in certain other
accounts, if any. The holders of the Class B Notes (the "Class B Noteholders")
will have the benefit of limited credit support in the form of the
subordination of the Class C Notes, funds on deposit in the reserve account,
residual realizations and amounts on deposit in certain other accounts, if any.
The Class C Notes are being offered in a private placement and therefore are
not being offered hereby. Capitalized terms used herein will have the meanings
ascribed to such terms herein. The pages on which terms are defined are set
forth on the Index of Terms contained herein.
Ironwood Capital Partners Ltd.
Co-Structuring Agent
(continued on next page)
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
An investment in the Offered Notes involves certain risks. See "Risk
Factors" commencing on page 16 for a discussion of certain factors that should
be considered in connection with an investment in the securities offered hereby.
THE OFFERED NOTES WILL NOT REPRESENT AN INTEREST IN OR AN OBLIGATION
OF COPELCO FINANCIAL SERVICES GROUP, INC., COPELCO CAPITAL, INC.
OR ANY OF THEIR AFFILIATES, OTHER THAN COPELCO CAPITAL
FUNDING CORP. II, NOR WILL THE OFFERED NOTES BE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY. SEE "RISK FACTORS" HEREIN.
<TABLE>
<CAPTION>
Initial Public Underwriting Proceeds to
Offering Price Discount Issuer
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Note.............. _____% _____% _____%
Per Class B Note.............. _____% _____% _____%
Total......................... $__________ $__________ $__________
</TABLE>
(1) The Issuer has agreed to indemnify the Underwriter against certain
liabilities, including under the Securities Act of 1933.
(2) Before deducting expenses estimated to be $400,000.
Lehman Brothers
The date of this Prospectus is August ____, 1996.
<PAGE>
(cover page continued)
Interest on the Notes will be payable monthly in arrears on the
twentieth day of the month beginning on September 20, 1996 (each, a "Payment
Date") with respect to the period from and including the immediately preceding
Payment Date (or with respect to the initial Payment Date, the Issuance Date)
to the period to and excluding such Payment Date. Principal payments with
respect to the Offered Notes will be payable on each Payment Date beginning on
September 20, 1996. The stated maturity date with respect to the Notes is the
July 2004 Payment 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. In addition, should an Event of Default, an Early Lease Termination
or a Casualty (each, as described herein) occur, repayment of principal on the
Offered Notes may be earlier than would otherwise be the case.
The Offered Notes are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order
in whole or in part and to withdraw, cancel, or modify any order without
notice. It is expected that delivery of the Offered Notes will be made in
book-entry form through the facilities of The Depository Trust Company, Cedel
Bank, S.A. or the Euroclear System on or about August __, 1996.
The Offered Notes offered hereby are being offered pursuant to this
Prospectus. Sales of the Offered Notes may not be consummated unless the
purchaser has received this Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED
NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Issuer has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Offered Notes
offered pursuant to this Prospectus and described herein. For further
information, reference is made to the Registration Statement which may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of the
Registration Statement may be obtained from the Public Reference Branch of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site at http://www.sec.gov pursuant to
Item 502(a) under Regulation S-K as recently amended in SEC Release No. 33-7289
(May 9, 1996). The Issuer will file with the Commission such periodic reports
with respect to the Trust as are required under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations of the
Commission thereunder.
2
<PAGE>
REPORTS TO NOTEHOLDERS
During such time as the Offered Notes remain in book-entry form, any
quarterly and annual reports, containing information concerning the
Issuer and the Offered Notes and required to be filed with the Commission will
be sent to Cede & Co. ("Cede"), as nominee of The Depository Trust Company
("DTC"), the Euroclear System ("Euroclear") or Cedel Bank, S.A. ("CEDEL") as
registered holders of the Offered Notes pursuant to the Indenture. Such reports
will be made available by DTC, Euroclear or CEDEL and its participants to
holders of interests in the Offered Notes (the "Offered Noteholders") in
accordance with the rules, regulations and procedures creating and affecting
DTC, Euroclear and CEDEL, respectively. See "Description of the Notes-Book Entry
Registration Notes." Upon the issuance of fully registered, certificated Notes,
such reports will be sent to each Noteholder. Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles.
3
<PAGE>
OFFERED NOTES SUMMARY
The following table summarizes certain of the principal terms of the
Notes being offered hereby and is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Class A Class B
------- -------
<S> <C> <C>
Initial Principal Amount (approximate)......... $214,736,000 $14,119,000
Expected Ratings
Moody's............................... Aaa A2
Standard & Poor's..................... AAA A
Duff & Phelps......................... AAA A
Interest Rate % %
Expected Average Life (0% CPR):
To Maturity........................... 1.86 years 2.02 years
To Optional Redemption................ 1.83 years 1.86 years
Expected Final Payment Date (0% CPR):
To Maturity........................... March 2001 June 2001
To Optional Redemption................ May 2000 May 2000
Stated Maturity................................ July 2004 Payment Date July 2004 Payment Date
</TABLE>
4
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. A listing
of pages on which some of such terms are defined can be found in the
"Index of Terms" herein.
Issuer.............................. Copelco Capital Funding Corp. II (the
"Issuer"), a Delaware corporation. The
Issuer's offices are located at East
Gate Center, 700 East Gate Drive, Mount
Laurel, New Jersey 08054-5400 and its
phone number is (609) 231-9600. The
Issuer has been established as a
bankruptcy remote entity, wholly-owned
by Copelco Capital, Inc. ("Copelco
Capital") and is intended to be a
limited-purpose corporation.
Accordingly, the Issuer's operations
have been restricted so that (a) it does
not engage in business with, or incur
liabilities to, any other entity which
may bring bankruptcy proceedings against
the Issuer; and (b) the risk that it
will be consolidated into the bankruptcy
proceedings of any other entity is
diminished. The Issuer will have no
significant assets other than the Trust
Fund (as described below) and the trust
funds securing other notes issued by the
Issuer in previously rated transactions.
Securities Offered.................. $214,736,000 (approximate) aggregate
principal amount of the ____% Class A
Lease-Backed Notes, Series 1996-A (the
"Class A Notes") and $14,119,000
(approximate) aggregate principal amount
of the ___% Class B Lease-Backed Notes,
Series 1996-A (the "Class B Notes";
together with the Class A Notes, the
"Offered Notes"). In addition, the
Issuer will be issuing, through a
private placement, $6,472,208
(approximate) aggregate principal amount
of the ____% Class C Lease-Backed Notes,
Series 1996-A (the "Class C Notes";
together with the Class A Notes and the
Class B Notes, the "Notes"). The Class
B Notes will be subordinated to the
Class A Notes to the extent provided in
the Indenture as described herein. The
Class C Notes will be subordinated to
the Offered Notes to the extent provided
in the Indenture as described herein.
The Class C Notes are not offered
hereby. The combined aggregate
principal amount of the Class A Notes,
the Class B Notes and the Class C Notes
will comprise the initial principal
amount (the "Initial Principal Amount")
of the Notes. The aggregate principal
amounts of the Class A Notes, the Class
B Notes and the Class C Notes set forth
herein are based upon the Discounted
Present Value of the Leases (as defined
herein) as of the close of business on
July 31, 1996 (the "Cut-Off Date")
calculated at the Statistical Discount
Rate (defined herein). The Initial
Principal Amount of the Notes will be
calculated using the actual Discount
Rate.
Denominations....................... The Notes will be issued in minimum
denominations of $100,000 and integral
multiples of $1,000 in excess thereof,
except that one Class A Note, Class B
Note and Class C Note may be issued in
another denomination.
5
<PAGE>
Interest Rate....................... ___% per annum on the Class A Notes (the
"Class A Interest Rate"), ___% per annum
on the Class B Notes (the "Class B
Interest Rate") and ___% per annum on
the Class C Notes (the "Class C Interest
Rate"), calculated on the basis of a
year of 360 days comprised of twelve
30-day months.
Initial Principal
Amount.............................. $214,736,000 (approximate) for the Class
A Notes (the "Class A Initial Principal
Amount"), $14,119,000 (approximate) for
the Class B Notes (the "Class B Initial
Principal Amount") and $6,472,208
(approximate) for the Class C Notes (the
"Class C Initial Principal Amount").
The Class A Initial Principal Amount
will be equal to 91.25% (the "Class A
Percentage") of the Discounted Present
Value of the Leases (as defined herein)
as of the Cut-Off Date, the Class B
Initial Principal Amount will be equal
to 6.00% (the "Class B Percentage") of
the Discounted Present Value of the
Leases as of the Cut-Off Date and the
Class C Initial Principal Amount will be
equal to 2.75% (the "Class C
Percentage") of the Discounted Present
Value of the Leases as of the Cut-Off
Date. 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 or Excess Copy Charges (defined
below)) from the Leases (including
Non-Performing Leases), discounted at a
rate equal to ____% (the "Discount
Rate"), which rate is equal to the sum
of (a) the weighted average Interest
Rate of the Class A Notes, the Class B
Notes and the Class C Notes on the
Issuance Date and (b) the Servicing Fee
Rate of 0.75% per annum. The "Discounted
Present Value of the Performing Leases"
equals the Discounted Present Value of
the Leases, reduced by all future
remaining scheduled payments on the
Non-Performing Leases (not including
delinquent amounts or Excess Copy
Charges), discounted at the Discount
Rate. See "Description of the
Notes--General." Each of the Indenture
and the Sales and Servicing Agreements
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 or Excess
Copy Charges) from the Leases as of the
Cut-off Date, discounted at a rate equal
to 7.15% (the "Statistical Discount
Rate"). The Statistical Discounted
Present Value of the Leases as of the
Cut-Off Date is $235,327,208.56 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 $______________.
6
<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. See "The Series
Pool--The Leases."
Stated Maturity..................... The July 2004 Payment 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 Notes........................... The Notes will represent obligations
solely of the Issuer and are secured by
the Trust Fund.
Seller and Servicer................. Copelco Capital, Inc., a Delaware
corporation ("Copelco Capital", the
"Seller," or in its capacity as
servicer, the "Servicer"). Copelco
Capital will enter into a sales and
servicing agreement (the "Sales and
Servicing Agreement") with the Issuer to
sell and service the Leases included in
the Series Pool and make Servicer
Advances (as defined herein).
Concurrently with the sale of the Leases
by Copelco Capital to the Issuer,
Copelco Capital's interest in the
Equipment (which is either an ownership
interest or a security interest) will be
transferred to the Issuer as a
contribution of capital.
Contemporaneously with the sale, the
Issuer will transfer its interests in
the Leases and Equipment to the Trustee
in accordance with the provisions of the
Indenture (as defined herein).
Trust Fund.......................... The Trust Fund will consist of a pool
(the "Series Pool") of equipment lease
contracts consisting of equipment lease
contracts of copiers, facsimile
machines, computers and other business
equipment (the "Lease Contracts"),
including all payments due thereunder
(the "Lease Receivables"; together with
the Lease Contracts, the "Leases") and
the interest in the related leased
equipment (the "Equipment") transferred
by Copelco Capital to the Issuer. In
addition, the Trust Fund will include
the funds on deposit in the Reserve
Account, if any, and to the limited
extent provided in the Indenture,
amounts on deposit in the Residual
Account, if any.
Trustee............................. Manufacturers and Traders Trust Company
(the "Trustee"). The Trustee's offices
are located at One M&T Plaza, 7th Floor,
Buffalo, New York 14203.
Determination Date.................. The fifth day prior to each Payment Date
(or the preceding business day, if such
day is not a business day). On such
date (each, a "Determination Date"), the
Servicer will determine the amount of
payments received on the Leases in
respect of the immediately preceding
calendar month (each such period, a
"Due Period") which will be available
for distribution on the Payment Date.
See "Description of the
Notes--Distributions on Notes."
7
<PAGE>
Payment Date........................ Payments on the Notes will be made on
the twentieth day of each month (or if
such day is not a business day, the next
succeeding business day), commencing on
September 20, 1996 (each, a "Payment
Date"), to holders of record on the last
day of the immediately preceding
calendar month (each, a "Record Date").
See "Description of the
Notes--Distributions on Notes."
Interest Payments................... On each Payment Date, the interest due
(the "Interest Payments") with respect
to the Class A Notes, the Class B Notes
and the Class C 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 August __,
1996 (the "Issuance Date") at the
applicable Interest Rate applied to the
then unpaid principal amounts (the
"Outstanding Principal Amounts") of the
Class A Notes, the Class B Notes and the
Class C Notes, respectively (the
"Outstanding Class A Principal Amount",
the "Outstanding Class B Principal
Amount" and the "Outstanding Class C
Principal Amount", respectively), after
giving effect to payments of principal
to the Class A Noteholders, the Class B
Noteholders and the Class C 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
and the Class C 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 under
"-Application of Payments" and
"Description of the Notes-Distributions
on Notes." On each Payment Date, to the
extent funds are available therefor,
the Principal Payment payable to the
Noteholders is as follows: (a) to the
Class A Noteholders, the amount
necessary to reduce the Outstanding
Class A Principal Amount to the Class A
Target Investor Principal Amount (the
"Class A Principal Payment"), (b) to the
Class B Noteholders, the amount
necessary to reduce the Outstanding
Class B Principal Amount to the greater
of the Class B Target Investor Principal
Amount and the Class B Floor (the "Class
B Principal Payment"), (c) to the Class
C Noteholders, the amount necessary to
reduce the Outstanding Class C Principal
Amount to the greater of the Class C
Target Investor Principal Amount and the
Class C Floor (the "Class C Principal
Payment"), and (d) to the extent that
the Class B Floor exceeds the Class B
Target Investor Principal Amount and/or
the Class C Floor exceeds the Class C
Target Investor Principal Amount,
Additional Principal (defined below)
shall be distributed, sequentially, as a
principal payment on the Class A Notes,
the Class B Notes and the Class C Notes
until the Outstanding Principal Amount
of each has been reduced to zero.
"Additional Principal" with respect
to each Payment Date is an amount equal
to (a) the difference between (i) the
Discounted Present Value of the
Performing Leases as of the previous
8
<PAGE>
Determination Date and (ii) the
Discounted Present Value of the
Performing Leases as of the related
Determination Date, less (b) the Class A
Principal Payment, the Class B Principal
Payment and the Class C Principal
Payment (defined above) to be paid on
such Payment Date.
The "Class A Target Investor Principal
Amount" with respect to each Payment
Date is an amount equal to the product
of (a) the Class A Percentage and (b)
the Discounted Present Value of the
Performing Leases as of the related
Determination Date.
The "Class B Target Investor Principal
Amount" with respect to each Payment
Date is an amount equal to the product
of (a) the Class B Percentage and (b)
the Discounted Present Value of the
Performing Leases as of the related
Determination Date.
The "Class C Target Investor Principal
Amount" with respect to each Payment
Date is an amount equal to the product
of (a) the Class C Percentage and (b)
the Discounted Present Value of the
Performing Leases as of the related
Determination Date.
The "Class B Floor" with respect to each
Payment Date means (a) 2.50% of the
initial Discounted Present Value of the
Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with
respect to such Payment Date, minus (c)
the sum, as of the related Determination
Date, of the Outstanding Principal
Amount of the Class C Notes and the
amount on deposit in the Reserve
Account after giving effect to
withdrawals to be made on such Payment
Date.
The "Class C Floor" with respect to each
Payment Date means (a) 1.00% of the
initial Discounted Present Value of the
Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with
respect to such Payment Date, minus
(c) the amount on deposit in the Reserve
Account after giving effect to
withdrawals to be made on such Payment
Date; provided, however, that if the
Outstanding Class B Principal Amount is
equal to the Class B Floor, on such
Payment Date the Class C Floor will
equal the Outstanding Class C Principal
Amount utilized in the calculation of
the Class B Floor Amount for such
Payment Date.
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 payments made on
such Payment Date, minus (ii) the lesser
of (A) the Discounted Present Value of
the Performing Leases as of the
Determination Date relating to the
immediately preceding Payment Date minus
the Discounted Present Value of the
Performing Leases as of the related
Determination Date and (B) Available
Funds remaining after the payment of
amounts owing the Servicer and in
respect of interest on the Notes on such
Payment Date over (b) the Discounted
Present Value of Performing Leases as
of the related Determination Date.
The Series Pool..................... The Series Pool will consist of the
Leases as of the Cut-Off Date, plus any
Substitute Leases (as defined herein)
and any Additional Leases (as defined
herein) excluding any Leases which have
been replaced by one or more Additional
Leases or Substitute Leases and, the
interest of the Issuer in the related
Equipment. See "The Series Pool" and
"Certain Legal Matters Affecting a
Lessee's Rights and Obligations."
9
<PAGE>
Copelco Capital will represent and
warrant that, as of the Cut-Off Date,
all Leases were current or less than 63
days delinquent and that, as of the
Issuance Date, the Lessees have made at
least one lease payment.
Equipment........................... As of the Cut-Off Date, a majority of
the Statistical Discounted Present Value
of the Leases consisted of leases of
copier equipment. The remaining Leases
consisted of Leases of facsimile
machines, computers and other business
equipment.
Lessees............................. The Lessees consist of businesses and
business owners (each, a "Lessee"; and
collectively, the "Lessees"). As of the
Cut-Off Date, the Collateral included
22,256 separate Leases and 19,951
Lessees. As of the Cut-Off Date, Leases
relating to Lessees in any one state did
not account for more than 18.73% of the
Statistical Discounted Present Value of
the Leases. See "The Series Pool--The
Leases."
Certain Lease Terms................. The Leases are triple-net leases,
requiring the Lessee to pay all taxes,
maintenance and insurance associated
with the Equipment. The Leases are
non-cancelable by the Lessees. All
payments under the Leases are absolute,
unconditional obligations of the Lessees
without right of offset for any reason.
Each Lessee entered into its Lease for
specified Equipment designated in
schedules incorporated into the Lease.
The schedules, among other things,
establish the payments and the term of
the Lease with respect to such
Equipment. The Leases have remaining
terms to maturity, calculated as of the
Cut-Off Date, of between approximately 1
and 83 months and a weighted average
term to stated maturity of 43 months.
See "The Series Pool--The Leases."
Substitutions and Adjustments....... Although the Leases will be
non-cancelable by the Lessees, Copelco
Capital has, from time to time,
permitted early termination by Lessees
("Early Lease Termination") or other
modifications of the lease terms in
certain circumstances more fully
specified in the Sales and Servicing
Agreement, including, without
limitation, in connection with a full
or partial buy-out or equipment upgrade.
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 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
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<PAGE>
Non-Performing Leases and Warranty
Leases for which Copelco Capital may
substitute Substitute Leases is limited
to an amount not in excess of 7% of the
aggregate Discounted Present Value of
the Leases as of the Cut-Off Date. The
aggregate Discounted Present Value of
Adjusted Leases for which Copelco
Capital may substitute Substitute Leases
is limited to an amount not in excess of
8% of the aggregate Discounted Present
Value of the Leases as of the Cut-Off
Date.
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 must 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 must be on or prior
to June 30, 2003 or, to the extent the
final payment on such Lease is due
subsequent to June 30, 2003, 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."
11
<PAGE>
Payments on Leases.................. All payments on Leases will be made by
the Lessees to the order of the Issuer
to the address specified by Servicer.
The Servicer will deposit the proceeds
of such payments to the Collection
Account (as defined herein) within two
Business Days of the receipt thereof.
See "Description of the
Notes--Collection Account."
Advances by Servicer................ Prior to any Payment Date, the Servicer
may, but will not be required to,
advance (each, a "Servicer Advance") to
the Trustee, an amount sufficient to
cover delinquencies on Leases in the
Trust Fund with respect to the prior Due
Period. The Servicer will be reimbursed
for Servicer Advances not recovered from
late payments from Available Funds on
the Payment Date following the date on
which the Servicer determined such Lease
to be a Non-Performing Lease. See
"Description of the Notes--Advances by
Servicer."
Servicing Fee....................... A Servicing Fee (the "Servicing Fee"),
will be paid monthly to the Servicer on
each Payment Date from amounts in the
Collection Account and will be
calculated by multiplying one-twelfth of
0.75% times the Outstanding Principal
Amount of the Notes at the Determination
Date for such Payment Date before
application of payments with respect
thereto.
The Servicing Fee will be paid to the
Servicer for servicing the Series Pool
and to pay certain administrative
expenses in connection with the Notes,
including Trustee fees and expenses.
See "Copelco Capital's Underwriting and
Servicing Practices."
Use of Proceeds..................... The net proceeds from the sale of the
Offered Notes will be used to purchase
the Leases from Copelco Capital. In
addition, the net proceeds from the
private placement of the Class C Notes
will be used for the same purpose.
Copelco Capital will use such amounts to
repay bank indebtedness and for general
corporate purposes.
The Indenture....................... The Notes are to be issued pursuant to,
and are to be in such form, bear
interest and be payable on such terms as
are prescribed in an indenture (the
"Indenture") to be executed between the
Issuer and the Trustee.
Available Funds..................... On each Payment Date, the Trustee will
use such funds to make required payments
of principal and interest to
Noteholders.
Funds received on or prior to the
related Determination Date ("Available
Funds") will be available for
distribution by the Trustee on a Payment
Date and will include:
a) Lease Payments due during the
prior Due Period (net of any Excess Copy
Charges);
b) Residual Realizations up to the
Residual Amount Cap;
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<PAGE>
c) recoveries from Non-Performing
Leases to the extent Copelco Capital has
not substituted a Substitute Lease for
such Non-Performing Leases (except to
the extent required to reimburse
unreimbursed Servicer Advances);
d) proceeds from repurchases by
Copelco Capital of Leases as a result of
breaches of representations and
warranties;
e) proceeds from investment of
funds in the Collection Account and the
Reserve Account;
f) Casualty Payments (as defined
herein);
g) Servicer Advances;
h) Termination Payments;
i) funds, if any, on deposit in the
Reserve Account; and
j) funds, if any, on deposit in
the Residual Account to the limited
extent provided in the Indenture.
Application of
Payments............................ Monthly distributions will be made by
the Trustee from Available Funds in the
following priority:
a) to pay the Servicing Fee;
b) to reimburse unreimbursed Servicer
Advances in respect of a prior Payment
Date;
c) to make Interest Payments owing on
the Class A Notes;
d) to make Interest Payments owing on
the Class B Notes;
e) to make Interest Payments owing on
the Class C Notes;
f) to make the Class A Principal
Payment;
g) to make the Class B Principal
Payment;
h) to make the Class C Principal
Payment;
i) to pay the Additional Principal,
if any, to the Class A Noteholders until
the Outstanding Class A Principal
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<PAGE>
Amount has been reduced to zero, then
to the Class B Noteholders until the
Outstanding Class B Principal
Amount has been reduced to zero and
thereafter to the Class C Noteholders
until the Outstanding Class C Principal
Amount has been reduced to zero;
j) to the Reserve Account, an
amount equal to the excess of the
Required Reserve Amount over the
Available Reserve Amount;
k) following a Residual Event
(defined below), to the Residual Account
an amount equal to Residual Realizations
up to the Residual Amount Cap; and
l) to the Issuer, the balance, if
any.
See "Description of the
Notes-Distribution on Notes."
Redemption.......................... The Issuer will have the option, subject
to certain conditions, to redeem all,
but not less than all, of the Notes and
thereby cause early repayment of the
Notes as of any Payment Date on which
the Discounted Present Value of the
Performing Leases is less than or equal
to 10% of the Discounted Present Value
of the Leases as of the Cut-Off Date
(after giving effect to the payment of
principal on such Payment Date). See
"Description of the Notes--Redemption."
Residual Realizations............... Following the Issuance Date, aggregate
cash flows realized from the sale or
re-lease of the Equipment, other than
Equipment subject to Non-Performing
Leases (the "Residual Realizations"),
shall be deposited into the Collection
Account for distribution until the
aggregate Residual Realizations used
(without duplication) to cover amounts
owing the Noteholders and the Servicer,
deposited into the Reserve Account,
on deposit in the Residual Account,
or withdrawn from the Residual
Account as a result of an Available
Funds Shortfall, equals $__________,
which represents 7% of the Discounted
Present Value of the Leases as of the
Cut-Off Date (the "Residual Amount
Cap"), and will provide additional
credit support to the Notes. Actual
Residual Realizations may be more or
less than the residual value of the
Equipment recorded on the books of the
Issuer (the "Booked Residual Value").
Under certain limited circumstances more
fully described in the Indenture (a
"Residual Event"), the Residual
Realizations not distributed to
Noteholders, paid to the Servicer or
deposited into the Reserve Account will
be deposited in the Residual Account.
As provided in the Indenture, funds on
deposit in the Residual Account will be
available to cover shortfalls in the
amount available to pay the amounts
owing the Servicer and to make interest
and principal payments on the Notes.
Following the termination of a Residual
Event, amounts on deposit in the
Residual Account will be disbursed to
the Issuer.
The aggregate Booked Residual Values of
the Lease as of the Cut-Off Date equals
$32,226,023.
14
<PAGE>
Subordination....................... The Class A Notes will be senior in
right of payment to the Class B Notes
and the Class B Notes will be senior in
right to the Class C Notes to the extent
described herein. See "Description of
the Notes--Distributions on Notes."
Reserve Account..................... The Noteholders will have the benefit of
funds on deposit in an account (the
"Reserve Account") to the extent that
there is a shortfall in the amount
available to pay amounts owing the
Servicer and to make interest and
principal payments on the Notes, on any
Payment Date. The Reserve Account will
be funded by an initial deposit of 1.25%
of the Discounted Present Value of the
Leases as of the Cut-Off Date.
Thereafter, to the extent provided in
the Indenture, additional deposits will
be made to the Reserve Account to the
extent that the amount on deposit in the
Reserve Account (the "Available Reserve
Amount") is less than the Required
Reserve Amount. The "Required Reserve
Amount" equals the greater of (a) 1.25%
of the Discounted Present Value of the
Performing Leases as of the related
Payment Date and (b) 1.00% of the
Discounted Present Value of the Leases
as of the Cut-Off Date, but not more
than the Outstanding Principal Amount of
the Notes, (the "Required Reserve
Amount"). Amounts on deposit in the
Reserve Account in excess of the
Required Reserve Amount will be
disbursed to the Issuer in accordance
with the provisions of the Indenture.
Federal Income Tax
Considerations...................... It is intended that the Notes will be
characterized as indebtedness of the
Issuer for federal income tax purposes.
If characterized as indebtedness,
interest on the Notes will be taxable as
ordinary income when received by a
Noteholder on the cash method of
accounting and when accrued by
Noteholders on the accrual method of
accounting. See "Certain Federal Income
Tax Considerations."
ERISA
Considerations...................... The Employee Retirement Income Security
Act of 1974, as amended ("ERISA") places
certain restrictions on those pension
and other employee benefits plans to
which it applies. Pursuant to
regulations issued by the United States
Department of Labor defining "plan
assets", if the Notes are considered to
be indebtedness without substantial
equity features under local law, the
assets of the Issuer will not be
considered assets of any ERISA plan
holding the Notes, thereby generally
avoiding potential application of
ERISA's prohibited transaction rules.
However, in certain circumstances, the
prohibited transaction rules may be
applicable to the purchase of the Notes
even if the Notes are not deemed to have
substantial equity features. Certain
exemptions from the prohibited
transaction rules could be applicable,
however, with respect to the acquisition
and holding of the Notes. Accordingly,
the notes may be acquired by ERISA
plans, subject to certain restrictions.
Before purchasing any of the Notes,
fiduciaries
15
<PAGE>
of such plans should determine whether
an investment in the Notes is
appropriate under ERISA. See "ERISA
Considerations."
Rating.............................. It is a condition to the issuance of the
Offered Notes that the Class A Notes be
rated at least "AAA," "AAA" and "Aaa"
and that the Class B Notes be rated at
least "A," "A" and "A2" by Standard &
Poor's Ratings Group ("S&P"), Duff &
Phelps Credit Ratings Co. ("DCR") and
Moody's Investors Service, Inc.
("Moody's"), respectively. The ratings
assess the likelihood of timely payment
of interest and the ultimate payment of
principal to the Noteholders by the
Stated Maturity Date. There is no
assurance that any rating will not be
lowered or withdrawn if, in the
judgement of any Rating Agency,
circumstances in the future so warrant.
See "Rating of the Notes."
16
<PAGE>
RISK FACTORS
Limited Liquidity. There is currently no public market for the Offered
Notes and there is no assurance that one will develop. The Underwriter expects,
but is not obligated, to make a market in the Offered Notes. There is no
assurance that any such market will be created or, if so created, will
continue. If no public market develops, the Offered Noteholders may not be able
to liquidate their investment in the Offered Notes prior to maturity.
Prepayments. Because the rate of payment of principal on the Notes
will depend, among other things, on the rate of payment on the Leases, such rate
of payment of principal on the Notes cannot be predicted. Payments on the Leases
will include scheduled payments as well as prepayments permitted by Copelco
Capital as the Servicer (to the extent not replaced with Additional Leases),
payments as a result of Non-Performing Leases (to the extent not replaced by
Substitute Leases), Casualty Payments (as defined herein), and payments upon
repurchases by Copelco Capital on account of a breach of certain representations
and warranties in the related Sales and Servicing Agreement (any such voluntary
or involuntary prepayment, a "Prepayment"). The rate of early terminations of
Leases due to Prepayments and defaults may be influenced by a variety of
economic and other factors which cannot be specified at this time. The risk of
reinvesting distributions of the principal of the Notes will be borne by the
Noteholders. See "Prepayment and Yield Considerations."
Additional Leases and Substitute Leases. As described herein, pursuant
to the Sales and Servicing Agreement, Copelco Capital may have the option, but
not the obligation, to designate one or more leases in its portfolio to be an
Additional Lease as a replacement for any prepaid in full or upgraded lease, in
which event the scheduled payments from such Additional Lease will replace (in
whole or in part) the remaining scheduled payments on a prepaid in full Lease.
In the event (and only to the extent) that Copelco Capital makes such a
designation, the amount (or portion thereof) received by the Issuer with
respect to a Prepayment will be allocated directly to Copelco Capital and the
payments with respect to the related Notes will be dependent upon the scheduled
payments received on such Additional Leases and such Substitute Leases. In
addition, pursuant to the Sales and Servicing Agreement, Copelco Capital may
have the option, but not the obligation to substitute one or more leases as
Substitute Leases in exchange for Non-Performing Leases, Warranty Leases and
Adjusted Leases. Accordingly, payments of principal of and interest on the Notes
may be dependent, in part, upon payments received on such Additional Leases. In
addition, to the extent that Copelco Capital does not designate one or more
leases as Additional Leases in connection with the prepayment of a Lease or
Substitute Leases in the case of partial prepayments, Non-Performing Leases or
Warranty Leases, the Discounted Present Value of the Performing Leases will be
decreased. See "Prepayment and Yield Considerations."
Security Interests in the Equipment. The Leases will consist of either
finance Leases (where substantially all of the value of the Equipment is
financed by the lease payments) or operating leases (where substantially less
than all of the value of the Equipment is recovered through the lease
payments). See "The Leases" herein. Finance leases include Leases ("Nominal
Buy-Out Leases") which contain a nominal purchase option upon expiration or
other terms which may be deemed effectively to vest equitable ownership of the
Equipment in the Lessee. Prior to the Cut-Off Date, Copelco Capital will have
filed Uniform Commercial Code ("UCC") financing statements in its favor against
Lessees in respect of Equipment, including Equipment subject to Nominal-Buy-Out
Leases, with an original Equipment cost in excess of $25,000. No action will be
taken to perfect the interest of Copelco Capital in any Equipment to the extent
the original Equipment cost of the related Equipment is less than $25,000. In
addition, the Indenture and the Sale and Servicing Agreement will require UCC
financing statements identifying security interests in the Equipment as
transferred to, or obtained by, the Issuer or the Trustee and UCC financing
17
<PAGE>
statements identifying equipment owned by Copelco Capital, transferred to the
Issuer and pledged to the Trustee to be filed in favor of the Issuer or the
Trustee in states in which Equipment relating to not less than 75% of the
Discounted Present Value of the Leases as of the Cut-Off Date is located (the
"Filing Locations"). To the extent UCC financing statements evidencing Copelco
Capital's security interest in the Equipment have not been filed against the
Lessee and to the extent the Equipment is located in the states other than the
Filing Locations, any such security interests in the Equipment will not be
perfected in favor of the Issuer or the Trustee and another party (such as other
creditors of Copelco Capital) may acquire rights in Copelco Capital's interest
in the Equipment superior to those of the Issuer or the Trustee. See "Certain
Legal Matters Affecting a Lessee's Rights and Obligations."
Restrictions on Recoveries. State laws impose requirements and
restrictions relating to foreclosure sales and obtaining deficiency judgments
following such sales. In the event that the Issuer must rely on repossession
and disposition of Equipment to cover losses on Non-Performing Leases, the
Issuer may not realize the full amount due because of the application of those
requirements and restrictions. Other factors that may affect the ability of the
Issuer to realize the full amount due on a Lease include the failure to file
financing statements to perfect the Issuer's security interest in the Equipment
against a Lessee, depreciation, obsolescence, damage or loss of any item of
Equipment, and the application of federal and state bankruptcy and insolvency
laws. As a result, the Noteholders may be subject to delays in receiving
payments and losses. See "Certain Legal Matters Affecting a Lessee's Rights and
Obligations."
Insolvency of Copelco Capital. Copelco Capital believes that each
transfer of the Leases to the Issuer should be treated as an absolute and
unconditional sale or assignment. However, in the event of an insolvency of
Copelco Capital, a court could attempt to recharacterize the sale of the
related Leases by Copelco Capital to the Issuer as a loan by Copelco Capital
from the Issuer, secured by a pledge of such Leases or could allow the trustee
in bankruptcy to repudiate the Leases that are operating leases and all
obligations thereunder. Such an attempt, even if unsuccessful, could result in
delays in payments of the related Notes. If such an attempt were successful,
such Notes would be accelerated, and the Trustee's recovery on behalf of the
Noteholders could be limited to the then current value of the Leases or the
underlying Equipment. Thus, the Noteholders could lose the right to future
payments and might incur reinvestment losses on amounts recovered. See "Certain
Legal Matters Affecting a Lessee's Rights and Obligations."
Credit Enhancement. Credit enhancement with respect to the Offered
Notes will be provided by the subordination of Class C Notes and funds on
deposit in the Reserve Account and, to the limited extent provided in the
Indenture, the Residual Account. In addition, the Class A Notes have the benefit
of the subordination of the Class B Notes. However, on any Payment Date the
amount available to Noteholders is limited to the extent of funds on deposit in
the Collection Account, the Reserve Account and, to the limited extent provided
in the Indenture, the Residual Account. In addition, payment of principal and
interest on the Offered Notes will be supported by the Residual Realizations on
the Equipment up to the Residual Amount Cap. Therefore, if a Lease becomes a
non-performing lease at a time when total losses on the Leases is in excess of
the outstanding principal amount of any subordinated Class and, the amounts, if
any, available to be withdrawn from the Reserve Account and the Residual Account
are reduced to zero, the holders of Notes of any senior Class may be forced to
rely solely on the amount of Residual Realizations on the Equipment for ultimate
payment of principal and interest on such Class of Notes. The aggregate amount
of Residual Realizations available to Noteholders to pay (without duplication)
the amounts owing the Servicer, to be deposited in the Reserve Account, on
deposit in the Residual Account or withdrawn from the Residual Account as the
result of an Available Funds Shortfall after the Issuance Date will not exceed
the Residual Amount Cap.
Non-Recourse Obligations. The Notes represent debt obligations of the
Issuer secured by the Leases only and do not represent interests in or
recourse obligations of Copelco Capital or any of its affiliates other than the
Issuer. The Issuer is a special purpose corporation with limited assets.
Consequently, the Noteholders must rely solely upon the Leases, the Equipment
and funds in the Reserve Account and the Residual Account, if any, for payment
of principal of and interest on the Notes. If no
18
<PAGE>
funds are on deposit in the Reserve Account or the Residual Account and the
payments made on the Leases and the disposition proceeds of the Equipment are
insufficient to make payments on the Notes, no other assets will be available
for the payment of the deficiency.
Book-Entry Registration. The Notes offered hereby initially will be
represented by one or more Notes registered in the name of Cede & Co. and will
not be registered in the names of the beneficial owners or their nominees. As a
result of this, unless and until Definitive Notes are issued, beneficial owners
will not be recognized by the Issuer or the Trustee as Noteholders, as that
term is used in each Indenture. Hence, until such time, beneficial owners will
only be able to exercise the rights of Noteholders indirectly, through DTC,
Euroclear or CEDEL and their respective participating organizations, and will
receive reports and other information provided for under the Indenture only if,
when and to the extent provided by DTC, Euroclear or CEDEL, as the case may be,
and its participating organizations. See "Description of the Notes--Book-Entry
Registration."
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to purchase
the Leases from Copelco Capital. Copelco Capital will utilize the proceeds from
the sale of the Leases to repay bank debt and for general corporate purposes.
THE SERIES POOL
The Leases. As of the close of business on July 31, 1996 (the "Cut-Off
Date"), the Notes will be secured by 22,256 Leases with 19,951 Lessees. The
Lessees are businesses and business owners throughout the United States. The
Leases were originated by the Document Image Division, the Computer Division
and the Major Accounts Division (or their predecessors) (the "Origination
Divisions"). See "Risk Factors," "Security for the Notes" and "Certain Legal
Matters Affecting a Lessee's Rights and Obligations." The statistical
information included herein was computed using the Statistical Discounted
Present Value of the Leases as of the Cut-Off Date. The Statistical Discounted
Present Value of the Leases will not vary materially from the Discounted
Present Value of the Leases as of the Cut-Off Date.
The Leases are triple-net leases which impose no affirmative
obligations on the Lessor, and are non-cancelable by the Lessees. Under certain
conditions, however, Copelco Capital may consent to prepayment of the Leases.
Generally, Copelco Capital will consent to a prepayment of a Lease where the
Lessee is upgrading the Equipment. All payments under the Leases are absolute,
unconditional obligations of the Lessees without right of offset for any
reason. Such payments will be made by the Lessees to the Servicer for the
account of the Issuer.
Each Lessee entered into its Lease for specified Equipment which may
be designated in schedules incorporated into the Lease. To the extent not set
forth in the Lease Contract, the schedules, among other things, establish the
monthly payments and the term of the Lease with respect to such Equipment. The
Leases follow one of several different forms of lease agreement, with
occasional modifications which do not materially affect the basic terms of the
Leases. The weighted average remaining term of the Series Pool is 43 months.
Copelco Capital will represent and warrant that, as of Cut-Off Date, all Leases
will be current or less than 63 days delinquent and, as of the Issuance Date,
all Lessees will have made at least one payment.
Lessees covenant to maintain the Equipment and install it at a place
of business agreed upon with Copelco Capital. Delivery, transportation, repairs
and maintenance are the obligation of the Lessees, and all Lessees are required
to carry, at their respective expense, liability and replacement cost insurance
under terms acceptable to Copelco Capital. Such insurance proceeds will
constitute Casualty Payments (as defined herein). Subject to certain
exceptions, if the Lessee does not provide evidence of insurance coverage
within 90 days of the commencement of the Lease, Copelco Capital obtains such
19
<PAGE>
insurance and invoices the Lessee for the cost thereof. Any defaults under a
Lease (as such, a "Non-Performing Lease," as defined herein) permit a
declaration as immediately due and payable all remaining Lease payments under
the Lease and the immediate return of the Equipment. Generally, any payments
received six days after the scheduled payment date are subject to late charges.
"Non-Performing Leases" are (a) Leases that have become more than 123
days delinquent or (b) Leases that have been accelerated by the Servicer or
Leases that the Servicer has determined to be uncollectible in accordance with
its customary practices.
At the end of the Lease term, the Lessee must return the Equipment
with certification from the manufacturer that the Equipment is in good working
order, normal wear and tear excepted, unless the Lease is renewed or the
Equipment is purchased by the Lessee.
Historically, most of the Equipment leased by the Origination
Divisions is purchased or relet by the original lessee at the expiration of the
lease term. "Nominal Buy-Out" Leases comprise 12.93% of the Leases. Pursuant to
the terms of the Leases, the Lessee is required to advise Copelco Capital at
least 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 period ranging from four months to one year. 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, a majority of the Statistical Discounted Present Value
of the Leases consisted of Leases of copier equipment. The remaining Leases
consist of Leases of facsimile machines, computers and other business
equipment.
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.
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Aggregate
Number Percentage Number Percentage Discounted Discounted Original Percentage of
of of Number of of Number Present Value Present Value Equipment Original
State Leases of Leases Lessees(1) of Lessees of the Leases of the Leases Cost Equipment Cost
----- ------ --------- ---------- ---------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alabama 36 0.16% 35 0.17% $374,664.29 0.16% $374,926.19 0.15%
Alaska 6 0.03 6 0.03 127,080.53 0.05 133,549.60 0.05
Arizona 167 0.75 154 0.76 2,237,376.99 0.95 2,313,070.11 0.90
California 4,349 19.54 3,997 19.63 44,087,582.04 18.73 47,495,608.74 18.41
Colorado 513 2.30 485 2.38 4,244,384.80 1.80 4,702,613.28 1.82
Connecticut 459 2.06 408 2.00 4,879,155.04 2.07 5,378,868.63 2.08
Delaware 28 0.13 28 0.14 277,292.93 0.12 289,199.48 0.11
District of
Columbia 276 1.24 257 1.26 3,298,540.59 1.40 3,561,133.40 138
Florida 1,214 5.45 1,089 5.35 11,458,876.07 4.87 12,227,516.10 4.74
Georgia 498 2.24 460 2.26 6,543,966.99 2.78 7,084,445.05 2.75
Hawaii 10 0.04 10 0.05 130,219.00 0.06 129,773.10 0.05
Idaho 50 0.22 47 0.23 471,783.25 0.20 502,047.28 0.19
Illinois 1,066 4.79 975 4.79 12,104,332.62 5.14 13,320,266.07 5.16
Indiana 121 0.54 99 0.49 1,318,624.99 0.56 1,371,245.71 0.53
Iowa 16 0.07 15 0.07 285,984.21 0.12 292,372.28 0.11
Kansas 59 0.27 58 0.28 601,601.83 0.26 627,386.45 0.24
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Aggregate
Number Percentage Number Percentage Discounted Discounted Original Percentage of
of of Number of of Number Present Value Present Value Equipment Original
State Leases of Leases Lessees(1) of Lessees of the Leases of the Leases Cost Equipment Cost
----- ------ --------- ---------- ---------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kentucky 144 0.65% 135 0.66% $1,955,797.64 0.83% $2,139,588.82 0.83%
Maine 292 1.31 262 1.29 2,653,525.89 1.13 2,881,619.91 1.12
Maryland 360 1.62 326 1.60 4,456,820.79 1.89 4,804,593.50 1.86
Massachusetts 820 3.68 751 3.69 8,305,056.21 3.53 9,215,540.20 3.57
Michigan 96 0.43 93 0.46 1,262,816.25 0.54 1,398,777.54 0.54
Minnesota 76 0.34 75 0.37 1,018,475.82 0.43 1,068,970.30 0.41
Mississippi 28 0.13 28 0.14 324,434.85 0.14 340,143.90 0.13
Missouri 193 0.87 173 0.85 1,421,394.81 0.60 1,492,334.10 0.58
Montana 29 0.13 25 0.12 313,352.98 0.13 327,616.27 0.13
Nebraska 6 0.03 6 0.03 38,772.78 0.02 40,082.58 0.02
Nevada 217 0.98 189 0.93 1,944,399.04 0.83 2,093,706.46 0.81
New Hampshire 57 0.26 55 0.27 431,017.38 0.18 471,695.78 0.18
New Jersey 1,376 6.18 1,270 6.24 15,151,090.76 6.44 16,893,472.62 6.55
New Mexico 61 0.27 59 0.29 606,730.71 0.26 626,767.05 0.24
New York 3,685 16.56 3,282 16.12 42,079,290.81 17.88 48,548,873.15 18.82
North Carolina 308 1.38 285 1.40 3,988,286.30 1.69 4,270,038.35 1.65
North Dakota 3 0.01 3 0.01 15,452.36 0.01 16,467.42 0.01
Ohio 837 3.76 770 3.78 8,634,179.96 3.67 9,238,468.98 3.58
Oklahoma 138 0.62 132 0.65 1,355,616.53 0.58 1,398,672.78 0.54
Oregon 268 1.20 252 1.24 2,878,202.32 1.22 3,242,702.49 1.26
Pennsylvania 902 4.05 841 4.13 8,404,940.22 3.57 9,059,794.03 3.51
Rhode Island 148 0.66 144 0.71 1,178,437.15 0.50 1,244,413.12 0.48
South Carolina 128 0.58 111 0.55 1,148,414.66 0.49 1,250,251.69 0.48
South Dakota 12 0.05 12 0.06 145,254.12 0.06 140,573.81 0.05
Tennessee 238 1.07 211 1.04 2,178,231.15 0.93 2,288,505.60 0.89
Texas 1,557 7.00 1,430 7.02 14,895,682.99 6.33 16,250,294.66 6.30
Utah 120 0.54 116 0.57 1,109,365.44 0.47 1,204,369.18 0.47
Vermont 33 0.15 30 0.15 290,087.30 0.12 293,764.22 0.11
Virginia 539 2.42 510 2.50 6,015,888.50 2.56 6,658,252.92 2.58
Washington 623 2.80 587 2.88 7,250,601.65 3.08 7,809,666.24 3.03
West Virginia 40 0.18 38 0.19 697,082.14 0.30 733,604.98 0.28
Wisconsin 49 0.22 33 0.16 576,239.16 0.24 588,058.46 0.23
Wyoming 5 0.02 4 0.02 160,803.72 0.07 196,965.58 0.08
- ----------------------------------------------------------------------------------------------------------------------------------
Total.......... 22,256 100.0% 20,361 100.00% $235,327,208.56 100.00% $258,032,668.16 100.00%
==================================================================================================================================
</TABLE>
(1) Total number of Lessees is greater than the total number of Lessees
appearing in the Distribution of Leases by Lessee Table because several
Lessees have Leases in more than one state.
21
<PAGE>
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
Percentage
of
Statistical Percentage
Statistical Discounted Aggregate of
Statistical Discounted Percentage Discounted Present Value Original Original
Present Value of the Number of Number Present Value of of Equipment Equipment
Leases of Leases of Leases Leases Leases Cost Cost
- ----------------------- --------- ---------- ---------------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
$0 - 5,000 8,903 40.00% $26,877,397.98 11.42% $31,252,003.61 12.11%
5,001 - 10,000 6,443 28.95 46,167,599.01 19.62 51,730,250.10 20.05
10,001 - 15,000 2,773 12.46 33,975,821.47 14.44 37,094,059.47 14.38
15,001 - 20,000 1,557 7.00 26,960,913.69 11.46 29,134,497.08 11.29
20,001 - 25,000 785 3.53 17,497,315.06 7.44 18,831,195.33 7.30
25,001 - 30,000 541 2.43 14,756,690.10 6.27 15,820,383.13 6.13
30,001 - 35,000 327 1.47 10,594,089.08 4.50 11,154,457.22 4.32
35,001 - 40,000 208 0.93 7,766,924.31 3.30 8,405,638.24 3.26
40,001 - 45,000 157 0.71 6,659,721.72 2.83 7,017,073.25 2.72
45,001 - 50,000 116 0.52 5,489,299.13 2.33 5,860,438.07 2.27
50,001 - 55,000 68 0.31 3,558,248.89 1.51 3,825,618.39 1.48
55,001 - 60,000 60 0.27 3,437,728.45 1.46 3,655,742.65 1.42
60,001 - 65,000 46 0.21 2,872,912.85 1.22 3,104,038.20 1.20
65,001 - 70,000 51 0.23 3,436,190.97 1.46 3,626,554.44 1.41
70,001 - 75,000 35 0.16 2,530,816.27 1.08 2,647,850.02 1.03
75,001 - 80,000 28 0.13 2,168,810.50 0.92 2,352,430.55 0.91
80,001 - 85,000 17 0.08 1,400,872.24 0.60 1,463,395.54 0.57
85,001 - 90,000 19 0.09 1,658,110.17 0.70 1,759,238.04 0.68
90,001 - 95,000 16 0.07 1,475,788.32 0.63 1,522,543.62 0.59
95,001 - 100,000 9 0.04 873,238.44 0.37 891,924.09 0.35
greater than $100,000 97 0.44 15,168,719.94 6.45 16,883,337.12 6.54
- -----------------------------------------------------------------------------------------------------------------------------------
Total................... 22,256 100% $235,327,208.56 100% $258,032,668.16 100%
===================================================================================================================================
</TABLE>
22
<PAGE>
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
Percentage of
Aggregate Percentage
Statistical Statistical Aggregate of
Statistical Percentage Discounted Discounted Original Original
Discounted Present Number of Number Present Value Present Value Equipment Equipment
Value of the Leases of Lessees of Lessees of Leases of Leases Cost Cost
-------------------- ---------- ---------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$0 - 5,000 7,587 38.03% $23,178,887.84 9.85% $26,827,517.41 10.40%
5,001 - 10,000 5,627 28.20 40,355,498.41 17.15 45,188,763.01 17.51
10,001 - 15,000 2,544 12.75 31,118,019.69 13.22 33,964,786.37 13.16
15,001 - 20,000 1,456 7.30 25,193,109.44 10.71 27,273,564.10 10.57
20,001 - 25,000 747 3.74 16,646,058.10 7.07 17,918,626.83 6.94
25,001 - 30,000 549 2.75 15,014,036.81 6.38 16,198,904.13 6.28
30,001 - 35,000 353 1.77 11,483,288.61 4.88 12,249,424.81 4.75
35,001 - 40,000 239 1.20 8,902,076.51 3.78 9,544,609.29 3.70
40,001 - 45,000 168 0.84 7,127,827.97 3.03 7,643,870.17 2.96
45,001 - 50,000 136 0.68 6,433,264.42 2.73 6,960,306.89 2.70
50,001 - 55,000 82 0.41 4,287,607.97 1.82 4,689,148.23 1.82
55,001 - 60,000 77 0.39 4,406,360.09 1.87 4,751,342.15 1.84
60,001 - 65,000 55 0.28 3,438,024.49 1.46 3,727,845.61 1.44
65,001 - 70,000 47 0.24 3,165,570.66 1.35 3,309,944.97 1.28
70,001 - 75,000 46 0.23 3,321,136.41 1.41 3,614,966.26 1.40
75,001 - 80,000 31 0.16 2,409,358.28 1.02 2,688,040.06 1.04
80,001 - 85,000 20 0.10 1,649,797.24 0.70 1,789,809.25 0.69
85,001 - 90,000 27 0.14 2,372,271.16 1.01 2,579,836.89 1.00
90,001 - 95,000 19 0.10 1,763,024.52 0.75 1,788,655.40 0.69
95,001 - 100,000 12 0.06 1,168,773.39 0.50 1,217,032.13 0.47
100,001 - 125,000 52 0.26 5,803,944.02 2.47 6,430,077.06 2.49
125,001 - 150,000 24 0.12 3,298,010.97 1.40 3,639,035.82 1.41
150,001 - 200,000 32 0.16 5,479,174.39 2.33 5,983,355.60 2.32
200,001 - 300,000 10 0.05 2,467,540.91 1.05 2,842,700.64 1.10
greater than $300,000 11 0.06 4,844,546.26 2.06 5,210,505.08 2.02
- ----------------------------------------------------------------------------------------------------------------------------------
Total.................. 19,951 100.00% $235,327,208.56 100.00% $258,032,668.16 100.00%
==================================================================================================================================
</TABLE>
23
<PAGE>
DISTRIBUTION OF LEASES BY
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage Percentage
of Aggregate of
Number Percentage Statistical Discounted Statistical Original Original
Remaining of of Number Present Discounted Equipment Equipment
Term Leases of Leases Value of Leases Present Value Cost Cost
- ---- ------ --------- --------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 251 1.13% $ 707,395.84 0.30% $ 1,564,745.73 0.61%
13 - 24 669 3.01 3,972,225.61 1.69 5,113,096.96 1.98
25 - 36 12,200 54.82 91,674,897.96 38.96 106,763,532.34 41.38
37 - 48 3,919 17.61 47,547,134.38 20.20 51,309,077.15 19.88
49 - 60 5,056 22.72 87,624,579.40 37.24 89,670,314.99 34.75
61 - 72 155 0.70 3,497,052.94 1.49 3,344,046.90 1.30
73 - 84 6 0.03 303,922.42 0.13 267,854.09 0.10
- ----------------------------------------------------------------------------------------------------------------------------------
Total.......... 22,256 100.00% $235,327,208.56 100.00% $258,032,668.16 100.00%
==================================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
<TABLE>
<CAPTION>
Statistical Percentage of
Percentage of Discounted Present Statistical Percentage of
Number Number Value of Discounted Aggregate Original Original
Lease Type of Leases of Leases Leases Present Value Equipment Cost Equipment Cost
---------- --------- --------- ------------------ ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Finance Lease 22,217 99.82% $234,833,986.48 99.79% $257,423,860.73 99.76%
Operating Lease 39 0.18 493,222.08 0.21 608,807.43 0.24
- ---------------------------------------------------------------------------------------------------------------------------
Total................. 22,256 100.00% $235,327,208.56 100.00% $258,032,668.16 100.00%
===========================================================================================================================
</TABLE>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
<TABLE>
<CAPTION>
Percentage
Percentage Percentage of Percentage
of of Statistical Statistical Aggregate of
Number Number Number Number Discounted Discounted Original Original
of of of of Present Present Equipment Equipment
Lease Type Leases Leases Lessees(1) Lessees Value Value Cost Cost
---------- ------ ------ ---------- ------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fair Market Value 17,695 79.65% 15,950 79.22% $179,206,581.20 76.31% $200,146,061.49 77.75%
Fixed Purchase Option 1,644 7.40 1,493 7.41 23,054,351.65 9.82 24,516,511.16 9.52
Nominal Buyout 2,878 12.95 2,692 13.37 32,573,053.63 13.87 32,761,288.08 12.73
- -----------------------------------------------------------------------------------------------------------------------------------
Total.................. 22,217 100.00% 20,135 100.00% $234,833,986.48 100.00% $257,423,860.73 100.00%
===================================================================================================================================
</TABLE>
(1) Total number of Lessees is greater than the total number of Lessees
appearing in the Distribution of Leases by Lessee Table because several
Lessees have numerous Leases, only a portion of which are Nominal Buyout
Leases.
24
<PAGE>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage
Discounted Discounted Aggregate of
Number Percentage Present Present Original Original
of of Number Value of Value of Equipment Equipment
Equipment Type Leases of Leases Leases Leases Cost Cost
-------------- ------ --------- ----------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Copiers 19,295 86.70% $200,494,550.62 85.20% $221,895,113.28 85.99%
Telephones 16 0.07 293,686.87 0.12 294,693.05 0.11
Telex machines 2 0.01 5,607.11 0.00 5,743.20 0.00
Facsimiles 1,151 5.17 3,724,865.88 1.58 4,251,638.36 1.65
Computers 1,454 6.53 25,624,404.40 10.89 26,064,366.65 10.10
Office Furniture 12 0.05 164,013.56 0.07 166,607.99 0.06
Mailing Equipment 148 0.66 1,473,376.68 0.63 1,592,955.62 0.62
Miscellaneous Equip 178 0.80 3,546,703.43 1.51 3,761,550.01 1.46
- -----------------------------------------------------------------------------------------------------------------------------------
Total....................... 22,256 100.00% $235,327,208.56 100.00% $258,032,668.16 100.00%
===================================================================================================================================
</TABLE>
Historical Delinquency Information. Problem accounts are reviewed by
senior management when an account becomes 45 days past due. Lease
receivables in the Origination Divisions are evaluated for write-down when
they become over 92 days delinquent. General delinquency information for
equipment leases in the Origination Divisions that are owned or serviced
by Copelco Capital is set forth below. Total receivables and delinquency
balances as of December 31, 1995 and June 30, 1996 exclude a portfolio
of leases in an amount equal to approximately $30 million which was sold
on December 28, 1995.
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
No. of
Delinquent Days June 30, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
- --------------- ------------- ------------- ------------- ------------- ------------- -------------
$ % $ % $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total
Receivables 749,744,071 669,800,056 543,197,213 385,838,619 257,038,244 171,673,575
Balance
- ---------------------------------------------------------------------------------------------------------------------------------
30-59 Days 17,500,501 2.33 18,298,831 2.73 8,636,836 1.59 5,401,741 1.40 4,138,316 1.61 2,576,974 1.50
60-89 Days 4,448,911 0.59 3,492,842 0.52 2,281,428 0.42 1,234,684 0.32 925,338 0.36 867,842 0.51
90 Days + 4,547,373 0.61 4,867,483 0.73 3,096,224 0.57 2,315,032 0.60 1,645,045 0.64 1,625,572 0.95
- ---------------------------------------------------------------------------------------------------------------------------------
Total
Delinquency 26,496,785 3.53 26,659,156 3.98 14,014,488 2.58 8,951,457 2.32 6,708,699 2.61 5,070,388 2.95
</TABLE>
- -----------------
(1) The Total Receivables Balance is equal to the aggregate future rent owing
on the leases less residuals, unearned income and advance rents thereon.
25
<PAGE>
Historical Default Experience. All accounts assessed over 92 days past due
automatically become non-accruing accounts. Any subsequent recoveries offset
net losses. General charge-off information for leases in the Origination
Divisions that are owned and serviced by Copelco Capital for the period January
1, 1991 to December 31, 1995 and for the six months ended June 30, 1996 is set
forth below. The period end balances with respect to the year ended December
31, 1995 and the six months ended June 30, 1996 utilized in the calculation of
Average Receivables Outstanding exclude a portfolio of leases in an amount
equal to approximately $30 million which was sold on December 28, 1995. Net
Losses for the year ended December 31, 1995 includes losses associated with
such portfolio.
HISTORICAL CHARGE-OFF EXPERIENCE
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, -----------------------------------------------------------------------
1996(2) 1995 1994 1993 1992 1991
------- ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding(1)................ $709,772,064 $606,498,635 $464,517,916 $321,438,432 $214,355,910 $155,408,751
Net Losses...................... $5,562,474 $9,969,495 $7,424,486 $5,307,182 $5,303,069 $4,474,038
Net Losses as a Percentage of
Average Receivables........... 1.57% 1.64% 1.60% 1.65% 2.47% 2.88%
</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 less
residuals, unearned income and advance rents thereon.
(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.
26
<PAGE>
COPELCO CAPITAL'S UNDERWRITING AND SERVICING PRACTICES
General. Copelco Capital, Inc., 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, commercial and industrial companies, business owners and
individuals. Copelco Capital's address is East Gate Center, 700 East Gate
Drive, Mount Laurel, New Jersey 08054-5400 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 1, 1994,
Copelco Leasing was merged into Copelco Credit with Copelco Credit as the
surviving legal entity; Copelco Credit then changed its name to Copelco
Capital, Inc. merging all of the Copelco Leasing and Copelco Capital leasing
operations. Copelco Capital currently consists of seven operating divisions
(each, a "Division"): the Document Image Division; the Ambulatory Care
Division; the Healthcare Vendor Division; the Manufacturing Technology
Division; the Computer Division; the Major Accounts Division and the Canadian
Division.
As of December 31, 1995, Copelco Capital had total assets of
$1,399,101,000 compared with $1,102,770,000 as of December 31, 1994, total
liabilities of $1,295,269,000 compared with $1,016,059,000 as of December 31,
1994, shareholder's equity of $103,832,000 compared with $86,711,000 as of
December 31, 1994 and total revenues and net income of $155,034,000 and
$17,304,000, respectively, for the year ended December 31, 1995, compared with
$119,646,000 and $14,558,000, respectively, for the year ended December 31,
1994.
Since 1986, Copelco Capital and its predecessors have participated in
28 equipment lease securitization transactions involving the issuance of in
excess of $2 billion in securities. Copelco Capital and its predecessors
performed all servicing functions in each of these prior transactions, 15 of
which remain outstanding.
The Document Image Division. The Document Image Division of Copelco
Capital obtains substantially all of its leases through a marketing program
which is directed primarily at major manufacturers and various distributors of
copier equipment (each, a "Vendor"). The remainder is obtained through new
leases with existing lessees and referrals. The Document Image Division
establishes both formal and informal relationships with Vendors, some of which
provide Copelco Capital with a right of first refusal on all equipment leases
with the Vendor's customers. This arrangement provides the Document Image
Division with a steady flow of lease referrals from Vendors which frequently
use lease financing as a marketing tool. The Document Image Division provides
some Vendors with private label programs under which billing and collections
are performed by Copelco Capital in the name of the Vendor.
The Document Image Division also offers a private label 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 Vendor
on the basis of the Equipment Financing Portion of the Fixed Payment and remits
the Maintenance Charge to the Vendor as it is collected every month. Copelco
Capital calculates usage periodically using 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 (the "Excess
Copy Charge"). This excess copy charge is remitted to the Vendor upon
collection by Copelco Capital. Only the Equipment Financing Portion of the
Fixed Payments is 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. Lease documents for the 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. In
either case, credit approvals are made by Copelco Capital. Terms of Copelco
Capital's lease documents are standard for
27
<PAGE>
virtually all leases, as is documentation for virtually all private label
programs. Typically, individual transactions range from $5,000 to $100,000 with
an average lease size of approximately $11,000.
The Computer Division. Copelco Capital established the Computer
Division as an outgrowth of the Document Image Division in early 1994 to focus
more directly on the personal computer segment of the industry. The operations
of the Computer Division have been developed to be virtually identical to those
of the Document Image Division. Copelco Capital initiates business through
distributors, direct sellers, mail order sellers and resellers. Vendor
relationships are established subject to established computer vendor approval
criteria. Until the recent establishment of the Computer Division, computers
were leased through Copelco Capital in what is now the Document Image Division.
Typically, individual transactions range from $5,000 to $500,000 with an
average lease size of approximately $20,000.
The Major Accounts Division. The Major Accounts Division initiates
business through a few major vendors. The operations of the Major Accounts
Division have been developed to be virtually identical to those of the Document
Image Division. Typically, individual transactions range from $5,000 to
$500,000 with an average lease size of approximately $15,000.
Credit Review. Prior to a lease approval by the Origination Divisions
of Copelco Capital, the Vendor's sales personnel are required to obtain from
the prospect 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 is submitted for credit review in Park Ridge, New Jersey
and Moberly, Missouri for the Document Image Division and Park Ridge, New
Jersey and Jacksonville, Florida for the Major Accounts Division and the
Computer Division. Credit review is performed and lease approvals are given at
these locations utilizing an interactive computer system designed to handle
applications which are telephoned or telecopied from Vendors.
Lessee evaluation includes an analysis of credit payment history,
business structure (partnership, sole proprietorship or corporation), 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 $25,000, the information collected includes the prospect's most
recent financial statements. If individual guarantors are involved, a consumer
credit bureau report is generally obtained for the guarantors.
The Origination Divisions have implemented an automated credit scoring
system. The system, designed by Dun & Bradstreet specifically for the Document
Image Division, was in development over a two year period and was formally
implemented on January 4, 1994. The system utilizes various filters which
enable the Origination Divisions to adapt "approve" and "decline" threshold
scores based upon criteria such as credit exposure, payment history, industry
(by SIC code), vendor and state. The model is consistent with the Origination
Divisions' traditional credit decision-making criteria (i.e., Dun & Bradstreet
data, consumer credit bureau information, and bank and trade references).
All credit requests not approved via automated credit scoring must be
underwritten by a credit officer. Each credit officer has a specific assigned
lending limit based upon experience and seniority. Transactions up to $50,000
may be approved individually by any SBU general manager. Transactions ranging
from $50,000 to $150,000 require the individual approval of a credit officer.
Transactions ranging from $150,000 to $250,000 require the approval of an
assistant credit manager. Transactions ranging from $250,000 to $500,000
require the approval of one of the group credit officers. Transactions ranging
from $500,000 to $800,000 require the approval of the president of Copelco
Capital. Transactions ranging from $800,000 to $1,500,000 require the approval
of the chief credit officer of Copelco Capital. Any single transaction or
transactions where the total original equipment cost of equipment leased by a
particular lessee exceeds $1,500,000 must be approved by the senior management
of Copelco Financial.
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All Lessees are required by the terms of the Leases 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.
Residual Values. The Origination Divisions have realized residual
values which, on average, exceeded the booked residual values in respect of
such leases. For Leases in which there is a pre-determined buy-out price, the
buy-out price is the residual value recorded on Copelco Capital's books.
Typically, for accounting purposes, the booked residual values are recorded at
no more than 15% of the original equipment cost.
To recover residuals on the equipment which is returned, the
Origination Divisions utilize the services of its Vendors and also participates
in an active secondary market for the sale of used equipment.
Collections. A late charge is assessed to lessees 6 days after 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.
On the day on which a Lease becomes 10 days delinquent, the
Origination Divisions' 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 sent out to the lessee
and to anyone providing personal guarantees on the Leases. An acceleration
letter is sent to all lessees and guarantors when a Lease becomes 45 days past
due. 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, each lease is evaluated on the merits of the individual
situation, with equipment value being considered as well as the current
financial strength of the lessee.
Sales and Servicing Agreement. Copelco Capital will enter into an
agreement (the "Sales and Servicing Agreement") with the Issuer, pursuant to
which Copelco Capital will, among other things, sell and service the Leases,
make Servicer Advances and forward Excess Copy Charges to Vendors. In the Sales
and Servicing Agreement, Copelco Capital will make certain representations and
warranties regarding the Leases and the Equipment. In the event that (a) any of
such representations and warranties made by Copelco Capital proves at any time
to have been inaccurate in any material respect as of the Issuance Date or (b)
any Lease shall be terminated in whole or in part by a Lessee, or any amounts
due with respect to any Lease shall be reduced or impaired, as a result of any
action or inaction by Copelco Capital (other than any such action or inaction
of Copelco Capital, when acting as Servicer, in connection with the enforcement
of any Lease (other than an Early Lease Termination) in a manner consistent
with the provisions of the Sales and Servicing Agreement) or any claim by any
Lessee against Copelco Capital and, in any such case, the event or condition
causing such inaccuracy, termination, reduction, impairment or claim shall not
have been cured or corrected within 30 days after the earlier of the date on
which Copelco Capital is given notice thereof by the Issuer or the 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 equal to the Discounted Present Value of such
Lease plus any amounts previously due and unpaid thereon. In addition, subject
to the satisfaction of certain requirements set forth in the Sales and
Servicing Agreement, Copelco Capital will have the option to substitute one or
more Substitute Leases for such Warranty Lease. Any inaccuracy in any
representation or warranty with respect to (i) the priority of the lien of the
Indenture with respect to any Lease or (ii) the amount (if less than
represented) of the Lease Payments, Casualty Payments or Termination Payments
under any Lease shall be deemed to be material.
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Servicing Fee. The Servicing Fee will be paid monthly on the Payment
Date from amounts in the Collection Account and will be calculated by
multiplying one-twelfth of 0.75% times the then Outstanding Principal Amount of
the Notes at such Payment Date before application of payments with respect
thereto.
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.
THE ISSUER
The Issuer is a wholly-owned bankruptcy-remote subsidiary of Copelco
Capital, formed solely for the purpose of acquiring from Copelco Capital Leases
and Equipment from time to time and issuing notes from time to time as provided
herein. As a bankruptcy-remote entity, the Issuer's operations will be
restricted so that (a) it does not engage in business with, or incur
liabilities to, any other entity (other than the Trustee on behalf of the
Noteholders and the trustee on behalf of the noteholders under indentures
similar to the Indenture) which may bring bankruptcy proceedings against the
Issuer and (b) the risk that it will be consolidated into the bankruptcy
proceedings of any other entity is diminished. The Issuer will have no other
assets available to pay amounts owing under the Indenture except the Trust
Fund, including the Leases and the interests in the Equipment, the proceeds
thereof, and the amounts on deposit in the Collection Account, the Reserve
Account and the Residual Account. The Issuer's address is East Gate Center, 700
East Gate Drive, Mount Laurel, New Jersey 08054-5400 and its phone number is
(609) 231-9600.
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture (the "Indenture")
between the Issuer and Manufacturers and Traders Trust Company, as trustee (the
"Trustee"). The following statements with respect to the Notes are subject to
the detailed provisions of the Indenture, the form of which is filed as an
exhibit to the registration statement of which this Prospectus forms a part.
Whenever any particular section of the Indenture or any term used therein is
referred to, the statement in connection with which such reference is made is
qualified in its entirety by such reference.
General. The Offered Notes represent secured debt obligations of the
Issuer secured by the Trust Fund and the privately placed Class C Notes
represent subordinated debt obligations of the Issuer only secured by the
related Trust Fund as provided in the related Indenture; and 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 special purpose corporation
with limited assets. Consequently, Noteholders must rely solely upon the
Leases, the interests in the Equipment, funds on deposit in the Collection
Account, the Reserve Account and the Residual Account for payment of principal
of and interest on the Notes.
The Initial Principal Amount of the Notes shall be equal to the
Discounted Present Value of the Leases as of the Cut-Off Date. Such Discounted
Present Value of the Leases, at any given time, shall equal the future
remaining scheduled payments from the related Leases (including Non-Performing
Leases), discounted at the Discount Rate, as set forth in the Indenture.
Each Class A Note, Class B Note and Class C Note will bear interest
from the Issuance Date at the Class A Interest Rate, Class B Interest Rate and
the Class C Interest Rate, respectively, calculated on the basis of a year of
360 days comprised of twelve 30-day months, payable on the twentieth day of
each month (or if such day is not a business day the next succeeding business
day), to the person in whose name the Note was registered at the close of
business on the preceding Record Date. Principal will be payable as set forth
under "Distributions on Notes." Notes may be presented to the corporate trust
office of the 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).
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Book-Entry Registration. Class A Noteholders and Class B Noteholders
may hold their Notes through DTC (in the United States) or Cedel or Euroclear
(in Europe) if they are participants of such systems, or indirectly through
organizations which are participants in such systems.
Cede, as nominee for DTC, will hold the global Class A Note or Notes
and the global Class B 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 or indirectly through
DTC, on the one hand, and directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected through DTC in
accordance with DTC rules on behalf of the relevant European international
clearing systems by its Depositary. Cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of securities by or through a Cedel Participant
or a Euroclear Participant to a Participant will be received with value on the
DTC settlement date but will be available in the relevant Cedel or Euroclear
cash account only as of the business day following settlement in DTC. For
information with respect to tax documentation procedures relating to the
Offered Notes, see "Certain 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
"Class A Noteholder" and "Class B Noteholder" will
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be Cede, as nominee of DTC, and that holders of beneficial interests in the
Class A Noteholders or Class B Noteholders, respectively, under the Indenture
will only be permitted to exercise the rights of Class A Noteholders or Class B
Noteholders, respectively, 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 or Class B Noteholder under the Indenture only
at the direction of one or more Participants to whose account with DTC the
Class A Notes or Class B Notes are credited. Additionally, DTC has advised the
Issuer that it may take actions with respect to the Class A Interest or the
Class B Interest that conflict with other of its actions with respect thereto.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes
in accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the Underwriters. Indirect access to Cedel is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York Banking Department, as well as the Belgian Banking
Commission.
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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 "Certain Federal Income Tax Considerations." Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by an Offered Noteholder under the Indenture on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to its Depositary's ability to effect such actions
on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Notes among participants
of DTC, Cedel and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
Definitive Notes. The Offered Notes will be issued in fully
registered, authenticated form to Beneficial Owners or their nominees (the
"Definitive Notes"), rather than to DTC or its nominee, only if (a) the Issuer
advises the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Depository with respect to such
Notes, and the Trustee or the Issuer is unable to locate a qualified successor
or (b) the Issuer at its option elects to terminate the book-entry system
through DTC. (Section 2.06).
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
Noteholders under the related Indenture (the "Holders"). (Section 2.07). The
Trustee will also notify the Holders of any adjustment to the Record Date with
respect to the Notes necessary to enable the Trustee to make distributions to
Holders of the Definitive Notes for such Class of record as of each Payment
Date.
Additionally, upon the occurrence of any such event described above,
distribution of principal of and interest on the Offered Notes will be made by
the Trustee directly to Holders in accordance with the procedures set forth
herein and in the Indenture. Distributions will be made by check, mailed to the
address of such Holder as it appears on the Note register. Upon at least 10
days' notice to Noteholders for such Class, however, the final payment on any
Note (whether the Definitive Notes or the Note for such Class registered in the
name of Cede representing the Notes of such Class) will be made only upon
presentation and surrender of such Note at the office or agency specified in
the notice of final distribution to Noteholders.
Definitive Notes of each Class will be transferable and exchangeable
at the offices of the Trustee or its agent in New York, New York, which the
Trustee shall designate on or prior to the issuance of any Definitive Notes
with respect to such Class. No service charge will be imposed for any
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith. (Section 2.03(e)).
Collection Account. The Trustee will establish and maintain an
Eligible Account (the "Collection Account") into which the Servicer will
deposit all Lease Payments, Casualty Payments, Termination Payments, Residual
Realizations, 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
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receipt thereof. 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 S&P, Moody's and DCR, 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 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), 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 the following funds into the Collection
Account (Section 3.03(a)), which funds were received on or prior to the related
Determination Date with respect to the related Due Period, including any funds
deposited into the Collection Account from the Reserve Account and the Residual
Account, shall be available for distribution ("Available Funds"), pursuant to
the Indenture, on the next succeeding Payment Date:
a) Lease Payments (net of any Excess Copy Charges) due during the
prior Due Period;
b) Residual Realizations up to the Residual Amount Cap;
c) 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);
d) late charges received on delinquent Lease payments not advanced
by the Servicer;
e) proceeds from repurchases by Copelco Capital of Leases as a
result of breaches of representations and warranties;
f) proceeds from investment of funds in the Collection Account, the
Reserve Account and the Residual Account;
g) Casualty Payments;
h) Termination Payments; and
i) Servicer Advances.
Reserve Account. The Trustee will establish and maintain an Eligible
Account (the "Reserve Account"). On the Closing Date, the Issuer will make an
initial deposit in an amount equal to 1.25% of the Discounted Present Value of
the Leases as of the Cut-Off Date into the
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Reserve Account. In the event that Available Funds (exclusive of amounts on
deposit in the Reserve Account and the Residual Account) are insufficient to pay
the amounts owing the Servicer, Interest Payments on the Notes and the Class A
Principal Payment, the Class B Principal Payment and the Class C Principal
Payment (such payments, the "Required Payments" and such Shortfall, an
"Available Funds Shortfall"), the Trustee will withdraw from the Reserve Account
an amount equal to the lesser of the funds on deposit in the Reserve Account
(the "Available Reserve Amount") and such deficiency. In addition, on each
Payment Date, Available Funds remaining after the payment of amounts owing the
Servicer and 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 greater of (a) 1.25% of the
Discounted Present Value of the Performing Leases as of the related Payment Date
and (b) 1.00% of the Discounted Present Value of the Leases as of the Cut-Off
Date, but not more than the Outstanding Principal Amount of the Notes (the
"Required Reserve Amount"). Any amounts on deposit in the Reserve Account in
excess of the Required Reserve Amount will be released to the Issuer. (Section
3.04(c)).
Residual Account. The Trustee will establish and maintain an Eligible
Account (the "Residual Account"). Under certain limited circumstances more
fully described in the Indenture (a "Residual Event"), after the Issuance Date,
Residual Realizations included in Available Funds and not previously disbursed
to the Servicer or the Noteholders, or deposited in the Reserve Account will be
deposited in the Residual Account up to the Residual Amount Cap. Following the
termination of a Residual Event, amounts on deposit in the Residual Account
will be disbursed to the Issuer and will no longer be available to Noteholders.
To the limited extent provided in the Indenture, funds on deposit in the
Residual Account will be available to cover shortfalls in the amount available
to pay amounts owing the Servicer and to make interest and principal payments on
the Notes to the extent that funds on deposit in the Reserve Account are
insufficient to cover an Available Funds Shortfall. (Section 3.04(c)).
Distributions on Notes. Payments on the Notes will commence on
September 20, 1996. On or before the fifth day prior to each Payment Date (or
the preceding business day, if such day is not a business day) (each, a
"Determination Date"), the Servicer will determine the Available Funds and the
Required Payments.
For each Payment Date, the interest due with respect to the Class A
Notes, the Class B Notes and the Class C 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 Interest Rates applied to the
Outstanding Principal Amount of such Class A Notes, Class B Notes and Class C
Notes, respectively, after giving effect to payments of principal to
Noteholders on the preceding Payment Date, plus all previously accrued and
unpaid interest on the Class A Notes, the Class B Notes and the Class C Notes
(the "Interest Payments"). (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 and the Class C Notes will be the Class A
Principal Payment, the Class B Principal Payment and the Class C Principal
Payment, respectively. In addition, to the extent that the Class B Floor
exceeds the Class B Target Investor Principal Amount and/or the Class C Floor
exceeds the Class C Target Investor Principal Amount, Additional Principal
shall be distributed, sequentially, as an additional principal payment on the
Class A Notes, the Class B Notes and the Class C Notes until the Outstanding
Principal Amount of each has been reduced to zero (Section 3.03 (b)).
"Additional Principal" with respect to each Payment Date is an
amount equal to (a) the difference between (i) the Discounted Present Value of
the Performing Leases as of the previous Determination Date and (ii) the
Discounted Present Value of the Performing Leases as of the related
Determination Date, less (b) the Class A Principal Payment, the Class B
Principal Payment and the Class C Principal Payment to be paid on such Payment
Date (Section 1.01).
The "Class A Percentage" equals 91.25% (Section 1.01).
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The "Class A Principal Payment" payable on each Payment Date will be
an amount equal to the lesser of (a) the amount necessary to reduce the
Outstanding Class A Principal Amount to the Class A Target Investor Principal
Amount and (b) funds available therefor (Section 1.01).
The "Class A Target Investor Principal Amount" with respect to each
Payment Date will be 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 Floor" with respect to each Payment Date means (a) 2.50%
of the initial Discounted Present Value of the Leases as of the Cut-Off Date,
plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c)
the sum, as of the related Determination Date, of the Outstanding Principal
Amount of the Class C Notes and the amount on deposit in the Reserve Account
after giving effect to any withdrawals to be made on such Payment Date (Section
1.01).
The "Class B Percentage" equals 6.00% (Section 1.01).
The "Class B Principal Payment" payable on each Payment Date will be
an amount equal to the amount necessary to reduce the Outstanding Class B
Principal Amount to the greater of Class B Target Investor Principal Amount and
the Class B Floor and (b) funds available therefor (Section 1.01).
The "Class B Target Investor Principal Amount" with respect to each
Payment Date will be 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 (Section 1.01).
The "Class C Floor" with respect to each Payment Date means (a) 1.00%
of the initial Discounted Present Value of the Leases as of the Cut-Off Date,
plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus
(c) the amount on deposit in the Reserve Account after giving effect to
withdrawals to be made on such Payment Date; provided, however, that if the
Outstanding Class B Principal Amount is equal to the Class B Floor on such
Payment Date, the Class C Floor will equal the Outstanding Class C Principal
Amount utilized in the calculation of the Class B Floor Amount for such
Payment Date (Section 1.01).
The "Class C Percentage" equals 2.75% (Section 1.01).
The "Class C Principal Payment Amount" payable on each Payment Date
will be an amount equal to the lesser of (a) the amount necessary to reduce the
Outstanding Class C Principal Amount to the greater of the Class C Target
Investor Principal Amount and the Class C Floor and (b) funds available
therefor (Section 1.01).
The "Class C Target Investor Principal Amount" with respect to each
Payment Date will be 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 (Section 1.01).
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 payments made on such Payment Date, minus (ii) the lesser
of (A) the Discounted Present Value of the Performing Leases as of the
Determination Date relating to the immediately preceding Payment Date minus the
Discounted Present Value of the Performing Leases as of the related
Determination Date and (B) Available Funds remaining after the payment of
amounts owing the Servicer and in respect of the interest on the Notes on
such Payment Date over (b) the Discounted Present Value of Performing Leases as
of the related Determination Date (Section 1.01).
The "Discounted Present Value of the Leases", with respect to the
Trust Fund at any given time, shall equal the future remaining scheduled
payments (not including delinquent amounts) from the related Leases (including
Non-Performing Leases (as defined herein)), discounted at the Discount Rate.
The Discount Rate will be equal to the sum of (a) the weighted average Interest
Rate of the Class A Notes, the Class B Notes and the Class C Notes on the
Issuance Date and (b) the Servicing Fee Rate (Section 1.01).
The "Discounted Present Value of the Performing Leases", with respect
to the Trust Fund at any given time equals the Discounted Present Value of the
Leases, including any Substitute Leases, reduced by all future
36
<PAGE>
remaining scheduled payments on the related Non-Performing Leases (not
including delinquent amounts), discounted at the Discount Rate. See
"Description of the Notes--General" (Section 1.01).
"Non-Performing Leases" are (a) Leases that are more than 123 days
delinquent or (b) Leases that have been accelerated by the Servicer. See "The
Series Pool--The Leases" (Section 1.01).
The "Residual Amount Cap" is $________, which represents 7% of the
Discounted Present Value of the Leases as of the Cut-off Date (Section 1.01).
A "Residual Event" has the meaning specified in the Indenture
(Section 1.01).
Unless an Event of Default and acceleration of the Notes has occurred,
on or before each Payment Date, the Servicer will instruct the Trustee to apply
or cause to be applied the Available Funds to make the following payments in
the following priority (Section 3.03(b)):
(a) to pay the Servicing Fee;
(b) to reimburse unreimbursed Servicer Advances in respect of a prior
Payment Date;
(c) to make Interest Payments on the Class A Notes;
(d) to make Interest Payments on the Class B Notes;
(e) to make Interest Payments on the Class C Notes;
(f) to pay the Class A Principal Payment to the Class A Noteholders;
(g) to pay the Class B Principal Payment to the Class B Noteholders;
(h) to pay the Class C Principal Payment to the Class C Noteholders;
(i) to pay the Additional Principal, if any, as an additional
reduction of principal, first to the Class A Noteholders until
the Outstanding Class A Principal Amount has been reduced to
zero, thereafter to the Class B Noteholders as an additional
reduction of principal until the Outstanding Class B Principal
Amount has been reduced to zero and, thereafter to the Class C
Noteholders until the Outstanding Class C Principal Amount has
been reduced to zero;
(j) 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;
(k) during such time as a Residual Event has occurred and is
continuing, to make a deposit to the Residual Account in an
amount equal to the balance of the remaining Residual
Realizations on deposit in the Collection Account and included in
Available Funds after giving effect to the allocations in clauses
(a) through (j) above on such Payment Date; and
(l) to the Issuer, the balance, if any.
Amounts will be considered due and payable to the Noteholders only to
the extent funds are available therefor as described above.
37
<PAGE>
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 all Leases with respect
to the prior Due Period. The Servicer will be reimbursed for Servicer Advances
from Available Funds on the second following Payment Date. See "Distribution on
Notes" above.
Redemption. The Issuer may, at its option, redeem the Notes, as a
whole, at their principal amount, without premium, together with interest
accrued to the date fixed for redemption if on any payment date the Discounted
Present Value of the Performing Leases is less than or equal to 10% of the
Discounted Present Value of the Leases as of the Cut-Off Date. (Sections 2.01
and 1.06.)
Events of Default and Notice Thereof. The following events will be
defined in the Indenture as "Events of Default":
(a) default in making Principal Payments or Interest Payments when
such become due and payable;
(b) default in the performance, or breach, by the Issuer of certain
negative covenants limiting its actions;
(c) default in the performance, or breach, of any other covenant of
the Issuer in the Indenture or the Sales and Servicing Agreement, and
continuance of such default or breach for a period of 30 days after the
earliest of (i) any officer of the Issuer first acquiring the knowledge
thereof, (ii) the Trustee's giving written notice thereof to the Issuer or
(iii) the holders of a majority of the then Outstanding Principal Amount
of the Notes giving written notice thereof to the Issuer and the Trustee;
(d) if any representation or warranty of the Issuer or Copelco Capital
made in the Indenture or the Sales and Servicing Agreement or any other
writing provided to the holders of the Notes proves to be incorrect in any
material respect as of the time when the same has been made; provided,
however, that the breach of any representation or warranty made by Copelco
Capital in the Sales and Servicing Agreement will be deemed to be
"material" only if it negatively 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 Copelco
Capital in the Sales and Servicing Agreement with respect to any of the
Leases or the Equipment subject thereto will not constitute an Event of
Default if Copelco Capital repurchases or substitutes for such Lease and
Equipment in accordance with the Sales and Servicing Agreement; or
(e) 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).
If an Event of Default under an Indenture of the kind specified in
clause (e) above occurs, the unpaid principal amount of the related Notes shall
automatically become due and payable together with all accrued and unpaid
interest thereon. If any other Event of Default occurs and is continuing, then
the Trustee will, if so directed by the holders of 66 2/3% (33 1/3% in the case
of a payment default) of the then Outstanding Principal Amount of the Class A
Notes (or if the Class A Notes are no longer outstanding, the Class B Notes or
if the Class B Notes are no longer outstanding the Class C Notes), or the
holders of such percentages of the then Outstanding Principal Amount of such
Notes may declare the unpaid principal amount of all the Notes to be due and
payable immediately, together with all accrued and unpaid interest thereon.
(Section 6.02). 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% (33 1/3% in the case of a payment default) of the
then Outstanding Principal Amount of the Class A Notes (or if the Class A Notes
are no longer outstanding, the Class B Notes or if the Class B Notes are no
longer outstanding the Class C Notes). (Section 6.03).
38
<PAGE>
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 Sales and
Servicing Agreement is not Copelco Capital or an Affiliate of Copelco
Capital, to the payment of all Servicer's Fees then due to such person;
Third first to the payment of all accrued and unpaid interest on the
Outstanding Principal Amount of the Class A 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 A Interest Rate, and to the payment of the Outstanding
Principal Amount of the Class A Notes to the date of payment thereof, and
then 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, and to the payment of the Outstanding Principal
Amount of the Class B Notes and then 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, and to
the payment of the Outstanding Principal Amount of the Class C 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 then due the Trustee under the
Indenture; and
Fifth 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 all Notes then outstanding under such Indenture will have
the right to waive certain defaults and, subject to certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee. (Sections 6.12 and 6.13). The Indenture will provide that in case an
Event of Default shall occur (which shall not have been cured or waived), the
Trustee will be required to exercise such of its rights and powers under such
Indenture and to use the degree of care and skill in their exercise that a
prudent man would exercise or use in the conduct of his own affairs. (Section
7.01(b)). Subject to such provisions, the Trustee will be under no obligation
to exercise any of its rights or powers under such Indenture at the request of
any of the Noteholders unless they shall have offered to the Trustee reasonable
security or indemnity. (Section 6.12).
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
39
<PAGE>
holders of not less than 66 2/3% in aggregate principal amount of the Notes
then outstanding under the Indenture; but no such modification may be made
which would (a) extend the fixed maturity of any Note, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of principal
or interest thereon, without the consent of the holder of each Note so affected
or (b) reduce the above-stated percentage of Notes, without the consent of the
holders of all Notes then outstanding under such Indenture. (Section 9.02).
Servicer Events of Default. The following events and conditions shall
be defined in the Sales 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 Sales 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 Sales and Servicing
Agreement;
(c) default on the part of either the Servicer or (so long as Copelco
Capital is the Servicer) Copelco Capital in its observance or performance
in any material respect of certain covenants or agreements in the Sales
and Servicing Agreement;
(d) if any representation or warranty of Copelco Capital made in the
Sales and Servicing Agreement shall prove to be incorrect in any material
respect as of the time made; provided, however, that the breach of any
representation or warranty made by Copelco Capital in such Sales and
Servicing Agreement will be deemed to be "material" only if it affects the
Noteholders, the enforceability of the Indenture or of the Notes and
provided, further, that such material breach of any representation or
warranty made by Copelco Capital in such Sales and Servicing Agreement
with respect to any of the Leases or the Equipment subject thereto will
not constitute a Servicer Event of Default if Copelco Capital repurchases
such Lease and Equipment in accordance with the Sales and Servicing
Agreement to the extent provided therein;
(e) certain insolvency or bankruptcy events relating to the Servicer;
(f) the failure of the Servicer to make one or more payments due with
respect to aggregate recourse debt or other obligations exceeding
$1,000,000, or the occurrence of any event or the existence of any
condition, the effect of which event or condition is to cause (or permit
one or more persons to cause) more than $1,000,000 of aggregate recourse
debt or other obligations of the Servicer to become due before its (or
their) stated maturity or before its (or their) regularly scheduled dates
of payment so long as such failure, event or condition shall be continuing
and shall not have been waived by the Person or Persons entitled to
performance;
(g) a final judgment or judgments (or decrees or orders) for the
payment of money aggregating in excess of $1,000,000 and any one of such
judgments (or decrees or orders) has remained unsatisfied and in effect
for any period of 60 consecutive days without a stay of execution.
Servicer Termination. So long as a Servicer Event of Default under the
Sales 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 Sales and Servicing Agreement (Section 5.01). On the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under the Sales and Servicing Agreement to take any action with
respect to any Lease or Equipment will cease and the same will pass to and be
vested in the Trustee pursuant to and under the Sales and Servicing Agreement
and the Indenture.
40
<PAGE>
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
Sales and Servicing Agreement. In such event, the repurchase price will
decrease the Discounted Present Value of the Performing Leases, causing the
corresponding weighted average life of the Notes to decrease. See "Risk
Factors--Prepayments."
In the event a Lease becomes a Non-Performing Lease, a Warranty Lease
or an Adjusted Lease, Copelco Capital will have the option to substitute for
the terminated lease another of similar characteristics (a "Substitute Lease")
in an aggregate amount not to exceed 7% of the Discounted Present Value of the
Leases as of the Cut-Off Date with respect to Non-Performing Leases and
Warranty Leases and in an aggregate amount not to exceed 8% of the Discounted
Present Value of the Leases as of the Cut-Off Date with respect to Adjusted
Leases. In addition, in the event of an Early Lease Termination which has been
prepaid in full, Copelco Capital will have the option to transfer an additional
lease of similar characteristics (an "Additional Lease"). The Substitute Leases
and Additional Leases will have a Discounted Present Value of the Leases equal
to or greater than that of the Leases being modified and replaced and the
monthly payments on the Substitute Leases or Additional Leases will be at least
equal to those of the terminated Leases through the term of such terminated
Leases. In the event that an Early Lease Termination is allowed by Copelco
Capital and a Substitute Lease is not provided, the amount prepaid will be
equal to at least the Discounted Present Value of the terminated Lease, plus
any delinquent payments. In addition, following the transfer of any Lease to
the Series Pool, there may be 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, but will
not be considered to be a substitution or prepayment of such Lease. The
Modified Leases and the Replacement Leases will have a Discounted Present Value
of the Leases equal to or greater than that of the Leases subject to such
modification or adjustment and the monthly payments on the Substitute Leases or
Additional Leases will be at least equal to those of the terminated Leases
through the term of such terminated Leases. See "Risk Factors--Additional
Leases."
The effective yield to holders of the Notes will depend upon, among
other things, the amount of and rate at which principal is paid to such
Noteholders. The after-tax yield to Noteholders may be affected by lags between
the time interest income accrues to Noteholders and the time the related
interest income is received by the Noteholders.
The following chart sets forth the percentage of the Initial Principal
Amount of the Class A and Class B Notes which would be outstanding on the
Distribution Dates set forth below assuming a CPR of 0% and 12%, respectively.
Such information is hypothetical and is set forth for illustrative purposes
only. The CPR ("Conditional Payment Rate") assumes that a fraction of the
outstanding Series Pool is prepaid on each Distribution Date, which implies
that each Lease in the Series Pool is equally likely to prepay. This fraction,
expressed as a percentage, is annualized to arrive at the Conditional Payment
Rate for the Contract Pool. The CPR measures prepayments based on the
outstanding Discounted Present Value of the Leases, after the payment of all
Scheduled Payments on the Leases during such Due Period. The CPR further
assumes that all Leases are the same size and amortize at the same rate and that
each Lease will be either paid as scheduled or prepaid in full. The amounts set
forth below are based upon the timely receipt of scheduled monthly Lease
payments as of the Cut-Off Date, assumes that the Issuer does not exercise its
option to redeem the Notes and assumes the Issuance Date is August 28, 1996.
41
<PAGE>
PERCENTAGE OF THE INITIAL CLASS A PRINCIPAL AMOUNT
AND THE INITIAL CLASS B PRINCIPAL AMOUNT
AT THE RESPECTIVE CPR SET FORTH BELOW
<TABLE>
<CAPTION>
========================================================================================================================
0% CPR 12% CPR
----------------------------------------------------------------------------
Date Class A Class B Class A Class B
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Issuance Date 100% 100% 100% 100%
9/20/96 98 98 97 97
10/20/96 95 95 93 93
11/20/96 93 93 90 90
12/20/96 91 91 87 87
1/20/97 88 88 84 84
2/20/97 86 86 81 81
3/20/97 84 84 78 78
4/20/97 81 81 75 75
5/20/97 79 79 72 72
6/20/97 77 77 69 69
7/20/97 74 74 66 66
8/20/97 72 72 63 63
9/20/97 69 69 60 60
10/20/97 67 67 58 58
11/20/97 64 64 55 55
12/20/97 62 62 52 52
1/20/98 60 60 50 50
2/20/98 57 57 47 47
3/20/98 55 55 45 45
4/20/98 52 52 42 42
5/20/98 50 50 40 40
6/20/98 47 47 37 37
7/20/98 45 45 35 35
8/20/98 42 42 33 33
9/20/98 39 39 30 30
10/20/98 37 37 28 28
11/20/98 35 35 26 26
12/20/98 32 32 24 24
1/20/99 30 30 22 22
2/20/99 28 28 20 20
3/20/99 26 26 19 19
4/20/99 24 24 17 17
5/20/99 23 23 16 17
6/20/99 21 21 14 17
7/20/99 20 20 13 17
8/20/99 18 18 12 17
9/20/99 17 17 11 17
10/20/99 16 17 10 17
11/20/99 14 17 9 17
12/20/99 13 17 8 17
1/20/00 12 17 7 17
2/20/00 11 17 6 17
3/20/00 10 17 6 17
4/20/00 9 17 5 17
5/20/00 8 17 4 17
6/20/00 7 17 3 17
7/20/00 6 17 3 17
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
0% CPR 12% CPR
----------------------------------------------------------------------------
Date Class A Class B Class A Class B
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8/20/00 5 17 2 17
9/20/00 4 17 2 17
10/20/00 3 17 1 17
11/20/00 2 17 1 17
12/20/00 2 17 * 17
1/20/01 1 17 0 14
2/20/01 * 17 0 9
3/20/01 0 14 0 4
4/20/01 0 9 0 1
5/20/01 0 3 0 0
6/20/01 0 0 0 0
7/20/01 0 0 0 0
WEIGHTED AVERAGE LIFE(1)(YEARS) 1.86 2.02 1.58 1.78
</TABLE>
* equals less than 0.5%.
(1) The weighted average life of a Class A Note or a Class B Note is
determined by (a) multiplying the amount of cash distributions in
reduction of the Outstanding Class A Principal Amount or the Outstanding
Class B Principal Amount, as the case may be, by the number of years from
the Issuance Date to such Payment Date, (b) adding the results, and
(c) dividing the sum by the Initial Class A Principal Amount or the
Initial Class B Principal Amount, as the case may be.
If the Issuer exercises its option to redeem the Notes, the average
life of the Class A Notes would be 1.83 years and 1.54 years, and the average
life of the Class B Notes would be 1.86 years and 1.57 years for the 0% CPR and
12% CPR scenarios, respectively.
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) an unperfected security
interest in the related Equipment owned by the Issuer and an assignment of the
Issuer's security interest in such Equipment subject to Nominal Buy-Out Leases,
which security interest was originally perfected by Copelco Capital (for
Equipment with an original cost in excess of $25,000 which assignment will be
recorded in the manner described below) and (c) all funds in the Collection
Account, the Reserve Account and Residual Account.
Copelco Capital has filed UCC financing statements in its favor
against Lessees in respect of all Equipment in the Series Pool (for Equipment
with an original cost in excess of $25,000) and will record assignments of such
UCC filings in favor of the Issuer or the Trustee, in the Filing Locations. See
"Certain Legal Matters Affecting a Lessee's Rights and Obligations."
Residual Realizations. Upon receipt of the final Lease Payment on a
performing Lease, the Equipment subject to that Lease shall be sold or re-let
by the Servicer, with any proceeds from such sale or lease constituting
Residual Values for deposit into the Collection Account for the benefit of the
Noteholders up to the Residual Amount Cap. Actual Residual Realizations may be
more or less than the Booked Residual Value of the related Equipment.
43
<PAGE>
THE TRUSTEE
Manufacturers & Traders will be the Trustee under the Indenture.
Copelco Capital, as Seller 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 each
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 Copelco Capital
will be obligated to appoint a successor Trustee. Copelco Capital 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, Copelco
Capital 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 are absolute and unconditional, regardless of any
defense, setoff or abatement which the Lessee may have against Copelco Capital,
as Seller or Servicer, the Issuer, or any other person or entity whatsoever.
Events of default 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 Sales and Servicing
Agreement, Copelco Capital will sell the Leases to the Issuer, make a capital
contribution to the Issuer of Equipment owned by Copelco Capital and subject to
the Leases, and assign its security interests in the Equipment subject to
Nominal Buy-Out Leases. Copelco Capital will warrant that the sale of the
Leases to the Issuer is a true sale, 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 Filing Locations. In the
event of the repossession and resale of Equipment subject
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to a superior lien, the senior lienholder would be entitled to be paid the full
amount of the indebtedness owed to it out of the sale proceeds before such
proceeds could be applied to the payment of claims by the Servicer on behalf of
the Issuer. Certain statutory provisions, including federal and state
bankruptcy and insolvency laws, may limit the ability of the Servicer to
repossess and resell collateral or obtain a deficiency judgment in the event of
a Lessee default. In the event of the bankruptcy or reorganization of a Lessee,
or Copelco Capital, as Seller or Servicer, various provisions of the Bankruptcy
Code of 1978, 11 U.S.C. Sections 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.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain federal income tax
consequences to the original purchasers of the Notes of the purchase, ownership
and disposition of the Notes. It does not purport to discuss all federal income
tax consequences that may be applicable to investment in the Notes or to
particular categories of investors, some of which may be subject to special
rules. In particular, this discussion applies only to institutional investors
that purchase Notes directly from the Issuer and hold the Notes as capital
assets.
The discussion that follows, and the opinion set forth below of Dewey
Ballantine, 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 Notes.
Characterization of the 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 Notes will be treated as indebtedness for
federal income tax purposes.
Although it is the opinion of Tax Counsel that the Notes will be
characterized as indebtedness for federal income tax purposes, no assurance can
be given that such characterization of the Notes will prevail. If the Notes
were treated as an ownership interest in the Leases, all income on such Leases
would be income to the holders of the Notes, and related fees and expenses
would generally be deductible (subject to certain limitations on the
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deductibility of miscellaneous itemized deductions by individuals) and certain
market discount and premium provisions of the Code might apply to a purchase of
the Notes.
If, alternatively, the Notes were treated as an equity interest in the
Issuer, distributions on the Notes probably would not be deductible in
computing the taxable income of the Issuer and all or a part of distributions
to the holders of the Notes probably would be treated as dividend income to
those holders. Such an Issuer-level tax could result in a reduced amount of
cash available for distributions to the holders of the Notes.
Taxation of Interest Income of Noteholders. If characterized as
indebtedness, interest on the Notes will be taxable as ordinary income for
federal income tax purposes when received by Noteholders using the cash method
of accounting and when accrued by Noteholders using the accrual method of
accounting. Interest received on the 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 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 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 Notes and thereafter. Market
discount generally will equal the excess, if any, of the then-current unpaid
principal balance of the Note over the purchaser's basis in the Note
immediately after such purchaser acquired the Note. In general, market discount
on a Note will be treated as accruing over the term of such Note in the ratio
of interest for the current period over the sum of such current interest and
the expected amount of all remaining interest payments, or at the election of
the holder, under a constant yield method. At the request of a holder of a
Note, information will be made available that will allow the holder to compute
the accrual of market discount under the first method described in the
preceding sentence.
The market discount rules also provide that a holder who incurs or
continues indebtedness to acquire a Note at a market discount may be required
to defer the deduction of all or a portion of the interest on such indebtedness
until the corresponding amount of market discount is included in income.
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 to 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
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amortize premium should be entitled to a deduction for any remaining
unamortized premium in the taxable year of redemption.
Sale or Exchange of Notes. If a Note is sold or exchanged, the seller
of the Note will recognize gain or loss equal to the difference between the
amount realized on the sale or exchange and the adjusted basis of the Note. The
adjusted basis of a Note will generally equal its cost, increased by any OID or
market discount includible in income with respect to the Note through the date
of sale and reduced by any principal payments previously received with respect
to the Note, any payments allocable to previously accrued OID or market
discount and any amortized market premium. Subject to the market discount
rules, gain or loss will generally be capital gain or loss if the Note was held
as a capital asset. Capital losses generally may be used only to offset capital
gains.
Backup Withholding with Respect to Notes. Payments of interest and
principal, together with payments of proceeds from the sale of 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 Notes Certain U.S. Federal Income Tax
Documentation Requirements. A beneficial owner of Notes holding securities
through CEDEL of Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons (as defined below), unless (i) each
clearing system, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity required to
withhold tax complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners of 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). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income (Form
4224). A Non-U.S. Person (as defined below), including a non-U.S. corporation
or bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States, can
obtain an exemption from the withholding tax by filing Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons residing in a country that has a tax
treaty with the United States can obtain an exemption or reduced tax rate
(depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or
Reduced Rate 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. Form 1001 may be filed by Certificate Owners or their agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Owner of a Note or,
in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting
the appropriate form to the person through whom it holds (the clearing agency,
in the case of persons holding directly on the books of the clearing agency).
Form W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
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On April 22, 1996 the IRS issued proposed regulations relating to
withholding, backup withholding and information reporting that, if adopted in
their current form would, among other things, unify current certification
procedures and forms and clarify certain reliance standards. The regulations
are proposed to be effective for payments made after December 31, 1997 but
provide that certificates issued on or before the date that is 60 days after
the proposed regulations are made final will continue to be valid until they
expire. Proposed regulations, however, are subject to change prior to their
adoption in final form.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust 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 Notes. Investors
are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Notes.
State, Local and Other Taxes. Investors should consult their own tax
advisors regarding whether the purchase of the 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 NOTES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS OR IN THE INTERPRETATIONS
THEREOF.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain requirements and restrictions on those pension and
other employee benefits plans to which it applies and on those persons who are
fiduciaries with respect to such plans. In accordance with ERISA's fiduciary
standards, before purchasing the Notes, a fiduciary should determine whether
such an investment is permitted under the documents and instruments governing
the plan and is appropriate for the plan in view of its overall investment
policy and the composition of its portfolio.
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of certain plans subject thereto (each
"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 Notes might be
deemed to constitute prohibited transactions under ERISA and the Code if assets
of the Issuer were deemed to be assets of a Benefit Plan. Under regulations
issued by the United States Department of Labor set forth in 29 C.F.R. Section
2510.3101 (the "Plan Asset Regulations"), the assets of the Issuer would be
treated as plan assets of a Benefit Plan for the purposes of ERISA and the Code
only if the Benefit Plan acquires an "Equity Interest" in the Issuer and none
of the exceptions contained in the Plan Asset Regulations is applicable. An
Equity Interest is defined under the Plan Asset Regulations as an interest
other than an instrument which is treated as indebtedness under applicable
local law and which has no substantial equity features. It is anticipated that
the Notes should be treated as indebtedness without substantial equity features
for purposes of the Plan Asset Regulations. However, even if the Notes are
treated as indebtedness for such purposes, the acquisition
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or holding of Notes by or on behalf of a Benefit Plan could be considered to
give rise to a prohibited transaction if the Issuer, the Trustee, the
Underwriter or any of their respective affiliates is or becomes a party in
interest or disqualified person with respect to such Benefit Plan. In this
event, certain exemptions from the prohibited transaction rules could be
applicable depending on the type and circumstances of the plan fiduciary making
the decision to acquire a Note. Included among these exemptions are: Prohibited
Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance
company pooled separate accounts; PTCE 91-38 regarding investments by bank
collective investment funds; PTCE 84-14, regarding transactions effected by
"qualified professional asset managers"; PTCE 95-60, regarding investments by
insurance company general accounts and PTCE 96-23 regarding transactions
effected by In-House Asset Managers. Each investor using assets of a Benefit
Plan which acquires the Notes, or to whom the Notes are transferred, will be
deemed to have represented that the acquisition and continued holding of the
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 Notes should also
consult their own counsel as to the application of the recent decision by the
United States Supreme Court in John Hancock Mutual Life Insurance Co. v. Harris
Trust and Savings Bank (114 S. Ct. 517 (1993)) to such a purchase. Under that
decision, assets held in an insurance company's general account may be deemed
assets of ERISA plans under certain circumstances.
Due to the complexity of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is particularly important that
a fiduciary investing assets of an ERISA plan consult with counsel regarding
the consequences under ERISA of the acquisition and holding of Notes, including
the availability of any administrative exemptions from the prohibited
transaction rules.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement (the "Underwriting Agreement") for the sale of the
Offered Notes, the Issuer has agreed to sell and Lehman Brothers (the
"Underwriter") has agreed to purchase the entire principal amount of the
Offered Notes.
In the Underwriting Agreement, the Underwriter has agreed to purchase
the Offered Notes, subject to the terms and conditions set forth therein.
The Issuer has been advised that the Underwriter proposes to initially
offer the Offered Notes directly to the public at the price set forth on the
cover page hereof. After the initial public offering, the public offering price
may be changed.
The Underwriter will represent and agree that:
(a) it has not offered or sold, and, prior to the expiry of six months
from the Closing Date, will not offer or sell, any Offered Notes to
persons in the United Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(as principal or agent) for purposes of their business, or otherwise in
circumstances which have not resulted and will not result in an offer to
the public in the United Kingdom within the meaning of the Public Offers
of Securities Regulations 1995;
(b) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to the Offered Notes in, from or otherwise involving the United
Kingdom; and
(c) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the Offered Notes to a person who is of a kind
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described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or persons to whom
such document may otherwise lawfully be issued, distributed or passed on.
The Issuer has agreed to indemnity the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Issuer has been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Notes, as permitted by
applicable laws and regulations. The Underwriter is 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 Underwriter.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Offered Notes.
The Underwriter and Ironwood Capital Partners Ltd. are serving as the
placement agents for the Class C Notes.
RATING OF THE NOTES
It is a condition to the issuance of the Offered Notes that the Class
A Notes be rated at least "AAA," "AAA" and "Aaa" and that the Class B Notes be
rated at least "A," "A" and "A2" by S&P, DCR and Moody's respectively.
Such rating will reflect only the views of the Rating Agency and will
be based primarily on the amount of subordination, the availability of funds on
deposit in the Reserve Account and the value of the Leases and Equipment. The
ratings are not a recommendation to purchase, hold or sell the related Offered
Notes, inasmuch as such ratings do not comment as to market price or
suitability for a particular investor. There is no assurance that any such
rating will continue for any period of time or that it will not be lowered or
withdrawn entirely by the Rating Agency if, in its judgment, circumstances so
warrant. A revision or withdrawal of such rating may have an adverse affect on
the market price of the Offered Notes. The rating of the Offered Notes
addresses the likelihood of the timely payment of interest and the ultimate
payment of principal on the Offered Notes by the Stated Maturity date. The
rating does not address the rate of Prepayments that may be experienced on the
Leases and, therefore, does not address the effect of the rate of Lease
Prepayments on the return of principal to the Offered Noteholders.
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INDEX OF TERMS
Term(s) Page(s)
- ------ -------
Additional Lease ...................................................... 10, 41
Additional Principal................................................... 8, 35
Adjusted Lease ........................................................ 10
Adjusted Leases ....................................................... 17
Available Funds ....................................................... 12, 34
Available Funds Shortfall ............................................. 34
Available Reserve Amount .............................................. 15, 35
Bankruptcy Code ....................................................... 45
Benefit Plan .......................................................... 48
Booked Residual Value ................................................. 14
Casualty Payment ...................................................... 34
Cede .................................................................. 3
CEDEL ................................................................. 3
Cedel Participants .................................................... 32
Class A Initial Principal Amount ...................................... 6
Class A Interest Rate ................................................. 6
Class A Noteholder .................................................... 31
Class A Noteholders.................................................... 1
Class A Notes ......................................................... 1, 5
Class A Percentage..................................................... 6, 35
Class A Principal Payment ............................................. 8, 36
Class A Target Principal Amount ....................................... 9, 36
Class B Floor ......................................................... 9, 36
Class B Initial Principal Amount....................................... 6
Class B Interest Rate.................................................. 6
Class B Noteholder..................................................... 31
Class B Noteholders.................................................... 1
Class B Notes ......................................................... 1, 5
Class B Percentage..................................................... 6, 36
Class B Principal Payment.............................................. 8, 36
Class B Target Principal Amount........................................ 9, 36
Class C Floor ......................................................... 9, 36
Class C Initial Principal Amount....................................... 6
Class C Interest Rate.................................................. 6
Class C Notes ......................................................... 1
Class C Percentage..................................................... 6, 36
Class C Principal Payment.............................................. 8
Class C Principal Payment Amount....................................... 36
Class C Target Principal Amount........................................ 9, 36
Code .................................................................. 45
Collection Account..................................................... 33
Commission ............................................................ 2
Conditional Payment Rate............................................... 41
Cooperative ........................................................... 32
Copelco Capital .......................................................1, 5, 7
Copelco Credit ........................................................ 27
Copelco Financial ..................................................... 27
Copelco Leasing ....................................................... 27
Cost per Copy ......................................................... 27
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Term(s) Page(s)
- ------- -------
Cumulative Loss Amount............................................... 9,35
Cut-Off Date ........................................................ 5
DCR ................................................................. 16
Default ............................................................. 38
Definitive Notes .................................................... 33
Depositaries ........................................................ 31
Determination Date .................................................. 7, 35
Discount Rate ....................................................... 6
Discounted Present Value of the Leases............................... 6, 36
Discounted Present Value of the Performing Leases.................... 6, 36
Division ............................................................ 27
DTC ................................................................. 3
Due Period .......................................................... 7
Early Lease Termination.............................................. 10
Eligible Account .................................................... 34
Equipment ........................................................... 7
Equipment Financing Portion.......................................... 27
Equity Interest ..................................................... 48
ERISA ............................................................... 15, 48
Euroclear ........................................................... 3
Euroclear Operator................................................... 32
Euroclear Participants............................................... 32
Events of Default ................................................... 38
Excess Copy Charge................................................... 27
Exchange Act ........................................................ 2
Filing Locations ................................................... 18
Fixed Payment ....................................................... 27
Holders ............................................................. 33
Indenture .......................................................... 12, 30
Indirect Participants................................................ 31
Initial Principal Amount............................................. 5
Interest Payments ................................................... 8, 35
investment income ................................................... 46
IRS ................................................................. 45
Issuance Date ....................................................... 8
Issuer .............................................................. 1, 5
Lease Contracts ..................................................... 7
Lease Payment ....................................................... 34
Lease Receivables ................................................... 7
Leases .............................................................. 7
Lessee .............................................................. 10
Lessees ............................................................. 10
Maintenance Charge................................................... 27
Moody's ............................................................. 16
Nominal Buy-Out ..................................................... 20
Nominal Buy-Out Leases .............................................. 17
Non-Performing Lease ................................................ 20
Non-Performing Leases ...............................................7, 20, 37
Non-U.S. Person ..................................................... 48
Notes ............................................................... 1, 5
Offered Noteholders.................................................. 3
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Term(s) Page(s)
- ------- -------
Offered Notes ....................................................... 1, 5
OID ................................................................ 46
Outstanding Class A Principal Amount ............................... 8
Outstanding Class B Principal Amount ............................... 8
Outstanding Class C Principal Amount ............................... 8
Outstanding Principal Amounts ...................................... 8
Participants ....................................................... 31
Payment Date ....................................................... 2, 8
Plan Asset Regulations ............................................. 48
Prepayment ......................................................... 17
Principal Payments.................................................. 8
PTCE ............................................................... 49
Record Date ........................................................ 8
Registration Statement.............................................. 2
Required Payments .................................................. 35
Required Reserve Amount............................................. 15, 35
Reserve Account .................................................... 15, 34
Residual Account ................................................... 35
Residual Amount Cap................................................. 14, 37
Residual Event .....................................................14, 35, 37
Residual Realizations............................................... 14
S&P ................................................................ 15
Sales and Servicing Agreement....................................... 1, 7, 29
SBU ................................................................ 27
Securities Act ..................................................... 2
Seller ............................................................. 7
Series Cut-Off Date................................................. 19
Series Pool ........................................................ 7
Series Pool Divisions............................................... 19
Servicer ........................................................... 7
Servicer Advance ................................................... 12, 37
Servicer Events of Default.......................................... 40
Servicing Fee ...................................................... 12
Statistical Discount Rate........................................... 6
Statistical Discounted Present Value of the Leases.................. 6
Substitute Lease ................................................... 10, 41
Tax Counsel ........................................................ 45
Termination Payment................................................. 34
Terms and Conditions................................................ 33
Trustee ............................................................ 7, 30
U.S. Person ........................................................ 48
UCC ................................................................ 17, 43
Underwriter ........................................................ 49
Underwriting Agreement.............................................. 49
Vendor ............................................................. 27
Warranty Lease ..................................................... 10, 29
Warranty Leases .................................................... 17
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==============================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given
or made, such information or representations must not be relied upon. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the
affairs of the Seller or the Issuer or any affiliate thereof or the Leases
since the date hereof. This Prospectus does not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation by
anyone in any state in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so to
anyone to whom it is unlawful to make such offer or solicitation.
----------------------
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION...................................................... 2
REPORTS TO NOTEHOLDERS..................................................... 3
OFFERED NOTES SUMMARY...................................................... 4
PROSPECTUS SUMMARY......................................................... 5
RISK FACTORS............................................................... 17
USE OF PROCEEDS............................................................ 19
THE SERIES POOL............................................................ 19
COPELCO CAPITAL'S UNDERWRITING AND
SERVICING PRACTICES..................................................... 27
THE ISSUER................................................................. 30
DESCRIPTION OF THE NOTES................................................... 30
PREPAYMENT AND YIELD CONSIDERATIONS........................................ 41
SECURITY FOR THE NOTES..................................................... 43
THE TRUSTEE................................................................ 44
CERTAIN LEGAL MATTERS AFFECTING A
LESSEE'S RIGHTS AND OBLIGATIONS......................................... 44
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS.......................................................... 45
ERISA CONSIDERATIONS....................................................... 48
UNDERWRITING............................................................... 49
RATING OF THE NOTES........................................................ 50
INDEX OF TERMS............................................................. 51
Until ________, 1996 (90 days after the date of this Prospectus), all dealers
effecting transactions in the Notes, whether or not participating in this
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
==============================================================================
==============================================================================
Copelco Capital
Funding Corp. II
$214,736,000 (Approximate) ____% Class A
Lease-Backed Notes, Series 1996-A
$14,119,000 (Approximate) ____% Class B
Lease-Backed Notes, Series 1996-A
---------------------
PRELIMINARY
P R O S P E C T U S
---------------------
LEHMAN BROTHERS
Dated August __, 1996
==============================================================================
55
<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.................................... $ 81,035.00
Printing and Engraving Expenses..................... 15,000.00
Trustee's Fees...................................... 5,000.00
Legal Fees and Expenses............................. 100,000.00
Blue Sky Fees and Expenses.......................... 5,000.00
Accountants' Fees and Expenses...................... 15,000.00
Rating Agency Fees.................................. 170,000.00
Miscellaneous Fees.................................. 8,965.00
===========
Total............................................... $400,000.00
Item 14. Indemnification of Directors and Officers
The General Corporation Law of Delaware (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes said corporation to buy director's
and officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
Copelco Financial Services Group, Inc. has also purchased liability
policies which indemnify the Registrant's officers and directors against loss
arising from claims by reason of their legal liability for acts as officers and
directors, subject to limitations and conditions as set forth in the policies.
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 15. Recent Sales of Unregistered Securities
On November 9, 1994 the Issuer privately placed $21,415,148 aggregate
principal amount of Class B Notes, Series 1994-A and on April 19, 1995, the
Issuer privately placed $14,292,000 aggregate principal amount of Class B
Lease-Backed Notes, Series 1995-A.
II-1
<PAGE>
Item 16. Exhibits and Financial Statements
(a) Exhibits
1.1* -- Underwriting Agreement, dated October 26, 1994 between
Prudential Securities Incorporated, Copelco Capital,
Inc. and Copelco Capital Funding Corp. II.
1.2** -- Underwriting Agreement, dated April 13, 1995 between
Prudential Securities Incorporated, Copelco Capital,
Inc. and Copelco Capital Funding Corp. II.
1.3+ -- Form of Underwriting Agreement between Lehman Brothers,
Copelco Capital, Inc. and Copelco Capital Funding Corp.
II.
3.1* -- Certificate of Incorporation of the Issuer.
3.2* -- By-laws of the Issuer.
4.1** -- Indenture, dated as of October 15, 1994 between Copelco
Capital Funding Corp. II and CoreStates Bank, National
Association, as trustee.
4.2*** -- Indenture, dated as of April 15, 1995 between Copelco
Capital Funding Corp. II and Manufacturers and Traders
Trust Company, as trustee.
4.3+ -- Form of Indenture, including forms of the Notes and
certain other related agreements as Exhibits thereto.
5.1+ -- Opinion of Dewey Ballantine regarding the securities
being registered.
8.1+ -- Opinion of Dewey Ballantine with respect to tax matter.
10.1** -- Sales and Servicing Agreement, dated as of October 15,
1994 between Copelco Capital, Inc. and Copelco Capital
Funding Corp. II.
10.2** -- Placement Agent Agreement, dated as of October 26, 1994
between Prudential Securities Incorporated, Copelco
Capital, Inc. and Copelco Capital Funding Corp. II.
10.3*** -- Sales and Servicing Agreement, dated as of April 15,
1995 between Copelco Capital, Inc. and Copelco Capital
Funding Corp. II.
10.4*** -- Placement Agent Agreement, dated as of April 13, 1995
between Prudential Securities Incorporated, Copelco
Capital, Inc. and Copelco Capital Funding Corp. II.
10.5+ -- Form of Sales and Servicing Agreement.
10.6+ -- Form of Placement Agent Agreement for the Class C Notes.
23.1+ -- Consent of Dewey Ballantine is included in the opinion
filed as Exhibits 5.1 and 8.1 hereto.
24.1 -- Power of Attorney (Previously Filed).
25.1** -- Statement of Eligibility under the Trust Indenture Act
of 1939 of the Trustee (Form T-1) (with respect to
Exhibit 4.1).
25.2*** -- Statement of Eligibility under the Trust Indenture Act
of 1939 of the Trustee (Form T-1) (with respect to
Exhibit 4.2).
25.3+ -- Statement of Eligibility and Qualification of Trustee
(Form T-1) (with respect to Exhibit 4.3).
+ Filed herewith.
* Incorporated by Reference from Registration Statement No. 33-84148
** Incorporated by Reference from Form 8-K filed with the Securities and
Exchange Commission on November 22, 1994.
*** Incorporated by Reference from Form 8-K filed with the Securities and
Exchange Commission on April 28, 1995.
(b) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
II-2
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(a) To provide to the Underwriters at the closing specified in the
Underwriting Agreement Notes in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each purchaser.
(b) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or 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.
(c) 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.
(d) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Mount Laurel, State
of New Jersey, on August 19, 1996.
COPELCO CAPITAL FUNDING CORP. II,
Registrant
By /s/ Stephen W. Shippie
--------------------------------------
Name: Stephen W. Shippie
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 on Form S-1 has been signed by the following persons in the
capacities indicated on the 19th day of August, 1996.
Signature Title
--------- -----
* Director
- ----------------------------------
Ian J. Berg
* Director
- ----------------------------------
John Hakemian
* Director
- ----------------------------------
Tadayuki Seki
Director
- ----------------------------------
Jeraldine Lane
* Chief Financial Officer
- ----------------------------------
Michael C. Ritter
By: /s/ Stephen W. Shippie
----------------------------
Attorney-in-Fact
<PAGE>
Form of Underwriting Agreement
COPELCO CAPITAL FUNDING CORP. II
___% CLASS A LEASE-BACKED NOTES, SERIES 1996-A
___% CLASS B LEASE-BACKED NOTES, SERIES 1996-A
UNDERWRITING AGREEMENT
August __, 1996
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Copelco Capital Funding Corp. II, a corporation
organized and existing under the laws of Delaware (the
"Issuer") and Copelco Capital, Inc., a corporation organized
and existing under the laws of Delaware ("Copelco"), hereby
agree with you as follows:
Section 1. Issuance and Sale of Notes. The Issuer
has authorized the issuance of $__________ (the "Class A
Initial Principal Amount") of ___% Class A Lease-Backed Notes,
Series 1996-A (the "Class A Notes"), $___________ (the "Class
B Initial Principal Amount") of ___% Class B Lease-Backed
Notes, Series 1996-A (the "Class B Notes") and $_________ (the
"Class C Initial Principal Amount"; together with the Class A
Initial Principal Amount and the Class B Initial Principal
Amunt, the "Inital Principal Amount") of ___% Class C Lease-
Backed Notes, Seriess 1996-A (the "Class C Notes; together
with the Class A Notes, and the Class B Notes the "Notes").
The Notes will be issued pursuant to an Indenture, dated as of
August __, 1996 (the "Indenture"), between the Issuer and
Manufacturers and Traders Trust Company (the "Trustee"). The
Notes are more fully described in the Final Prospectus (as
defined below), a copy of which the Issuer is furnishing to
you. The Notes will evidence secured debt obligations of the
Issuer. The assets of the Issuer will include a pool of
healthcare 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 Notes will be sold by the Issuer to you as
underwriter (the "Underwriter").
<PAGE>
The terms which follow, when used in this Agreement,
shall have the meanings indicated:
"Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment
or amendments thereto became or become effective under
the Securities Act.
"Execution Time" shall mean the date and time
that this Agreement is executed and delivered by the
parties hereto.
"Final Prospectus" shall mean the prospectus
that contains all disclosures required by the Securities
Act (including Rule 430A Information) and is delivered to
purchasers of the Notes at or before the time of
confirmation of their purchases.
"Preliminary Prospectus" shall mean any
preliminary prospectus included in the Registration
Statement, and which, as of the Effective Date, omits
Rule 430A Information.
"Registration Statement" shall mean the
registration statement referred to in the preceding
paragraph and any registration statement required to be
filed under the Securities Act or rules thereunder,
including amendments, incorporated documents, exhibits
and financial statements, in the form in which it has or
shall become effective and, in the event that any
post-effective amendment thereto becomes effective prior
to the Issuance Date, shall also mean such registration
statement as so amended. Such term shall include Rule
430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
"Rule 424" and "Rule 430A" refer to such rules
under the Securities Act.
"Rule 430A Information" means information with
respect to the Notes and the offering thereof permitted,
pursuant to Rule 430A, to be omitted from the
Registration Statement when it becomes effective.
Section 2. Purchase and Sale of Notes.
(a) Subject to the terms and conditions and in
reliance upon the covenants, representations and warranties
set forth herein, the Underwriter agrees to purchase from the
Issuer the Initial Principal Amount of Notes pursuant to the
terms of this Agreement on the Issuance Date at a purchase
price equal to ___% of the Initial Principal Amount of the
Class A Notes and ___% of the Initial Principal Amount of the
Class B Notes (the "Purchase Price").
2
<PAGE>
(b) It is understood that the Underwriter proposes
to offer the 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 Notes to be purchased by the Underwriter
shall be made at the offices of Dewey Ballantine, 1301 Avenue
of the Americas, New York, New York, at 10:00 A.M., New York
time, on August __, 1996 (the "Issuance Date"). The Notes
shall be registered in the name of the Underwriter against
payment by the Underwriter of the Purchase Price therefor less
the Deferred Amount (defined herein), 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 underwriter, delivery of one or more global notes (the
"Global Notes") representing the Notes shall be made to the
account of the Underwriter against delivery to the Trustee of
the originally issued 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 Notes will
be represented by book entries on the records of DTC and
participating members thereof. Definitive Notes representing
the Notes will be available under the circumstances described
in the Indenture.
The Issuer agrees to have the Global Notes available
for inspection, checking and packaging by the Underwriter in
New York, New York, not later than 1:00 p.m., New York City
time, on the Business Day prior to the Exchange Date.
Section 4. Representations and Warranties. (a) The
Issuer hereby represents and warrants to, and agrees with, the
Underwriter 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-_____),
including the Preliminary Prospectus relating to the
Notes, on such Form S-1 for the registration under the
Securities Act of the Notes. The Issuer may have filed
one or more amendments thereto, including the related
Preliminary Prospectus, each of which has previously been
furnished to you. The Issuer will file with the
Commission either, (A) prior to the effectiveness of such
Registration Statement, a further amendment thereto
(including the form of Final Prospectus) or, (B) after
effectiveness of such Registration Statement, a Final
Prospectus in accordance with Rules 43OA and 424(b)(1) or
(4). In the case of clause (B), the Issuer will include
in such Registration Statement, as amended at the
Effective Date, all information (other than Rule 430A
Information) required by the Securities Act and the rules
thereunder to be included with
3
<PAGE>
respect to the Notes and the offering thereof. As filed,
such amendment and form of Final Prospectus, or such
Final Prospectus, shall include all Rule 430A Information
and, except to the extent you shall agree in writing to a
modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to
the extent not completed at the Execution Time, shall
contain only such specific additional information and
other changes (beyond that contained in the latest
Preliminary Prospectus which has previously been
furnished to you) as the Issuer has advised you, prior to
the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration
Statement did or will comply in all material respects
with the applicable requirements of the Securities Act
and the rules thereunder; on the Effective Date and when
the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Issuance Date, the
Final Prospectus will comply in all material respects
with the applicable requirements of the Securities Act
and the rules thereunder; on the Effective Date, the
Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein not misleading;
and the Final Prospectus, as of its date and on the
Issuance Date, did not or will not include any untrue
statement of a material fact or omit to state a material
fact necessary in order to make the statements therein,
in the light of the circumstances under which they were
made, not misleading; provided, however, that the Issuer
makes no representations or warranties as to the
information contained in or omitted from the Registration
Statement or the Final Prospectus in reliance upon and in
conformity with information furnished in each case, in
writing to the Issuer specifically for use in connection
with the preparation of the Registration Statement or the
Final Prospectus by you.
(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 Underwriter may be subject to limitations of public
policy.
(iv) Each of the Indenture and the Sales and
Servicing Agreement have been duly authorized by the
Issuer and, when executed and delivered by the Issuer,
will constitute the legal, valid and binding obligation
of the Issuer, enforceable in accordance with its terms.
(v) The issuance of the Notes has been duly
authorized by the Issuer and, when duly and validly
executed,
4
<PAGE>
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 Notes and the
performance of this Agreement, the Indenture and the
Sales and Servicing Agreement by the Issuer will (A) not
conflict with or result in a breach of, and will not
constitute a default under any of the provisions of, its
certificate of incorporation or any law, governmental
rule or regulation, or any judgment, decree or order
binding on the Issuer or its properties, or any of the
provisions of any indenture, mortgage, deed of trust,
contract or other agreement or instrument to which the
Issuer is a party or by which it is bound or (B) not
result in the creation or imposition of any adverse claim
and no consent, approval, authorization, order,
registration or qualification of or with any such court
or governmental agency or body is required for the issue
and sale of the Notes or the consummation by the Issuer
of the transactions contemplated by this Agreement,
except such consents, approvals, authorizations,
registrations or qualifications as may be required under
the Securities Act and under state securities or Blue Sky
laws in connection with the purchase and distribution of
the Notes by the Underwriter.
(vii) The Issuer is not, and will not, as of
the Issuance Date, be an "investment company" under the
Investment Company Act of 1940, as amended (the "1940
Act").
(viii) The Issuer hereby makes and repeats
each of the representations and warranties set forth in
Article Eleven of the Indenture. Such representations
and warranties are incorporated by reference in this
Section 4(a) and the Underwriter may rely thereon as if
such representations and warranties were fully set forth
herein.
(b) Copelco hereby represents and warrants to and
agrees with the Underwriter as follows:
(i) This Agreement has been duly
authorized, executed and delivered, the Sales and
Servicing Agreement has been duly authorized, and this
Agreement constitutes, and when executed and delivered,
the Sales and Servicing Agreement will constitute the
legal, valid and binding obligations of Copelco,
enforceable in accordance with their respective terms,
except that the provisions hereof relating to
indemnification of the Underwriter may be subject to
limitations of public policy.
(ii) The performance of this Agreement by
Copelco, and the consummation by Copelco of the
transactions herein contemplated, will (A) not conflict
with or result in
5
<PAGE>
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
Notes by the Underwriter.
(iii) Copelco hereby makes and repeats the
representations and warranties set forth in Section 2 of
the Sales and Servicing Agreement. Such representations
and warranties are incorporated by reference in this
Section 4(b), and the Underwriter may rely thereon as if
such representations and warranties were fully set forth
herein.
(iv) Copelco represents and warrants it has
delivered to the Underwriter complete and correct copies
of its balance sheet and statements of income and
retained earnings reported by Copelco Credit Corporation
and Copelco Financial Services Group, Inc. (the "Copelco
Entities") for the year ended December 31, 1994. Except
as set forth in or contemplated in the Registration
Statement and the Final Prospectus, there has been no
material adverse change in the condition (financial or
otherwise) of the Copelco Entities since December 31,
1995.
(v) Any taxes, fees and other governmental
charges arising from the execution and delivery of this
Agreement, the Sales and Servicing Agreement and the
Indenture and in connection with the execution, delivery
and issuance of the Notes and with the transfer of the
Leases and the Equipment, have been paid or will be paid
by the Issuer.
(c) Each of the Issuer and Copelco represents and
warrants to you, jointly and severally, that:
(i) There is no pending or threatened
action, suit or proceeding against or affecting it in any
court or tribunal or before any arbitrator of any kind or
before or by any governmental authority (A) asserting the
invalidity of this Agreement, the Sales and Servicing
Agreement, the Indenture or the Notes, (B) seeking to
prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by this Agreement,
the Sales and Servicing
6
<PAGE>
Agreement or the Indenture or (C) seeking any
determination or ruling that might materially and
adversely affect (x) its performance of its obligations
under this Agreement, the Sales and Servicing Agreement
or the Indenture (as applicable) or (y) the validity or
enforceability of this Agreement, the Sales and Servicing
Agreement, the Indenture or the Notes.
(ii) KMPG-Peat Marwick is an independent
public accountant with respect to the Copelco Entities
and the Issuer within the meaning of the Securities Act
and the rules and regulations promulgated thereunder.
Section 5. Covenants of the Issuer and Copelco.
The Issuer and Copelco, jointly and severally, hereby covenant
and agree with you as follows:
(a) To use best efforts to cause the Registration
Statement, and any amendment thereto, if not effective as of
the date hereof, to become effective. If the Registration
Statement has become or becomes effective pursuant to Rule
430A, or filing of the Final Prospectus is otherwise required
under Rule 424(b), the Issuer will file the Final Prospectus,
properly completed, pursuant to Rule 424(b) within the time
period prescribed and will provide evidence satisfactory to
the Underwriter of such timely filing. The Issuer will
promptly advise the Underwriter (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 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 Underwriter reasonably objects. The Issuer and
Copelco will use best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible
the withdrawal thereof.
(b) If, at any time when a Final Prospectus
relating to the 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
7
<PAGE>
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 Noteholders and to the Underwriter 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 Underwriter and
counsel for the Underwriters, without charge, signed copies of
the Registration Statement (including exhibits thereto) and,
so long as delivery of a prospectus by the Underwriter or any
dealer may be required by the Securities Act, as many copies
of each Final Prospectus relating to the Notes and any
supplement thereto as the Underwriter may reasonably request.
(e) Copelco and the Issuer will take all reasonable
actions requested by the Underwriter to arrange for the
qualification of the Notes for sale under the laws of such
jurisdictions within the United States or as necessary to
qualify for DTC and as the Underwriter may designate, will
maintain such qualifications in effect so long as required for
the completion of the distribution of the 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 Notes are outstanding, the
Issuer and Copelco shall deliver to the Underwriter by
first-class mail and as soon as practicable a copy of all
reports and notices delivered to the Trustee or the
Noteholders under the Indenture.
(g) For so long as the Notes are outstanding, the
Issuer and Copelco will furnish to the Underwriter as soon as
practicable after filing any other information concerning the
Issuer or Copelco filed with any government or regulatory
authority which is otherwise publicly available.
(h) To the extent, if any, that any rating provided
with respect to the Notes set forth in Section 6(g) hereof is
conditional upon the furnishing of documents reasonably
available to the Issuer or Copelco, the Issuer and Copelco
shall furnish such documents.
Section 6. Conditions of Underwriter's Obligation.
The obligations of the Underwriter to purchase and pay for the
Notes on the Issuance Date shall be subject to the accuracy in
all material respects of the representations and warranties of
the Issuer and Copelco herein, in the Sales and Servicing
Agreement and in the Indenture, to the performance by the
Issuer and Copelco in all material respects of their
obligations hereunder and to the following additional
conditions:
8
<PAGE>
(a) The Issuer and Copelco shall each have
delivered a certificate (an "Officer's Certificate"), dated
the Issuance Date, signed by its President and its Chief
Financial Officer, to the effect that:
(i) the representations and warranties made
by the Issuer or Copelco (as the case may be) in this
Agreement, the Indenture and the Sales and Servicing
Agreement are true and correct in all material respects
at and as of the date of such Officer's Certificate as if
made on and as of such date (except to the extent they
expressly relate to an earlier date);
(ii) the Issuer or Copelco (as the case may
be) has complied with all the agreements and satisfied
all the conditions on its part to be performed or
satisfied under this Agreement, the Indenture and the
Sales and Servicing Agreement at or prior to the date of
such Officer's Certificate;
(iii) nothing has come to such officer's
attention that would lead him to believe that the Final
Prospectus contains any untrue statement of a material
fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
and
(iv) such officer is not aware of (A) any
request of the Commission for further amendment of the
Registration Statement or the Final Prospectus for any
additional information, (B) the issuance by the
Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation or
threatening of any proceeding for that purpose or (C) any
notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction
or the threatening of any proceeding for that purpose.
(b) You shall have received from Spencer N.
Lempert, Esq., a favorable opinion (subject to customary and
usual qualifications), dated the Issuance Date and reasonably
satisfactory in form and substance to the Underwriter and its
counsel with respect to, or to the effect that: (i) the due
formation and qualification of each of the Issuer and Copelco
and that the Issuer and Copelco, as applicable, have the
corporate power and authority to perform this Agreement, the
Sales and Servicing Agreement, the Indenture and the Copelco
Limited Guarantee and the transactions contemplated herein and
therein; (ii) the due authorization, execution, delivery and
enforceability of this Agreement, the Sales and Servicing
Agreement, the Indenture and the Copelco Limited Guarantee, as
applicable, by the Issuer and Copelco; (iii) each of this
Agreement, the Sales and Servicing Agreement, the Indenture
and the Copelco Limited Guarantee are the legal, valid and
binding obligation of the Issuer and Copelco, as
9
<PAGE>
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, the Sales and Servicing Agreement
and the Copelco Limited Guarantee, as applicable, and the
consummation of the transactions contemplated herein and
therein will not conflict with the organizational documents of
the Issuer or Copelco, or to the best of such counsel's
knowledge, any other contracts to which the Issuer or Copelco
is a party or by which either of them is bound; (vi) to the
best of such counsel's knowledge, there is no legal or
governmental proceeding threatened or pending against the
Issuer or Copelco which would have a material adverse effect
on the issuance of the Notes; (vii) in the event a court
disregarded the intent of the parties and characterized the
transfers as a pledge of collateral, the Sales and Servicing
Agreement and accompanying documentation creates a valid
security interest in the Leases and the Equipment (or
interests therein) under New Jersey law; and (viii) assuming
no prior financing statements covering the Leases are in
effect, that financing statements covering the Leases and
naming (A) the Issuer as secured party and Copelco as debtor
and (B) the Issuer as debtor and the Trustee as secured party
are being filed in the appropriate filing offices of the State
of New Jersey, and that the Trustee has taken possession of
the Leases, the Trustee has a first priority perfected
security interest in all right, title and interest of Copelco
and the Issuer in the Leases. In rendering such opinion,
counsel may rely, to the extent deemed proper and as stated
therein, as to matters of fact on certificates of responsible
officers of the Issuer or Copelco and public officials and as
to matters of state law of jurisdictions other than the
jurisdictions in which such counsel is admitted to practice,
on opinions of local counsel satisfactory to the Underwriter.
(c) The Underwriter shall have received from Dewey
Ballantine, special counsel for the Underwriter, such opinion
or opinions, dated the Issuance Date, with respect to the
validity of the Notes, the Registration Statement, the Final
Prospectus, true sale, nonconsolidation and other related
matters as the Underwriter may require.
(d) At the Execution Time and at the Issuance Date,
KMPG-Peat Marwick shall have furnished to the Underwriter a
letter or letters, dated the date of this Agreement and the
Issuance Date, respectively, in form and substance
satisfactory to the Underwriter.
10
<PAGE>
(e) The Class A Notes shall have been rated at
least "___" and "___" and "____" by Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies ("S&P"),
Moody's Invetors Service, Inc. ("Moody's") and Duff & Phelps
Credit Rating Co. ("DCR"), respectively, the Class B Notes
shall have been rated at least "___", "___" and "___" by
[S&P, Moody's and DCR], respectilvely and the Class C Notes
have been rated at least "___", "___" and "___" by [S&P,
Moody's and DCR], 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 Underwriter and counsel for the
Underwriter and to the Issuer and Copelco and their counsel
with respect to, or to the effect that: (i) the due
incorporation and valid existence of the Trustee, (ii) the due
authorization, execution and delivery by the Trustee of the
Indenture, (iii) the Indenture is the legal, valid and bending
obligation of the Trustee, enforceable against the Trustee in
accordance with its terms (subject to customary and usual
exceptions), (iv) no approvals or filings with any
Governmental Authority required in connection with the
execution, delivery or performance by the Trustee of the
Indenture and (v) the execution, delivery and performance of
the Indenture will not cause any default under the Trustee's
organizational documents or other contracts to which it is a
party or by which it is bound.
(g) All proceedings in connection with the
transactions contemplated by this Agreement and all documents
incident hereto shall be reasonably satisfactory in form and
substance to you, and you and your special counsel shall have
received such other information, certificates and documents as
you or they may reasonably request.
Section 7. Reimbursement of Expenses. In the event
that (x) no closing of the sale of the Notes occurs by the
Issuance Date through no fault of the Issuer or Copelco or
because the conditions set forth in Sections 6(d) and 6(f)
have not been met, or (y) the Underwriter terminates the
engagement pursuant to Section 10 or because any conditions
precedent in Section 6 (other than Section 6(d)) have not been
fulfilled, then the Issuer and Copelco's liability to the
Underwriter shall be limited to the reimbursement of the
Underwriter'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:
(a) The Issuer or Copelco shall pay the reasonable
fees and expenses associated with the transactions
contemplated hereby not paid by the Underwriter in accordance
with the provisions of
11
<PAGE>
Section 7(b) including, without limitation, the following fees
and expenses:
(i) Rating Agency fees payable to S&P,
Moody's and DCR with respect to their ratings of the
Notes;
(ii) fees charged by the firm of independent
public accountants referred to in Section 6(e);
(iii) filing fees in connection with the
transactions contemplated hereby including, but not
limited to, the Commission;
(iv) fees and expenses of counsel to the
Underwriter;
(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 Notes;
(viii) all expenses in connection with the
qualification of the 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 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
Underwriter in the event of the Underwriter's failure to
perform in accordance with this Agreement.
(b) It is understood and agreed that, except
as provided in Section 8 and 9, the Underwriter will pay
securities transfer taxes on resale of any of the 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
12
<PAGE>
harmless the Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter
may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Final
Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will promptly reimburse the Underwriter for any legal or other
expenses reasonably incurred by the Underwriter in connection
with investigating, preparing to defend or defending, or
appearing as a third-party witness in connection with, any
such action or claim; provided, however, (i) that the Issuer
and Copelco shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the
Registration Statement or the Final Prospectus or any such
amendment or supplement in reliance upon and in conformity
with written information furnished to the Issuer or Copelco by
the Underwriter expressly for use therein and (ii) such
indemnity with respect to any Final Prospectus shall not inure
to the benefit of the Underwriter from whom the Person
asserting any such action or claim purchased the Notes which
are the subject thereof if such Person did not receive a copy
of the Final Prospectus (or the Final Prospectus as amended or
supplemented) at or prior to the confirmation of sale of such
Note to such Person in any case where such delivery is
required by the Securities Act and the untrue statement or
omission of a material fact contained in such Final Prospectus
was corrected in the Final Prospectus as amended or
supplemented.
(b) The Underwriter will indemnify and hold
harmless the Issuer and Copelco against any losses, claims,
damages or liabilities to which the Issuer or Copelco may
become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Final Prospectus,
or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in the Registration Statement or the Final Prospectus
or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Issuer or
Copelco by the Underwriter expressly for use therein; and will
reimburse the Issuer or Copelco for any legal or other
expenses reasonably incurred by the Issuer or Copelco in
connection with the investigating, preparing to defend or
defending, or appearing as a
13
<PAGE>
third-party witness in connection with, any such action or
claim. The Issuer and Copelco acknowledge that the statements
set forth in the last paragraph of the cover page and under
the heading "Underwriting" in the Registration Statement, the
Preliminary Prospectus and the FInal Prospectus constitute the
only information furnished in writing by or on behalf of the
Underwriter for inclusion in the Registration Statement or the
Final Prospectus, and you confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the
commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but
the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any
indemnified party otherwise than under such subsection. In
case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified
party and the indemnifying party, and the indemnified party
shall have been advised by counsel that representation of such
indemnified party and the indemnifying party may be
inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between
them, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of
such indemnified party or parties. It is understood that the
indemnifying party shall, in connection with any such action
or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable
fees and expenses of only one separate firm of attorneys
together with appropriate local counsel at any time from all
indemnified parties not having actual or potential differing
interests with any other indemnified party. Upon receipt of
notice from the indemnifying party to such indemnified party
of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the
indemnifying party will not be liable for any settlement
entered into without its consent and will not be liable to
such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party
in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence,
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for
14
<PAGE>
the indemnified party at the expense of the indemnifying
party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii). Notwithstanding the
immediately preceding sentence and the first sentence of this
paragraph, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party
agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by
such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of
such settlement.
(d) If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless
an indemnified party under subsection (a) or (b) above in
respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the
Issuer and Copelco on the one hand and the Underwriter 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 Underwriter 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 Underwriter 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
Underwriter, 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 Underwriter 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 Underwriter agree that it would not be just
and equitable if contributions pursuant to this subsection (d)
were determined by pro rata allocation or by any other method
of
15
<PAGE>
allocation which does not take into account the equitable
considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating, preparing to defend or
defending, or appearing as a third-party witness in connection
with, any such action or claim. Notwithstanding the provisions
of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the
total price at which the Notes underwritten by it and
distributed to the public were offered to the public exceeds
the amount of damages which the Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Issuer and Copelco under
this Section 8 shall be in addition to any liability which the
Issuer or Copelco may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Securities
Act; and the obligations of the Underwriter under this Section
8 shall be in addition to any liability which the Underwriter
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 Underwriter 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 Underwriter, 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.
Section 10. Termination. (a) This Agreement may be
terminated by you at any time upon the giving of notice at any
time prior to the Issuance Date: (i) if there has been, since
December 31, 1995, 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
16
<PAGE>
reasonable judgment, impracticable to market the Notes or
enforce contracts for the sale of the Notes, or (iii) if
trading generally on either the American Stock Exchange or the
New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges
for prices for securities have been required, by either of
said exchanges or by order of the Commission or any other
governmental authority, or (iv) if a banking moratorium has
been declared by either federal or New York authorities. In
the event of any such termination, no party will have any
liability to any other party hereto, except as otherwise
provided in Section 7 or 8 hereof.
(b) This Agreement may not be terminated by the
Issuer or Copelco, except in accordance with law, without the
written consent of the Underwriter.
(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 Underwriter's
obligations hereunder may be immediately cancelled by the
Underwriter by notice thereof to the Issuer or Copelco. Any
such cancellation shall be without liability of any party to
any other party except that the provisions of Sections 8 and
9 hereof shall survive any such cancellation.
Section 11. Notices. All communications provided
for or permitted hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered to or
mailed by certified or registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar
mailed writing, if to you, addressed to you, at the address
first stated in this Agreement, or to such other address as
you may designate in writing to the Issuer and Copelco; if to
Copelco, addressed to Copelco at East Gate Center, 700 East
Gate Drive, Mount Laurel, New Jersey 08054-5400, if to the
Issuer, addressed to the Issuer at 1700 Suckle Plaza,
Pennsauken, New Jersey 08110, 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 Underwriter 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
17
<PAGE>
(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.
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.
18
<PAGE>
Very truly yours,
COPELCO CAPITAL, INC.
By: ___________________________
Name:
Title:
COPELCO CAPITAL FUNDING CORP. II
By: ___________________________
Name:
Title:
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
LEHMAN BROTHERS INC.,
As Underwriter
By: _______________________
Name:
Title:
19
<PAGE>
================================================================================
Exhibit 4.3 -- Form of Indenture
COPELCO CAPITAL
FUNDING CORP. II,
ISSUER
AND
MANUFACTURERS AND TRADERS TRUST COMPANY,
TRUSTEE
----------------------------------------
INDENTURE
Dated as of August ___, 1996
----------------------------------------
$___________ in aggregate principal amount of
Lease-Backed Notes, Series 1996-A,
consisting of:
$__________ of ______% CLASS A LEASE-BACKED NOTES
$___________ of______% CLASS B LEASE-BACKED NOTES
$__________ of _____% CLASS C LEASE-BACKED NOTES
================================================================================
COPELCO CAPITAL FUNDING CORP. II
Reconciliation and Tie between the Indenture
dated as of August ___, 1996 and the
Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
Section 310(a)(1) Section 7.08
(a)(2) 7.08
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 7.08; 7.09; 6.07;
1.05; 1.06
(c) Not Applicable
311(a) 7.14
(b) 7.14
312(a) 2.11
(b) 12.02
(c) 12.02
313(a) 7.15
(b)(1) Not Applicable
(b)(2) 7.15
(c) 7.15; 1.06
(d) 7.15
314(a) 8.12; 8.09; 1.06
(b) Not Applicable
(c)(1) 12.03
(c)(2) 12.03
(c)(3) 12.01
(d) 12.01
(e) 12.04
(f) Not Applicable
315(a) 7.01(a)
(b) 7.02; 1.06
(c) 7.01(b)
(d) 7.01(c)
(e) 6.14
316(a) (last sentence) 2.12
(a)(1)(A) 6.12
(a)(1)(B) 6.13
(a)(2) Not Applicable
317(a)(1) 6.03(c)
(a)(2) 6.04
(b) 8.03(c)
318(a) 12.01
(c) 12.01
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION. . . . . . . . . . 2
SECTION 1.01. General Definitions. . . . . . . . . . . . . 2
SECTION 1.02. Compliance Certificates and Opinions . . . . 16
SECTION 1.03. Form of Documents Delivered to Trustee . . . 16
SECTION 1.04. Acts of Noteholders, etc.. . . . . . . . . . 18
SECTION 1.05. Notices, etc., to Trustee, Servicer and
Company. . . . . . . . . . . . . . . . . . . 19
SECTION 1.06. Notice to Noteholders; Waiver. . . . . . . . 20
SECTION 1.07. Effect of Headings and Table of Contents . . 20
SECTION 1.08. Successors and Assigns . . . . . . . . . . . 20
SECTION 1.09. Governing Law. . . . . . . . . . . . . . . . 20
SECTION 1.10. Legal Holidays . . . . . . . . . . . . . . . 20
SECTION 1.11. Execution in Counterparts. . . . . . . . . . 21
SECTION 1.12. Inspection . . . . . . . . . . . . . . . . . 21
SECTION 1.13. Survival of Representations and Warranties . 21
ARTICLE 2.
THE NOTES. . . . . . . . . . . . . 22
SECTION 2.01. General Provisions . . . . . . . . . . . . . 22
SECTION 2.02. Execution, Authentication, Delivery, and
Dating . . . . . . . . . . . . . . . . . . . 24
SECTION 2.03. Transfer and Exchange. . . . . . . . . . . . 24
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes. 26
SECTION 2.05. Book-Entry Registration of Class A Notes and
Class B Notes. . . . . . . . . . . . . . . . 27
SECTION 2.06. Notice to Clearing Agency. . . . . . . . . . 28
SECTION 2.07. Definitive Class A Notes and Definitive
Class B Notes. . . . . . . . . . . . . . . . 28
SECTION 2.08. Payment of Interest and Principal; Rights
Preserved. . . . . . . . . . . . . . . . . . 29
SECTION 2.09. Persons Deemed Owners. . . . . . . . . . . . 29
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . 30
SECTION 2.11. Noteholder Lists . . . . . . . . . . . . . . 30
SECTION 2.12. Treasury Securities. . . . . . . . . . . . . 30
ARTICLE 3.
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS. . . . . . . 31
SECTION 3.01. Trust Accounts; Investments by Trustee . . . 31
SECTION 3.02. Collection of Moneys . . . . . . . . . . . . 33
SECTION 3.03. Collection Account; Payments . . . . . . . . 34
SECTION 3.04. Reserve Account. . . . . . . . . . . . . . . 36
SECTION 3.05. Reports by Trustee; Notices of Certain
Payments . . . . . . . . . . . . . . . . . . 37
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SECTION 3.06. Trustee May Rely on Certain Information from
Copelco and Servicer . . . . . . . . . . . . 38
ARTICLE 4.
RELEASE OF LEASES AND EQUIPMENT . . . . . . . 39
SECTION 4.01. Release of Equipment . . . . . . . . . . . . 39
SECTION 4.02. Release of Leases Upon Final Lease Payment . 39
SECTION 4.03. Execution of Documents . . . . . . . . . . . 39
ARTICLE 5.
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER . . . 40
SECTION 5.01. Servicer Events of Default . . . . . . . . . 40
SECTION 5.02. Substitute Servicer. . . . . . . . . . . . . 40
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES . . . . . . . . 41
SECTION 6.01. Events of Default. . . . . . . . . . . . . . 42
SECTION 6.02. Acceleration of Maturity; Rescission and
Annulment. . . . . . . . . . . . . . . . . . 43
SECTION 6.03. Remedies . . . . . . . . . . . . . . . . . . 44
SECTION 6.04. Trustee Shall File Proofs of Claim . . . . . 44
SECTION 6.05. Trustee May Enforce Claims Without
Possession of Notes. . . . . . . . . . . . . 45
SECTION 6.06. Application of Money Collected . . . . . . . 45
SECTION 6.07. Limitation on Suits. . . . . . . . . . . . . 46
SECTION 6.08. Unconditional Right of Noteholders to
Receive Principal and Interest . . . . . . . 47
SECTION 6.09. Restoration of Rights and Remedies . . . . . 48
SECTION 6.10. Rights and Remedies Cumulative . . . . . . . 48
SECTION 6.11. Delay or Omission Not Waiver . . . . . . . . 48
SECTION 6.12. Control by Noteholders . . . . . . . . . . . 48
SECTION 6.13. Waiver of Events of Default. . . . . . . . . 49
SECTION 6.14. Undertaking for Costs. . . . . . . . . . . . 49
SECTION 6.15. Waiver of Stay or Extension Laws . . . . . . 50
SECTION 6.16. Sale of Trust Estate . . . . . . . . . . . . 50
ARTICLE 7.
THE TRUSTEE . . . . . . . . . . . . 52
SECTION 7.01. Certain Duties and Responsibilities. . . . . 52
SECTION 7.02. Notice of Defaults or Events of Default. . . 53
SECTION 7.03. Certain Rights of Trustee. . . . . . . . . . 54
SECTION 7.04. Not Responsible for Recitals or Issuance of
Notes. . . . . . . . . . . . . . . . . . . . 54
SECTION 7.05. May Hold Notes . . . . . . . . . . . . . . . 54
SECTION 7.06. Money Held in Trust. . . . . . . . . . . . . 54
SECTION 7.07. Compensation, Reimbursement, etc.. . . . . . 55
SECTION 7.08. Corporate Trustee Required; Eligibility. . . 55
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SECTION 7.09. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . 56
SECTION 7.10. Acceptance of Appointment by Successor . . . 57
SECTION 7.11. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . 57
SECTION 7.12. Co-trustees and Separate Trustees. . . . . . 57
SECTION 7.13. Trustee to Hold Leases . . . . . . . . . . . 59
SECTION 7.14. Preferential Collection of Claims Against
the Company. . . . . . . . . . . . . . . . . 59
SECTION 7.15. Reports by Trustee to Noteholders. . . . . . 59
SECTION 7.16. No Proceedings . . . . . . . . . . . . . . . 60
ARTICLE 8.
COVENANTS . . . . . . . . . . . . . 60
SECTION 8.01. Payment of Principal and Interest. . . . . . 60
SECTION 8.02. Maintenance of Office or Agency; Chief
Executive Office . . . . . . . . . . . . . . 60
SECTION 8.03. Money for Payments to Noteholders to be Held
in Trust . . . . . . . . . . . . . . . . . . 60
SECTION 8.04. Corporate Existence; Merger; Consolidation,
etc. . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.05. Protection of Trust Estate; Further
Assurances . . . . . . . . . . . . . . . . . 63
SECTION 8.06. Opinions as to Trust Estate. . . . . . . . . 64
SECTION 8.07. Performance of Obligations; Sales and
Servicing Agreement. . . . . . . . . . . . . 65
SECTION 8.08. Negative Covenants . . . . . . . . . . . . . 65
SECTION 8.09. Information as to Company. . . . . . . . . . 66
SECTION 8.10. Taxes. . . . . . . . . . . . . . . . . . . . 68
SECTION 8.11. Indemnification. . . . . . . . . . . . . . . 68
SECTION 8.12. Commission Reports; Reports to Trustee;
Reports to Noteholders . . . . . . . . . . . 68
ARTICLE 9.
SUPPLEMENTAL INDENTURES . . . . . . . . . 69
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders. . . . . . . . . . . . . . . . . 69
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders. . . . . . . . . . . . . . . . . 70
SECTION 9.03. Execution of Supplemental Indentures . . . . 71
SECTION 9.04. Effect of Supplemental Indentures. . . . . . 71
SECTION 9.05. Reference in Notes to Supplemental
Indentures . . . . . . . . . . . . . . . . . 71
SECTION 9.06. Compliance with Trust Indenture Act. . . . . 71
ARTICLE 10.
SATISFACTION AND DISCHARGE. . . . . . . . . 72
SECTION 10.01. Satisfaction and Discharge of Indenture . . 72
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SECTION 10.02. Application of Trust Money. . . . . . . . . 73
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY. . . . . . . . . . . . 73
SECTION 11.01. Corporate Organization and Authority. . . . 73
SECTION 11.02. Pending Litigation. . . . . . . . . . . . . 74
SECTION 11.03. Transactions Legal and Authorized . . . . . 74
SECTION 11.04. No Defaults . . . . . . . . . . . . . . . . 75
SECTION 11.05. Governmental Consent. . . . . . . . . . . . 75
SECTION 11.06. Use of Proceeds . . . . . . . . . . . . . . 75
SECTION 11.07. Compliance with Law . . . . . . . . . . . . 75
SECTION 11.08. Restrictions on Company . . . . . . . . . . 75
SECTION 11.09. Legal, Valid and Binding Obligations. . . . 76
SECTION 11.10. Perfected Security Interest . . . . . . . . 76
SECTION 11.11. Taxes . . . . . . . . . . . . . . . . . . . 76
SECTION 11.12. Nonconsolidation. . . . . . . . . . . . . . 77
ARTICLE 12.
MISCELLANEOUS. . . . . . . . . . . . 77
SECTION 12.01. Trust Indenture Act Controls. . . . . . . . 77
SECTION 12.02. Communication by Noteholders with Other
Noteholders . . . . . . . . . . . . . . . . 77
SECTION 12.03. Officers' Certificate and Opinion of
Counsel as to Conditions Precedent. . . . . 78
SECTION 12.04. Statements Required in Certificate or
Opinion . . . . . . . . . . . . . . . . . . 78
SCHEDULES
SCHEDULE 1 Leases
EXHIBITS
EXHIBIT A Forms of Notes and Form of Trustee's
Certificate of Authentication
EXHIBIT B Form of Investor Letter
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INDENTURE
This INDENTURE dated as of August ___, 1996, is between
COPELCO CAPITAL FUNDING CORP. II, a Delaware corporation (herein
called the "Company"), and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation, as trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the issuance of
$___________ in aggregate principal amount of its Lease-Backed
Notes, Series 1996-A, consisting of $_____________ principal
amount of _________% Class A Lease-Backed Notes (the "Class A
Notes"), $____________ principal amount of ________% Class B
Lease-Backed Notes (the "Class B Notes") and $_____________
principal amount of ________% Class C Lease-Backed Notes (the
"Class C Notes"; the Class A Notes, the Class B Notes and the
Class C Notes are referred to collectively as the "Notes"), of
substantially the tenor hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and
delivery of this Indenture. The Class A Notes, the Class B Notes
and the Class C Notes shall be entitled to payments of interest
and principal as set forth herein.
All things necessary to make the Notes, when executed by
the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase
of the Notes by the holders thereof, it is mutually covenanted
and agreed, for the benefit of all Noteholders, as follows:
GRANTING CLAUSE
The Company hereby Grants to the Trustee on the Issuance
Date, for the benefit and security of the Noteholders, all of the
Company's right, title and interest in and to (a) the Leases and
all Lease Payments, Casualty Payments, Termination Payments and
other amounts now due or becoming due with respect thereto since
the Cut-Off Date (other than any prepayments of rent required
pursuant to the terms of any Lease at or before the commencement
of the Lease and any payments due before the Cut-Off Date), (b)
all rights of the Company to or under any guarantees of or
collateral (including all rights of the Company in any security
deposits and the Company's right to repayment by Copelco Capital,
Inc. ("Copelco") of any inter-company loans pursuant to Section
13.01 of the Sales and Servicing Agreement) for the Lessee's
<PAGE>
obligations under any Lease, (c) all interests of the Company in
the Equipment at any time subject to any Lease, (d) all moneys
from time to time held by the Trustee pursuant to Section 3.01(a)
hereof pending deposit in one of the accounts referred to
therein, (e) all moneys from time to time on deposit in any of
the Trust Accounts, including all investments and income from the
investment of such moneys, (f) all rights of the Company under
the Sales and Servicing Agreement, and (g) all proceeds of the
conversion, whether voluntary or involuntary, of any of the
foregoing into cash or other property. Such Grant is made in
trust to secure (i) the payment of all amounts due on the Class A
Notes, the Class B Notes and the Class C Notes, in accordance
with their terms, equally and ratably without prejudice,
priority, or distinction among any of the Class A Notes, the
Class B Notes and the Class C Notes, respectively, by reason of
differences in time of issuance or otherwise, (ii) the payment of
all other sums payable under this Indenture with respect to the
Notes and (iii) compliance with the provisions of this Indenture
with respect to the Notes.
The Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions hereof, and agrees to
perform the duties herein required to the best of its ability and
to the end that the interests of the Noteholders may be
adequately and effectively protected as hereinafter provided.
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. General Definitions.
Except as otherwise specified or as the context may
otherwise require, the following terms have the meanings set
forth below for all purposes of this Indenture, and the
definitions of such terms are applicable to the singular as well
as to the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
Act: with respect to any Noteholder, as defined in
Section 1.04.
Administration Account: as defined in Section 3.02(b).
Additional Principal: with respect to any Payment Date,
an amount equal to the sum of (a) the excess, if any, of the
Class B Floor over the Class B Target Investor Principal Amount,
plus (b) the excess, if any, of the Class C Floor over the Class
C Target Investor Principal Amount.
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Affiliate: of any specified Person: any other Person
which directly or indirectly controls, or is controlled by, or is
under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
Authorized Officer: with respect to any matter, any
officer of or other Person representing the Company, Copelco or
the Servicer, as the case may be, who is authorized to act for
the Company, Copelco or the Servicer, as the case may be.
Available Cash Reserve Amount: the amount on deposit in
the Reserve Account.
Available Funds: With respect to any Payment Date, the
amount on deposit in the Collection Account with respect to the
immediately preceding Due Period, including, without limitation,
to the extent deposited therein (a) Lease Payments due during
the immediately preceding Due Period (net of any Excess Copy
Charges), (b) Residual Values up to the Residual Amount Cap; (c)
recoveries from Non-Performing Leases (except to the extent
required to reimburse unreimbursed Servicer Advances pursuant to
Section ___ of the Sales and Servicing Agreement); (d) proceeds
from repurchases by Copelco Capital of Leases as a result of
breaches of representations and warranties by Copelco Capital;
(e) proceeds from investment of funds in the Collection Account,
the Residual Account and the Reserve Account; (f) Casualty
Payments; (g) Servicer Advances; and (h) Termination Payments.
Available Funds Shortfall: as defined in Section
3.04(b).
Available Residual Amount: the excess of (a) the
Residual Amount Cap over (b) the Utilized Residual Amount.
Book-Entry Class A Notes: beneficial interests in the
Class A Notes, the ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
2.05.
Book-Entry Class B Notes: beneficial interests in the
Class B Notes, the ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
2.05.
Business Day: any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the city in
which the Corporate Trust Office and the Servicer is located are
authorized or obligated by law or executive order to remain
closed.
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Casualty Payment: any payment pursuant to a Lease on
account of the loss, theft, condemnation, governmental taking,
destruction, or damage beyond repair of any item of Equipment
subject thereto which results, in accordance with the terms of
the Lease, in a reduction in the number or amount of any future
Lease Payments due thereunder or in the termination of the
Lessee's obligation to make future Lease Payments thereunder.
Casualty Pay-Through Amount: with respect to any Lease
(or portion thereof) with respect to which Casualty Payment has
been made, an amount equal to the Discounted Present Value of
such Lease (or portion thereof) as of the Payment Date next
succeeding the date on which such Casualty Payment is made.
Cede & Co.: the initial registered holder of the Class A
Notes and the Class B Notes, acting as nominee of The Depository
Trust Company.
Class A Noteholder: Cede & Co. or a holder of a
Definitive Class A Note.
Class A Notes: as defined in the Recitals hereto.
Class A Note Interest Rate: the rate at which interest
accrues on the Class A Notes, which rate with respect to each Due
Period shall be at a rate per annum equal to _____%.
Class A Note Owner: with respect to a Book-Entry Class A
Note, the Person who is the beneficial owner of such Book-Entry
Class A 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 Percentage: __%.
Class A Principal Payment: with respect to each Payment
Date will be an amount equal to the lesser of (a) the amount
necessary to reduce the Outstanding Class A Principal Amount to
the Class A Target Investor Principal Amount and (b) funds
available therefor.
Class A Target Investor Principal Amount: with respect
to each Payment Date, an amount equal to the lesser of (a) the
product of (i) the Class A Percentage and (ii) the Discounted
Present Value of the Performing Leases as of the related
Determination Date and (b) Outstanding Class A Principal Amount.
Class B Floor: with respect to each Payment Date, the
product of (a) 2.50% of the Discounted Present Value of the
Leases as of the Cut-Off Date plus (b) the excess, if any, as of
the prior Payment Date after giving effect to all distributions
made on such Payment Date of (i) the Outstanding Principal Amount
4
<PAGE>
of the Notes over (ii) the Discounted Present Value of the
Performing Leases minus (c) the sum of (i) the Outstanding
Principal Amount of the Class C Notes and (ii) the amount on
deposit in the Reserve Account, in each case determined as of the
related Determination Date.
Class B Noteholder: Cede & Co. or a holder of a
Definitive Class B Note.
Class B Noteholder: a holder of a Class B Note.
Class B Notes: as defined in the Recitals hereto.
Class B Note Interest Rate: the rate at which interest
accrues on the Class B Notes, which rate shall be ________% per
annum.
Class B Note Owner: with respect to a Book-Entry Class B
Note, the Person who is the beneficial owner of such Book-Entry
Class B Note, as reflected on the books of the Clearing Agency,
or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
Class B Percentage: __%.
Class B Principal Payment: with respect to each Payment
Date will be an amount equal to the lesser of (a) the amount
necessary to reduce the Outstanding Class B Principal Amount to
the Class B Target Investor Principal Amount and (b) funds
available therefor.
Class B Target Investor Principal Amount: with respect to
each Payment Date, an amount equal to (a) the lesser of (i) the
product of (i) the Class B Percentage and (ii) the Discounted
Present Value of the Performing Leases as of the related
Determination Date and (b) the Outstanding Class B Principal
Amount.
Class C Floor: with respect to each Payment Date, the
product of (a) 1.00% of the Discounted Present Value of the
Leases as of the Cut-Off Date plus (b) the excess, if any, as of
the prior Payment Date after giving effect to all distributions
made on such Payment Date of (i) the Outstanding Principal Amount
of the Notes over (ii) the Discounted Present Value of the
Performing Leases minus (c) the sum of (i) the Outstanding
Principal Amount of the Class C Notes and (ii) the amount on
deposit in the Reserve Account, in each case determined as of the
related Determination Date.
Class C Noteholder: a holder of a Class C Note.
Class C Notes: as defined in the Recitals hereto.
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Class C Note Interest Rate: the rate at which interest
accrues on the Class B Notes, which rate shall be ________% per
annum.
Class C Percentage: __%.
Class C Principal Payment: with respect to each Payment
Date will be an amount equal to the lesser of (a) the amount
necessary to reduce the Outstanding Class C Principal Amount to
the Class C Target Investor Principal Amount and (b) funds
available therefor.
Class C Target Investor Principal Amount: with respect to
each Payment Date, an amount equal to the lesser of (a) the
product of (i) the Class C Percentage and (ii) the Discounted
Present Value of the Performing Leases as of the related
Determination Payment Date and (b) the Outstanding Class C
Principal Amount.
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.
Company: the Person named as the "Company" in the first
paragraph of this instrument.
Company Order or Company Request: a written order or
request delivered to the Trustee and signed in the name of the
Company by an Authorized Officer.
Copelco: Copelco Capital, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its
successors.
Corporate Trust Office: the principal corporate trust
office of the Trustee located at One M&T Plaza, 7th Floor,
Buffalo, New York 14203, or at such other address as the Trustee
may designate from time to time by notice to the Noteholders, the
Company and Copelco.
Cut-Off Date: August ___, 1996.
6
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DCR: Duff & Phelps Credit Rating Co, and any such
successor.
Default: any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
Definitive Class A Note: a definitive, fully registered
Class A Note issued pursuant to Section 2.07.
Definitive Class B Note: a definitive, fully registered
Class B Note issued pursuant to Section 2.07.
Delinquent Lease: as of any Determination Date, any
Lease (other than a Lease which became a Non-Performing Lease
prior to such Determination Date) with respect to which the
Lessee has not paid all Lease Payments then due.
Depository Agreement: the letter of representations,
between the Company and the Depository Trust Company, as Clearing
Agency.
Determination Date: with respect to any Payment Date,
the fifth Business Day immediately preceding such Payment Date.
Discount Rate: with respect to any Determination Date,
_______%, which equals the sum of (a) the weighted-average
Interest Rate of the Class A Notes, the Class B Note Interest
Rate and the Class C Interest Rate on the Issuance Date and (b)
the Servicing Fee rate of 0.75% per annum.
Discounted Present Value of the Leases: with respect to
any Lease as of the Cut-Off Date or any date thereafter, an
amount equal to the net present value of all Lease Payments (not
including delinquent amounts) to become due thereunder following
the Cut-Off Date or the Due Period preceding the following
Payment Date, as the case may be (determined by discounting on a
monthly basis (assuming a calendar year consisting of twelve
30-day months), at a rate equal to the Discount Rate, each such
Lease Payment from the Payment Date following such Lease Payment
to such date).
Discounted Present Value of the Performing Leases: the
Discounted Present Value of the Leases, reduced by the Discounted
Present Value of the Leases that are Non-Performing Leases.
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 whose long-term unsecured
7
<PAGE>
debt obligations are rated at least A- by S&P, Aa by Moody's and
A- by DCR (or, if the obligations of such depositary institution
are not rated by DCR, the ratings specified by S&P or Moody's),
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.
Eligible Investments: any one or more of the following
obligations or securities:
(a) direct non-callable obligations of, and non- callable
obligations fully guaranteed by, the United States of America,
or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith
and credit of the United States of America;
(b) demand and time deposits in, certificates of deposits
of, and bankers' acceptances issued by, any depository
institution or trust company (including the Trustee acting in
its commercial capacity) incorporated under the laws of the
United States of America or any state thereof, having a
combined capital and surplus of at least $100,000,000, and
subject to supervision and examination by federal and/or state
banking authorities, so long as at the time of such investment
or contractual commitment providing for such investment the
commercial paper or other short-term debt obligations of such
depository institution or trust company (or, in the case of a
depository institution that is the principal subsidiary of a
holding company, the commercial paper or other short-term debt
obligations of such holding company) have the highest
short-term credit ratings available from S&P, Moody's and, to
the extent rated by DCR, DCR;
(c) repurchase obligations with respect to and
collateralized by (i) any security described in clause (a)
above or (ii) any other security issued or guaranteed by an
agency or instrumentality of the United States of America, in
each case entered into with a depository institution or trust
company (acting as principal) of the type described in clause
(b) above, provided that the Trustee has taken delivery of
such security;
(d) commercial paper (including both non-interestbearing
discount obligations and interest-bearing obligations) payable
on demand or on a specified date not more than one year after
the date of issuance thereof having the highest short-term
credit ratings from S&P, Moody's and, to the extent rated by
DCR, 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 AAAm or AAAm-G by Standard and Poor's and ______ by
Moody's; and
8
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(f) such other investments as may be approved by S&P,
Moody's and DCR.
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 Change: 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 amount per month.
Financing Statement: as defined in Section 12 of the
Sales and Servicing Agreement.
Grant: grant, bargain, sell, convey, assign, transfer,
mortgage, pledge, create and grant a security interest in and
right of set-off against, deposit, set over and confirm. The
Grant of the Trust Estate effected by this Indenture shall
include all rights, powers, and options (but none of the
obligations) of the Company with respect thereto, including,
without limitation, the immediate and continuing right to claim
for, collect, receive, and give receipts for Lease Payments in
respect of the Leases and all other moneys payable thereunder, to
give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options,
to bring judicial proceedings in the name of the Company or
otherwise, and generally to do and receive anything that the
Company is or may be entitled to do or receive thereunder or with
respect thereto.
Holder: a holder of a Class A Note, Class B Note or a
Class C Note.
Indenture: this instrument as originally executed and as
from time to time supplemented or amended pursuant to the
applicable provisions hereof.
Initial Payment Date: __________, 1996.
Initial Principal Amount of the Notes: $___________.
Inter-Company Loans: as defined in Section 13 of the
Sales and Servicing Agreement.
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Interest Payments: as defined in Section 2.01(c).
Issuance Date: ________, 1996.
Lease: at any time, each separate lease agreement and
each lease schedule or supplement (and each master lease
agreement insofar as the same relates to any such schedule or
supplement) described in Schedule 1 hereto, as the same may be
amended or modified from time to time in accordance with the
provisions hereof and thereof unless and until released from the
lien of this Indenture.
Lease Delinquency Payment: any payment made with respect
to a Lease in an amount equal to all or part of any specific
Lease Payment due with respect to such Lease (a) by the Servicer
pursuant to Section 4.01 of the Sales and Servicing Agreement,
(b) by a transfer from the Reserve Account pursuant to Section
3.04, or (c) by the Company in its sole discretion.
Lease Payment: each periodic installment of rent payable
by a Lessee under a Lease. Casualty Payments, Termination
Payments, prepayments of rent required pursuant to the terms of a
Lease, at or before the commencement of the Lease, payments
becoming due on or before the Cut-Off Date and supplemental or
additional payments required by the terms of a Lease with respect
to taxes, insurance, maintenance (including, without limitation,
any Maintenance Charges), or other specific charges shall not be
Lease Payments hereunder. For purposes of calculating the
Discounted Present Value of the Leases and the Discounted Present
Value of the Performing Leases, the amount of any Excess Copy
Changes that may be payable under such Lease shall not be
included in such calculation.
Lease Repurchase Amount: as defined in Section 12 of the
Sales and Servicing Agreement.
Lessee: with respect to any Lease, the lessee
thereunder.
Lien: as defined in Section 12 of the Sales and
Servicing Agreement.
Maintenance Charges: with respect to any Lease, the
amount owing by the Lessee under the terms of the related Lease
in respect of maintenance services being provided in connection
therewith.
Maturity: with respect to any installment of principal
of or interest on any Note, the date on which such installment is
due and payable as therein or herein provided, whether at the
Stated Maturity, by declaration of acceleration, or otherwise.
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Moody's: Moody's Investor Services, Inc. and any
successors thereto.
Nominal Buy-Out Lease: as defined in Section 12 of the
Sales and Servicing Agreement.
Non-Performing Lease Payment: any payment, other than a
Lease Delinquency Payment, made with respect to a Non-Performing
Lease (a) by the Lessee under or with respect to such Lease (or
by the application of any security deposit or other monies owed
or belonging to such Lessee) as actual, liquidated or punitive
damages resulting from the breach of such Lease, (b) by a
transfer from the Reserve Account pursuant to Section 3.04, or
(c) by the Servicer or the Trustee from the proceeds of any
disposition of the Equipment subject to such Lease. Lease
Payments for any Due Period prior to a Lease becoming a
Non-Performing Lease are not Non-Performing Lease Payments.
Non-Performing Lease: as of any Determination Date, any
Lease with respect to which either (a) a Lease Payment, or any
portion thereof, was 123 or more days overdue as of the last day
of the Due Period with respect to such Determination Date, unless
on or before such Determination Date such Lease Payment (or
portion thereof) has been paid or (b) the Servicer has
accelerated the remaining payments or has determined such Lease
to be uncollectible in accordance with the Servicer's customary
practices prior to the last day of the Due Period with respect to
such Determination Date.
Non-Performing Lease Pay-Through Amount: with respect to
any Lease with respect to which a Non-Performing Lease Payment is
made or due, an amount equal to the Discounted Present Value of
such Lease as of the Payment Date immediately following the first
Determination Date on which such Lease was a Non-Performing
Lease.
Noteholder: at any time, any Person in whose name a Note
is registered in the Note Register.
Note Interest Rate: the Class A Note Interest Rate, the
Class B Note Interest Rate or the Class C Note Interest Rate, as
the case may be.
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 Company, and by another Vice President, the
Treasurer, and Assistant Treasurer, the Secretary, or an
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Assistant Secretary of the Company who is not the same Person as
the other officer signing such certificate.
Opinion of Counsel: a written opinion, which shall be
satisfactory in form and substance to the Trustee, of counsel who
may, except as otherwise expressly provided in this Indenture, be
inside or outside counsel for the Company and who shall be
satisfactory to the Trustee.
Other Lease Payments: all payments on or in respect of
leases which are not Lease Payments, Lease Delinquency Payments,
Non-Performing Lease Payments, Casualty Payments, Termination
Payments, Similar Transaction Payments or Residual Values.
Outstanding: with respect to the Notes, as of any date
of determination, all Notes theretofore authenticated and
delivered under this Indenture except:
(a) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Notes or portions thereof for whose payment money in
the necessary amount has been theretofore irrevocably
deposited with the Trustee in trust for the holders of such
Notes; and
(c) Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this
Indenture unless proof satisfactory to the Trustee is
presented that any such Notes are held by a Person in whose
hands the Note is a valid obligation;
provided, however, that in determining whether the holders of the
requisite percentage of the Outstanding Principal Amount of the
Notes have given any request, demand, authorization, direction,
notice, consent, or waiver hereunder, Notes owned by the Company
or any Affiliate of the Company shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, or waiver,
only Notes that a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded.
Outstanding Class A Principal Amount: the aggregate
principal amount of the Class A 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 Principal Amount: the aggregate unpaid
principal amount of the Notes Outstanding at any time.
Paying Agent: each agent of the Company appointed for
the purpose of making payments on the Notes, including the
Trustee.
Payment Date: the 20th day of each month, commencing on
the Initial Payment Date, and ending with the Stated Maturity of
the Class A Notes, the Class B Notes or the Class C Notes, as the
case may be.
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.
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: the Initial Principal Amount of the Notes
less Principal Payments on the Notes.
Principal Payments: as defined in Section 2.01(b).
Rating Agency: DCR, Moody's and S&P.
Record Date: with respect to any Payment Date, the last
day of the calendar month immediately preceding such Payment
Date.
Required Deposit Date: as defined in Section 3.02(c).
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 Event: [the failure of the performance of
specified leases serviced by the Servicer to satisfy certain
performance requirements which failure may be cured with the
satisfaction of such performance requirements for a period of
_______].
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Residual Values: the aggregate cash flows realized from
the sale (including pursuant to a Lessee's purchase option) or
reletting of any Equipment following the termination of the
related Lease.
Residual Amount Cap: an amount equal to $____________; [
7% of the Discounted Present Value of the Leases as of the Cut-
Off Date]
Responsible Officer: with respect to the Trustee, any
person regularly engaged in the administration or supervision of
corporate trust accounts (including, in the case of the original
Trustee hereunder, any officer in its Corporate Trust
Administration) and also, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
S&P: Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies Inc. and any successor thereto.
Sales and Servicing Agreement: the Sales and Servicing
Agreement dated as of the date hereof between the Company and
Copelco, as the same may be amended or modified from time to time
in accordance with the provisions hereof and thereof.
Securities Act: the Securities Act of 1933, as amended.
Servicer: Copelco and any successor Servicer appointed
pursuant to the terms hereof and of the Sales and Servicing
Agreement and, to the extent that it at any time is performing
the functions of the Servicer, the Trustee, subject to the terms
of Section 5.01 hereof.
Servicer Advance: a payment by the Servicer under clause
(a) of the definition of Lease Delinquency Payment.
Servicer Event of Default: as defined in Section 8.01 of
the Sales and Servicing Agreement.
Servicer Order: a written order or request delivered to
the Trustee and signed in the name of the Servicer by an
Authorized Officer.
Servicing Fee: with respect to any Payment Date, the
Servicing Fee payable at a rate of 0.75% per annum to the
Servicer on such Payment Date pursuant to the Sales and Servicing
Agreement.
Similar Transaction Agreement: an indenture between the
Trustee and a wholly-owned special purpose subsidiary of Copelco
other than the Company, substantially similar to this Indenture,
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pursuant to which notes, substantially similar to the Notes, have
been issued.
Similar Transaction Amount: for each Required Deposit
Date, the amount of all Similar Transaction Payments received by
the Servicer and deposited in the Collection Account pursuant to
Section 3.02(a) and reported by the Servicer for such Required
Deposit Date pursuant to Section 5.03(a) of the Sales and
Servicing Agreement.
Similar Transaction Payments: all payments on or in
respect of leases subject to the lien of any Similar Transaction
Agreement.
Stated Maturity: the date on which the entire remaining
unpaid Outstanding Principal Amount of the Notes is due and
payable, which date is _______ for the Class A Notes, the Class B
Notes and the Class C Notes.
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 Company, and the
Lessee in accordance with the provisions of Section 3.02 of the
Sales and Servicing Agreement.
Transaction Payment Amount: for each Required Deposit
Date, the amount of all Lease Payments, Lease Delinquency
Payments, Non-Performing Lease Payments, Casualty Payments,
Termination Payments and other payments on or in respect of a
Lease received by the Servicer and deposited in the Collection
Account pursuant to Section 3.02(a) and reported by the Servicer
for such Required Deposit Date in accordance with Section 5.03(a)
of the Sales and Servicing Agreement.
Trust Accounts: the Collection Account, the Reserve
Account and the Residual Account.
Trust Estate: all money, instruments and other property
subject to or intended to be subject to the lien of this
Indenture including all proceeds thereof.
Trustee: the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Person shall have
become the Trustee pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean such successor
Person; provided, that the provisions of Section 7.07 and Section
8.11, as applicable to any Person at any time serving as Trustee
hereunder, shall survive the termination of such Person's status
as Trustee hereunder and the succession of any other Person to
such status.
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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.
Underwriting Agreement: the Underwriting Agreement,
among the Company, Copelco and Lehman Brothers.
Uniform Commercial Code: with respect to a particular
jurisdiction, the Uniform Commercial Code, as in effect from time
to time in such jurisdiction, or any successor statute thereto.
Utilized Residual Amount: on any day of determination,
the sum of (a) the total Residual Values applied to make payments
of amounts owing the Servicer and the Noteholders and (b) the
amount on deposit in the Reserve Account and the Residual Account
on such date allocable to Residual Values.
Vice President: with respect to the Company, any vice
president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.02. Compliance Certificates and Opinions.
Upon any written application or request (or oral
application with prompt written or telecopied confirmation) by
the Company to the Trustee to take any action under any provision
of this Indenture, other than any request that (a) the Trustee
authenticate the Notes specified in such request, (b) the Trustee
invest moneys in any of the Trust Accounts pursuant to the
written directions specified in such request, or (c) the Trustee
pay moneys due and payable to the Company hereunder to the
Company's assignee specified in such request, the Trustee shall
require the Company to furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been complied with and that the request otherwise is in
accordance with the terms of the Indenture, and an Opinion of
Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except
that, in the case of any such requested action as to which other
evidence of satisfaction of the conditions precedent thereto is
specifically required by any provision 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
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one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer of the Company
delivered to the Trustee may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such
officer's certificate or opinion and any Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company as to such factual matters unless such
officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of
Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such
counsel and the Trustee may reasonably rely upon the opinion of
such other counsel.
Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Wherever in this Indenture, in connection with any
application or certificate or report to the Trustee, it is
provided that the Company shall deliver any document as a
condition of the granting of such application, or as evidence of
compliance with any term hereof, it is intended that the truth
and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall
in such case be conditions precedent to the right of the Company
to have such application granted or to the sufficiency of such
certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth
and accuracy of any statement or opinion contained in any such
document as provided in Section 7.01(a)(ii).
Whenever in this Indenture it is provided that the
absence of the occurrence and continuation of a Default or Event
of Default or Servicer Event of Default is a condition precedent
to the taking of any action by the Trustee at the request or
direction of the Company, then, notwithstanding that the
satisfaction of such condition is a condition precedent to the
Company's right to make such request or direction, the Trustee
shall be protected in acting in accordance with such request or
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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 clause (a) of
Section 6.01) or Servicer Event of Default unless a Responsible
Officer of the Trustee shall have actual knowledge thereof or
shall have been notified in writing thereof by the Company, the
Servicer, or any Noteholder.
SECTION 1.04. Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Noteholders may be embodied in
and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 7.01) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section
1.04.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of
a witness of such execution or by a 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 therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made
upon such Note.
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(d) By accepting the Notes issued pursuant to this
Indenture, each Noteholder irrevocably appoints the Trustee
hereunder as the special attorney-in-fact for such Noteholder
vested with full power on behalf of such Noteholder to effect and
enforce the rights of such Noteholder and the revisions pursuant
hereto for the benefit of such Noteholder; provided that nothing
contained in this Section 1.04(d) shall be deemed to confer upon
the Trustee any duty or power to vote on behalf of the
Noteholders with respect to any matter on which the Noteholders
have a right to vote pursuant to the terms of this Indenture.
SECTION 1.05. Notices, etc., to Trustee, Servicer and
Company.
Any request, demand, authorization, direction, notice,
consent, waiver, Act of Noteholders, or other document provided
or permitted by this Indenture to be made upon, given or
furnished to, or filed with, the Trustee, the Company or the
Servicer shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or certified mail return receipt
requested, or sent by private courier or confirmed telecopy.
Unless otherwise specifically provided herein, no such request,
demand, authorization, direction, notice, consent, waiver, Act of
Noteholders or other document shall be effective until received
and any provision hereof requiring the making, giving,
furnishing, or filing of the same on any date shall be
interpreted as requiring the same to be sent or delivered in such
fashion that it will be received on such date. Any such request,
demand, authorization, direction, notice, consent, waiver, Act of
Noteholders, or other document shall be sent or delivered to the
following addresses:
(a) if to the Trustee, at the Corporate Trust Office,
Attention: Corporate Trust Administration (Number for
telecopy: (716) 842-4474), or at any other address previously
furnished in writing to the Company and the Servicer by the
Trustee; or
(b) if to the Company, at East Gate Center, 700 East
Gate Drive, Mount Laurel, New Jersey 08054-5400, Attention:
President (Number for telecopy: 609-231-9600), or at any
other address previously furnished in writing to the Trustee
and the Servicer by the Company; or
(c) if to the Servicer, at East Gate Center, 700 East
Gate Drive, Mount Laurel, New Jersey 08054-5400, Attention:
President (Number for telecopy: 609-231-9600), or at any
other address previously furnished in writing to the Trustee
and the Company by the Servicer.
SECTION 1.06. Notice to Noteholders; Waiver.
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(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
Company or the Trustee shall bind its respective successors and
permitted assigns, whether so expressed or not.
SECTION 1.09. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
THIS INDENTURE IS SUBJECT TO THE TRUST INDENTURE ACT OF 1939 AND
SHALL BE GOVERNED THEREBY AND CONSTRUED IN ACCORDANCE THEREWITH.
SECTION 1.10. Legal Holidays.
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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 Company agrees that, on reasonable prior notice, it
will permit the representatives of the Trustee or any Noteholder
holding Notes, or a beneficial interest therein, evidencing at
least 25% of the Outstanding Principal Amount of the Notes,
during the Company's normal business hours, to examine all of the
books of account, records, reports and other papers of the
Company, to make copies thereof and extracts therefrom, to cause
such books to be audited by independent accountants selected by
the Company and reasonably acceptable to the Trustee or such
Noteholder, as the case may be, and to discuss its affairs,
finances and accounts with its officers, employees and
independent accountants (and by this provision the Company hereby
authorizes its accountants to discuss with such representatives
such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested for the purpose
of reviewing or evaluating the financial condition or affairs of
the Company or the performance of and compliance with the
covenants and undertakings of the Company in this Indenture, the
Sales and Servicing Agreement or any of the other documents
referred to herein or therein. Any expense incident to the
exercise by the Trustee at any time or any Noteholder during the
continuance of any Default or Event of Default, of any right
under this Section 1.12 shall be borne by the Company.
SECTION 1.13. Survival of Representations and
Warranties.
The representations, warranties and certifications of the
Company made in this Indenture or in any certificate or other
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writing delivered by the Company pursuant hereto shall survive
the authentication and delivery of the Notes hereunder.
ARTICLE 2.
THE NOTES
SECTION 2.01. General Provisions.
(a) The Notes shall consist of $_____________ principal
amount of Class A Notes, $____________ principal amount of Class
B Notes and $_____________ principal amount of Class C Notes, and
the forms thereof and of the Trustee's certificate of
authentication shall be in substantially the forms set forth in
Exhibit A hereto, with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted
by this Indenture.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to
$___________, 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 $100,000 and integral multiples of
$1,000, in excess thereof; provided that the foregoing shall not
restrict or prevent the transfer in accordance with Section 2.03
of any Note having a remaining Outstanding Principal Amount of
other than an integral multiple of $1,000, or the issuance of a
single Class A Note, a single Class B Note and a single Class C
Note with a denomination less than $100,000.
(b) For each Payment Date, payments of principal (the
"Principal Payments") on the Notes will be made in accordance
with Sections 3.03(b) or 6.06, as applicable. Except as
otherwise provided in Section 6.02, no part of the principal of
any Note shall be paid prior to the Payment Date on which such
principal is due in accordance with the preceding provisions of
this Section 2.01(b), except that the Company may redeem the
Notes in their entirety, without premium, as of any Payment Date
on which the Discounted Present Value of the Performing Leases is
less than or equal to ten percent (10%) of the aggregate
Discounted Present Value of the Leases as of the Cut-Off Date
(after giving effect to all Principal Payments on such Payment
Date). The Company will give notice of any such redemption to
each Noteholder and the Trustee at least 30 days before the
Payment Date fixed for such prepayment by certified mail return
receipt requested, hand delivery or overnight courier. Notice of
such prepayment having been so given, the remaining unpaid
principal as of the Payment Date fixed for prepayment together
with all interest accrued and unpaid to such Payment Date, shall
become due and payable on such Payment Date.
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(c) For each Payment Date, the interest due (the
"Interest Payments") with respect to the Class A Notes, the Class
B Notes and the Class C Notes will be the interest that has
accrued on the Notes since the last Payment Date or, in the case
of the first Payment Date, since _________, 1996, at the Interest
Rates applied to the then Outstanding Principal Amounts of the
Class A Notes, the Class B Notes, and the Class C Notes
respectively, on the preceding Payment Date. Interest Payments
will be made in accordance with Sections 3.03(b) and 6.06, as
applicable.
(d) All payments made with respect to any Note shall be
made in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and
private debts and shall be applied first to the interest then due
and payable on such Notes, then to the principal thereof, and
finally to premium, if any.
(e) All Class A 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 Notes shall be
made pro rata among all Outstanding Class A Notes, without
preference or priority of any kind.
(f) 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.
(g) 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.
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SECTION 2.02. Execution, Authentication, Delivery, and
Dating.
(a) The Notes shall be manually executed on behalf of
the Company by its President or one of its Vice Presidents, under
its corporate seal reproduced thereon.
(b) Any Note bearing the signature of an individual who
was at the time of execution thereof a proper officer of the
Company shall bind the Company, notwithstanding that such
individual ceases to hold such office prior to the authentication
and delivery of such Note or did not hold such office at the date
of such Note.
(c) No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Note a certificate of authentication
substantially in the form provided for herein, executed by the
Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder. Each
Note shall be dated the date of its authentication.
(d) The Notes may from time to time be executed by the
Company and delivered to the Trustee for authentication together
with a Company Request to the Trustee directing the
authentication and delivery of such Notes and thereupon the same
shall be authenticated and delivered by the Trustee in accordance
with such Company Request.
SECTION 2.03. Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate
Trust Office a register (the "Note Register") in which, subject
to such reasonable regulations as the Trustee may prescribe, the
Company shall provide for the registration of Notes and of
transfers of Notes. The Trustee is hereby appointed "Note
Registrar" for the purpose of registering Notes and transfers of
Notes as herein provided.
No transfer of any Class C Note may be made unless that
transfer is made pursuant to an effective registration statement
under the Securities Act and an effective registration or a
qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or
qualification because the transfer satisfies one of the
following: (i) such transfer is in compliance with Rule 144A
under the Securities Act, to a person who the transferor
reasonably believes is a Qualified Institutional Buyer (as
defined in Rule 144A) that is purchasing for its own account or
for the account of a Qualified Institutional Buyer and to whom
notice is given that such transfer is being made in reliance upon
Rule 144A under the Securities Act as certified by such
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transferee in a letter in the form of Exhibit B hereto; (ii)
after the appropriate holding period, such transfer is pursuant
to an exemption from registration under the Securities Act
provided by Rule 144 under the Securities Act; (iii) such
transfer is to a transferee who is an accredited investor 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 C Noteholder's
prospective transferee referred to in the preceding clauses (iii)
or (iv) deliver an investment letter certifying to the Company
and the Trustee as to the facts surrounding such transfer in the
form of Exhibit B hereto. Except in the case of a transfer of
Class C Notes to a transferee referred to in the preceding clause
(i) or, in general, a transfer that is to be made after three
years from the Issuance Date, the Servicer shall require an
opinion of counsel satisfactory to it to the effect that such
transfer may be made pursuant to an exemption from the Securities
Act without such registration (which opinion of counsel shall not
be an expense of the Trustee or the Servicer or the Company).
None of the Company, the Servicer or the Trustee is obligated to
register or qualify the Class C Notes under the Securities Act or
any other securities law or to take any action not otherwise
required under this Indenture to permit the transfer of any Class
C Note without registration.
(b) Subject to Section 2.03(a), upon surrender for
registration of transfer of any Note at the office of the Company
designated pursuant to Section 8.02 for such purpose, the Company
shall execute and the Trustee upon request shall authenticate and
deliver, in the name of the designated transferee or transferees,
one or more new Notes of any authorized denominations and of a
like aggregate original principal amount. The Trustee shall make
a notation on any such new Note of the amount of principal, if
any, that has been paid on such Note.
(c) All Notes issued upon any registration of transfer
or exchange of Notes shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.
(d) Every Note presented or surrendered for registration
of transfer or for exchange shall (if so required by the Company
or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Trustee duly executed, by the holder thereof or his attorney
duly authorized in writing.
(e) No service charge shall be made for any registration
of transfer or exchange of Notes, but the Company or the Trustee
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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 Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a replacement Note of like tenor and
principal amount and bearing a number not contemporaneously
outstanding.
(b) If there shall be delivered to the Company and the
Trustee (i) evidence to their satisfaction of the destruction,
loss or theft of any Note and (ii) such security or indemnity as
may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of actual notice to
the Company or the Trustee that such Note has been acquired by a
bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Note, a replacement Note of
like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(c) In case the final installment of principal on any
such mutilated, destroyed, lost or stolen Note has become or will
at the next Payment Date become due and payable, the Company in
its discretion may, instead of issuing a replacement Note, pay
such Note.
(d) Upon the issuance of any replacement Note under this
Section, the Company or the Trustee may require the payment by
the Noteholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed as a result of the
issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this
Section 2.04 in lieu of any destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Note shall
be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately
with any and all other Notes duly issued hereunder.
(f) The provisions of this Section 2.04 are exclusive
and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes.
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SECTION 2.05. Book-Entry Registration of Class A Notes
and Class B Notes.
Each of the Class A Notes and the Class B Notes, upon
original issuance, shall be issued in the form of one or more
typewritten Class A Notes and one or more typewritten Class B
Notes (the "Book-Entry Class A Notes" and "Book-Entry Class B
Notes", respectively) to be delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the
Company. Each of the Class A 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 Note Owner or Class B Note Owner will receive a
definitive note representing such Class A Note Owner's interest
in the Class A Notes or Class B Note Owner's interest in the
Class B Notes, as the case may be, except as provided in Section
2.07. Unless and until definitive, fully registered Class A
Notes ("Definitive Class A Notes") have been issued to the
applicable Class A Note Owners pursuant to Section 2.07 and/or
fully registered Class B Notes ("Definitive Class B Notes") have
been issued to the applicable Class B 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 Notes or the Class B
Notes, as the case may be;
(b) the Company, the Servicer and the Trustee may deal
with the Clearing Agency and the Clearing Agency Participants for
all purposes with respect to the Class A Notes or the Class B
Notes, as the case may be, (including the making of distributions
on the Class A Notes and the Class B Notes, as the case may be)
as the authorized representatives of the respective Class A Note
Owners and the Class B Note Owners, respectively;
(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 Class A Note Owners and
the Class B 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
Class A Note Owners or Class B Note Owner, as the case may be,
and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depository Agreement, unless and until Definitive
Class A Notes or Definitive Class B Notes, as the case may be,
are issued pursuant to Section 2.07, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal
and interest on the related Class A Notes or the related Class B
Notes, as the case may be, to such Clearing Agency Participants.
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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 Notes or Class B Notes, as the case may
be, evidencing a specified percentage of the Outstanding
Principal Amount of the Class A Notes or the Class B Notes,
respectively, such direction or consent may be given by Class A
Note Owners or the Class B Note Owners, as the case may be
(acting through the Clearing Agency and the Clearing Agency
Participants) owning Class A Notes or Class B Notes evidencing
the requisite percentage of the Outstanding Principal Amount of
the Class A Notes or Class B Notes, respectively.
SECTION 2.06. Notice to Clearing Agency.
Whenever notice or other communication to the Class A
Noteholders or Class B Noteholders is required under this
Agreement, unless and until Definitive Class A Notes or
Definitive Class B Notes shall have been issued to the related
Owners pursuant to Section 2.07, the Trustee shall give all such
notices and communications specified herein to be given to the
Class A Noteholders and the Class B Noteholders to the applicable
Clearing Agency which shall give such notices and communications
to the related Class A Note Owners and the related Class B Note
Owners in accordance with its applicable rules, regulations and
procedures.
SECTION 2.07. Definitive Class A Notes and Definitive
Class B Notes. If (a) (i) the Company advises the Trustee in
writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository
Agreement with respect to the Class A Notes and/or the Class B
Notes and (ii) the Trustee or the Company is unable to locate a
qualified successor, (b) the Company, at its option, advises the
Trustee in writing that it elects to terminate the book-entry
system with respect to the Class A Notes and/or the Class B Notes
through the Clearing Agency or (c) after the occurrence of a
Servicer Event of Default, Class A Note Owners with respect to
the Class A Notes evidencing not less than 50% of the aggregate
unpaid Outstanding Principal Amount of the Class A Notes or with
respect to the Class B Notes evidencing not less than 50% of the
aggregate unpaid Outstanding Principal Amount of the Class B
Notes 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 Notes or the
Class B Notes, respectively, through the Clearing Agency is no
longer in the best interests of the Class A Note Owners or Class
B Note Owners, as the case may be, the Trustee shall notify all
Class A Note Owners with respect to the Class A Notes or all
Class B Note Owners with respect to the Class B Notes, as
applicable, through the Clearing Agency, of the occurrence of any
such event and of the availability of Definitive Class A Notes to
Class A Note Owners requesting the same or the availability of
Definitive Class B Notes to Class B Note Owners requesting the
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same. Upon surrender to the Trustee of the Class A Notes or the
Class B Notes, as the case may be, by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency
for registration, the Company shall execute and the Trustee shall
authenticate and deliver the Definitive Class A Notes or the
Definitive Class B Notes, as the case may be. Neither the
Company nor the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of
Definitive Class A Notes or Definitive Class B Notes, as the case
may be, all references herein to obligations imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed
upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Class A Notes or Definitive Class B
Notes and the Trustee shall recognize the holders of the
Definitive Class A Notes as Class A Noteholders and/or the
holders of the Definitive Class B Notes as Class B Noteholders
hereunder.
SECTION 2.08. Payment of Interest and Principal; Rights
Preserved.
(a) Any installment of interest or principal, payable on
any Note that is punctually paid or duly provided for by the
Company on the applicable Payment Date shall be paid to the
Person in whose name such Note was registered at the close of
business on the Record Date for such Payment Date by wire
transfer of federal funds to the account and number specified in
the Note Register on such Record Date for such Person (which
shall be, as to each original purchaser of the Notes, the account
and number specified below such purchaser's signature to the Note
Agreement until such time as such purchaser notifies the Trustee
in writing of a change therein) 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 therefor or in lieu thereof, whether or not such
payment is noted on such Note. All payments on the Notes shall
be paid without any requirement of presentment but each holder of
any Note shall be deemed to agree, by its acceptance of the same,
to surrender such Note at the Corporate Trust Office against
payment of the final installment of principal of such Note (or in
the case of the Class B Notes promptly thereafter).
SECTION 2.09. Persons Deemed Owners.
Prior to due presentment of a Note for registration of
transfer, the Company, the Trustee, and any agent of the Company
or the Trustee may treat the registered Noteholder as the owner
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of such Note for the purpose of receiving payment of principal of
and interest on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Company, the
Trustee, nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 2.10. Cancellation.
All Notes surrendered for registration of transfer or
exchange or following final payment shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and
shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered
shall be promptly cancelled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled
as provided in this Section, except as expressly permitted by
this Indenture. All cancelled Notes held by the Trustee may be
disposed of in the normal course of its business or as directed
by a Company Order.
SECTION 2.11. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Noteholders and shall otherwise comply
with Section 3.12(a) of the Trust Indenture Act. In the event
the Trustee no longer serves as the Note Registrar, the Company
(or any other obligor upon the Notes) shall furnish to the
Trustee at least five Business Days before each interest payment
date (and in all events in intervals of not more than 6 months)
and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders, and
the Company shall otherwise comply with Section 3.12(a) of the
Trust Indenture Act.
SECTION 2.12. Treasury Securities.
In determining whether the Noteholders of the required
Outstanding Principal Amount of the Notes have concurred in any
direction, waiver or consent, Notes owned by the Company, any
other obligor upon the Notes or an Affiliate of the Company shall
be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes
which a Responsible Officer knows are so owned shall be so
disregarded.
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ARTICLE 3.
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS
SECTION 3.01. Trust Accounts; Investments by Trustee.
(a) On or before the Issuance Date, the Trustee shall
establish in the name of the Trustee for the benefit of the
Noteholders and the Company to the extent of their interests
therein as provided in this Indenture and in the Sales and
Servicing Agreement, the following accounts, which accounts shall
be Eligible Accounts maintained at the Corporate Trust Office:
(i) Collection Account;
(ii) Reserve Account; and (iii) Residual Account
Subject to the further provisions of this Section 3.01(a), the
Trustee shall, upon receipt or upon transfer from another
account, as the case may be, deposit into such accounts all
amounts received by it which are required to be deposited therein
in accordance with the provisions of this Indenture. All such
amounts and all investments made with such amounts, including all
income and other gain from such investments, shall be held by the
Trustee in such accounts as part of the Trust Estate as herein
provided, subject to withdrawal by the Trustee in accordance
with, and for the purposes specified in the provisions of, this
Indenture.
(b) The Trustee shall hold in trust but shall not be
required to deposit in any account specified in Section 3.01(a)
any payment received by it until such time as the Trustee shall
have identified to its reasonable satisfaction the nature of such
payment and, on the basis thereof, the proper account or accounts
into which such payment is to be deposited. In determining into
which of the accounts, if any, referred to above any amount
received by the Trustee is to be deposited, the Trustee may
conclusively rely (in the absence of bad faith on the part of the
Trustee) on the advice of the Servicer. Unless the Trustee is
advised differently in writing by the Lessee making the payment
or by the Servicer in writing (with the Servicer's instruction
controlling), the Trustee shall assume that any amount remitted
to it by such Lessee is to be deposited into the Collection
Account pursuant to Section 3.03. The Trustee may establish from
time to time such deadline or deadlines as it shall determine are
reasonable or necessary in the administration of the Trust Estate
after which all amounts received or collected by the Trustee on
any day shall not be deemed to have been received or collected
until the next succeeding Business Day.
(c) Neither the Servicer, Trustee nor the institution
then acting as Trustee shall have any right of set-off with
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respect to the Collection Account, the Reserve Account or the
Residual Account, or any investment therein.
(d) So long as no Event of Default shall have occurred
and be continuing, all or a portion of the amounts in the
Collection Account, the Reserve Account and the Residual Account
shall be invested and reinvested by the Trustee pursuant to a
Company Order in one or more Eligible Investments. Subject to
the restrictions on the maturity of investments set forth in
Section 3.01(f), each such Company Order or Servicer Order may
authorize the Trustee to make the specific Eligible Investments
set forth therein, to make Eligible Investments from time to time
consistent with the general instructions set forth therein, or to
make specific Eligible Investments pursuant to instructions
received in writing or by telegraph or facsimile transmission
from the employees or agents of the Company or the Servicer, as
the case may be, identified therein, in each case in such amounts
as such Company Order or Servicer Order shall specify. The
Company agrees to report as income for financial reporting and
tax purposes (to the extent reportable) all investment earnings
on amounts in the Collection Account or the Reserve Account.
Each of the Company and the Servicer agrees to give appropriate
and timely investment directions to the Trustee so that there
will not be more than two Business Days in any one calendar year
at the end of which funds in the Collection Account, the Reserve
Account or the Residual Account are not invested, directly or
indirectly, pursuant to a Company Order or a Servicer Order in
Eligible Investments that mature on or after the opening of
business on the next Business Day.
(e) In the event that either (i) the Company or the
Servicer, as the case may be, shall have failed to give
investment directions to the Trustee by 9:30 A.M., New York City
time on any Business Day on which there may be uninvested cash or
(ii) an Event of Default shall promptly invest and reinvest the
funds then in the Collection Account, the Reserve Account or the
Residual Account, as the case may be, to the fullest extent
practicable in one or more Eligible Investments. All investments
made by the Trustee shall mature no later than the maturity date
therefor permitted by Section 3.01(f).
(f) No investment of any amount held in the Collection
Account, the Reserve Account or the Residual Account shall mature
later than the Business Day immediately preceding the Payment
Date which is scheduled to occur immediately following the date
of investment. All income or other gains (net of losses) from
the investment of moneys deposited in the Collection Account, the
Reserve Account and the Residual Account shall be deposited by
the Trustee in such account immediately upon receipt.
(g) Any investment of any funds in the Collection
Account, the Reserve Account and the Residual Account and any
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sale of any investment held in such accounts, shall be made under
the following terms and conditions:
(i) each such investment shall be made in the name of
the Trustee or in the name of a nominee of the Trustee, in
each case in such manner as shall be necessary to maintain the
identity of such investments as assets of the Trust Estate;
(ii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Trustee or its
agent and the Trustee shall have sole possession of such
instrument, and all income on such investment; and
(iii) the proceeds of any sale of an investment shall be
remitted by the purchaser thereof directly to the Trustee for
deposit in the account in which such investment was held.
(h) If any amounts are needed for disbursement from the
Collection Account, the Reserve Account or the Residual Account
and sufficient uninvested funds are not collected and available
therein to make such disbursement, in the absence of a Company
Order or Servicer Order for the liquidation of investments held
therein in an amount sufficient to provide the required funds,
the Trustee shall select and cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such
accounts.
(i) The Trustee shall not in any way be held liable by
reason of any insufficiency in the Collection Account, the
Reserve Account or the Residual Account resulting from losses on
investments made in accordance with the provisions of this
Section 3.01 (but the institution serving as Trustee shall at all
times remain liable for its own debt obligations, if any,
constituting part of such investments). The Trustee shall not be
liable for any investment made by it in accordance with this
Section 3.01 on the grounds that it could have made a more
favorable investment or a more favorable selection for sale of an
investment.
SECTION 3.02. Collection of Moneys.
(a) On or before the Issuance Date, the Servicer shall
designate an address for the receipt directly from Lessees of all
Lease Payments, Casualty Payments and Termination Payments on or
in respect of each Lease (which payments may be aggregated by the
Lessee paying the same with Similar Transaction Payments and
Other Lease Payments and which designated address may be the same
designated address to which such Similar Transaction Payments and
Other Lease Payments may be sent). The Servicer shall, within
two Business Days of receipt of any payment at such designated
address, deposit such payment in the Collection Account. All
Lease Payments, Casualty Payments, Termination Payments and other
payments relating to a Lease received at such designated address
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and so deposited in the Collection Account shall constitute part
of the Trust Estate. Any Similar Transaction Payments and Other
Lease Payments from time to time received at such designated
address or otherwise received by the Servicer or deposited in the
Collection Account shall not constitute part of the Trust Estate.
(b) The Trustee shall from time to time, in accordance
with instructions of the Servicer and the provisions of the
Similar Transaction Agreements, withdraw from the Collection
Account any amounts in the Collection Account which the Servicer
advises the Trustee are (i) Similar Transaction Payments and
apply such payments in accordance with the Similar Transaction
Agreements and (ii) Other Lease Payments and deposit such
payments in a trust account that the Trustee shall establish for
the benefit of Copelco (the "Administration Account"). All
amounts from time to time on deposit in the Administration
Account shall not constitute part of the Trust Estate.
(c) The Trustee will hold in the Administration Account
all Other Lease Payments from time to time deposited therein
until the first Business Day after each Payment Date. All
amounts in the Administration Account may be invested in
investments maturing not later than the next succeeding Payment
Date pursuant to investment directions provided to the Trustee by
Copelco. On such Business Day after each such Payment Date the
Trustee shall remit all Other Lease Payments received prior to
the preceding Determination Date, together with all investment
earnings thereon, to Copelco, in accordance with the request of
the Servicer pursuant to Section 5.03(c) of the Sales and
Servicing Agreement. 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.
(d) If at any time the Company shall receive any payment
on or in respect of any Lease, it shall hold such Payment in
trust for the benefit of the Trustee and the holders of the
Notes, shall segregate such payment from the other property of
the Company, and shall, promptly (but in no event later than the
next following Business Day) upon receipt, deliver such payment
in the form received to the Trustee.
SECTION 3.03. Collection Account; Payments.
(a) The Servicer shall within two Business Days of
receipt deposit the following funds, as received, into the
Collection Account:
(i) Lease Payments (net of any Maintenance Payments);
(ii) Residual Values up to the Residual Amount Cap;
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(iii) recoveries from Non-Performing Leases (except to the
extent required to reimburse unreimbursed Servicer Advances);
(iv) late charges on delinquent Lease payments not
advanced by the Servicer;
(v) proceeds from repurchases by Copelco of Leases as a
result of breaches of representations and warranties by
Copelco;
(vi) proceeds from investment of funds in the Collection
Account and the Reserve Account;
(vii) Casualty Payments;
(viii) Servicer Advances; and
(ix) Termination Payments.
(b) Unless the Notes have been declared due and payable
pursuant to Section 6.02 and moneys collected by the Trustee are
being applied in accordance with Section 6.06, Available Funds on
deposit in the Collection Account and the amounts, if any,
deposited into the Collection Account from the Reserve Account
and the Residual Account in accordance with the provisions of
Section 3.04 shall be withdrawn on or before each Payment Date
from the Collection Account, in the amounts required, for
application in the following order of priority, to make the
following required payments:
(i) to pay the Servicing Fee;
(ii) to reimburse unreimbursed Servicer Advances in
respect of a prior Payment Date;
(iii) to make Interest Payments on the Class A Notes;
(iv) to make Interest Payments on the Class B Notes;
(v) to make Interest Payments on the Class C Notes;
(vi) to pay the Class A Principal Payment to the Class A
Noteholders;
(vii) to pay the Class B Principal Payment to the Class B
Noteholders until the entire Outstanding Principal Amount of
the Class B Notes has been paid in full;
(viii) to pay the Class C Principal Payment to the Class
C Noteholders;
(ix) to pay the Additional Principal, if any, as an
additional reduction of principal, first to the Class A
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Noteholders until the Outstanding Class A Principal Amount has
been reduced to zero, thereafter to the Class B Noteholders as
an additional reduction of principal until the Outstanding
Class B Principal Amount has been reduced to zero and,
thereafter to the Class C Noteholders until the Outstanding
Class C Principal Amount has been reduced to zero;
(x) to make a deposit to the Reserve Account in amount
equal to the excess of the Required Reserve Amount over the
Available Reserve Amount;
(xi) during such time as a Residual Event has occurred
and is continuing, to make a deposit to the Residual Account
in an amount equal to the balance of the remaining Residual
Values on deposit in the Collection Account and included in
Available Funds after giving effect to the allocations in
clauses (i) through (x) above on such Payment Date; and
(xii) to the Issuer, the balance, if any.
Notwithstanding the foregoing, the Trustee shall retain
in the Collection Account an amount equal to all Lease Payments
received that were due since the prior Due Period, and all
Casualty Payments and Termination Payments received by the
Trustee after the Determination Date for such Payment Date and
shall not distribute any such amounts on such Payment Date. If
at any time any amount or portion thereof previously distributed
pursuant to this Section 3.03(b) shall have been recovered, or
shall be subject to recovery, in any proceeding with respect to
the Company or otherwise, then for purposes of determining future
distributions pursuant to this Section 3.03(b) such amount or
portion thereof shall be deemed to have not been previously so
distributed.
(c) Amounts will be considered due and payable hereunder
only to the extent funds are available therefor in accordance
with the provisions of this Article III.
SECTION 3.04. The Reserve Account and the Residual
Account.
(a) On each Payment Date, the Trustee shall transfer (i)
to the Reserve Account from the Collection Account such amounts
as shall be required by Section 3.03(b)(xi) and (ii) to the
Residual Account from the Collection Account such amounts as
shall be required by Section 3.03(b)(xii).
(b) If by 12:00 noon, New York City time, on the third
Business Day preceding any Payment Date, the amount of collected
funds on deposit in the Collection Account available for
distribution under Section 3.03(b) is insufficient to permit on
such Payment Date all distributions required by Section
3.03(b)(i) through 3.03(b)(ix) (such payments, the "Required
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Payments" and such shortfall, an "Available Funds Shortfall") ,
then, to the extent of the Available Reserve Amount on deposit in
the Reserve Account, the Trustee shall transfer, not later than
the end of such Business Day, from the Reserve Account to the
Collection Account such amount as shall be necessary to make on
such Payment Date all Required Payments. In addition, in the
event that the Available Funds Shortfall is greater than the
Available Reserve Amount, then, the Trustee shall transfer, not
later than the end of such Business Day, from the Residual
Account to the Collection Account, an amount equal to the lesser
of (i) the remaining Available Funds Shortfall and (ii) the
amount, if any, on deposit in the Residual Account and available
therefor.
(c) In the event that after giving effect to all the
disbursements required to be made on any Payment Date, the
Available Cash Reserve Amount exceeds the Required Cash 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) In the event that there are funds on deposit in the
Residual Account and a Residual Event is not continuing, the
Trustee shall transfer, not later than the close of Business on
the immediately following Payment Date, an amount equal to the
amount on deposit in the Residual Account. Funds on deposit in
the Residual Account shall only be available for allocation
pursuant to Section 3.04(b) during such time as a Residual Event
has occurred and is continuing.
(e) Upon termination of this Indenture, any balance
remaining in the Reserve Account and the Residual Account, after
all obligations to the Noteholders hereunder have been fully
satisfied, shall be paid to reimburse the Trustee for any amounts
owing to it arising from the performance of its obligations under
this Indenture and, then, to the Company.
SECTION 3.05. Reports by Trustee; Notices of Certain
Payments.
(a) The Trustee shall within two Business Days after the
request of the Company, the Servicer or any Noteholder, deliver
to the requesting person a written report setting forth the
amounts on deposit in the Collection Account, the Reserve Account
and the Residual Account and identifying the investments included
therein.
(b) Within five Business Days following each Payment
Date or as promptly as possible thereafter but in no event later
than two Business Days following the receipt of the Monthly
Status Report from the Servicer pursuant to Section 5.01, the
Trustee shall mail to the Company, Copelco, each Rating Agency
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and the Servicer and make available to each Noteholder the
following information:
(i) the principal amount of all Outstanding Class A
Notes, Class B Notes, and Class C Notes, respectively, and of
the Outstanding Class A Notes, Class B Notes and Class C
Notes, respectively, held by each Noteholder on the Record
Date with respect to such Payment Date;
(ii) the amount of Interest Payments and payments in
reduction of principal on such Payment Date with respect to
all Class A Notes, Class B Notes and Class C Notes,
respectively, and with respect to the Notes held by each
Noteholder;
(iii) the amount of the Servicing Fee paid on such
Payment Date pursuant to of Section 3.03(b)(i);
(iv) the Available Residual Amount and the Utilized
Residual Amounts;
(v) the amounts, if any, paid to the Servicer or Copelco
pursuant to the last paragraph of Section 3.03(b) and any
amount not previously reported pursuant to this Section 3.05
which the Trustee has been advised was paid directly by the
Servicer to Copelco for the purposes set forth in Section
3.03(b); and
(vi) the amount on deposit in the Collection Account, the
Reserve Account and the Residual Account, in each case after
giving effect to all of the withdrawals and applications or
transfers required on or before such Payment Date pursuant to
Sections 3.02, 3.03, 3.04 and 3.05.
With each report of the Trustee furnished pursuant to
this Section 3.05(b) following any Payment Date, the Trustee
shall enclose a copy of the report required to be furnished to
the Trustee by the Servicer following such Payment Date pursuant
to Section 5.01 of the Sales and Servicing Agreement or, if such
report has not been received, a statement to such effect.
SECTION 3.06. Trustee May Rely on Certain Information
from Copelco and Servicer.
Pursuant to Sections 3.01, 4.06 and 5.01 through 5.03 of
the Sales and Servicing Agreement and Section 3.02 hereof, the
Servicer is required to furnish to the Trustee from time to time
certain information and make various calculations which are
relevant to the performance of the Trustee's duties in this
Article Three and in Article Four of this Indenture. The Trustee
shall be entitled to rely in good faith on such information or
calculations in the performance of its duties hereunder (1)
unless and until a Responsible Officer of the Trustee has actual
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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 4.
RELEASE OF LEASES AND EQUIPMENT
SECTION 4.01. Release of Equipment.
The Trustee shall release Equipment from the Lien of the
Indenture upon the occurrence of any of the following events: (a)
the sale of such Equipment pursuant to Section 3.03(b) of the
Sales and Servicing Agreement (unless retained by the Company for
re-leasing), (b) the expiration of the related Lease, (c) the
repurchase of the related Lease in accordance with the provisions
of Section 4 of the Sales and Servicing Agreement, (d) the
addition of an Additional Lease to the extent new Equipment is
provided in replacement of such Equipment in accordance with the
provisions of Section 1.05 of the Sales and Servicing Agreement
and (e) upon the substitution of a Substitute Lease in accordance
with the provisions of Section 9 of the Sales and Servicing
Agreement. The proceeds of any such sale, repurchase or re-
leasing shall be deposited in the Collection Account for
disposition under this Indenture.
SECTION 4.02. Release of Leases Upon Final Lease
Payment.
In the event that the Trustee shall have received notice
(either in writing or orally with prompt written or telecopied
confirmation) from the Servicer that the Trustee has received
from amounts paid by the Lessee, from the Lease Repurchase Amount
or from the proceeds of the Equipment subject to any Lease (i)
the final Lease Payment due and payable under such Lease, (ii) a
Termination Payment in respect of such Lease, (iii) a Casualty
Payment under such Lease (and, following such final Lease
Payment, Casualty Payment or Termination Payment, no further
payments on or in respect of such Lease are or will be due and
payable), or (iv) the full amount of any Non-Performing Lease
Pay-Through Amount with respect to such Lease, such Lease shall
be released from the lien of this Indenture.
SECTION 4.03. Execution of Documents.
The Trustee shall promptly execute and deliver such
documents, including without limitation partial releases and
termination statements (which shall be furnished to the Trustee
by the Company), and take such other actions as the Company, by
Company Request, may reasonably request (including the return of
any Lease which has been released) to fully effectuate the
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release from this Indenture of any Lease and interests in the
related Equipment required to be so released pursuant to Sections
4.01 or 4.02.
ARTICLE 5.
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.01. Servicer Events of Default.
If a Servicer Event of Default shall have occurred and be
continuing, the Trustee shall, upon the written request of the
holders of 66-2/3% of the then Outstanding Principal Amount of
the Notes, give notice in writing to the Servicer of the
termination of all of the rights and obligations of the Servicer
under the Sales and Servicing Agreement (but none of Copelco's
obligations pursuant to Section 4 of the Sales and Servicing
Agreement, which shall survive such termination). On and after
the giving of such written notice, all rights and obligations of
the Servicer under the Sales and Servicing Agreement, including,
without limitation, the Servicer's right thereunder to receive
the Servicing Fee, but none of the Servicer obligations pursuant
to Section 4 thereof, shall pass to, be vested in, and be assumed
by the Trustee, and the Trustee shall be authorized to, and
shall, execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such
termination and of such passing, vesting, and assumption;
provided that in performing the duties of the Servicer under the
Sales and Servicing Agreement the Trustee shall at all times be
deemed to be acting as the Trustee hereunder and shall be
entitled to the full benefit of all the protections, benefits,
immunities and indemnities provided in this Indenture for or with
respect to the Trustee, including without limitation those set
forth in Article Seven hereof.
SECTION 5.02. Substitute Servicer.
Notwithstanding the provisions of Section 5.01, the
Trustee may, if it shall be unwilling to continue to act as the
successor to the Servicer in accordance with Section 5.01, or
shall, if it is unable to continue to so act or is so instructed
in writing by the holders of 66-2/3% of the then Outstanding
Principal Amount of the Notes, appoint a successor to the
Servicer in accordance with the provisions of Section 8.03 of the
Sales and Servicing Agreement.
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ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default.
"Event of Default," wherever used herein, means any one
of the following (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in making of Principal Payments or Interest
Payments when such become due and payable;
(b) default in the performance, or breach, of any
covenant set forth in Section 8.07(b) and Section 8.08;
(c) default in the performance, or breach, of any
covenant of the Company in this Indenture (other than a
covenant dealing with a default in the performance of which or
the breach of which is specifically dealt with elsewhere in
this Section 6.01) or the Sales and Servicing Agreement, and
continuance of such default or breach for a period of 30 days
after the earliest of (i) any officer of the Company first
acquiring knowledge thereof, (ii) the Trustee's giving written
notice thereof to the Company or (iii) the holders of a
majority of the then Outstanding Principal Amount of the Notes
giving written notice thereof to the Company and the Trustee;
(d) if any representation or warranty of the Company or
Copelco made in this Indenture or the Sales and Servicing
Agreement or any other writing provided to the holders of the
Notes shall prove to be incorrect in any material respect as
of the time when the same shall have been made; provided,
however, that the breach of any representation or warranty
made by Copelco or the Company in the Sales and Servicing
Agreement shall be deemed to be "material" for purposes of
this Section 6.01(a) only if the facts or circumstances
causing such representation or warranty to be incorrect shall
negatively affect the Trust Estate in some material respect,
the enforceability hereof or of the Notes and provided
further, that a material breach of any representation or
warranty made by Copelco in Section 2.04 or 2.05(b) of the
Sales and Servicing Agreement with respect to any of the
Leases or the interests in the Equipment subject thereto shall
not constitute an Event of Default if Copelco repurchases such
Lease and interests in the related Equipment in accordance
with Section 4.05(a) of the Sales and Servicing Agreement;
(e) the entry by a court having jurisdiction in the
premises of (i) a decree or order for relief in respect of the
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Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of or in respect of the Company
under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee,
sequestrator, or other similar official of the Company or of
any substantial part of its property, or ordering the winding
up or liquidation of its affairs, and the continuance of any
such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive
days; or
(f) the commencement by the Company of a voluntary case
or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law
or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar
law or to the commencement of any bankruptcy or insolvency
case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by
it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator, or similar official of the
Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or
the Company's failure to pay its debts generally as they
become due, or the taking of corporate action by the Company
in furtherance of any such action.
SECTION 6.02. Acceleration of Maturity; Rescission and
Annulment.
(a) If an Event of Default of the kind specified in
Section 6.01(e) or Section 6.01(f) occurs, the unpaid principal
amount of the Notes shall automatically become due and payable at
par together with all accrued and unpaid interest thereon,
without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Company. If an Event of
Default (other than an Event of Default of the kind described in
clauses (v) or (vi) of Section 6.01) occurs and is continuing,
then and in every such case the Trustee shall, if so directed by
the holders of Notes evidencing 66-2/3% (33-1/3% in the case of
an Event of Default of the kind described in clause (i) of
Section 6.01) of the then Outstanding Class A Principal Amount
(or if the Class A Notes are no longer Outstanding, the holders
of Notes evidencing 66-2/3% of the then Outstanding Class B
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Principal Amount or if the Class A Notes and Class B Notes are no
longer outstanding, the holders of Notes evidencing 66-2/3% of
the then Outstanding Class C Principal Amount), or the holders of
such percentages of the then Outstanding Principal Amount of
Notes may, declare the unpaid principal amount of all the Notes
to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Noteholders), and upon
any such declaration such principal amount shall become
immediately due and payable together with all accrued and unpaid
interest thereon, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the
Company.
(b) At any time after such a declaration of acceleration
has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this
Article provided, the holders of Notes evidencing 66-2/3% of the
then Outstanding Class A Principal Amount of the Class A Notes
(or if the Class A Notes are no longer Outstanding, the holders
of Notes evidencing 66-2/3% of the then Outstanding Class B
Principal Amount of the Class B Notes or if the Class A Notes and
Class B Notes are no longer outstanding, the holders of Notes
evidencing 66-2/3% of the then Outstanding Class C Principal
Amount), by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a
sum sufficient to pay:
(A) all Principal Payments on any Class A, Class B
Notes and Class C Notes which have become due otherwise
than by such declaration of acceleration and interest
thereon from the date when the same first became due
until the date of payment or deposit at the appropriate
Note Interest Rate,
(B) all Interest Payments due with respect to any
Class A, Class B Notes and the Class C 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;
and
(ii) all Events of Default, other than the non-payment
of the Outstanding Principal Amount of the Notes which has
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become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Event of Default
or impair any right consequent thereon.
SECTION 6.03. Remedies.
(a) If an Event of Default occurs and is continuing of
which a Responsible Officer has actual knowledge, the Trustee
shall immediately give notice to each Noteholder as set forth in
Section 7.02 and shall solicit the Noteholders for advice. The
Trustee shall then take such action as so directed by the holders
of 66-2/3% of the Outstanding Principal Amount of the Notes.
(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(i)
occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust
against the Company for the whole amount of principal and
interest remaining unpaid.
(d) In exercising its rights and obligations under this
Section 6.03, the Trustee may sell the Trust Estate; provided
that if the Event of Default involves other than non-payment of
principal or interest on the Notes, then such sale must be for an
amount greater than or equal amounts due under clauses first
through fourth in Section 6.06. Neither the Trustee nor any
Noteholder shall have any rights against the Company other than
to enforce the Lien against the Leases and the Equipment and to
sell the Trust Estate.
SECTION 6.04 Trustee Shall File Proofs of Claim.
(a) In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition, or other judicial proceeding relative to
the Company, Copelco, the Servicer or any other obligor upon the
Notes or the other obligations secured hereby or relating to the
property of the Company, Copelco, the Servicer or of such other
obligor or their creditors, the Trustee (irrespective of whether
the principal of the Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company,
Copelco or the Servicer for the payment of overdue principal or
interest or any such other obligation) shall by intervention in
such proceeding or otherwise,
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(i) file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the
Notes and any other obligation secured hereby and to file such
other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the
Noteholders allowed in such judicial proceeding, and
(ii) collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator, or other similar official in any such judicial
proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the
Noteholders to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07.
(b) Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the
rights of any holder thereof or to authorize the Trustee to vote
in respect of the claim of any Noteholder in any such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or
the Notes may be prosecuted and enforced by the Trustee without
the possession of any of the Notes or the production thereof in
any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the
Notes in respect of which such judgment has been recovered.
SECTION 6.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this
Article, and any moneys that may then be held or thereafter
received by the Trustee shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the
distribution of the entire amount due on account of principal or
interest, upon presentation of the Notes and surrender thereof:
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first to the payment of all costs and expenses of
collection incurred by the Trustee and the Noteholders
(including the reasonable fees and expenses of any counsel to
the Trustee and the Noteholders);
second if the person then acting as Servicer under the
Sales and Servicing Agreement is not Copelco Capital or an
Affiliate of Copelco Capital, to the payment of all Servicer's
Fees then due to such person;
third first to the payment of all accrued and unpaid
interest on the Outstanding Principal Amount of the Class A
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 A Interest Rate, and to the
payment of the Outstanding Principal Amount of the Class A
Notes to the date of payment thereof, and then 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, and to the payment of the Outstanding Principal Amount
of the Class B Notes and then 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, and to
the payment of the Outstanding Principal Amount of the Class C
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 then due the Trustee
hereunder; and
fifth to the payment of the remainder, if any, to the
Issuer or any other Person legally entitled thereto.
SECTION 6.07. Limitation on Suits.
None of the Noteholders shall have any right to institute
any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:
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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 25% 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 (which the Trustee agrees, in the
case of the original purchasers of the Notes, need only be the
written promise of such Person) against the costs, expenses
and liabilities to be incurred in compliance with such
request;
(iv) the Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute
any such proceeding; and
(v) so long as any of the Notes remain Outstanding, no
direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the holders
of a majority of the then Outstanding Principal Amount of the
Notes;
it being understood and intended that no one or more Noteholders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb,
or prejudice the rights of any other Noteholders, or to obtain or
to seek to obtain priority or preference over any other
Noteholders or to enforce any right under this Indenture, except
in the manner herein provided and for the equal and ratable
benefit of all the Noteholders. It is further understood and
intended that so long as any portion of the Notes remains
Outstanding, Copelco shall not have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture
(other than for the enforcement of Sections 3.03(b), 3.04, 4.01
and 4.02 hereof) or for the appointment of a receiver or trustee
(including without limitation a proceeding under the Bankruptcy
Code), or for any other remedy hereunder. Nothing in this
Section 6.07 shall be construed as limiting the rights of
otherwise qualified Noteholders to petition a court for the
removal of a Trustee pursuant to Section 7.09(h) hereof.
SECTION 6.08. Unconditional Right of Noteholders to
Receive Principal and Interest.
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
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interest on such Note on the Maturities for such payments,
including the Stated Maturity, and to institute suit for the
enforcement of any such payment, and such rights shall not be
impaired without the consent of such Noteholder.
SECTION 6.09. Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Noteholder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and
the Noteholders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Noteholders continue as though no
such proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost, or stolen
Notes in the last paragraph of Section 2.04, no right or remedy
herein conferred upon or reserved to the Trustee or to the
Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any holder of
any Note to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the
Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
SECTION 6.12. Control by Noteholders.
Except as may otherwise be provided in this Indenture,
until such time as the conditions specified in Sections
10.01(a)(i) and (ii) have been satisfied in full, the holders of
66-2/3% of the then Outstanding Principal Amount of the Notes
shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
Notwithstanding the foregoing,
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(i) no such direction shall be in conflict with any rule
of law or with this Indenture;
(ii) the Trustee shall not be required to follow any
such direction which the Trustee reasonably believes might
result in any personal liability on the part of the Trustee
for which the Trustee is not adequately indemnified; and
(iii) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with any such
direction; provided that the Trustee shall give notice of any
such action to each Noteholder.
SECTION 6.13. Waiver of Events of Default.
(a) The holders of 66-2/3% of the then Outstanding
Principal Amount of the Notes may, by one or more instruments in
writing, waive any Event of Default hereunder and its
consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or
premium or interest on any Note (which may only be waived by
the holder of such Note), or
(ii) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the holder of each Outstanding Note affected (which
only may be waived by the holders of all Outstanding Notes
affected).
(b) A copy of each waiver pursuant to Section 6.13(a)
shall be furnished by the Company to the Trustee. Upon any such
waiver, such Event of Default shall cease to exist and shall be
deemed to have been cured, for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other Event
of Default or impair any right consequent thereon.
SECTION 6.14. Undertaking for Costs.
All parties to this Indenture agree (and each holder of
any Note by its acceptance thereof shall be deemed to have
agreed) that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Noteholder, or
group of Noteholders, holding in the aggregate more than 10% of
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the then Outstanding Principal Amount of the Notes, or to any
suit instituted by any Noteholder for the enforcement of the
payment of the principal of or interest on any Note on or after
the Maturities for such payments, including the Stated Maturity
as applicable.
SECTION 6.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 6.16. Sale of Trust Estate.
(a) The power to effect any sale of any portion of the
Trust Estate pursuant to Section 6.03 shall not be exhausted by
any one or more sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired 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.
(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 (i)
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.
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(a) 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 therefor, deliver
in lieu of cash any Outstanding Notes or claims for interest
thereon for credit in the amount that shall, upon distribution
of the net proceeds of such sale, be payable thereon, and the
Notes, in case the amounts so payable thereon shall be less
than the amount due thereon, shall be returned to the
Noteholders after being appropriately stamped to show such
partial payment;
(ii) the Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a sale thereof;
(iii) the Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Company to transfer and
convey its interest in any portion of the Trust Estate in
connection with a sale thereof, and to take all action
necessary to effect such sale; and
(iv) no purchaser or transferee at such a sale shall be
bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the
application of any moneys.
(d) The method, manner, time, place and terms of any
sale of all or any portion of the Trust Estate shall be
commercially reasonable.
(e) The provisions of this Section 6.16 shall not be
construed to restrict the ability of the Trustee to exercise any
rights and powers against the Company or the Trust Estate that
are vested in the Trustee by this Indenture, including, without
limitation, the power of the Trustee to proceed against the
collateral subject to the lien of this Indenture and to institute
judicial proceedings for the collection of any deficiency
remaining thereafter.
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ARTICLE 7.
THE TRUSTEE
SECTION 7.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default
known to the Trustee,
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing to the actual knowledge of a Responsible Officer of
the Trustee, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct,
except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it shall be proved, subject to Section 7.03(f) hereof, that
the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Noteholders in accordance
with Section 6.12 relating to the time, method, and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and
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(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, notice of such Default or Event of Default hereunder
known to the Trustee, unless such Default or Event of Default
shall have been cured or waived.
SECTION 7.03. Certain Rights of Trustee.
Subject to the provisions of Section 7.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, note, debenture, other
evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order and any action of the Company may be
sufficiently evidenced by a Company Order;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel as to legal
matters and the written advice of any such counsel selected by
the Trustee with due care shall be full and complete
authorization and protection in respect of any action taken,
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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 Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
SECTION 7.04. Not Responsible for Recitals or Issuance
of Notes.
The recitals contained herein and in the Notes, except
the Trustee's certificates of authentication, shall be taken as
the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or of the Notes. The Trustee shall not be accountable
for the use or application by the Company of the proceeds of the
Notes.
SECTION 7.05. May Hold Notes.
The Trustee, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with
the Company with the same rights it would have if it were not
Trustee.
SECTION 7.06. Money Held in Trust.
Money and investments held by the Trustee shall be held
in trust in one or more trust accounts hereunder, but need not be
segregated from other funds except to the extent required by law.
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SECTION 7.07. Compensation, Reimbursement, etc.
Subject to Section 3.04(c) of the Sales and Servicing
Agreement, the Company agrees:
(a) to pay to the Trustee from time to time, solely from
and only to the extent that amounts are available, such
compensation for all services rendered by it hereunder as the
Company and the Trustee may agree in writing (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
and
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request, solely from and only
to the extent that amounts are available under clause twelfth
of Section 3.03(b) or clause first of Section 6.06(a), for all
reasonable expenses, disbursements, and advances incurred or
made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except
any such expense, disbursement, or advance as may be
attributable to its negligence or bad faith.
SECTION 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall (a) be a corporation organized and doing business under the
laws of the United States of America, any state thereof or the
District of Columbia, authorized under such laws to exercise
corporate trust powers; (b) have a combined capital and surplus
of at least $100,000,000; (c) be subject to supervision or
examination by federal or state authority; and (d) at the time of
appointment, shall have long-term debt obligations (or, if the
Trustee does not have outstanding commercial paper or other
short-term 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.
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
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Trust Indenture Act regarding disqualification of a trustee upon
acquiring any conflicting interest.
SECTION 7.09. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 7.10.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company and by mailing notice of
resignation by first-class mail, postage prepaid, to Noteholders
at their addresses appearing on the Note Register.
(c) The Trustee may be removed at any time by Act of the
holders of not less than a majority of the then Outstanding
Principal Amount of the Notes, delivered to the Trustee and the
Company.
(d) If the Trustee shall resign, be removed, or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, with the consent of the
holders of 66-2/3% of the Outstanding Principal Amount of the
Notes, by an act of the Company, shall promptly appoint a
successor Trustee.
(e) If no successor Trustee shall have been so appointed
by the Company or the Noteholders as hereinbefore provided and
accepted appointment in the manner hereinafter provided within 30
days after any such resignation or removal, existence of
incapability, or occurrence of such vacancy, the Trustee or any
Noteholder may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation
and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to all Noteholders, as their
names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address
of its Corporate Trust Office.
(g) The Company may remove the Trustee if the Trustee
fails to comply with Section 7.08 of this Indenture.
(h) If the Trustee after written request by any
Noteholder who has been a Noteholder for at least six months
fails to comply with Section 3.10(b) of the Trust Indenture Act,
such Noteholder may petition any court of competent jurisdiction,
for the removal of the Trustee and the appointment of a successor
Trustee.
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SECTION 7.10. Acceptance of Appointment by Successor.
(a) Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but,
on request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges and expenses, execute
and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
(b) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
SECTION 7.11. Merger, Conversion, Consolidation or
Succession to Business.
Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case
any Notes shall have been authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion,
or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated
such Notes.
SECTION 7.12. Co-trustees and Separate Trustees.
(a) At any time or times, if the Company, the Trustee or
any Noteholder determines that it is necessary for the purpose of
meeting the legal requirements of any jurisdiction in which any
of the Trust Estate may at the time be located, the Company and
the Trustee shall have power to appoint, and, upon the written
request of the Trustee or the holders of a majority of the then
Outstanding Principal Amount of the Notes, the Company shall for
such purpose join with the Trustee in the execution, delivery,
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and performance of all instruments and agreements necessary or
proper to appoint one or more Persons approved by the Trustee
either to act as co-trustee, jointly with the Trustee, of all or
any part of such Trust Estate, or to act as separate trustee of
any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such
Person or Persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the
other provisions of this Section. If the Company does not join
in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default has occurred and
is continuing, the Trustee, or the holders of a majority of the
then Outstanding Principal Amount of the Notes, alone shall have
power to make such appointment.
(b) Should any written instrument from the Company be
required by any co-trustee or separate trustee so appointed for
more fully confirming to such co-trustee or separate trustee such
property, title, right, or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the
Company.
(c) Every co-trustee or separate trustee shall, to the
extent permitted by law, but to such extent only, be appointed
subject to the following terms:
(i) The Notes shall be authenticated and delivered and
all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with,
the Trustee hereunder, shall be exercised, solely by the
Trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Trustee in respect of any
property covered by such appointment shall be conferred or
imposed upon and exercised or performed by the Trustee or by
the Trustee and such co-trustee or separate trustee jointly,
as shall be provided in the instrument appointing such co--
trustee or separate trustee, except to the extent that, under
any law of any jurisdiction in which any particular act is to
be performed, the Trustee shall be incompetent or unqualified
to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(iii) The Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Company
evidenced by a Company Order, may accept the resignation of or
remove any co-trustee or separate trustee appointed under this
Section, and, in case an Event of Default has occurred and is
continuing, the Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate
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trustee without the concurrence of the Company. Upon the
written request of the Trustee, the Company shall join with
the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or
separate trustee so resigned or removed may be appointed in
the manner provided in this Section.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Trustee or any other such trustee hereunder and the Trustee
shall not be personally liable by reason of any act or
omission of any co-trustee or other such separate trustee
hereunder selected by the Trustee with due care or appointed
in accordance with directions to the Trustee pursuant to
Section 6.12.
(v) Any Act of Noteholders delivered to the Trustee
shall be deemed to have been delivered to each such co-trustee
and separate trustee.
SECTION 7.13. Trustee to Hold Leases.
The Trustee shall hold the original, manually executed
counterpart of each Lease, together with any documents relating
thereto that may from time to time be delivered to the Trustee,
until such time as such Lease is released from the lien of this
Indenture pursuant to the provisions hereof. The Trustee shall
at no time (except to the extent the Trustee is at any time
acting as Servicer under the Sales and Servicing Agreement) have
any responsibility or liability for or with respect to the
validity, legality and enforceability of any Lease (except that
the Trustee shall verify, within 120 days following the Issuance
Date, that the Trustee has in its possession what appears to be
the manually executed original copy of each Lease and report the
results of such verification within such time period to the
Noteholders and the Servicer).
SECTION 7.14. Preferential Collection of Claims Against
the Company.
The Trustee is subject to Trust Indenture Act Section
3.11(a), excluding any creditor relationship listed in Trust
Indenture Act Section 3.11(b). A Trustee who has resigned or
been removed shall be subject to Trust Indenture Act Section
3.11(a) to the extent indicated therein.
SECTION 7.15. Reports by Trustee to Noteholders.
Within 60 days after each May 15, following the date of
this Indenture, the Trustee shall mail to Noteholders a brief
report dated as of such reporting date that complies with Trust
Indenture Act Section 3.13(a), if such a report is required
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pursuant to Trust Indenture Act Section 3.13(a). The Trustee
also shall comply with Trust Indenture Act Section 3.13(b). The
Trustee shall also transmit by mail all reports as required by
Trust Indenture Act Section 3.13(c).
A copy of each such report required under Trust Indenture
Act Section 3.13 shall, at the time of such transmission to
Noteholders be filed with the Commission and with each stock
exchange or other market system on which the Notes are listed.
The Company or any other obligor upon the Notes shall notify the
Trustee if the Notes become listed on any stock exchange or
market trading system.
SECTION 7.16. No Proceedings. The Trustee hereby agrees
that it will not, with respect to its fees and expenses, directly
or indirectly institute, or cause to be instituted, against the
Company any proceeding of the type referred to in Section 6.01(e)
or (f) so long as there shall not have elapsed one year plus one
day since the latest maturing Notes have been paid in full in
cash.
ARTICLE 8.
COVENANTS
SECTION 8.01. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of
and interest on the Notes in accordance with the terms of the
Notes and this Indenture.
SECTION 8.02. Maintenance of Office or Agency; Chief
Executive Office.
(a) The Company will maintain at the Corporate Trust
Office an office or agency where Notes may be surrendered for
registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this
Indenture may be served. The Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders,
notices and demands.
(b) The chief executive office of the Company, and the
office at which the Company maintains its records with respect to
the Leases, the interests in the Equipment, and the transactions
contemplated hereby, is currently located in Mount Laurel, New
Jersey. The Company will not change the location of such office
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.
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(a) All payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the
Collection Account pursuant to Section 3.03(b) or Section 6.06
shall be made on behalf of the Company by the Trustee, and no
amounts so withdrawn from the Collection Account for payments of
Notes shall be paid over to the Company under any circumstances
except as provided in this Section 8.03 or in Section 3.03(b) or
Section 6.06.
(b) In making payments hereunder, the Trustee will:
(i) allocate all sums received for payment to the
Noteholders on each Payment Date among such Noteholders, first
to the Class A Noteholders on a pro rata basis and then to the
Class B Noteholders on a pro rata basis in accordance with the
information known to the Trustee;
(ii) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and pay
such sums to such Persons as herein provided; and
(iii) comply with all requirements of the Internal
Revenue Code of 1986, as amended (or any successor statutes),
and all regulations thereunder, with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect
to any applicable reporting requirements in connection
therewith.
(c) If the Company shall at any time act as its own
Paying Agent, it will, on or before each due date of the
principal of or interest on any of the Notes, segregate and hold
in trust for the benefit of the Noteholders entitled thereto a
sum sufficient to pay the principal or interest so becoming due
until such sums shall be paid to such Noteholders or otherwise
disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying
Agents, it will, prior to each due date of the principal of or
interest on any Notes, deposit with a Paying Agent a sum
sufficient to pay the principal or interest so becoming due, such
sum to be held in trust for the benefit of the Noteholders
entitled to such principal or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
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(1) hold all sums held by it for the payment of the
principal of or interest on Notes in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided, and
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the
making of any payment of principal or interest.
(d) Except as required by applicable law, any money held
by the Trustee in trust for the payment of any amount due with
respect to any Note and remaining unclaimed for three years after
such amount has become due and payable to the Noteholder shall be
discharged from such trust and, subject to applicable escheat
laws, paid to the Company upon request; and such Noteholder shall
thereafter, as an unsecured general creditor, look only to the
Company for payment thereof (but only to the extent of the
amounts so paid to the Company), and all liability of the Trustee
with respect to such trust money shall thereupon cease.
SECTION 8.04. Corporate Existence; Merger;
Consolidation, etc.
(a) The Company will keep in full effect its existence,
rights and franchises as a corporation under the laws of the
State of Delaware, and will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the
validity and enforceability of the Indenture, the Notes or any of
the Leases.
(b) The Company shall at all times observe and comply in
all material respects with (i) all laws applicable to it, (ii)
all requirements of law in the declaration and payment of
dividends on its capital stock, and (iii) all requisite and
appropriate corporate and other formalities (including without
limitation meetings of the Company's board of directors and, if
required by law, its charter or otherwise, meetings and votes of
the shareholders of the Company to authorize corporate action) in
the management of its business and affairs and the conduct of the
transactions contemplated hereby and by the Underwriting
Agreement and the Sales and Servicing Agreement.
(c) The Company shall not issue or register the transfer
of any of its capital stock to any Person other than Copelco and
will deliver any certificate of such stock so issued to the
Trustee in accordance with Section 7.02 of the Sales and
Servicing Agreement.
(d) The Company shall not (i) consolidate or merge with
or into any other Person or convey or transfer its properties and
assets substantially as an entirety to any other Person or (ii)
commingle its assets with those of any other Person.
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(e) At least one director of the Company shall at all
times be a person who is not, and for five years prior to such
individual's election as a director shall not have been, a
director, officer, employee or 10% beneficial owner of the
outstanding shares of common stock of its parent institution or
any of its Affiliates.
(f) The Company will, at all times, (i) maintain (A)
corporate books and records separate from those of any other
Person and (B) minutes of the meetings and other proceedings of
its shareholders and board of directors; (ii) continuously
maintain the resolutions, agreements and other instruments
underlying the transactions contemplated hereby and by the Sales
and Servicing Agreement as official records of the Company; (iii)
act solely in its corporate name and through its duly authorized
officers or agents to maintain an arm's-length relationship with
Copelco and its Affiliates and (iv) pay all of its operating
expenses and liabilities from its own funds.
(g) The Company shall conduct its business solely in its
own name so as to not mislead others as to the identity of the
corporation with which those others are concerned, and
particularly will use its best efforts to avoid the appearance of
conducting business on behalf of Copelco or any of its Affiliates
or that the assets of the Company are available to pay the
creditors of Copelco or any of its Affiliates. Without limiting
the generality of the foregoing, all oral and written
communications, including without limitation letters, invoices,
purchase orders, contracts, statements and loan applications,
will be made solely in the name of the Company.
SECTION 8.05. Protection of Trust Estate; Further
Assurances.
The Company will from time to time execute and deliver
all such supplements and amendments hereto and all such Financing
Statements, continuation statements, instruments of further
assurance, and other instruments, and will take such other action
as may be necessary or advisable to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain or preserve the Lien of this Indenture or
carry out more effectively the purposes hereof;
(iii) publish notice of, or protect the validity of, any
Grant made or to be made by this Indenture and perfect the
security interest contemplated hereby in favor of the Trustee
in each of the Leases, in the Equipment and all other property
included in the Trust Estate; provided, that the Company shall
not be required to file Financing Statements with respect to
the interests in the Equipment in addition to those
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contemplated by Section 3.01(c) of the Sales and Servicing
Agreement;
(iv) enforce or cause the Servicer to enforce any of the
Leases; or
(v) preserve and defend title to the Leases (including
the right to receive all payments due or to become due
thereunder), the interests in the Equipment, or other property
included in the Trust Estate and preserve and defend the
rights of the Trustee and the Noteholders in such Leases
(including the right to receive all payments due or to become
due thereunder), interests in the Equipment and other property
against the claims of all Persons and parties.
The Company, upon the Company's failure to do so, hereby
designates the Trustee its agent and attorney-in-fact to execute
any Financing Statement or continuation statement required
pursuant to this Section 8.05; provided, however, that such
designation shall not be deemed to create a duty in the Trustee
to monitor the compliance of the Company with the foregoing
covenants, and provided, further, that the duty of the Trustee to
execute any instrument required pursuant to this Section 8.05
shall arise only if a Responsible Officer of the Trustee has
actual knowledge of any failure of the Company to comply with the
provisions of this Section 8.05.
SECTION 8.06. Opinions as to Trust Estate.
On or before February 15 in each calendar year, beginning
February 15, 1997, the Company shall furnish to the Trustee an
Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the
recording, filing, rerecording, and re-filing of each Lease, this
Indenture, any indentures supplemental hereto, and any other
prerequisite documents and with respect to the execution and
filing of any Financing Statements and continuation statements as
is required pursuant to Section 8.05 hereof to maintain the
ownership interest of the Company in each Lease (including the
right to receive all payments due or to become due thereunder)
and each item of Equipment and the valid and perfected first
priority lien and security interest created by this Indenture in
each Lease (including the right to receive all payments due or to
become due thereunder), in the interest in the related Equipment
(to the extent required by Section 8.05) and all other property
in the Trust Estate and reciting the details of such action or
stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing,
re-recording and re-filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents and the
execution and filing of any Financing Statements and continuation
statements that will, in the opinion of such counsel, be required
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to maintain the valid and perfected first priority lien and
security interest of this Indenture with respect to the Trust
Estate until February 15 in the following calendar year.
SECTION 8.07. Performance of Obligations; Sales and
Servicing Agreement.
(a) The Company will punctually perform and observe all
of its obligations and agreements contained in this Indenture,
the Notes and the Underwriting Agreement.
(b) The Company will not take any action or permit any
action to be taken by others which would release any Person from
any of such Person's covenants or obligations under any Lease or
any other instrument included in the Trust Estate, or which would
result in the amendment, hypothecation, subordination,
termination, or discharge of, or impair the validity or
effectiveness of, any Lease or such other instrument, except as
expressly provided in this Indenture or the Sales and Servicing
Agreement.
(c) If any Authorized Officer shall have knowledge of
the occurrence of a default under the Sales and Servicing
Agreement, the Company shall promptly notify the Trustee and the
Noteholders thereof, and shall specify in such notice the action,
if any, the Company is taking in respect of such default. Unless
consented to by the holders of 66 2/3% of the then Outstanding
Principal Amount of the Notes, the Company may not waive any
default under or amend the Sales and Servicing Agreement.
SECTION 8.08. Negative Covenants.
The Company will not:
(a) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by
this Indenture;
(b) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes by reason of
the payment of any taxes levied or assessed upon any portion
of the Trust Estate;
(c) engage in any business or activity other than in
connection with, or relating to the ownership of, the Leases
and the interests in the Equipment, the issuance of the Notes,
and the specific transactions contemplated hereby;
(d) become liable for, issue, incur, assume, or allow to
remain outstanding any indebtedness, or guaranty any
indebtedness of any Person, other than the Notes, except as
contemplated by this Indenture, the shelf registration
statement filed with respect to the Class A Notes (and any
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registration statement for similar securities), and the Sales
and Servicing Agreement;
(e) seek dissolution or liquidation in whole or in part
or reorganization of its business or affairs;
(f) (i) permit the validity or effectiveness of this
Indenture or any Grant hereby to be impaired, or permit the
lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations under this
Indenture, except as may be expressly permitted hereby, (ii)
permit any lien, charge, security interest, mortgage or other
encumbrance to be created on or to extend to or otherwise
arise upon or burden the Trust Estate or any part thereof or
any interest therein or the proceeds thereof other than the
lien of this Indenture, or (iii) subject to Section 3.01(c) of
the Sales and Servicing Agreement, permit the lien of this
Indenture not to constitute a valid first priority security
interest in the Trust Estate; or
(g) make any loan or advance to any Affiliate of the
Company or to any other Person; provided that the Company may
from time to time make Inter-Company Loans on the terms and
conditions set forth in Section 13 of the Sales and Servicing
Agreement.
SECTION 8.09. Information as to Company.
The Company shall deliver to the Trustee and, upon
request, to each holder of outstanding Notes (and, upon the
request of any Noteholder, to any prospective transferee of any
Notes):
(a) Quarterly Statements - within 45 days after the end
of each of the first three quarterly fiscal periods in each
fiscal year of the Company, three copies of:
(i) a balance sheet of the Company as at the end of such
quarter, and
(ii) statements of income, retained earnings and cash
flow of the Company for that quarter and for the portion of
the fiscal year ending with such quarter, setting forth in
each case in comparative form the figures for the
corresponding periods in the previous fiscal year,
all in reasonable detail and accompanied by a certificate signed
by a principal financial officer of the Company stating that such
financial statements present fairly the financial condition of
the Company and have been prepared in accordance with generally
accepted accounting principles consistently applied;
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(b) Annual Statements - within 135 days after the end of
each fiscal year of the Company, three copies of:
(i) a balance sheet of the Company, as at the end of
that year, and
(ii) statements of income, retained earnings and cash
flow of the Company for that year, setting forth in each case
in comparative form the figures for the previous fiscal year,
all in reasonable detail and accompanied by a certificate signed
by a principal financial officer of the Company stating that such
financial statements present fairly the financial condition of
the Company and have been prepared in accordance with generally
accepted accounting principles consistently applied;
(c) Officer's Certificate - with each set of financial
statements delivered pursuant to Section 8.09(a) or 8.09(b), the
Company will deliver an Officer's Certificate stating that such
officer has reviewed the relevant terms of this Indenture
(including without limitation Section 8.04 hereof) and the Sales
and Servicing Agreement and has made, or caused to be made, under
such officer's supervision, a review of the transactions and
conditions of the Company during the period covered by the income
statements then being furnished and that the review has not
disclosed the existence of any Event of Default or, if an Event
of Default exists, describing its nature.
(d) Notice of Event of Default - immediately upon
becoming aware of the existence of any condition or event which
constitutes a Default or an Event of Default, a written notice
describing its nature and period of existence and what action the
Company is taking or proposes to take with respect thereto; and
(e) Report on Proceedings - promptly upon the Company's
becoming aware of
(i) any proposed or pending investigation of it by any
governmental authority or agency, or
(ii) any pending or proposed court or administrative
proceeding which involves or may involve the possibility of
materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of
the Company
a written notice specifying the nature of such investigation or
proceeding and what action the Company is taking or proposes to
take with respect thereto and evaluating its merits.
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SECTION 8.10. Taxes.
The Company shall pay all taxes when due and payable or
levied against its assets, properties or income, including any
property that is part of the Trust Estate.
SECTION 8.11. Indemnification.
The Company agrees to indemnify and hold harmless the
Trustee and each Noteholder (each an "Indemnified Party") against
any and all liabilities, losses, damages, penalties, costs and
expenses (including costs of defense and legal fees and expenses)
which may be incurred or suffered by such Indemnified Party
without negligence or willful misconduct on its part as a result
of claims, actions, suits or judgments asserted or imposed
against it and arising out of the transactions contemplated
hereby or by the Sales and Servicing Agreement, including without
limitation, any claims resulting from any use, operation,
maintenance, repair, storage or transportation of any item of
Equipment, whether or not in the Company's possession or under
its control, and any tort claims and any fines or penalties
arising from any violation of the laws or regulations of the
United States or any state or local government or governmental
authority; provided that, all amounts payable pursuant to this
Section 8.11 shall be fully subordinated to amounts payable under
the Notes, shall be without recourse to the Company except to the
extent that all amounts otherwise due and payable under the terms
of this Indenture have been fully paid and shall not, to the
extent that such amounts are unpaid, constitute a claim against
the Company except to the extent that all amounts otherwise due
and payable under the terms of this Indenture have been fully
paid.
SECTION 8.12. Commission Reports; Reports to Trustee;
Reports to Noteholders.
To the extent it has not satisfied the following
requirements by reporting under Section 8.09 hereof, the Company
shall:
(a) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other
reports which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act (or copies of such portions thereof as may be
prescribed by rules and regulations of the Commission); or, if
the Company is not required to file with the Commission
information, documents or reports pursuant to either Section 13
or Section 15(d) of the Exchange Act, then the Company will file
with the Trustee and with the Commission, in accordance with
rules and regulations prescribed by the Commission, such of the
supplementary and periodic information, documents and reports
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required pursuant to Section 13 of the Exchange Act in respect of
a security listed and registered on a national securities
exchange as may be prescribed in such rules and regulations;
(b) file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed by the
Commission, such additional information, documents and reports
with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required by
such rules and regulations, including, in the case of annual
reports, if required by such rules and regulations, certificates
or opinions of independent public accountants, conforming to the
requirements of Sections 12.03 and 12.04 hereof, as to compliance
with conditions or covenants, compliance with which is subject to
verification by accountants; and
(c) furnish to the Trustee for distribution to the
Noteholders, as the names and addresses of such Noteholders
appear in the Note Register, in the manner and to the extent
provided in Section 7.15 hereof, such summaries of any
information, documents and reports required to be filed with the
Trustee pursuant to the provisions of Subsections (a) and (b) of
this Section 8.12 as may be required to be provided to such
Noteholders by the rules and regulations of the Commission under
the provisions of the Trust Indenture Act.
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of any Noteholders, the Company,
by a Company Order, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto,
in form satisfactory to the Trustee, for any of the following
purposes:
(i) to add to the covenants of the Company for the
benefit of the Noteholders, or to surrender any right or power
herein conferred upon the Company;
(ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other
provision herein; or
(iii) to correct or amplify the description of any
property at any time subject to the lien of this Indenture, or
to better assure, convey and confirm unto the Trustee any
property subject or required to be subjected to the lien of
this Indenture;
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provided such action pursuant to this Section 9.01(a) shall not
adversely affect the interests of the Noteholders in any respect.
(b) The Trustee shall promptly deliver to each
Noteholder a copy of any supplemental indenture entered into
pursuant to Section 9.01(a).
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders.
(a) With the consent of the holders of not less than
66-2/3% of the then Outstanding Principal Amount of the Notes and
by Act of said Noteholders delivered to the Company and the
Trustee, the Company, by a Company Order, and the Trustee may
enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Noteholders under this
Indenture; provided, that no supplemental indenture shall,
without the consent of the holder of each Outstanding Note
affected thereby,
(i) change the Stated Maturity of any Note or the
Principal Payments or Interest Payments due or to become due
on any Payment Date with respect to any Note, or change the
priority of payment thereof as set forth herein, or reduce the
principal amount thereof or the Note Interest Rate thereon, or
change the place of payment where, or the coin or currency in
which, any Note or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such
payment on or after the Maturity thereof;
(ii) reduce the percentage of the Outstanding Principal
Amount of the Notes the consent of whose Noteholders is
required for any such supplemental indenture, for any waiver
of compliance with provisions of this Indenture or Events of
Default and their consequences, or for any Act of Noteholders;
(iii) modify any of the provisions of this Section or
Section 6.13 except to increase any percentage or fraction set
forth therein or to provide that certain other provisions of
this Indenture cannot be modified or waived without the
consent of the holder of each Outstanding Note affected
thereby;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or
on a parity with the lien of this Indenture with respect to
any part of the Trust Estate or, except as provided in
Sections 4.01 or 4.02, terminate the lien of this Indenture on
any property at any time subject hereto or deprive any
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Noteholder of the security afforded by the lien of this
Indenture.
(b) The Trustee shall promptly deliver to each
Noteholder 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 Company shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Notes.
SECTION 9.06. Compliance with Trust Indenture Act.
Every amendment, supplement or waiver to this Indenture
or the Notes shall comply with the Trust Indenture Act as then in
effect.
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ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.01. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect
(except as to any surviving rights of registration of transfer or
exchange of Notes herein expressly provided for), and the
Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(i) 100 days shall have elapsed since either
(A) all Notes theretofore authenticated and
delivered (other than (1) Notes which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.04 and (2) Notes for whose
payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such
trust, as provided in Section 8.03(c)) have been
delivered to the Trustee for cancellation; or
(B) the final installments of principal on all such
Notes not theretofore delivered to the Trustee for
cancellation
(1) have become due and payable, or
(2) will become due and payable at their
Stated Maturity, as applicable, within
one year,
and the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for
the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, for principal
and interest to the date of such deposit (in the case of
Notes which have become due and payable) or to the Stated
Maturity thereof;
(ii) the Company has paid or caused to be paid all other
sums payable hereunder by the Company for the benefit of the
Noteholders; and
(iii) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been
complied with.
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At such time, the Trustee shall deliver to the Company or, upon
Company Order, its assignee, all cash, securities and other
property held by it as part of the Trust Estate other than funds
deposited with the Trustee pursuant to Section 10.01(a)(i)(B),
for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company to the Trustee
under Sections 7.07 and 8.11, and, if money shall have been
deposited with the Trustee pursuant to Section 10.01(a)(i)(B),
the obligations of the Trustee under Section 10.02 and Section
8.03(c) shall survive.
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 11.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants as follows:
SECTION 11.01. Corporate Organization and Authority.
The Company:
(a) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties
and to carry on its business as now conducted (except where the
failure to have such licenses and permits would not have a
material adverse effect on the business or condition (financial
or otherwise) of the Company or impair the enforceability of any
Lease) and to enter into and perform its obligations under this
Indenture and the Sales and Servicing Agreement, and the
transactions contemplated hereby and thereby, including the
issuance and sale of the Notes and the performance of its
obligations thereunder; and
(c) has duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each
jurisdiction where the character of its properties or the nature
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of its activities makes such qualification necessary (except
where the failure to be so qualified or in good standing would
not have a material adverse effect on the business or condition
(financial or otherwise) of the Company or impair the
enforceability of any Lease).
SECTION 11.02. Pending Litigation.
There are no proceedings or investigations pending, or to
the knowledge of the Company (after due inquiry) threatened,
against or affecting the Company in or before any court,
governmental authority or agency or arbitration board or
tribunal, including but not limited to any such proceeding or
investigation with respect to any environmental or other
liability resulting from the ownership or use of any of the
Equipment, which, individually or in the aggregate, involve the
possibility of materially and adversely affecting the properties,
business, prospects, profits or condition (financial or
otherwise) of the Company, or the ability of the Company to
perform its obligations hereunder or under the Sales and
Servicing Agreement or the Notes. The Company is not in default
with respect to any order of any court, governmental authority or
agency or arbitration board or tribunal.
SECTION 11.03 Transactions Legal and Authorized.
The sale of the Notes by the Company, the purchase of the
Leases (including the right to receive all payments due or to
become due thereunder) and the acquisition of the interests in
the Equipment pursuant to the Sales and Servicing Agreement, the
granting of the Liens created by the Indenture, and compliance by
the Company with all of the provisions of this Indenture, the
Sales and Servicing Agreement and the Notes:
(a) have been duly authorized by all necessary corporate
action on the part of the Company, and do not require any
stockholder approval, or approval or consent of any trustee or
holders of any indebtedness or obligations of the Company except
such as have been duly obtained;
(b) are within the corporate powers of the Company; and
(c) are legal and will not conflict with, result in any
breach of any of the provisions of, constitute a default under,
or result in the creation of any Lien upon any property of the
Company (except as contemplated by this Indenture) under the
provisions of any agreement, charter instrument, by-law or other
instrument to which the Company is a party or by which it or its
property may be bound or result in the violation of any law,
regulation, rule, order or judgment applicable to the Company or
its properties, or any order to which the Company or its
properties is subject, of or by any government or governmental
agency or authority.
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<PAGE>
SECTION 11.04. No Defaults.
No event has occurred and no condition exists which, upon
the issue of the Notes or with the lapse of time and/or the
giving of notice, would constitute a Default or an Event of
Default. The Company is not in violation in any material respect
of any term of any agreement, charter instrument, by-law or other
instrument to which it is a party or by which it is or may be
bound.
SECTION 11.05. Governmental Consent.
No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Notes or the
consummation by the Company of the transactions contemplated by
this Indenture, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Securities Act and under state securities or Blue Sky laws in
connection with the purchase and distribution of the Notes
pursuant to the Underwriting Agreement.
SECTION 11.06. Use of Proceeds.
The proceeds from the sale of the Notes will be used by
the Company to purchase the Leases from the Seller pursuant to
the Sales and Servicing Agreement.
SECTION 11.07. Compliance with Law.
The Company:
(a) is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject;
(b) has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its properties or to the conduct of its business;
and
(c) is not in violation in any material respect of any
term of any agreement, charter instrument, by-law or other
instrument to which it is a party or by which it may be bound,
which violation or failure to obtain might materially adversely
affect the business or condition (financial or otherwise) of the
Company or the transactions contemplated by the Sales and
Servicing Agreement, the Notes, or this Indenture.
SECTION 11.08. Restrictions on Company.
The Company is not a party to any contract or agreement,
or subject to any charter or other corporate restriction, which
materially and adversely affects its business. The Company has
75
<PAGE>
not agreed or consented to cause or permit in the future (upon
the happening of a contingency or otherwise) any of its
properties, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by the Indenture.
SECTION 11.09. Legal, Valid and Binding Obligations.
This Indenture, the Sales and Servicing Agreement and any
other documents executed by or on behalf of the Company in
connection with the transactions contemplated hereby or thereby
each constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with the respective terms
hereof and thereof, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights
generally and by equitable principles. The Notes, when issued in
accordance with the provisions hereof, will represent the legal,
valid and binding obligations of the Company, enforceable in
accordance with the terms thereof, except as the same may be
limited by bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of
creditors, rights generally and by equitable principles.
SECTION 11.10. Perfected Security Interest.
Except for the execution and delivery of the Indenture,
the delivery of the Leases to the Trustee and the filing of
required Financing Statements, no further action, including any
filing or recording of any document, is necessary or advisable in
order to establish, protect and perfect the security interest of
the Trustee in (a) the Leases (including the right to receive all
payments due or to become due thereunder) and (b) the Equipment
and any proceeds thereof subject to Leases having a Discounted
Present Value of all Leases as of the Cut-Off Date, in each case
as against any third party in any applicable jurisdiction in the
United States. In the case of each Lease which consists of a
master lease and one or more exhibits or schedules thereto, the
Company has delivered the schedules relating to the Leases to the
Trustee and has neither assigned such schedules or such master
lease in its entirety, nor delivered physical possession of such
schedules or such master lease, to any Person other than the
Trustee (including the trustee under another indenture in a
transaction substantially similar to the transaction contemplated
hereby, which other indenture provides for a lien insofar as it
relates to the lease schedules which are not part of the Trust
Estate).
SECTION 11.11. Taxes.
The Company is not in default with respect to the payment
of any taxes levied or assessed against it or any of its assets
and has not failed to file any tax return required to be filed by
it.
76
<PAGE>
SECTION 11.12. Nonconsolidation.
The Company is operated in such a manner that it would
not be substantively consolidated in the bankruptcy estate of
Copelco, such that the separate existence of the Company and
Copelco would be disregarded in the event of a bankruptcy or
insolvency of the Company or Copelco, and in such regard:
(a) the Company is not involved in the day-to-day
management of Copelco;
(b) the Company maintains separate corporate records and
books of account from Copelco and otherwise observes corporate
formalities and has a separate business office from Copelco;
(c) the financial statements and books and records of
the Copelco prepared after the Issuance Date will reflect the
separate existence of the Company;
(d) the Company maintains its assets separately from the
assets of Copelco (including through the maintenance of a
separate bank account), the Company's funds and assets, and
records relating thereto, have not been and are not commingled
with those of Copelco and the separate creditors of the Company
will be entitled to be satisfied out of the Company's assets
prior to any value in the Company becoming available to the
Company's equityholders or the Copelco's creditors;
(e) all business correspondence of the Company and other
communications are conducted in the Company's own name and on its
own stationery; and
(f) Copelco does not act as an agent of the Company in
any capacity and the Company does not act as agent for Copelco,
but instead presents itself to the public as a corporation
separate from Copelco.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of Trust Indenture
Act Section 318(a), the duties imposed by Section 318(a) shall
control.
SECTION 12.02. Communication by Noteholders with Other
Noteholders.
77
<PAGE>
Noteholders may communicate, pursuant to Trust Indenture
Act Section 3.12(b), with other Noteholders with respect to their
rights under this Indenture or the Notes. The Company, the
Trustee, the Note Registrar and all other parties shall have the
protection of Trust Indenture Act Section 3.12(c).
SECTION 12.03. Officers' Certificate and Opinion of
Counsel as to Conditions Precedent.
Upon any request or application by the Company (or any
other obligor upon the Notes) to the Trustee to take any action
under this Indenture, the Company (or such other Obligor) shall
furnish to the Trustee:
(a) an Officers' Certificate (which shall include the
statements set forth in Section 12.04) stating that, in the
opinion of the signers, all conditions precedent and covenants,
if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(b) an Opinion of Counsel (which shall include the
statements set forth in Section 12.04) stating that, in the
opinion of such counsel, all such conditions precedent and
covenants have been complied with.
SECTION 12.04. Statements Required in Certificate or
Opinion.
Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
78
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and witnessed, all as of the day and
year first above written.
COPELCO CAPITAL FUNDING CORP. II
________________________________________
Name:
Title:
[SEAL]
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
[SEAL] By:_____________________________________
Name:
Title:
79
<PAGE>
SCHEDULE 1
LEASES
80
<PAGE>
EXHIBIT A
[FORM OF
CLASS A NOTE]
COPELCO CAPITAL FUNDING CORP. II
___% CLASS A LEASE-BACKED NOTE, SERIES 1996-A
CUSIP NO.
No. R- $
Copelco Capital Funding Corp. II, a corporation duly
organized and existing under the laws of Delaware (herein called
the "Company", which term includes any successor Person under the
Indenture referred to herein), for value received, hereby
promises to pay to , or registered assigns, the
principal sum of Dollars ($ ), payable
in monthly installments beginning on __________, 1996, 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 Note shall be paid
on the [__]th day of each month (or, if such day is not a
Business Day, the next succeeding Business Day), commencing
__________, 1996, either by check to the registered address of
the Holder of this Class A Note as of the relevant Record Date or
by wire transfer to an account at a bank in the United States as
the Holder shall specify, as provided more fully in the
Indenture; provided, that the final payment of principal and
interest in respect of the Notes shall be payable to the Holder
of this Note only upon presentation and surrender of this Note at
the Corporate Trust Office of the Trustee or at the principal
office of any Paying Agent appointed pursuant to the Indenture.
The Stated Maturity of the Class A Notes is __________,
____.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by
manual signature, this Class A Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
A-1
<PAGE>
This Class A Note is one of a duly authorized issue of
Class A Notes of the Company designated as its "___% Class A
Lease-Backed Notes, Series 1996-A" (herein called the "Class A
Notes") limited in aggregate principal amount of $__________,
issued under the Indenture, dated as of ___________, 1996 (herein
called the "Indenture"), between the Company and
_____________________ as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders and of the terms upon
which the Class A 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 Note will be secured by the pledge to the
Trustee of the Trust Estate.
If an Event of Default under the Indenture has been
declared by the Trustee, the principal of all the Class A Notes
(but not less than all the Class A Notes) may be declared due and
payable in the manner and with the effect provided in the
Indenture. Notice of such declaration will be given by mail to
Holders, as their names and addresses appear in the Note
Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the
obligations of the Company with respect to the payment of
principal and interest on this Class A Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the
rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of 66 2/3% in aggregate
principal amount of the Class A Notes and the Company's _____%
Class B Lease-Backed Notes, Series 1996-A (the "Class B Notes")
at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate
principal amount of the Class A Notes and the Class B Notes at
the time Outstanding, on behalf of all the Holders, to waive
compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Class A Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Class A Note and of any Class A
Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Class A Note or any
Class A Note.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class A Note
A-2
<PAGE>
is registrable in the Note Register, upon surrender of this Class
A Note for registration of transfer at the office or agency of
the Trustee in The City of [__________], and at any other office
or agency maintained by the Company for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Note Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Class A Notes, of authorized
denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Class A Notes are issuable only in registered form
without coupons in minimum denominations of $1,000. As provided
in the Indenture and subject to certain limitations therein set
forth, Class A Notes are exchangeable for a like aggregate
principal amount of Class A Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration
of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or
the Trustee may treat the Person in whose name this Class A Note
is registered as the owner hereof for all purposes, whether or
not this Class A Note may be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Class A Note shall be deemed to be
contracts made under the laws of the State of New York and shall
for all purposes be governed by, and construed in accordance
with, the laws of the State of New York.
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: ________________, 199___
COPELCO CAPITAL FUNDING CORP. II
[SEAL]
By: ____________________________
Authorized Officer
Attest:
_______________________
Trustee's Certificate of Authentication
This is one of the Class A Notes referred to in the
within mentioned Indenture.
_____________________, as Trustee
By: _____________________________
Authorized Signatory
A-4
<PAGE>
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class A Note, fill
in the form below and have your signature guaranteed:
I or we assign and transfer this Class A 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 Note on the books of the Company. The agent may
substitute another to act for him.
Dated: _______________ Signed: ________________________
____________________________________
(sign exactly as the name appears on
the other side of this Class A Note)
Signature Guarantee ________________________________________
Important Notice: When you sign your name to this Assignment Form
without filling in the name of your "Assignee" or "Attorney",
this Note becomes fully negotiable, similar to a check endorsed
in blank. Therefore, to safeguard a signed Class A Note, it is
recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead of using this
Assignment Form, you may sign a separate "power of attorney" form
and then mail the unsigned Class A Note and the signed "power of
attorney" in separate envelopes. For added protection, use
certified or registered mail for a Class A Note.
A-5
<PAGE>
[FORM OF
CLASS B NOTE]
THIS CLASS B NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF BY THE OWNER
HEREOF UNLESS SUCH TRANSACTION IS EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AND SUCH STATE LAWS, AND WILL NOT BE A
"PROHIBITED TRANSACTION" UNDER THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"). BY ACCEPTANCE OF
THIS CLASS B NOTE, THE HOLDER AGREES TO BE BOUND BY ALL THE TERMS
OF THE INDENTURE.
COPELCO CAPITAL FUNDING CORP. II
_____% CLASS B LEASE-BACKED NOTE
CUSIP No. _________
No. R- $_________
Copelco Capital Funding Corp. II, a corporation duly
organized and existing under the laws of Delaware (herein called
the "Company", which term includes any successor Person under the
Indenture referred to herein), for value received, hereby
promises to pay to _________, or registered assigns, the
principal sum of __________ Dollars ($ ), payable in
monthly installments beginning on __________, 1996, 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 [__]th day of each month (or, if such day is not a
Business Day, the next succeeding Business Day), commencing
__________, 1996, either by check to the registered address of
the Holder of this Class B Note or by wire transfer to an account
at a bank in the United States as the Holder shall specify, as
provided more fully in the Indenture; provided, that the final
payment of principal and interest in respect of the Class B Notes
during the Principal Amortization Period shall be payable to the
Holder of this Class B Note only upon presentation and surrender
of this Class B Note at the Corporate Trust Office of the Trustee
or at the principal office of any Paying Agent appointed pursuant
to the Indenture.
A-6
<PAGE>
The Stated Maturity of the Class B Notes is ___________,
____.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by
manual signature, this Class B Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
This Class B Note is one of a duly authorized issue of
Class B Notes of the Company designated as its "_____% Class B
Lease-Backed Notes, Series 1996-A" (herein called the "Class B
Notes"), limited in aggregate principal amount of $_____________,
issued under the Indenture, dated as of ___________, 1996 (herein
called the "Indenture"), between the Company and
____________________ as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders and of the terms upon
which the Class B Notes are authenticated and delivered. Unless
otherwise defined herein, all capitalized terms used herein shall
have the meanings set forth in the Indenture.
If an Event of Default under the Indenture has been
declared by the Trustee, the principal of all the Class B Notes
(but not less than all the Class B Notes) may be declared due and
payable in the manner and with the effect provided in the
Indenture. Notice of such declaration will be given by mail to
Holders, as their names and addresses appear in the Note
Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the
obligations of the Company with respect to the payment of
principal and interest on this Class B Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the
rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of 66 2/3% in aggregate
principal amount of the Company's _____% Class A Lease-Backed
Notes, Series 1996-A
(the "Class A Notes"), the Class B Notes and the Class C Notes at
the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate
principal amount of the Class A Notes and the Class B Notes at
the time outstanding, on behalf of all the Holders, to waive
compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Class B Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Class B Note and of any Class B
A-7
<PAGE>
Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Class B Note or any
Class B Note.
No sale or transfer of this Class B Note may be made
unless such sale or transfer complies with or is exempt from
registration requirements of the Securities Act and applicable
state securities laws. Prospective transferees of this Class B
Note will be required to deliver a certificate pursuant to the
terms of the Indenture relating to compliance with the Securities
Act and applicable state securities law.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class B Note
is registrable in the Note Register, upon surrender of this Class
B Note for registration of transfer at the office or agency of
the Trustee in The City of [__________], and at any other office
or agency maintained by the Company for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Note Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Class B Notes, of authorized
denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Class B Notes are issuable only in registered form
without coupons in minimum denominations of $250,000. As
provided in the Indenture and subject to certain limitations
therein set forth, Class B Notes are exchangeable for a like
aggregate principal amount of Class B Notes of a different
authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration
of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or
the Trustee may treat the Person in whose name this Class B Note
is registered as the owner hereof for all purposes, whether or
not this Class B Note may be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Class B Note shall be deemed to be
contracts made under the laws of the State of New York and shall
for all purposes be governed by, and construed in accordance
with, the laws of the State of New York.
A-8
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated:__________________, 199___
COPELCO CAPITAL FUNDING CORP. II
[SEAL]
By: ____________________________
Authorized Officer
Attest:
______________________
Trustee's Certificate of Authentication
This is one of the Class B Notes referred to in the
within mentioned Indenture.
_____________________, as Trustee
By: _____________________________
Authorized Signatory
A-9
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class B Note, fill
in the form below and have your signature guaranteed:
I or we assign and transfer this Class B Note to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint __________________________, agent to
transfer this Class B Note on the books of the Company. The
agent may substitute another to act for him.
Dated: _______________ Signed:_________________________
_______________________________________
(signed exactly as the name appears
on the other side of this Class B
Note)
Signature Guarantee ________________________________
Important Notice: When you sign your name to this Assignment Form
without filling in the name of your "Assignee" or "Attorney",
this Note becomes fully negotiable, similar to a check endorsed
in blank. Therefore, to safeguard a signed Class B Note, it is
recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead of using this
Assignment Form, you may sign a separate "power of attorney" form
and then mail the unsigned Class B Note and the signed "power of
attorney" in separate envelopes. For added protection, use
certified or registered mail for a Class B Note.
A-10
<PAGE>
[FORM OF
CLASS C NOTE]
THIS CLASS C NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF BY THE OWNER
HEREOF UNLESS SUCH TRANSACTION IS EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AND SUCH STATE LAWS, AND WILL NOT BE A
"PROHIBITED TRANSACTION" UNDER THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"). BY ACCEPTANCE OF
THIS CLASS C NOTE, THE HOLDER AGREES TO BE BOUND BY ALL THE TERMS
OF THE INDENTURE.
COPELCO CAPITAL FUNDING CORP. II
_____% CLASS C LEASE-BACKED NOTE
PP No. _________
No. R- $_____________
Copelco Capital Funding Corp. II, a corporation duly
organized and existing under the laws of Delaware (herein called
the "Company", which term includes any successor Person under the
Indenture referred to herein), for value received, hereby
promises to pay to _____________, or registered assigns, the
principal sum of ___________ Dollars ($___________ ), payable in
monthly installments beginning on __________, 1996, in accordance
with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of _____% per
annum, until the full amount of principal hereof is otherwise
paid or made available for payment and shall be computed on the
basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class C Note shall be paid
on the [__]th day of each month (or, if such day is not a
Business Day, the next succeeding Business Day), commencing
__________, 1996, either by check to the registered address of
the Holder of this Class C Note or by wire transfer to an account
at a bank in the United States as the Holder shall specify, as
provided more fully in the Indenture; provided, that the final
payment of principal and interest in respect of the Class C Notes
during the Principal Amortization Period shall be payable to the
Holder of this Class C Note only upon presentation and surrender
of this Class C Note at the Corporate Trust Office of the Trustee
or at the principal office of any Paying Agent appointed pursuant
to the Indenture.
B-1
<PAGE>
The Stated Maturity of the Class C Notes is ___________,
____.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by
manual signature, this Class C Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
This Class C Note is one of a duly authorized issue of
Class C Notes of the Company designated as its "_____% Class C
Lease-Backed Notes, Series 1996-A" (herein called the "Class C
Notes"), limited in aggregate principal amount of $_____________,
issued under the Indenture, dated as of ___________, 1996 (herein
called the "Indenture"), between the Company and
____________________ as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders and of the terms upon
which the Class C Notes are authenticated and delivered. Unless
otherwise defined herein, all capitalized terms used herein shall
have the meanings set forth in the Indenture.
If an Event of Default under the Indenture has been
declared by the Trustee, the principal of all the Class C Notes
(but not less than all the Class C Notes) may be declared due and
payable in the manner and with the effect provided in the
Indenture. Notice of such declaration will be given by mail to
Holders, as their names and addresses appear in the Note
Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the
obligations of the Company with respect to the payment of
principal and interest on this Class C Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the
rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of 66 2/3% in aggregate
principal amount of the Company's _____% Class A Lease-Backed
Notes, Series 1996-A
(the "Class A Notes"), the Class C Notes and the Class C Notes at
the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate
principal amount of the Class A Notes and the Class C Notes at
the time outstanding, on behalf of all the Holders, to waive
compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Class C Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Class C Note and of any Class C
B-2
<PAGE>
Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Class C Note or any
Class C Note.
No sale or transfer of this Class C Note may be made
unless such sale or transfer complies with or is exempt from
registration requirements of the Securities Act and applicable
state securities laws. Prospective transferees of this Class C
Note will be required to deliver a certificate pursuant to the
terms of the Indenture relating to compliance with the Securities
Act and applicable state securities law.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class C Note
is registrable in the Note Register, upon surrender of this Class
C Note for registration of transfer at the office or agency of
the Trustee in The City of [__________], and at any other office
or agency maintained by the Company for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Note Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Class C Notes, of authorized
denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Class C Notes are issuable only in registered form
without coupons in minimum denominations of $250,000. As
provided in the Indenture and subject to certain limitations
therein set forth, Class C Notes are exchangeable for a like
aggregate principal amount of Class C Notes of a different
authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration
of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or
the Trustee may treat the Person in whose name this Class C Note
is registered as the owner hereof for all purposes, whether or
not this Class C Note may be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Class C Note shall be deemed to be
contracts made under the laws of the State of New York and shall
for all purposes be governed by, and construed in accordance
with, the laws of the State of New York.
B-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated:____________ , 199____
COPELCO CAPITAL FUNDING CORP. II
[SEAL]
By:_____________________________
Authorized Officer
Attest:
___________________________
Trustee's Certificate of Authentication
This is one of the Class C Notes referred to in the
within mentioned Indenture.
_____________________, as Trustee
By:_____________________________
Authorized Signatory
B-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 Company. The
agent may substitute another to act for him.
Dated: _______________ Signed: ____________________________
___________________________________
(signed exactly as the name appears
on the other side of this Class C
Note)
Signature Guarantee___________________________________________
Important Notice: When you sign your name to this Assignment Form
without filling in the name of your "Assignee" or "Attorney",
this Note becomes fully negotiable, similar to a check endorsed
in blank. Therefore, to safeguard a signed Class C Note, it is
recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead of using this
Assignment Form, you may sign a separate "power of attorney" form
and then mail the unsigned Class C Note and the signed "power of
attorney" in separate envelopes. For added protection, use
certified or registered mail for a Class C Note.
B-5
<PAGE>
B-1
<PAGE>
EXHIBIT B
[FORM OF
INVESTOR'S LETTER]
(Date)
Copelco Capital Funding Corp. II
1700 Suckle Plaza
Pennsauken, New Jersey 08110
Ladies and Gentlemen:
We propose to purchase $ _________ in original aggregate
principal amount of Copelco Capital Funding Corp. II _____% Class
C Lease-Backed Notes, Series 1996-A, (the "Class C Notes"). The
Class C Notes were issued pursuant to an Indenture (the
"Indenture"), dated as of _______________, among Copelco Capital
Funding Corp. II and Manufacturers and Traders Trust Company.
Capitalized terms used herein but not otherwise defined shall
have the same meaning as in the Indenture.
In connection with our proposed purchase of Class C
Notes, we agree to the following terms and conditions and make
the representations and warranties stated herein with the express
understanding that they will be relied upon by Copelco Capital
Funding Corp. II and ____________________.
1. We understand that the Class C Notes have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act") or registered or qualified under any state
securities or "Blue Sky" laws and are being sold to us in a
transaction that is exempt from the registration requirements of
the Securities Act and the registration or qualification
requirements of such state laws.
2. We are (Check one):
___ (a) a "Qualified Institutional Buyer" (as defined
in Rule 144A under the Securities Act), in the
case of a transfer of Certificates to be made
in reliance on Rule 144A.
___ (b) an institutional investor that has such
knowledge and experience in financial and
business matters as to be capable of evaluating
the merits and risks of an investment in the
Class C Notes and is able to bear the economic
risk of investment in the Class C Notes.
___ (c) an "accredited investor" as defined in Rule 501
promulgated under the Securities Act that has
B-2
<PAGE>
such knowledge and experience in financial and
business matters as to be capable of evaluating
the merits and risks of investment in the Class
C Notes and is able to bear the economic risk
of investment in the Class C Notes.
3. We agree that, to the extent that Section 2(a) of
this letter is applicable, that the Class C Notes will not be
transferred unless such transfer is made in reliance on Rule 144A
or unless some other exemption from the registration requirements
of the Securities Act, or any applicable state securities law, is
available.
4. To the extent that Section 2(b) or (c) of this
letter is applicable, that we are acquiring the Class C Notes (i)
solely for investment purposes for our own account or for
accounts as to which we exercise sole investment discretion and
not with a view to any resale or distribution of the Class C
Notes in whole or in part, or (ii) otherwise for purposes which
will not constitute a distribution of securities under the
Securities Act, or under any state securities or "Blue Sky" laws
subject, nevertheless, to the understanding that disposition of
our property shall at all times be and remain within our control,
and under no circumstances will we attempt to sell, pledge,
hypothecate or otherwise transfer all or any portion of our
interest in the Class C Notes except in accordance with the terms
of the Class C Notes and the Indenture.
5. We agree not to sell the Class C Notes in whole or
in part, unless the subsequent purchaser agrees to be subject to
the same representations and warranties as were applicable to us
in acquiring the Class C Notes.
6. We understand that each of the Class C Notes shall
bear a legend to substantially the following effect:
THIS CLASS C NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF BY THE OWNER
HEREOF UNLESS SUCH TRANSACTION IS EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AND SUCH STATE LAWS, AND WILL NOT BE A
"PROHIBITED TRANSACTION" UNDER THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"). BY ACCEPTANCE OF
THIS CLASS C NOTE, THE HOLDER AGREES TO BE BOUND BY ALL THE TERMS
OF THE INDENTURE.
7. We understand that there is no public market for the
Class C Notes and it is unlikely that such market will develop.
8. We are authorized to invest in the Class C Notes.
B-3
<PAGE>
9. We certify that, in acquiring the Class C Notes, we
have complied with any applicable guidelines or regulations for
or limitations on investments established by each regulatory
agency or body, if any, which has jurisdiction over investments
made by us and that our acquisition and retention of the Class C
Notes will not violate the limitations on possession contained in
any such guidelines, regulations or limitations.
10. We further agree to be bound by all of the terms and
conditions of ownership of the Class C Notes contained in the
Indenture, as the same may be amended from time to time.
Very truly yours,
[TRANSFEREE]
B-4
<PAGE>
EXHIBIT 5.1
[letterhead]
August 19, 1996
Copelco Capital Funding Corp. II
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
Re: Copelco Capital Funding Corp. II
(File No. 333-07335)
--------------------
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding Corp. II, a
Delaware corporation (the "Issuer"), in connection with the preparation of the
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 Lease-Backed Notes, Series 1996-A and Class B Lease-Backed Notes, Series
1996-A (the "Offered Notes") to be issued pursuant the Indenture dated August 1,
1996 ("Indenture") between the Issuer and Manufacturers and Traders Trust
Company, as Indenture Trustee (substantially in the form filed as an Exhibit to
the Registration Statement).
In that regard, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary or appropriate for the purposes of this
opinion.
The opinions expressed below are subject to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
We are admitted to the Bar of the State of New York and we express no
opinion as to the laws of any other jurisdiction except as to matters that are
governed by Federal law or the laws of the State of New York or the Delaware
General Corporate Law. 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 all necessary action and duly executed and delivered by
the Issuer and the Indenture Trustee and when the Offered Notes 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, fully paid and nonassessable, and the holders of such Offered Notes will
be entitled to the benefits of such Indenture.
This opinion is furnished by us as counsel to the Issuer and is solely for
the benefit of the addressee hereof. It may not be relied upon by any other
person or for any other purpose without our prior written consent.
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
<PAGE>
EXHIBIT 8.1
[letterhead]
August 19, 1996
Copelco Capital Funding Corp. II
East Gate Drive
Mount Laurel, New Jersey 08054-5400
Re: Copelco Capital Funding Corp. II
(File No. 333-7335)
-------------------
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding Corp. II, a
Delaware corporation (the "Issuer"), in connection with the preparation of the
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") of the registration under the Act of
Class A Lease-Backed Notes, Series 1996-A and Class B Lease-Backed Notes, Series
1996-A (the "Offered Notes") to be issued pursuant the Indenture dated August 1,
1996 between the Issuer and Manufacturers and Traders Trust Company, as
Indenture Trustee (substantially in the form filed as an Exhibit to the
Registration Statement). You have requested that we confirm our opinion within
the Prospectus regarding the treatment of the Offered Notes for Federal income
tax pruposes and our opinion as to the accuracy of the description in the
Prospectus of certain Federal tax matters relating to ownership of the Offered
Notes.
We have examined the Prospectus and such other documents as we have deemed
necessary to render our opinions expressed below and within the Prospectus.
We hereby confirm our opinion with respect to the Federal income tax
characterization of the Offered Notes and the Federal income tax treatment of
the issuance of such Offered Notes set forth under the caption "Prospectus
Summary - Federal Income Tax Consequences" and "Certain Federal Income Tax
Considerations", subject to the limitations expressed therein. Moreover, it is
our opinion that the discussion of certain Federal tax matters within the
Prospectus is an accurate description of the material tax aspects of owning
(including) the purchase and sale of) the Offered Notes.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this opinion within the
Prospectus. In giving this consent, 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
<PAGE>
Form of Sale and Servicing Agreement -- Exhibit 10.5
============================================================
COPELCO CAPITAL, INC.,
SELLER AND SERVICER
AND
COPELCO CAPITAL FUNDING CORP. II,
PURCHASER
_________________________
SALES AND SERVICING AGREEMENT
Dated as of August __, 1996
_________________________
============================================================
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF
COPELCO CAPITAL FUNDING CORP. II 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 AUGUST __, 1996, 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 . . . . . . . . . . . . . . . . . . . 1
SECTION 1. PURCHASE AND SALE. . . . . . . . . . . . . 1
1.01 Purchase of Leases. . . . . . . . . . . . . . . 1
1.02 Consideration and Payment . . . . . . . . . . . 2
1.03 Capital Contribution. . . . . . . . . . . . . . 2
1.04 Grant of Security Interest. . . . . . . . . . . 2
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE
SELLER . . . . . . . . . . . . . . . . . . 3
2.01 Corporate Organization and Authority. . . . . . 3
2.02 Business and Property . . . . . . . . . . . . . 3
2.03 Financial Statements. . . . . . . . . . . . . . 4
2.04 Equipment and Leases. . . . . . . . . . . . . . 4
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 . . . . . . . . . . . . . . . . . . . . . 10
2.12 Compliance with Law . . . . . . . . . . . . . . 10
2.13 ERISA . . . . . . . . . . . . . . . . . . . . . 10
2.14 Ability to Perform. . . . . . . . . . . . . . . 11
2.15 Ordinary Course; No Insolvency. . . . . . . . . 11
2.16 Assets and Liabilities. . . . . . . . . . . . . 11
2.17 Fair Consideration. . . . . . . . . . . . . . . 12
2.18 Ability to Pay Debts. . . . . . . . . . . . . . 12
2.19 Bulk Transfer Provisions. . . . . . . . . . . . 12
2.20 Transfer Taxes. . . . . . . . . . . . . . . . . 12
2.21 Principal Executive Office. . . . . . . . . . . 12
2.22 Servicing Provisions Customary. . . . . . . . . 12
2.23 Nonconsolidation. . . . . . . . . . . . . . . . 13
2.24 Sale Treatment. . . . . . . . . . . . . . . . . 13
SECTION 3. ADMINISTRATION OF LEASES. . . . . . . . . . . 14
3.01 Servicer to Act . . . . . . . . . . . . . . . . 14
3.02 Lease Amendments and Modifications. . . . . . . 17
3.03 Non-Performing Leases . . . . . . . . . . . . . 17
3.04 Costs of Servicing; Servicing Fee;
Administrative Expenses . . . . . . . . . . . . 18
3.05 Other Transactions. . . . . . . . . . . . . . . 19
i
<PAGE>
SECTION 4. SERVICER ADVANCES AND SELLER'S SUPPORT. . . . 19
4.01 Late Lease Payments . . . . . . . . . . . . . . 19
4.02 Early Termination Leases. . . . . . . . . . . . 19
4.03 Indemnification . . . . . . . . . . . . . . . . 20
4.04 Other Payments. . . . . . . . . . . . . . . . . 20
4.05 Payment Advices . . . . . . . . . . . . . . . . 22
SECTION 5. INFORMATION TO BE PROVIDED. . . . . . . . . . 22
5.01 Monthly Status Reports. . . . . . . . . . . . . 22
5.02 Certain Reports and Calculations. . . . . . . . 23
5.03 Annual Independent Public Accountant's
Report. . . . . . . . . . . . . . . . . . . . . 24
SECTION 6. THE SERVICER. . . . . . . . . . . . . . . . . 25
6.01 Merger or Consolidation of the Servicer . . . . 25
6.02 Limitation on Liability of the Servicer and
Others. . . . . . . . . . . . . . . . . . . . . 25
6.03 Servicer Not to Resign or Be Removed. . . . . . 25
6.04 Financial and Business Information. . . . . . . 26
6.05 Officers' Certificates. . . . . . . . . . . . . 28
6.06 Inspection. . . . . . . . . . . . . . . . . . . 28
6.07 Servicer Records. . . . . . . . . . . . . . . . 28
SECTION 7. THE SELLER. . . . . . . . . . . . . . . . . . 29
7.01 Merger or Consolidation of the Seller . . . . . 29
7.02 Control of Company. . . . . . . . . . . . . . . 29
7.03 Financial and Business Information. . . . . . . 29
7.04 Officers' Certificates. . . . . . . . . . . . . 32
7.05 Inspection. . . . . . . . . . . . . . . . . . . 32
7.06 Books and Records . . . . . . . . . . . . . . . 33
7.07 Communications. . . . . . . . . . . . . . . . . 33
7.08 Tax Returns . . . . . . . . . . . . . . . . . . 33
SECTION 8. DEFAULT . . . . . . . . . . . . . . . . . . . 33
8.01 Servicer Events of Default. . . . . . . . . . . 33
8.02 Termination . . . . . . . . . . . . . . . . . . 35
8.03 Trustee to Act; Appointment of Successor. . . . 36
8.04 Servicer to Cooperate . . . . . . . . . . . . . 37
8.05 Notification to Noteholders . . . . . . . . . . 37
8.06 Remedies Not Exclusive. . . . . . . . . . . . . 37
SECTION 9. SUBSTITUTION OF LEASES. . . . . . . . . . . . 38
9.01 Substitution. . . . . . . . . . . . . . . . . . 38
9.02 Procedure . . . . . . . . . . . . . . . . . . . 39
9.03 Objection and Repurchase. . . . . . . . . . . . 40
ii
<PAGE>
9.04 Seller's and Servicer's Subsequent
Obligations . . . . . . . . . . . . . . . . . . 40
SECTION 10. ASSIGNMENT . . . . . . . . . . . . . . . . . 40
10.01 Assignment to Trustee. . . . . . . . . . . 40
10.02 Assignment by Seller or Servicer . . . . . 41
SECTION 11. NATURE OF SELLER'S OBLIGATIONS AND
SECURITY THEREFOR. . . . . . . . . . . . . 41
11.01 Seller's Obligations Absolute. . . . . . . 41
11.02 Security for Obligations . . . . . . . . . 42
11.03 Further Assurances; Financing
Statements . . . . . . . . . . . . . . . . 42
SECTION 12. DEFINITIONS. . . . . . . . . . . . . . . . 43
SECTION 13. INTER-COMPANY LOANS. . . . . . . . . . . . 48
13.01 Inter-Company Loans. . . . . . . . . . . . 48
SECTION 14. MISCELLANEOUS. . . . . . . . . . . . . . . 48
14.01 Continuing Obligations . . . . . . . . . . 48
14.02 GOVERNING LAW. . . . . . . . . . . . . . . 48
14.03 Successors and Assigns . . . . . . . . . . 48
14.04 Modification . . . . . . . . . . . . . . . 49
14.05 No Proceedings . . . . . . . . . . . . . . 49
14.06 Notices. . . . . . . . . . . . . . . . . . 49
14.07 Counterparts . . . . . . . . . . . . . . . 49
Schedule 1 - Subsidiaries of the Seller
Exhibit A - Schedule of Leases and Equipment
Exhibit B - Form of Inter-Company Loan Note
iii
<PAGE>
SALES AND SERVICING AGREEMENT
This SALES AND SERVICING AGREEMENT is made and
dated as of August __, 1996, by and between COPELCO CAPITAL
FUNDING CORP. II, a Delaware corporation, as purchaser
hereunder (the "Company"), and COPELCO CAPITAL, INC., a
Delaware corporation, as seller (in such capacity, the
"Seller") and servicer (in such capacity, the "Servicer")
hereunder.
R E C I T A L S
A. The Seller wishes to sell and assign to the
Company, and the Company wishes to purchase from the Seller,
all right, title and interest of the Seller in, to and under
the Leases (such term and all other capitalized terms used
herein having the meanings ascribed thereto in Section 12
hereof unless otherwise indicated).
B. Contemporaneously with such sale and
assignment, the Seller wishes to contribute to the Company
all right, title and interest of the Seller in and to each
item of Equipment subject to each Lease.
C. Pursuant to the Indenture, the Company is
issuing one class of _______% Class A Lease-Backed Notes,
Series 1996-A in the aggregate principal amount of
$___________ (the "Class A Notes"), one class of _______%
Class B Leased-Backed Notes, Series 1996-A (the "Class B
Notes"), in the aggregate principal amount of $_______ and
one class of ____% Class C Lease-Backed Notes, Series 1996-
A, in the aggregate principal amount of $__________ (the
"Class C Notes") (the Class A Notes, the Class B Notes and
the Class C Notes are referred to collectively as the
"Notes"), the proceeds of which are being used by the
Company to make payment to the Seller for the Leases.
D. Pursuant to the Indenture, the Company is
granting, inter alia, to the Trustee, for the benefit of the
holders from time to time of the Notes, a security interest
in all right, title and interest of the Company in, to and
under the Leases, the interests in the Equipment and this
Sales and Servicing Agreement.
A G R E E M E N T S
SECTION 1. PURCHASE AND SALE
1.01 Purchase of Leases. By their execution and
delivery of this Sales and Servicing Agreement, the Seller
hereby sells and assigns to the Company, and the Company
hereby purchases from the Seller without recourse (except to
<PAGE>
the extent of the Seller's repurchase obligations as set
forth herein), all of the Seller's right, title and interest
in and to each of the Leases (including the right to receive
all payments due or to become due thereunder since the
Cut-Off Date).
1.02 Consideration and Payment. The purchase
price of the Leases (including the right to receive all
payments due or to become due thereunder since the Cut-Off
Date) is $________.
1.03 Capital Contribution. The Seller and the
Company each acknowledge and confirm that contemporaneously
with the sale and purchase of the Leases as hereinabove
provided, the Seller, as the sole stockholder of the
Company, is contributing and transferring to the Company,
and in connection with each sale, transfer and assignment of
Additional Leases and Substitute Leases the Seller will
contribute and transfer to the Company, without recourse,
all right, title and interest of the Seller in and to each
item of Equipment subject to each Lease, Additional Lease
and Substitute Lease. After such contribution and transfer
by the Seller to the Company, all right, title and interest
of the Seller in and to each item of Equipment subject to
each Lease shall be vested in the Company.
1.04 Grant of Security Interest. It is the
intention of the parties hereto that the transfer of Leases,
Additional Leases, Substitute Leases, Lease Payments and all
other amounts due or becoming due with respect thereto and
Equipment (or interests therein) being made hereunder shall
constitute a purchase and sale or capital contribution and
not a loan. The Seller shall take no action inconsistent
with the Company's ownership of the Leases, the Lease
Receivables and all other amounts due or becoming due with
respect thereto and the interests in the Equipment, the
Seller shall indicate in its records that ownership of each
of the Leases, the Lease Receivables and the interests in
the Equipment is held by the Company, and the Seller shall
respond to any inquiries from third parties by indicating
that its ownership in the Leases, Additional Leases,
Substitute Leases, the Lease Receivables and all other
amounts due or becoming due with respect thereto and the
interests in the Equipment is held by the Company and
pledged to the Trustee. In the event, however, that a court
of competent jurisdiction were to hold that any transaction
evidenced hereby constitutes a loan and not a purchase and
sale or capital contribution, it is the intention of the
parties hereto that this Agreement shall constitute a
security agreement under applicable law and that the Seller
shall be deemed to have granted to the Company and the
Trustee a first priority security interest in all of the
Seller's right, title and interest in, to and under the
2
<PAGE>
Leases, Additional Leases, Substitute Leases, the Lease
Payments and the Equipment, and all proceeds of any such
Leases and Equipment.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants as
follows:
2.01 Corporate Organization and Authority.
The Seller:
(a) is a corporation duly organized,
validly existing and in good standing
under the laws of its jurisdiction of
incorporation,
(b) has all requisite power and authority
and all necessary licenses and permits
to own and operate its properties and
to carry on its business as now
conducted (except where the failure to
have such licenses and permits would
not have a material adverse effect on
the business or condition (financial
or otherwise) of the Seller or impair
the enforceability of any Lease) and
to enter into and perform its
obligations under this Sales and
Servicing Agreement, and the
transactions contemplated hereby,
including performance of the duties of
the Servicer and the Seller's support
obligations hereunder, and
(c) has duly qualified and is authorized
to do business and is in good standing
as a foreign corporation in each
jurisdiction where the character of
its properties or the nature of its
activities makes such qualification
necessary (except where the failure to
be so qualified or in good standing
would not have a material adverse
effect on the Trust Estate or the
business or condition (financial or
otherwise) of the Seller or impair the
enforceability of any Lease).
2.02 Business and Property. The Prospectus and
the Private Placement Memorandum, accurately describe in all
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material respects the general nature of the business of the
Seller. The Seller has no subsidiaries other than those
listed on Schedule 1 hereto.
2.03 Financial Statements. (a) The
consolidated balance sheet of the Seller and its
consolidated subsidiaries for the fiscal periods ended
December 31, 1995, December 31, 1994 and December 31, 1993
and the related consolidated statements of income, retained
earnings and cash flow for the respective period and fiscal
years ended on such dates, all accompanied by reports
thereon containing opinions without qualification, except as
therein noted, by KPMG Peat Marwick, independent certified
public accountants, and the unaudited interim consolidated
balance sheet of the Seller and its consolidated
subsidiaries as of March 30, 1996 and June 30, 1996 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 Seller and its
subsidiaries as of such dates and the results of their
operations for such periods.
(b) Except as disclosed in the Prospectus, the
Private Placement Memorandum and the financial statements
referred to in the preceding Section 2.03(a), since December
31, 1995 there has been no change in the business, condition
or prospects (financial or otherwise) of the Seller except
changes in the ordinary course of business, none of which
individually or in the aggregate has been materially
adverse. Neither the Seller nor any of its subsidiaries has
any material liabilities or obligations not incurred in the
ordinary course of business other than those disclosed in
the financial statements referred to in Section 2.03(a) or
for which adequate reserves are reflected in such financial
statements and certain contingent obligations of the Seller
relating to other asset securitization transactions
involving the Seller.
2.04 Equipment and Leases. (a) Prior to the
date of each transfer of any Leases and contribution of
Equipment in accordance with Sections 1.01, 1.03 and 9,
respectively, the Seller purchased each item of Equipment
from either (i) the manufacturer or other supplier following
receipt of an invoice from such manufacturer or supplier or
(ii) a Lessee following confirmation that such item of
Equipment was on such Lessee's premises. The Seller has
paid in full, to the manufacturer or supplier or Lessee, as
the case may be, the purchase price and any related charges
in connection with the acquisition of the Equipment. The
sale to the Company of the Leases and all of the Seller's
right, title and interest in each item of Equipment does not
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violate the terms or provisions of any Lease or any other
agreement to which the Seller is a party or by which it is
bound.
(b) Upon payment of the consideration described
in Section 1.02 hereof, issuance of its common stock as
described in Section 1.03 hereof, and transfer of the
Seller's interest in the Equipment, the Company will (i) be
the legal owner of the Leases (including the right to
receive all payments due or to become due thereunder),
(ii) have good title to each item of the Equipment subject
to any Lease other than a Nominal Buy-Out Lease, and (iii)
have a valid security interest in each item of Equipment
with a purchase price in excess of $25,000 subject to a
Nominal Buy-Out Lease. At such time, the Leases (including
the right to receive all payments due or to become due
thereunder) and the Seller's interest in the Equipment will
be free and clear of all Liens other than the rights of each
Lessee under the Lease to which such Lessee is a party and
the Lien created by the Indenture; and there will be no
delinquent taxes or other outstanding charges affecting the
Equipment which are or may be Liens prior to, or equal or
coordinate with, the Lien of the Trustee under the
Indenture.
(c) At the time of each transfer of a Lease
hereunder, each such Lease (i) is a triple-net lease and
(ii) is a legal, valid and binding full recourse obligation
of the Lessee thereunder, enforceable by the Company (and by
the Trustee as assignee of the Company) against such Lessee
in accordance with the terms thereof, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws relating to or
affecting the enforcement of creditors, rights and by
general equity principles, is noncancellable by the Lessee
and is in full force and effect, and any and all
requirements of any federal, state or local law, including,
without limitation, usury, truth-in-lending and equal credit
opportunity laws applicable to each Lease have been complied
with; and the Seller has no knowledge (after due inquiry) of
any challenge, dispute or claim by or against the Lessee
under or affecting any Lease or of the bankruptcy or
insolvency of any such Lessee. Each Lessee has paid at
least one installment of rent under its respective Lease.
(d) At the time that any item of Equipment
(including the Seller's security interest in any item not
owned by it) is contributed hereunder, the Seller will have
no knowledge that any item of the Equipment has suffered any
loss or damage which has not been repaired.
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(e) Each Lease requires the Lessee thereunder
to maintain insurance on the Equipment subject thereto in an
amount at least equal to the fair market value thereof.
(f) In addition to the insurance maintained by
the Lessees with respect to the Equipment, the Seller (or an
Affiliate of the Seller) maintains (i) one or more casualty
insurance policies which, in the aggregate, are in an amount
not less than the aggregate Outstanding Principal Amount of
the Notes, (ii) a general liability insurance policy in the
aggregate amount of $1,000,000 and (iii) an excess liability
insurance policy in umbrella form in the aggregate amount of
$10,000,000. Each of such policies is in full force and
effect and covers all equipment owned by the Seller and the
Company. All premiums in respect of such policies have been
paid. Each of the Trustee and the Company are named as loss
payees and additional insureds, as their interests may
appear, on such casualty and liability policies maintained
by the Seller.
(g) At the time of each transfer of a Lease
hereunder, no Lease had outstanding rent which was [63] or
more days past due as of the Cut-Off Date.
(h) Each Lease was entered into or acquired by
the Seller in accordance with the Seller's regular credit
approval process described in the Prospectus, and no
selection procedures adverse to the credit quality of the
Leases were employed in selecting the Leases for sale under
this Sales and Servicing Agreement.
(i) [insert representation re lease
characteristics]
(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 Company, the Seller or the Servicer
or any change in circumstance of such Lessee or any other
circumstance whatsoever except to the extent that in the
event of a casualty of any item of Equipment, the Lessee is
obligated to pay, in lieu of the future Lease Payments with
respect to such item, an amount which equals or exceeds the
Discounted Present Value of the Lease as of the Payment Date
next succeeding the making of such payment.
(k) In the case of each Lease which consists of
a master lease and one or more exhibits or schedules
thereto, the Seller has neither assigned such master lease
in its entirety, nor delivered physical possession of such
master lease, to any Person other than the Company or the
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Trustee (including the trustee under another indenture in a
transaction substantially similar to the transaction
contemplated hereby, which other indenture provides that the
lien thereof on such master lease extends only to such
master lease insofar as it relates to lease schedules which
are not part of the Trust Estate).
(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
(a) originated by the Seller in the ordinary course of its
business or (b) purchased by the Seller for value and taken
into possession prior to the Cut-Off Date in the ordinary
course of its business.
(p) No Lease was originated in or is subject to
the laws of any jurisdiction whose laws would make the
transfer and sale thereof under this Sales and Servicing
Agreement unlawful.
(q) All parties to each Lease had authority and
capacity to execute such Lease.
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(r) None of the Leases is a consumer lease and
each Lessee has accepted the Equipment leased to it.
(s) The book value of the Equipment as of the
Cut-Off Date equals $__________.
(t) All parties to each Lease had all requisite
authority and capacity to execute such Lease.
2.05 Payments. (a) The aggregate amount of
Lease Payments payable by the Lessees under the Leases
during each Payment Period (as defined in the Indenture) is
sufficient to cover the Servicing Fee and pay the principal
and interest on the Notes, as such payments become due and
payable.
(b) The portfolio detail delivered or to be
delivered to the Trustee on or prior to the Closing Date
(i) accurately sets forth, as of the Cut-Off Date, the
amount of each Lease Payment due under each of the Leases
and the month in which such Lease Payment is to be paid in
accordance with the terms of the Lease under which the same
is to be paid, (ii) accurately sets forth, as of the Cut-Off
Date, the information with respect to certain other
characteristics of the Leases and the Equipment described in
such portfolio detail and (iii) is otherwise true and
correct in all respects.
2.06 Full Disclosure. The Prospectus and the
Private Placement Memorandum (including, without limitation,
the statistical and descriptive information with respect to
the initial Leases, Lessees and Equipment), as of their
respective dates, do not contain any untrue statement of a
material fact or omit a material fact necessary to make the
statements contained therein, in light of the circumstances
under which they were made, not misleading. There is no
fact peculiar to the Seller or any Affiliate of the Seller
or, to the knowledge of the Seller, any Lease, Lessee or
item of Equipment, which the Seller has not or will not
disclose in the Prospectus or the Private Placement
Memorandum which materially affects adversely nor, so far as
the Seller can now reasonably foresee, will materially
affect adversely the ability of the Seller to perform the
transactions contemplated by this Sales and Servicing
Agreement.
2.07 Pending Litigation. There are no
proceedings or investigations pending, or to the knowledge
(after due inquiry) of the Seller threatened, against or
affecting the Seller or any subsidiary in or before any
court, governmental authority or agency or arbitration board
or tribunal, including, but not limited to, any such
proceeding or investigation with respect to any
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environmental or other liability resulting from the
ownership or use of any of the Equipment, which,
individually or in the aggregate, involve the possibility of
materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of
the Seller and its subsidiaries, or the ability of the
Seller to perform its obligations under this Sales and
Servicing Agreement. The Seller is not in default with
respect to any order of any court, governmental authority or
agency or arbitration board or tribunal.
2.08 Title to Properties. Immediately following
the transfer by the Seller to the Company of the Leases and
the Seller's interest in the Equipment, the Leases
(including the right to receive all payments due or to
become due thereunder) and the interest in the Equipment
will be free and clear of all Liens, except the Lien on the
Trust Estate in favor of the Trustee granted pursuant to the
Indenture (or the Lien in favor of the Company which is
assigned to the Trustee pursuant to the Indenture).
2.09 Transactions Legal and Authorized. The
transfer by the Seller of all of its right, title and
interest in and to each item of Equipment and each Lease
(including the right to receive all payments due or to
become due thereunder) and compliance by the Seller with all
of the provisions of this Sales and Servicing Agreement:
(a) have been duly authorized by all necessary
corporate action on the part of the Seller,
and do not require any stockholder
approval, or approval or consent of any
trustee or holders of any indebtedness or
obligations of the Seller except such as
have been duly obtained;
(b) are within the corporate powers of the
Seller; and
(c) are legal and will not conflict with,
result in any breach in any of the
provisions of, constitute a default under,
or result in the creation of any Lien upon
any property of the Seller under the
provisions of, any agreement, charter
instrument, by-law or other instrument to
which the Seller is a party or by which it
or its property may be bound or result in
the violation of any law, regulation, rule,
order or judgment applicable to the Seller
or its properties, or any order to which
the Seller or its properties is subject, of
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or by any government or governmental agency
or authority.
2.10 Governmental Consent. No consent, approval
or authorization of, or filing, registration or
qualification with, any governmental authority is necessary
or required on the part of the Seller in connection with the
execution and delivery of this Sales and Servicing Agreement
or the sale of the Leases and contribution of the Equipment.
2.11 Taxes. (a) All tax returns required to be
filed by the Seller or any subsidiary in any jurisdiction
have in fact been filed, and all taxes, assessments, fees
and other governmental charges upon the Seller or any
subsidiary, or upon any of their respective properties,
income or franchises, shown to be due and payable on such
returns have been paid. To the best of the Seller's
knowledge all such tax returns were true and correct and
neither the Seller nor any subsidiary knows of any proposed
additional tax assessment against it in any material amount
nor of any basis therefor.
(b) The provisions for taxes on the books of
the Seller and each of its subsidiaries are in accordance
with generally accepted accounting principles.
2.12 Compliance with Law.
The Seller:
(a) is not in violation of any laws,
ordinances, governmental rules or
regulations to which it is subject;
(b) has not failed to obtain any licenses,
permits, franchises or other
governmental authorizations necessary
to the ownership of its property or to
the conduct of its business; and
(c) is not in violation in any material
respect of any term of any agreement,
charter instrument, by-law or other
instrument to which it is a party or
by which it may be bound,
which violation or failure to obtain might materially
adversely affect the business or condition (financial or
otherwise) of the Seller and its subsidiaries.
2.13 ERISA. (a) The present value of all
benefits vested under all "employee pension benefit plans,"
as such term is defined in Section 3 of ERISA, maintained by
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the Seller and its Related Persons, or in which employees of
the Seller or any Related Person are entitled to
participate, 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 (based on the value of such assets as of December
31, 1994, the last annual valuation date);
(b) No Prohibited Transactions, Accumulated
Funding Deficiencies, Withdrawals or Reportable Events have
occurred with respect to any Pension Plans that, in the
aggregate, could subject the Seller to any material tax,
penalty or other liability; and
(c) No notice of intent to terminate a Pension
Plan has been filed, nor has any Pension Plan been
terminated under Section 4041 (f) of ERISA, 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 Seller does not believe, nor does it have any reasonable
cause to believe, that it cannot perform each and every
covenant contained in this Sales and Servicing Agreement.
2.15 Ordinary Course; No Insolvency. The
transactions contemplated by the Notes, the Indenture and
this Sales and Servicing Agreement are being consummated by
the Seller in furtherance of the Seller's ordinary business
purposes and constitute a practical and reasonable course of
action by the Seller designed to improve the financial
position of the Seller, with no contemplation of insolvency
and with no intent to hinder, delay or defraud any of its
present or future creditors. The Seller will not, either as
a result of the transaction contemplated by this Sales and
Servicing Agreement, or immediately before or after such
transaction, be insolvent or have an unreasonably small
capital for the conduct of its business and the payment of
anticipated obligations.
2.16 Assets and Liabilities. (a) Both
immediately before and after any transfer of Leases
(including the right to receive all payments due or to
become due thereunder) and the transfer of the interests in
the Equipment contemplated by this Sales and Servicing
Agreement, the present fair salable value of the Seller's
assets was or will be in excess of the amount that will be
required to pay the Seller's probable liabilities as they
then exist and as they become absolute and matured; and
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(b) Both immediately before and after any
transfer of Leases (including the right to receive all
payments due or to become due thereunder) and the transfer
of the interests in the Equipment contemplated by this Sales
and Servicing Agreement, the sum of the Seller's assets was
or will be greater than the sum of the Seller's debts,
valuing the Seller's assets at a fair salable value.
2.17 Fair Consideration. The consideration
received by the Seller, in exchange for the Leases
(including the right to receive all payments due or to
become due thereunder) and the transfer of its interests in
the Equipment, is fair consideration having value equivalent
to or in excess of the value of the assets being transferred
by the Seller.
2.18 Ability to Pay Debts. Neither as a result
of the transaction contemplated by this Sales and Servicing
Agreement nor otherwise does the Seller believe that it will
incur debts beyond its ability to pay or which would be
prohibited by its charter documents or by-laws. The
Seller's assets and cash flow enable it to meet its present
obligations in the ordinary course of business as they
become due.
2.19 Bulk Transfer Provisions. The sale,
transfer, assignment and conveyance of the Leases and its
interests in the Equipment by the Seller pursuant to this
Sales and Servicing Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in
any applicable jurisdiction.
2.20 Transfer Taxes. The sale, transfer,
assignment and conveyance of the Leases (including all
payments due or to become due thereunder) and its interests
in the Equipment by the Seller pursuant to this Sales and
Servicing Agreement is not subject to and will not result in
any tax, fee or governmental charge payable by the Seller to
any federal, state or local government ("Transfer Taxes").
In the event that the Company receives actual notice of any
Transfer Taxes arising out of the transfer, assignment and
conveyance of the Leases and/or its interests in the
Equipment, on written demand by the Company, or upon the
Seller otherwise being given notice thereof, the Seller
shall pay, and otherwise indemnify and hold the Company, the
Trustee and the holders of the Notes harmless, on an
after-tax basis, from and against any and all such Transfer
Taxes (it being understood that the holders of the Notes and
the Trustee shall have no obligation to pay such Transfer
Taxes).
2.21 Principal Executive Office. The principal
executive office of each of the Seller and the Servicer is
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located at [East Gate Center, 700 East Gate Drive, Mount
Laurel, New Jersey].
2.22 Servicing Provisions Customary. The
servicing arrangements hereunder, including without
limitation the terms and conditions pursuant to which the
Seller will act as Servicer and the Servicing Fee to be paid
to the Seller, are consistent with the arrangements and
customary practices of the Seller when providing comparable
services to non-affiliated entities and of other servicers
in the equipment leasing industry.
2.23 Nonconsolidation. The Seller is at all
times since its incorporation has been operated in such a
manner that it would not be substantively consolidated with
the Company, such that the separate existence of the Seller
and the Company would be disregarded in the event of a
bankruptcy or insolvency of the Seller or the Company, and
in such regard:
(a) the Seller is not involved in the day-to-
day management of the Company;
(b) the Seller maintains separate corporate
records and books of account from the Company and otherwise
observes corporate formalities and has a separate business
office from the Company;
(c) the financial statements and books and
records of the Seller prepared after the Closing Date will
reflect the separate existence of the Company;
(d) the Seller maintains its assets separately
from the assets of the Company (including through the
maintenance of a separate bank account), the Seller's funds
and assets, and records relating thereto, have not been and
are not commingled with those of the Company and the
separate creditors of the Company will be entitled to be
satisfied out of the Company's assets prior to any value in
the Company becoming available to the Company's equity-
holders or the Seller's creditors;
(e) all business correspondence of the Seller
and other communications are conducted in the Seller's own
name and on its own stationery; and
(f) the Company does not act as an agent of the
Seller in any capacity and the Seller does not act as agent
for the Company, but instead presents itself to the public
as a corporation separate from the Company; provided that
the Seller is the Servicer hereunder.
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2.24 Sale Treatment. The Seller will treat the
transfer to the Company of the Leases and the Lease
Receivables as a sale for reporting and accounting purposes
and the Seller will treat the transfer to the Company of its
interest in the Equipment as a contribution for reporting
and accounting purposes.
SECTION 3. ADMINISTRATION OF LEASES
3.01 Servicer to Act. (a) Notwithstanding the
transfers and assignments of the Leases (including the right
to receive all payments due or to become due thereunder) and
the related interests in the Equipment contemplated hereby,
the Servicer, for the benefit of the Company, will service
and administer each Lease in accordance with the terms
thereof and of this Sales and Servicing Agreement. The
Servicer shall take, or cause to be taken, all such actions
as may be necessary or advisable to service, administer and
collect each Lease from time to time, all in accordance with
(i) customary and prudent servicing procedures for leases of
a similar type, (ii) all applicable laws, rules and
regulations, and (iii) without limitation as to its
obligations under the preceding clauses (i) and (ii), no
less a standard of care than that which it applies to Leases
it services for its own account. The Servicer shall provide
the Lessees with appropriate invoices and such other notices
as may be required to ensure that all Lease Payments,
Casualty Payments and Termination Payments on or in respect
of each Lease are remitted by the Lessees to the address
specified by the Servicer. The Servicer shall deposit such
payments to the Collection Account within one Business Day
of the receipt thereof. Any other amount received by the
Servicer from time to time from the Seller, the Company or
any Lessee which is or is intended to be subject to the Lien
of the Indenture shall be held in trust by the Servicer, as
agent for the Trustee and promptly turned over to the
Trustee or deposited into the Collection Account for
application in accordance with the provisions of the
Indenture.
(b) The Servicer shall do, and shall have full
power and authority to do, subject only to the specific
requirements and prohibitions of this Sales and Servicing
Agreement, any and all things in connection with the
servicing and administration of the Leases and the interests
in the Equipment which are consistent with the manner in
which it services leases and equipment constituting part of
its own portfolio and consistent with the customary
practices of servicers in the equipment leasing industry,
but in performing its duties hereunder, the Servicer will
act on behalf and for the benefit of the Company, the
Trustee and the holders of the Notes, subject at all times
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to the provisions of the Indenture, without regard to any
relationship which the Servicer or any Affiliate of the
Servicer may otherwise have with a Lessee. The Servicer
shall at all times act in accordance with the provisions of
each Lease, and shall observe and comply with all
requirements of law applicable to it. Except as permitted
by the terms of any Lease following a default thereunder,
the Servicer shall not take any action which would result in
the interference with the Lessee's right to quiet enjoyment
of the Equipment subject to the Lease during the term
thereof. The Servicer shall exercise with respect to each
item of Equipment all rights and remedies it, the Company or
the Trustee shall have against any vendor of the Equipment,
subject to the provisions of any Lease, and shall promptly
pay all amounts realized from such actions to the Trustee
for deposit in the Collection Account.
(c) Without limiting the generality of the
foregoing, the Servicer agrees to (i) invoice each Lessee
monthly (except quarterly in the case of Leases which
provide for quarterly Lease Payments) for all Lease Payments
required to be paid by such Lessee in such manner and to the
same extent as the Servicer does with respect to leases held
for its own account, (ii) maintain with respect to each
Lease and each item of Equipment, and with respect to each
payment by each Lessee and compliance by each Lessee with
the provisions of each Lease, complete and accurate records
in the same form and to the same extent as the Servicer does
with respect to leases and equipment held for its own
account (which records shall be at least as complete and
accurate as those maintained by the Servicer as of the date
of this Sales and Servicing Agreement), and (iii) from time
to time execute, deliver and file (or cause the same to be
done), and the Servicer is hereby authorized and empowered
to execute, deliver, and file on behalf of the Company and
the Trustee, any and all tax returns with respect to sales,
use, personal property and other taxes (other than corporate
income tax returns) and any and all reports or licensing
applications required to be filed in any jurisdiction with
respect to any Lease or any item of Equipment and any and
all required Financing Statements and assignments of
Financing Statements and such additional Financing
Statements and continuation statements with respect thereto
as may from time to time be necessary because of Lease
substitutions, equipment replacements in accordance with the
provisions of any Lease or otherwise so that the security
interest contemplated by the Indenture in favor of the
Trustee in each of the Leases, at all times will be
perfected by such filings with the appropriate Uniform
Commercial Code filing offices; provided, further, that in
the event that the senior debt obligations of the Seller
currently rated _____ by S&P, _____ by Moody's and ____ by
DCR are placed on credit review with negative implications,
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or if such rating is withdrawn or downgraded, the Seller
shall, within 30 days of such event file UCC-1 Financing
Statements naming the Seller as debtor, the Company as
secured party and the Trustee as assignee with respect to
all Equipment, other than Equipment related to Nominal
Buy-Out Leases, located in the following states:
_______________________________________________. The Seller
and the Servicer agree to file Financing Statements on Form
UCC-1 to perfect the security interest of the Trustee in the
Leases and the Lease Payments, and to the extent provided
herein, the Equipment.
(d) The Servicer will maintain, or cause to be
maintained, with respect to the Leases and the Equipment
casualty and liability insurance in amounts at least as
great as those described in Section 2.04(f). Each such
casualty and liability policy (i) if maintained by the
Servicer, shall name the Company and Trustee as loss payees
or additional insureds and (ii) if maintained by the Lessee,
shall name the Servicer or the Trustee as loss payee and
additional insured; provided that the Servicer shall cause
all such policies to name the Trustee and the Company as
loss payees and additional insureds if (A) the Seller is no
longer the Servicer, (B) an Event of Default shall have
occurred and be continuing or (C) a Servicer Event of
Default shall have occurred and be continuing.
(e) On or prior to the Closing Date, the
Servicer will file the Financing Statements and assignments
of Financing Statements in accordance with the Filing
Requirements and thereafter will file such additional
Financing Statements and continuation statements and
assignments with respect thereto 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 contribution of the Equipment subject
thereto, and Equipment and Lease substitutions pursuant to
Section 9 hereof or otherwise so that (i) the ownership
interest contemplated by this Agreement in favor of the
Company and the security interest contemplated by the
Indenture in favor of the Trustee in (A) each of the Leases,
and (B) Equipment subject to Leases having a Discounted
Present Value of at least 75% of the aggregate Discounted
Present Value of all Leases will be perfected by such
filings with the appropriate Uniform Commercial Code filing
offices.
(f) The Servicer shall enforce the obligations
of the party responsible for providing maintenance services
under each Acquisition Agreement covering any Maintenance
Included Lease (a "Maintenance Provider"). If at any time a
Maintenance Provider is unable to, or does not in a manner
acceptable to the Servicer, fulfill its maintenance
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obligations under an Acquisition Agreement covering any
Maintenance Included Lease, the Servicer shall substitute a
new provider of maintenance services for such Lease and
thereupon, such new provider shall be the Maintenance
Provider for such Lease for all purposes hereunder. Upon
such substitution, all Maintenance Charges due pursuant to
the Acquisition Agreement with respect to such Lease shall
be paid to the new Maintenance Provider; provided that such
Maintenance Charges shall not exceed the Maintenance Charges
set forth in the Acquisition Agreement covering such Lease.
Any separate maintenance agreement with any new Maintenance
Provider shall be assigned to the Trustee pursuant to the
Indenture.
3.02 Lease Amendments and Modifications. In
performing its obligations hereunder, the Servicer may,
acting in the name of the Company and without the necessity
of obtaining the prior consent of the Company or the
Trustee, enter into and grant modifications, waivers and
amendments to the terms of any Lease except for
modifications, waivers or amendments that (a) are
inconsistent with the servicing standards set forth in
Section 3.01 above, (b) would reduce the amount or extend
the time for payment of any Lease Payment, Casualty Payment
or Termination Payment to be made under a Lease (other than
to permit termination of a Lease which does not otherwise
provide for termination by requiring the payment, in lieu of
all future Lease Payments with respect to the Lease or
Equipment subject thereto, an amount which equals or exceeds
the Lease Repurchase Amount for such Lease as of such date)
or the Lessee's absolute and unconditional obligation to
make payment of the same, (c) would reduce or adversely
affect the Lessee's obligation to maintain, service, insure
and care for the Equipment or would permit the alteration of
any item of Equipment in any way which could adversely
affect its present or future value or (d) otherwise could
adversely affect the interests of any of the Company, the
Trustee or the holders of the Notes.
In the event of any modification, waiver or
amendment of any Lease in accordance with this Section 3.02,
the Servicer will promptly furnish the Company and the
Trustee with a copy thereof, together with a certificate of
the Servicer signed by one of its executive or financial
officers stating that such modification, waiver or amendment
is permitted by the provisions of this Section 3.02.
In addition, following the transfer of any Lease
to the Issuer in accordance herewith, there may be
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, but will not be considered to be a substitution
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or prepayment of such Lease. To the extent that such
administrative adjustments in the aggregate result in a
breach of the representations and warranties of the Seller
with respect to such Leases, Copelco Capital will be
required to contribute additional Leases to the extent
necessary to remedy such breach.
3.03 Non-Performing Leases. (a) Upon receipt
of notice from the Company, the Trustee or any other Person,
or if the Servicer otherwise learns that any Lease is a
Non-Performing Lease, the Servicer will take such action as
is appropriate, consistent with the Servicer's
administration of leases in its own portfolio and consistent
with the customary practices of servicers in the equipment
leasing industry, including such action as may be necessary
to cause, or attempt to cause, the Lessee thereunder to cure
such non-performance (if the same may be cured) or to
terminate or attempt to terminate such Lease and to recover,
or attempt to recover, all damages resulting from such
default. The Servicer shall demand, on behalf of the
Company, that the Seller immediately repay any Inter-Company
Loan representing the advance pursuant to Section 12.01
hereof of any security deposit with respect to any Lease
which becomes a Non-Performing Lease, and the Servicer shall
apply such security deposit in accordance with Section
3.03(d) hereof.
(b) The Servicer will use its best efforts to
sell or lease any Equipment upon the expiration or early
termination of a Lease or that is subject to a
Non-Performing Lease in a timely manner and upon the most
favorable terms and conditions available at the time. In
the event of an early lease termination, any substitute
Lease must have a Discounted Present Value equal to or
greater than that of the terminated Lease and monthly
payments at least equal to those of the terminated Lease
through the remaining term of such terminated Lease.
(c) In the event that the Servicer is required
to sell or lease any item of Equipment pursuant to the
provisions of this Section 3.03 at a time when the Servicer
has other similar items of equipment available to it, the
Servicer will not favor any such other item in its
remarketing efforts.
(d) All amounts realized by the Servicer in the
performance of its duties hereunder with respect to any
Lease or Equipment remaining subject to the Lien of the
Indenture (net of the Servicer's actual out-of-pocket
expenses reasonably incurred in such realization) shall be
held in trust by the Servicer, as agent for the Trustee and
deposited into the Collection Account for application in
accordance with the provisions of the Indenture; provided
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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 Company on
each Payment Date following the Closing Date a servicing fee
(the "Servicing Fee") in the amount described in paragraph
(b) below.
(b) The amount of the Servicing Fee which the
Servicer shall be entitled to receive on each Payment Date
following the original issuance of the Notes shall be
determined by multiplying the Outstanding Principal Amount
of the Notes at the Determination Date for such Payment Date
times one-twelfth of 1.00%.
(c) The Servicer agrees to pay, out of the
Servicing Fee, all Trustee's Fees and expenses in connection
with the Notes (including the expenses relating to the
preparation and delivery of reports to Noteholders) and all
fees of accountants in connection with the Notes.
3.05 Other Transactions. Nothing in this Sales
and Servicing Agreement shall preclude the Seller or the
Servicer from entering into other leases or other financial
transactions with any Lessee or selling or discounting any
such lease with any Person.
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SECTION 4. SERVICER ADVANCES AND SELLER'S SUPPORT
4.01 Late Lease Payments. On each Determination
Date, the Servicer may, but will not be required to, advance
and remit to the Trustee, in such manner as will ensure that
the Trustee will have immediately available funds on account
thereof by 11:00 a.m. New York City time on the second
Business Day prior to the next succeeding Payment Date, an
amount (a "Servicer Advance") equal to any Lease Payment due
during the prior Lease Payment Period but unpaid prior to
such Determination Date with respect to any Lease. In
consideration of each Servicer Advance the Servicer will be
entitled to retain any late payment fees recovered from the
Lessee with respect to any lease Payment covered by a
Servicer Advance. In addition, the Servicer will be
reimbursed for Servicer Advances from funds in the
Collection Account in accordance with the Indenture on the
second following Payment Date.
4.02 Early Termination Leases. Following the
Determination Date as of which any Lease first becomes an
Early Termination Lease the Seller may, but shall have no
obligation to, either (a) substitute one or more Eligible
Leases and the Equipment subject thereto for such Lease and
the Equipment subject thereto pursuant to Section 9 hereof
(if the Seller is then entitled to substitute Leases and
Equipment in accordance with the provisions of Section 9.01
hereof) on or before the second Business Day prior to the
next succeeding Payment Date, (b) repurchase from the
Company such Lease and the related Equipment by remitting to
the Trustee an amount equal to the Lease Repurchase Amount
in such manner as will ensure that the Trustee will have
immediately available funds therefor by 11 a.m. New York
City time on the second Business Day prior to the next
succeeding Payment Date or (c) offer for sale to the Company
one or more Additional Leases in consideration of the
proceeds thereof in accordance with Section 9 hereof. Any
Early Termination Lease and the Equipment subject thereto
which is repurchased, or for which an Additional Lease 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 or Substitute Lease or Substitute Leases
have been transferred in accordance with the provisions of
Section 9 hereof or the Lease Purchaser Amount has been
deposited into the Collection Account. A Lease will be
considered to be an "Eligible Lease" if on the date such
Lease is substituted for or added in replacement of an Early
Termination Lease, such Lease satisfies the representations
and warranties set forth in Section 2.04(a) through (r) and
the requirements of Section 9 hereof.
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4.03 Indemnification. The Seller agrees to
indemnify and hold harmless the Company, the Servicer, the
Trustee and each holder of the Notes (each an "Indemnified
Party") against any and all liabilities, losses, damages,
penalties, costs and expenses (including costs of defense
and legal fees and expenses) which may be incurred or
suffered by such Indemnified Party (except to the extent
arising out of the gross negligence or willful misconduct on
the part of the Indemnified Party) as a result of claims,
actions, suits or judgments asserted or imposed against it
and arising out of the transactions contemplated hereby or
by the Indenture, including, without limitation, any claims
resulting from any use, operation, maintenance, repair,
storage or transportation of any item of Equipment, whether
or not in the Servicer's possession or under its control
pursuant to this Sales and Servicing Agreement, and any tort
claims and any fines or penalties arising from any violation
of the laws or regulations of the United States or any state
or local government or governmental authority; provided that
the foregoing indemnity shall in no way be deemed to impose
on the Seller any obligation, other than to the extent
specifically set forth in this Section 4, to make any
payment with respect to principal or interest on the Notes
or to reimburse the Company for any payments on account of
the Notes.
4.04 Other Payments. (a) In the event that
(i) any of the representations or warranties made by the
Seller in Sections 2.04 and 2.05 hereof with respect to any
of the Leases or the Equipment subject thereto proves at any
time to have been inaccurate in any material respect as of
the Closing Date or (ii) any Lease shall be terminated in
whole or in part by a Lessee, or any amounts due with
respect to any Lease shall be reduced or impaired, as a
result of any action or inaction by the Seller (other than
any such action or inaction of the Seller, when acting as
Servicer, in connection with the enforcement of any Lease in
a manner consistent with the provisions of this Sales and
Servicing Agreement) or any claim by any Lessee against
the Seller and, in any such case, the event or condition
causing such inaccuracy, termination, reduction, impairment
or claim shall not have been cured or corrected within 30
days after the earlier of the date on which the Seller is
given notice thereof by the Company or the Trustee or the
date on which the Seller otherwise first has notice thereof,
the Seller will repurchase such Lease and the Equipment
subject thereto by paying to the Trustee, not later than the
third Business Day after the Determination Date next
following the expiration of such 30-day period, an amount
equal to the Lease Repurchase Amount, and simultaneously
with such repurchase, the Seller shall reimburse the
Servicer for all amounts, if any, theretofore advanced by
the Servicer pursuant to Section 4.01 with respect to such
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Lease. Without limiting the generality of the foregoing, it
is agreed and understood that for purposes of this Section
4.05, any inaccuracy in any representation or warranty with
respect to (i) the priority of the Lien of the Indenture
with respect to any Lease or (ii) the amount (if less than
represented) of the Lease Payments, Casualty Payments or
Termination Payment under any Lease shall be deemed to be
material.
(b) The Seller agrees to obtain and provide to
the Trustee UCC searches against it and the Company from the
central filing offices in New Jersey confirming the absence
of any UCC filings against either the Seller or the Company
with respect to the Leases (including the right to receive
all payments due or to become due thereunder) and the
Equipment, other than those naming the Company as the
purchaser of the Leases or the Trustee as secured party. If
any searches delivered pursuant to this Section 4.05(b)
disclose UCC filings (which are not in the process of being
released pursuant to releases delivered on the Closing Date)
against the Company or the Seller with respect to Leases of
Equipment the Discounted Present Value of which (i) is
greater than 2% but less than 5% of all the Leases, then the
Seller shall cause searches to be made in additional states
within 30 days following such disclosure so that the
Discounted Present Value of Leases of Equipment in states
where searches have been performed exceeds 75% of the
aggregate Discounted Present Value of all Leases or (ii) is
greater than 5% of all the Leases then the Seller shall
cause searches to be made in additional states within 30
days following such disclosure so that the Discounted
Present Value of Leases of Equipment in states where such
searches have been performed equals 100% of the aggregate
Discounted Present Value of all Leases. Without limiting
the provisions of Section 4.05(a) or this Section 4.05(b),
in the event the Seller fails to provide any such searches
required by the preceding sentences of this Section 4.05(b)
within the required time period or any search reveals the
existence of any conflicting Liens (which are not removed
within 30 days of receipt of such search), the Seller shall
be required to repurchase not later than the third Business
Day after the Determination Date following the expiration of
the time period during which such search was to be obtained
or such Lien released, as the case may be, any Lease of
Equipment in any such state for which such searches are not
provided or with respect to which conflicting Liens are
found to exist at the Lease Repurchase Amount for such
Lease.
(c) The Seller's obligations under this Section
4.05 are the full recourse obligations of the Seller and
shall in no way be limited or discharged by the application
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of any funds constituting part of the Trust Estate or by any
amounts drawn on the Copelco Limited Guarantee.
4.05 Payment Advices. Each payment by the
Seller or the Servicer to the Trustee pursuant to any of the
provisions of this Sales and Servicing Agreement shall be
accompanied by written advice containing sufficient
information to identify the Lease and/or Equipment to which
such payment relates, the Section of this Sales and
Servicing Agreement pursuant to which such payment is made,
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. (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 holder of the Notes) a written report, signed by one
of the Servicer's financial officers, (i) identifying each
Lease with respect to which any Lease Payment was 30 or more
days overdue as of the end of the immediately preceding
Lease Payment Period, the Discounted Present Value of such
Lease as of such Payment Date, the amount advanced by the
Servicer with respect to such Lease pursuant to Section 4.01
hereof since the Servicer's previous monthly report (or, in
the case of the first such report, since the Cut-Off Date),
(ii) identifying each Lease with respect to which any Lease
Payment was 60 or more days overdue as of the end of the
immediately preceding Lease Payment Period, the Discounted
Present Value of such Lease as of such Payment Date, the
amount advanced by the Servicer with respect to such Lease
pursuant to Section 4.01 hereof since the Servicer's
previous monthly report (or, in the case of the first such
report, since the Closing Date), (iii) identifying each
Lease with respect to which any Lease Payment was 94 or more
days overdue as of the end of the immediately preceding
Lease Payment Period, the Discounted Present Value of such
Lease as of such Payment Date, the amount advanced by the
Servicer with respect to such Lease pursuant to Section 4.01
hereof since the Servicer's previous monthly report (or, in
the case of the first such report, since the Closing Date),
(iv) identifying each Lease which became a Non-Performing
Lease as of the preceding Determination Date and specifying
the Discounted Present Value of such Lease as of such
Determination Date (or, in the case of the first such
report, subsequent to the Cut-Off Date) and the aggregate
Discounted Present Value of all such Non-Performing Leases
and (v) indicating the aggregate amount recovered by the
Servicer subsequent to the preceding Payment Date (or, in
the case of the first Payment Date, subsequent to the
Cut-Off Date) and on or prior to such Payment Date with
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respect to Lease Delinquency Payments and Non-Performing
Lease Payments previously made by the Seller and the
Servicer (and the specific amounts so recovered with respect
to any Non-Performing Lease). 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.
5.02 Certain Reports and Calculations. (a) The
Servicer shall identify and report to the Trustee in writing
each Lease Payment, Casualty Payment, Termination Payment,
Similar Transaction Payment, Other Lease Payment and all
other payments deposited by the Servicer in the Collection
Account by 11:00 a.m. on the second Business Day following
the receipt and deposit of such items, which report shall
include a calculation of the Transaction Payment Amount and
the Similar Transaction Amount with respect to such items
and the total amount of such Other Lease Payments.
(b) By 11:00 a.m. on the second Business Day
following each Determination Date, the Servicer will report
in writing to the Trustee the total amount of all Lease
Payments, Casualty Payments, Termination Payments,
Non-Performing Lease Payments, Similar Transaction Payments
and Other Lease Payments received by the Servicer and
deposited in the Collection Account prior to such
Determination Date and on or subsequent to the Determination
Date preceding such Determination Date (or, in the case of
the first Determination Date, on or subsequent to the
Cut-Off Date). Such report shall indicate the amount of all
Lease Payments received by the Servicer and deposited in the
Collection Account which are for any Lease Payment Period
other than the Lease Payment Period for such Determination
Date and shall identify each Lease with respect to which a
Casualty Payment, Termination Payment or Non-Performing
Lease Payment was made during such time period. Such report
shall also indicate (i) the aggregate amount paid by the
Servicer on or subsequent to the most recent Determination
Date with respect to Non-Performing Leases pursuant to
Section 4.01 hereof, and (ii) the aggregate amount
reimbursed to the Servicer prior to the most recent
Determination Date and on or subsequent to the Determination
Date preceding such Determination Date (or, in the case of
the first Determination Date, on or subsequent to the
Cut-Off Date) for actual cash payments made by the Servicer
with respect to Non-Performing Leases pursuant to Section
4.01 hereof. The Servicer hereby represents and warrants
that such calculations will be correct and accurate, and the
Servicer shall be fully responsible for, and shall reimburse
and indemnify each Indemnified Party for, any loss resulting
from such Indemnified Party's reliance on any such
calculations which are not correct.
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(c) If the Servicer intends to withdraw any
funds from the Administration Account in accordance with
Section 3.02(c) of the Indenture after the Payment Date
relating to the Determination Date for which a report is
submitted pursuant to Section 5.03 (b) hereof, the Servicer
shall submit with such report a certificate (i) setting
forth the amounts to be withdrawn (on an item-by-item
basis), (ii) stating that none of such amounts are all or
part of any Lease Payment, Lease Delinquency Payment,
Non-Performing Lease Payment, Casualty Payment or
Termination Payment, and (iii) identifying the lease or
leases to which such amounts relate. The Seller agrees to
report as income for financial reporting and tax purposes
(to the extent reportable) all investment earnings on
amounts in the Administration Account.
5.03 Annual Independent Public Accountant's
Report. The Servicer shall cause a firm of independent
public accountants (who may also render other services to
the Servicer or to the Seller) to deliver to the Trustee,
with a copy to each Rating Agency, within 135 days following
the end of each fiscal year of the Servicer, beginning with
the Servicer's fiscal year ending December 31, 1996, a
written statement to the effect that such firm has
(a) obtained from the Servicer a copy of the monthly status
report pursuant to Section 5.01 for a single month during
the previous calendar year; (b) compared the information
contained in such monthly status report and in the monthly
summaries prepared by the Servicer in support of such
monthly status report to the computer printouts and accounts
prepared by the Servicer and supporting such reports; and
(c) selected, at random, at least ten 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
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each jurisdiction in which such qualification is necessary
to protect the validity and enforceability of any of the
Leases or to permit performance of the Servicer's duties
under this Sales and Servicing Agreement.
6.02 Limitation on Liability of the Servicer and
Others. Neither the Servicer nor any of the directors,
officers, employees or agents of the Servicer shall incur
any liability to the Company, the Trustee or the holders of
the Notes for any action taken or not taken in good faith
pursuant to the terms of this Sales and Servicing Agreement
with respect to any Lease (including any Non-Performing
Lease) or the Equipment subject thereto; provided, however,
that this provision shall not protect the Servicer or any
such person against any breach of warranties, represen-
tations or covenants made by it herein or in any certificate
delivered in conjunction with the purchase of the Notes or
for any liability which would otherwise be imposed for any
action or inaction resulting from willful misconduct or bad
faith or for negligence in the performance or nonperformance
of its duties hereunder.
6.03 Servicer Not to Resign or Be Removed. The
Servicer shall not resign from the servicing obligations and
duties hereby imposed on it except upon determination that
such duties hereunder are no longer permissible under
applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an opinion
of independent counsel to the Servicer, in form and
substance satisfactory to the holders of the Notes, to such
effect delivered to the Trustee.
Except as provided in Section 8.02 hereof, the
Servicer shall not be removed or be replaced as Servicer
with respect to any Lease or any of the Equipment.
No resignation or removal of the Servicer shall in
any event (i) become effective until the Trustee or a
successor servicer shall have assumed the Servicer's
servicing responsibilities and obligations in accordance
with Section 8.02 hereof, or (ii) affect the Seller's
obligations pursuant to Section 4 hereof.
6.04 Financial and Business Information. The
Servicer will deliver to the Company, the Trustee and, upon
request, each holder of outstanding 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, to each Rating Agency:
(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, three copies of:
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(1) a consolidated balance sheet of the
Servicer (or its parent) and its consolidated
subsidiaries at the end of such quarter, and
(2) consolidated statements of income, retained
earnings and cash flow of the Servicer (or its parent)
and its consolidated subsidiaries for that quarter and
for the portion of the fiscal year ending with such
quarter,
accompanied by a certificate signed by a principal financial
officer of the Servicer stating that such financial
statements present fairly the financial condition of the
Servicer and its consolidated subsidiaries and have been
prepared in accordance with generally accepted accounting
principles consistently applied;
(b) Annual Statements - within 135 days after
the end of each fiscal year of the Servicer, three copies
of:
(1) a consolidated balance sheet of the
Servicer (or its parent) and its consolidated
subsidiaries, at the end of that year, and
(2) consolidated statements of income, retained
earnings and cash flow of the Servicer (or its parent)
and its consolidated subsidiaries for that year,
setting forth in each case in comparative form the
figures for the previous fiscal year,
all in reasonable detail and accompanied by an opinion of a
firm of independent certified public accountants of
recognized national standing stating that such financial
statements present fairly the financial condition of the
Servicer and its consolidated subsidiaries and have been
prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in
application in which such accountants concur and footnote),
and that the examination of such accountants in connection
with such financial statements has been made in accordance
with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other
auditing procedures as were considered necessary in the
circumstances;
(c) Notice of Servicer Event of Default -
immediately upon becoming aware of the existence of any
condition or event which constitutes a Servicer Event of
Default, a written notice, by certified mail return receipt
requested, hand delivery or overnight courier, describing
its nature and period of existence and what action the
Servicer is taking or proposes to take with respect thereto;
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(d) SEC and Other Reports - promptly upon their
becoming available, one copy of each report (including the
Servicer's annual report to shareholders and reports on Form
8-K, 10-K, and 10-Q), proxy statement, registration
statement, prospectus and notice filed with or delivered to
any securities exchange, the Securities and Exchange
Commission or any successor agencies; and
(e) Report on Proceedings - promptly upon the
Servicer's becoming aware of
(1) any proposed or pending investigation of it
by any governmental authority or agency, or
(2) any court or administrative proceeding
which involves or may involve the possibility of materially
and adversely affecting the properties, business, prospects,
profits or conditions (financial or otherwise) of the
Servicer, a written notice specifying the nature of such
investigation or proceeding and what action the Servicer is
taking or proposes to take with respect thereto and
evaluating its merits; and
(f) Requested Information - with reasonable
promptness, any other data and information which may be
reasonably requested from time to time, including, without
limitation, any information required to be made available at
any time to any prospective transferee of any Notes in order
to satisfy the requirements of Rule 144A under the
Securities Act of 1933, as amended.
6.05 Officers' Certificates. With each set of
financial statements delivered pursuant to Section 6.04, the
Servicer will deliver an Officers' Certificate stating
(i) that the officers signing such Officers' Certificate
have reviewed the relevant terms of this Sales and Servicing
Agreement and have made, or caused to be made under such
officers' supervision, a review of the activities of the
Servicer during the period covered by the statements then
being furnished, (ii) that the review has not disclosed the
existence of any Servicer Event of Default or, if a Servicer
Event of Default exists, describing its nature and what
action the Servicer has taken and is taking with respect
thereto, and (iii) that on the basis of such review the
officers signing such certificate are of the opinion that
during such period the Servicer has serviced the Leases in
compliance with the procedures hereof except as described in
such certificate.
6.06 Inspection. The Servicer will permit, on
reasonable prior notice, the representatives of the Company
and the Trustee and the holder of any Notes to examine all
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of the books of account, records, reports and other papers
of the Servicer, to make copies and extracts therefrom, and
to discuss the Servicer's affairs, finances and accounts
with its officers, employees and independent public
accountants (and by this provision the Servicer authorizes
said accountants to discuss the finances and affairs of the
Servicer) all at such reasonable times and as often as may
be reasonably requested for the purpose of reviewing or
evaluating the financial condition or affairs of the
Servicer or the Servicer's performance of its duties and
obligations hereunder. Any expense incident to the exercise
by the Company, the Trustee, or any holder of the Notes
during the continuance of any Servicer Event of Default, or
any event or condition which with the giving of notice or
the lapse of time or both would become a Servicer Event of
Default, of any right under this Section 6.06 shall be borne
by the Servicer.
6.07 Servicer Records. The Servicer will
indicate in its records that it is servicing and
administering each Lease in its capacity as Servicer
hereunder, at [insert servicer location address] subject to
the provisions of the indenture.
SECTION 7. THE SELLER
7.01 Merger or Consolidation of the Seller. The
Seller will keep in full force and effect its existence,
rights and franchise as a corporation under the laws of its
jurisdiction of incorporation and will preserve its
qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is necessary
to protect the validity and enforceability of any of the
Leases or to permit performance of the Seller's duties under
this Sales and Servicing Agreement.
The Seller shall not merge or consolidate with any
other Person unless (i) the entity surviving such merger or
consolidation is a corporation organized under the laws of
the United States or any jurisdiction thereof and (ii) the
surviving entity, if not the Seller, shall execute and
deliver to the Company, the Servicer and the Trustee, in
form and substance satisfactory to each of them, (a) an
instrument expressly assuming all of the obligations of the
Seller hereunder and (b) an opinion of counsel to the effect
that such Person is a corporation of the type described in
the preceding clause (i) and has effectively assumed the
obligations of the Seller hereunder.
7.02 Control of Company. So long as any of the
Notes or the other obligations secured by the Indenture
remain outstanding, the Seller will not (i) sell, pledge or
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otherwise transfer any of the capital stock in the Company
held by the Seller or (ii) vote such stock in favor of any
amendment to or alteration of the certificate of
incorporation of the Company. In furtherance of the
Seller's negative covenant pursuant to clause (i) of the
preceding sentence, the Seller will deliver to the Trustee
on the Closing Date each certificate representing any share
of the capital stock of the Company held by the Seller, and
the Seller will promptly deliver to the Trustee upon receipt
by the Seller each certificate representing any additional
shares of the capital stock of the Company at anytime
thereafter received by the Seller.
7.03 Financial and Business Information. The
Seller will deliver to the Company, the Trustee and, upon
request, each holder of outstanding Notes (and, upon the
request of any holder of outstanding Notes, to any
prospective transferee of any Notes):
(a) Quarterly Statements - Within 45 days after
the end of each of the first three quarterly fiscal
periods in each fiscal year of the Seller, three copies
of:
(1) a consolidated balance sheet of the
Seller (or its parent) and its consolidated
subsidiaries as at the end of such quarter, and
(2) consolidated statements of income,
retained earnings and cash flow of the Seller (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 Seller stating that such
financial statements present fairly the financial
condition of the Seller 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 Seller, three copies
of:
(1) a consolidated balance sheet of the
Seller (or its parent) and its consolidated
subsidiaries, at the end of that year, and
(2) consolidated statements of income,
retained earnings and cash flow of the Seller (or
its parent) and its consolidated subsidiaries for
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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 Seller 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 (with a copy to each
Rating Agency) describing its nature and period of
existence and what action the Seller is taking or
proposes to take with respect thereto;
(d) SEC and Other Reports - promptly upon their
becoming available, one copy of each report (including
the Seller's annual report to shareholders and reports
on Form 8-K, 10-K, and 10-Q), proxy statement,
registration statement, prospectus and notice filed
with or delivered to any securities exchange, the
Securities and Exchange Commission or any successor
agencies;
(e) Report on Proceedings - promptly upon the
Seller's becoming aware of
(1) any proposed or pending investigation
of it by any governmental authority or agency, or
(2) any court or administrative
proceeding,
which involves or may involve the possibility of materially
and adversely affecting the properties, business, prospects,
profits or condition (financial or otherwise) of the Seller,
a written notice specifying the nature of such investigation
or proceeding and what action the Seller is taking or
proposes to take with respect thereto and evaluating its
merits;
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(f) ERISA - (i) promptly and in any event
within ten days after the Seller knows or has reason,
to know of the occurrence of a Reportable Event with
respect to a Pension Plan with regard to which notice
must be provided to the PBGC, a copy of such materials
required to be filed with the PBGC with respect to such
Reportable Event and in each such case a statement of
the chief financial officer of the Seller setting forth
details as to such Reportable Event and the action
which the Seller proposes to take with respect thereto;
(ii) at least ten days prior to the filing by any plan
administrator of a Pension Plan of a notice of intent
to terminate such Pension Plan, a copy of such notice;
(iii) promptly and in no event more than ten days after
the filing thereof with the Internal Revenue Service,
copies of each annual report which is filed on Form
5500, together with certified financial statements for
the Pension Plan (if any) as of the end of such year
and actuarial statements on Schedule B to such Form
5500; (iv) promptly and in any event within ten days
after it knows or has reason to know of any event or
condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension
Plan, a statement of the chief financial officer of the
Seller describing such event or condition; (v) promptly
and in no event more than ten days after receipt
thereof by the Seller or any Related Person, each
notice received by the Seller or any Related Person
concerning the imposition of any withdrawal liability
under Section 4042 of ERISA; and (vi) promptly after
receipt thereof a copy of any notice the Seller or any
Related Person may receive from the PBGC or the
Internal Revenue Service with respect to any Pension
Plan; provided, however, that this subsection (6) shall
not apply to notices of general application promulgated
by the PBGC or the Internal Revenue Service; and
(g) Requested Information - with reasonable
promptness, any other data and information which may be
reasonably requested from time to time.
7.04 Officers' Certificates. With each set of
financial statements delivered pursuant to Section 7.03, the
Seller will deliver an Officers' Certificate stating that
the officers signing such Certificate have reviewed the
relevant terms of this Sales and Servicing Agreement and
have made, or caused to be made under such officers'
supervision, a review of the activities of the Seller during
the period covered by the income statements then being
furnished and, so long as the Seller is Servicer hereunder,
that the review has not disclosed the existence of any
Servicer Event of Default or, if a Servicer Event of Default
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exists, describing its nature and what action the Seller has
taken and is taking with respect thereto.
7.05 Inspection. The Seller will permit, on
reasonable prior notice, the representatives of the Company,
the Servicer, the Trustee, or any holder of the Notes to
examine all of the books of account, records, reports and
other papers of the Seller, to make copies and extracts
therefrom, and to discuss the Seller's affairs, finances and
accounts with its officers, employees and independent public
accountants (and by this provision the Seller authorizes
said accountants to discuss the finances and affairs of the
Seller) all at such reasonable times and as often as may be
reasonably requested for the purpose of reviewing or
evaluating the financial condition or affairs of the Seller
or the Seller's performance of its duties and obligations
hereunder. Any expense incident to the exercise by the
Company, the Trustee or any holder of the Notes during the
continuance of any default by the Seller in any of its
obligations hereunder of any right under this Section 7.05
shall be borne by the Seller.
7.06 Books and Records. The Seller will clearly
mark its books and records to reflect each sale of a Lease
and contribution of the Equipment subject thereto to the
Company.
7.07 Communications. The Seller will reply to
all inquiries by third parties with respect to the
transactions contemplated by this Agreement by indicating
that it has sold to the Company the Leases and contributed
to the Company its right, title and interest in the related
Equipment.
7.08 Tax Returns. All federal tax returns filed
by the Seller will include the Company as a consolidated
entity.
SECTION 8. DEFAULT
8.01 Servicer Events of Default. The following
events and conditions shall constitute Servicer Events of
Default hereunder:
(i) failure on the part of the Servicer to
deposit to the Collection Account or other
applicable account within three Business Days
following the receipt thereof any monies received
by the Servicer (including, without limitation,
any Lease Payments and any Non-Performing Lease
Payments) and required to be deposited hereunder;
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(ii) so long as the Seller is the Servicer
hereunder, failure on the part of the Seller to
pay to the Trustee on the date when due in
accordance with the terms hereof, any payment
required to be made by the Seller pursuant to
Section 4 hereof;
(iii) failure on the part of either the
Servicer or (so long as the Seller is the
Servicer) the Seller to observe or perform in any
material respect any other of their respective
covenants or agreements in this Sales and
Servicing Agreement which failure continues
unremedied for a period of 30 days after the
earlier of (A) the date it first becomes known to
any officer of the Seller or the Servicer, as the
case may be, and (B) the date on which written
notice thereof requiring the same to be remedied
shall have been given to the Seller or the
Servicer, as the case may be, by the Trustee, or
to the Seller or the Servicer, as the case may be,
and the Trustee by any holder of the Notes;
(iv) if any representation or warranty made
by the Seller in this Sales and Servicing
Agreement or in any certificate or other writing
delivered pursuant hereto or made by any successor
Servicer in connection with such successor
Servicer's assumption of the duties of the
Servicer shall prove to be incorrect in any
material respect as of the time when the same
shall have been made; provided, however, that the
breach of any representation or warranty made by
the Seller or Servicer in this Sales and Servicing
Agreement will be deemed to be "material" only if
it affects the Noteholders, the enforceability of
the Indenture or of the Notes and provided,
further, that a material breach of any
representation or warranty made by the Servicer in
the Sales and Servicing Agreement with respect to
any of the Leases or the Equipment subject thereto
will not constitute a Servicer Event of Default if
the Seller repurchases such Lease and Equipment in
accordance with this Sales and Servicing
Agreement.
(v) the entry by a court having
jurisdiction in the premises of (A) a decree or
order for relief in respect of the Servicer in an
involuntary case or proceeding under any
applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law
or (B) a decree or order adjudging the Servicer
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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
$500,000, 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 $500,000 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
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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 $500,000 and any one of
such judgments (or decrees or orders) has remained
unsatisfied and in effect for any period of 60
consecutive days without a stay of execution.
8.02 Termination. So long as a Servicer Event
of Default shall be continuing, the Trustee shall, upon the
instructions of the holders of 66-2/3% in Outstanding
Principal Amount of the Notes, by notice in writing to the
Servicer terminate all of the rights and obligations of the
Servicer (but not the Seller's obligations which shall
survive any such termination) under this Sales and Servicing
Agreement. On the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this
Sales and Servicing Agreement to take any action with
respect to any Lease or Equipment shall cease and the same
shall pass to and be vested in the Trustee pursuant to and
under this Section and the Indenture; and, without
limitation, the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all other acts or
things necessary or appropriate to effect the purposes of
such notice of termination, whether to complete the transfer
and assignment of any Lease and the related Equipment, or
otherwise.
8.03 Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.02 hereof, the Trustee,
subject to the terms of Section 5.02 of the Indenture, shall
be the successor in all respects to the Servicer in its
capacity as servicer of the Leases under this Sales and
Servicing Agreement and, to such extent, shall be subject to
all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions
hereof (but not the obligations of the Seller contained in
Section 4 hereof which shall survive any such termination as
above provided) and shall be entitled to receive from the
Company the Servicing Fee provided for in Section 3.04
hereof; provided that the Trustee shall in no way be
responsible or liable for any action or actions of the
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
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satisfactory to the holders of 66-2/3% in Outstanding
Principal Amount of the Notes as the successor to the
Servicer hereunder to assume all of the rights and
obligations of the Servicer hereunder, including, without
limitation, the Servicer's right hereunder to receive the
Servicing Fee (but not the obligations of the Seller
contained in Section 4 hereof) or, (ii) if no such
institution satisfactory to the holders of 66-2/3% in
Outstanding Principal Amount of the Notes is so appointed
within 60 days following the giving of such notice, appoint
a bank or other established institution, which has
experience in servicing lease contracts and equipment
similar to the Leases and Equipment and which has long-term
unsecured obligations having a credit rating of at least "A"
from S&P, as the successor to the Servicer hereunder or,
(iii) if no such institution is so appointed, petition a
court of competent jurisdiction to appoint an institution
meeting such criteria as the Servicer hereunder. Pending
appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided.
In connection with such appointment and assumption, the
Trustee shall cause such successor to the Servicer to enter
into a servicing agreement substantially in the form of this
Sales and Servicing Agreement except that such agreement
shall not include any of the Seller's representations,
warranties or obligations and the Trustee may make
arrangements for the compensation of such successor out of
payments on Leases as it and such successor shall agree;
provided, however, that no such compensation shall be in
excess of that provided for a successor to the Servicer in
Section 3.04 hereof.
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
Lease Contracts. 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
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instruments which may be necessary or advisable to effect
such transfer of the Servicer's responsibilities and rights
hereunder.
8.05 Notification to Noteholders. Upon any such
termination or appointment of a successor to the Servicer,
the Company shall cause the Trustee to give prompt written
notice thereof to each Rating Agency and to each holder of
the Notes in the manner provided in the Indenture.
8.06 Remedies Not Exclusive. Nothing in the
preceding provisions of this Section 8 shall be interpreted
as limiting or restricting any rights or remedies which the
Company, the Trustee or any other Person would otherwise
have at law or in equity on account of the breach or
violation of any provision of this Sales and Servicing
Agreement by the Servicer, including, without limitation,
the right to recover full and complete damages on account
thereof to the extent not inconsistent with Section 6.02
hereof.
SECTION 9. SUBSTITUTION OF LEASES
9.01 Substitution. (a) The Seller will have
the right (but not the obligation) at any time to substitute
one or more Eligible Leases and the Equipment subject
thereto for a Lease (for purposes of this Section 9 referred
to as a "Predecessor Lease") and the Equipment subject
thereto if:
(i) the Predecessor Lease became (A) an
Early Termination Lease which has not been pre-
paid in full by the Lessee or (B) a Non-Performing
Lease during the immediately preceding Due Period;
(ii) the equipment subject to the
Substitute Lease or Leases or an Additional Lease
or Leases has a booked residual value which when
added to the sum of the current booked Residual
Value of the Leases will not be less than __% of
the Discounted Present Value of the Performing
Leases;
(iii) the Substitute Lease or Leases and the
Additional Leases require the lessee or lessees
thereunder to make Lease Payments during each
month ending on or prior to [_____________] and
that after the addition of such substitute lease
the aggregate amount of Lease Payments through the
term of the Leases (including the Substitute
Leases) will not be materially less than the
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aggregate scheduled Lease Payments of the Leases
prior to such substitution;
(iv) the aggregate Discounted Present Value
of the Leases that are Predecessor Leases shall
not exceed 7% of the Discounted Present Value of
the Leases on the Cut-Off Date; and
(v) such lease was originated in the
Document Image Division, the Computer Division and
the Major Accounts Division.
Each 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 and
any security deposits paid by the related Lessee to the
Seller in connection therewith (other than any prepayments
of rent required pursuant to the terms thereof at or before
the commencement of such Lease and any payments due before
the Lease Payment Period during which such substitution is
made). At the time of each such substitution, the Seller
shall transfer to the Trustee all Lease Payments actually
received by the Seller which became due during the current
Lease Payment Period. Within 30 days following the date on
which the Discounted Present Value of the Leases referenced
in clause (v) of this Section 9.01 equals the amount
referenced therein, the Seller shall deliver to the Rating
Agency, an opinion of counsel relating to the perfection and
priority of a first priority security interest in such
Leases and the characterization of the transfer of all
Leases pursuant to this Agreement as a true sale, subject,
in each case to customary and usual exceptions.
Addition. (b) 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 subject
to the satisfaction of the requirements set forth in Section
4 and Section 9 hereof. The purchase price of such
Additional Lease or Leases will be an amount equal to the
proceeds of such Early Termination Lease.
9.02 Procedure. (a) By 11:00 a.m. on the third
Business Day following each Determination Date, the Seller
shall give written notice to the Servicer of any
substitution of Substitute Leases for Predecessor Leases or
addition of Additional Leases for Early Termination Leases
which have been prepaid in full pursuant to Section 9.01
during the preceding Lease Payment Period. By 11:00 a.m. on
the fourth Business Day following each Payment Date, the
Seller shall deliver to the Servicer and the Trustee (i) a
supplement to Exhibit A hereto setting forth the information
shown thereon for each such Substitute Lease and Additional
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Lease, (ii) an Officer's Certificate (1) certifying that
each such Substitute Lease and Additional Lease is an
"Eligible Lease" and (2) 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
projected residual value under each such Predecessor Lease
and the amount of each periodic Lease Payment and the
projected residual value under each Additional Lease and
Substitute Lease being transferred thereby 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 Seller
assigned to the Company pursuant to Section 9.01 hereof all
of the Seller's right, title and interest in and to the
Substitute Leases and Additional Leases identified in such
supplement and the related rights described in Section 9.01
hereof, (ii) the Seller transferred to the Company, as a
contribution to capital, all of the Seller's right, title
and interest in and to the Equipment subject to such
Substitute Leases (to the extent of the Seller's interest in
such Equipment, including the Seller's security interest in
any Equipment which is not owned by the Seller), and (iii)
the Company assigned and transferred to the Seller, without
representation or warranty, all of the Company's right,
title and interest in and to the Predecessor Leases and
Early Termination Leases identified in such Officer's
Certificate and the Equipment subject thereto (to the extent
of the Company's interest in such Equipment, including the
Company's security interest in any Equipment which is not
owned by the Company). The Seller shall promptly deliver to
the Trustee the original executed counterpart of each
Substitute Lease and Early Termination Lease assigned to the
Company pursuant to Section 9.01 hereof and the Company
shall promptly request the Trustee to deliver to the Seller
the original executed counterpart of each Predecessor Lease
for which substitution has been made pursuant to Section
9.01 hereof.
9.03 Objection and Repurchase. If any holder of
the Notes objects to any substitution of Leases within ten
days of receipt of the Servicer's monthly report providing
notice thereof pursuant to Section 5.01 above, on the
grounds either that any Substitute Lease or Additional Lease
is not an Eligible Lease within the meaning of the
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definition thereof or that such substitution or addition is
otherwise not permitted under the provisions of Section 9.01
hereof, the Seller shall be entitled to present such
additional information as it deems appropriate in an effort
to demonstrate that such Lease is an Eligible Lease and that
such substitution is permitted under the provisions of
Section 6.01 hereof. Following such presentation, the
substitution shall remain effective if each person
originally objecting to the substitution withdraws his
objection. If the conditions specified in the preceding
sentence are not satisfied, or if at any time it is
established that any lease was not, at the time of
substitution, an Eligible Lease, then the Seller shall be
required to repurchase such Lease in accordance with the
provisions of Section 4.05 hereof.
9.04 Seller's and Servicer's Subsequent
Obligations. Upon any substitution of Leases in accordance
with the provisions of this Section 9, the Seller's and the
Servicer's obligations hereunder with respect to the
Predecessor Lease shall cease but the Seller and the
Servicer shall each thereafter have the same obligations
with respect to the Substitute Lease substituted as it has
with respect to all other Leases subject to the terms
hereof.
SECTION 10. ASSIGNMENT
10.01 Assignment to Trustee. It is understood
that this Sales and Servicing Agreement and all rights of
the Company hereunder will be assigned by the Company to the
Trustee pursuant to the Indenture, for the benefit of the
Trustee, the holders from time to time of the Notes as
provided in the Indenture, and may be subsequently assigned
by the Trustee to any successor Trustee or as otherwise
provided in the Indenture. Each of the Seller and the
Servicer hereby expressly agrees to each such assignment and
agrees that all of its duties, obligations, representations
and warranties hereunder shall be for the benefit of, and
may be enforced by, the Trustee, the holders from time to
time of the Notes, and any successor to or assignee of any
thereof.
10.02 Assignment by Seller or Servicer. None of
the respective rights or obligations of the Seller and the
Servicer hereunder may be assigned without the prior written
consent of the Company, the Trustee (acting upon the
instructions of the holders of 66-2/3% of the then aggregate
unpaid Outstanding Principal Amount of the Notes); provided,
that nothing herein shall preclude the Servicer from
performing its duties hereunder through the use of agents to
the extent that such use is consistent with the Servicer's
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business practices in dealing with leases and equipment for
its own account.
SECTION 11. NATURE OF SELLER'S OBLIGATIONS
AND SECURITY THEREFOR
11.01 Seller's Obligations Absolute. The
obligations of the Seller hereunder, and the rights of the
Trustee, as assignee of the Company, in and to all amounts
payable by the Seller hereunder, shall be absolute and
unconditional and shall not be subject to any abatement,
reduction, setoff, defense, counterclaim or recoupment
whatsoever, including, without limitation, abatements,
reductions, setoffs, defenses, counterclaims or recoupments
due or alleged to be due to, or by reason of, any past,
present or future claims which the Seller may have against
the Servicer, the Company, the Trustee, and any holder of
the Notes or any other Person for any reason whatsoever;
nor, except as otherwise expressly provided herein, shall
this Sales and Servicing Agreement terminate, or the
respective obligations of the Company, the Seller or the
Servicer be otherwise affected, by reason of any defect in
any Lease or in any unit of Equipment or in the respective
rights and interests of the Company, the Seller and the
Trustee therein, or by reason of any Liens, encumbrances,
security interests or rights of others with respect to any
Lease or any unit of Equipment, or any failure by the
Company or the Servicer to perform any of its obligations
herein contained, or by reason of any other indebtedness or
liability, howsoever and whenever arising, of the Company,
the Servicer, the Trustee, or any holder of the Notes to the
Seller or any other Person or by reason of any insolvency,
bankruptcy, or similar proceedings by or against the Seller,
the Servicer, the Company, the Trustee or any other Person
or for any other cause whether similar or dissimilar to the
foregoing, any present or future law to the contrary
notwithstanding, it being the intention of the parties
hereto that all obligations of the Seller hereunder and all
amounts payable by the Seller hereunder shall continue to be
due and payable in all events and in the manner and at the
times herein provided unless and until the obligation to
perform or pay the same shall be terminated or limited
pursuant to the express provisions of this Sales and
Servicing Agreement.
11.02 Security for Obligations. As security for
the full and timely performance by the Seller and the
Servicer of each of its obligations hereunder, and by the
Company of each of its obligations hereunder and under the
Notes and the Indenture, the Seller hereby pledges and
grants to the Trustee (as a precaution in the event that,
contrary to the intent of the parties to the transactions
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<PAGE>
contemplated hereby, it is contended that the Seller has any
continuing interest in any Lease or item of Equipment
subject to the Indenture) a first priority Lien on and
security interest in all right, title and interest of the
Seller now or hereafter acquired in and to each Lease
(including the right to receive all payments due or to
become due thereunder) and each item of Equipment at any
time subject to the Indenture. The foregoing security
interest is granted upon and is subject to the same terms
and provisions as are set forth in the Indenture and shall
continue in full force and effect until the same is
discharged in accordance with the terms therein,
notwithstanding any waiver or modification of any of the
terms hereof or thereof or of any of the Notes, whether with
or without the consent of the Seller.
11.03 Further Assurances; Financing Statements.
Each of the Seller and the Servicer severally agrees that at
any time and from time to time, at its expense, it shall
promptly execute and deliver all further instruments and
documents, and take all further action, that may be
necessary or desirable or that the Company or the Trustee
may request to perfect and protect the assignments and
security interests granted or purported to be granted herein
with respect to the Leases and the Lease Payments or to
enable the Company or the Trustee to exercise and enforce
its rights and remedies under this Agreement with respect to
any Leases and the Lease Payments. Without limiting the
generality of the foregoing, the Seller shall execute and
file such financing or continuation statements, or
amendments thereto, and such other instruments or notices as
may be necessary or desirable or that the Company or the
Trustee may request to protect and preserve the assignments
and security interests granted by this Agreement.
SECTION 12. DEFINITIONS
As used in this Sales and Servicing Agreement, the
following terms have the respective meanings set forth below
or set forth in the Section hereof or in any other agreement
indicated:
Additional Lease: - each separate lease agreement
and each lease schedule or supplement (and each master lease
agreement insofar as the same relates to any such schedule
or supplement) acquired by the Company from the Seller with
all or a portion of the proceeds of an Early Termination
Lease that has been prepaid in full pursuant to Section 9
hereof.
Accumulated Funding Deficiency - a funding
deficiency described in Section 302 of ERISA.
43
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Administration Account - Section 1.01 of the
Indenture.
Affiliate - Section 1.01 of the Indenture.
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 is located.
Casualty Payment - any payment pursuant to a Lease
on account of the loss, theft, condemnation, governmental
taking, destruction, or damage beyond repair of any item of
Equipment subject thereto which results, in accordance with
the terms of the Lease, in a reduction in the number or
amount of any future Lease Payments due thereunder or in the
termination of the Lessee's obligation to make future Lease
Payments thereunder.
Class A Notes - the Company's _______% Class A
Lease-Backed Notes, Series 1996-A.
Class B Notes - the Company's __________% Class B
Lease-Backed Notes, Series 1996-A.
Class C Notes - the Company's _______% Class C
Lease-Backed Notes, Series 1996-A.
Closing Date - August __, 1996, the date on which
the Notes are originally issued pursuant to the Prospectus
and the Private Placement Memorandum.
Code - the Internal Revenue Code of 1986, as
amended.
Collection Account - Section 1.01 of the
Indenture.
Company - the corporation so identified in the
first paragraph of this Sales and Servicing Agreement and
any successor corporation.
Corporate Trust - Section 1.01 of the Indenture.
Cut-Off Date - ____________, 1996.
Delinquency Condition - Section 1.01 of the
Indenture.
Delinquent Lease - Section 1.01 of the Indenture.
Determination Date - Section 1.01 of the
Indenture.
44
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Discounted Present Value of the Leases - Section
1.01 of the Indenture.
Early Termination Lease - a lease which has been
terminated.
Eligible Lease - Section 4.02 hereof.
Equipment - all units or items of equipment from
time to time subject to any Lease and all such units or
items of equipment (to the extent of the Company's interest
therein) remaining subject to the Lien of the Indenture
following the expiration or termination of the Lease to
which the same was previously subject.
ERISA - the Employee Retirement Income Security
Act of 1974, as amended.
Event of Default - Section 1.01 of the Indenture.
Filing Requirements - [list states].
Financing Statement - a statement filed pursuant
to the UCC which evidences a perfected security interest in
an asset.
Indemnified Party - Section 4.04 hereof.
Indenture - the Indenture dated as of the date
hereof, between the Company and the Trustee, as the same may
be supplemented, modified or amended from time to time in
accordance with the terms thereof.
Inter-Company Loans - Section 13.01 hereof.
Lease - each separate lease agreement and each
lease schedule or supplement (and each master lease
agreement insofar as the same relates to any such schedule
or supplement) described on Exhibit A hereto, as the same
may be amended or modified from time to time in accordance
with the provisions hereof and thereof.
Lease Delinquency Payment - Section 1.01 of the
Indenture.
Lease Payment - Section 1.01 of the Indenture.
Lease Payment Period - with respect to any Payment
Date and the Determination Date with respect thereto, the
calendar month prior to the month in which such Payment Date
and Determination Date occur.
45
<PAGE>
Lease Repurchase Amount - at any date with respect
to any Lease, an amount equal to the Discounted Present
Value of the Lease as of the next following Payment Date
plus any amounts previously due and unpaid.
Lessee - each lessee under a Lease.
Lien - means a security interest, lien, charge,
pledge, equity, or encumbrance of any kind other than tax
liens, mechanics liens, and any liens that attach to a Lease
by operation of law.
Nominal Buy-Out Lease - each Lease identified on
Exhibit A hereto as having an Estimated Residual Value of $0
or $1 in the column under the-heading "RESIDUAL".
Non-Performing Lease - Section 1.01 of the
Indenture.
Non-Performing Payment - 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
Sales and Servicing Agreement and the Indenture.
Notes - the Company's Class A Notes and Class B
Notes issued pursuant to the Indenture and all Notes issued
in exchange therefor pursuant to the Indenture.
Officers' Certificate - with respect to the Seller
or Servicer, a certificate delivered to the Trustee and
signed by the Chairman, the President, or a Vice President,
and by another Vice President, the Treasurer, an Assistant
Treasurer, the Secretary, or an Assistant Secretary of the
Seller or Servicer, as the case may be, who is not the same
person as the other officer signing such certificate.
Original Principal Amount of the Notes - the
principal amount of the Notes originally issued on the
Closing Date.
Other Lease Payments - Section 1.01 of the
Indenture.
Outstanding Principal Amount - Section 1.01 of the
Indenture.
PBGC - the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
46
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Payment Date - the 20th day of each calendar
month.
Payment Period - Section 1.01 of the Indenture.
Predecessor Lease - Section 9.01 hereof.
Pension Plan - Section 2.14 hereof.
Person - an individual, partnership, corporation,
trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Prime Rate - the Manufacturers and Traders Trust
Company prime lending rate.
Private Placement Memorandum - the final Private
Placement Memorandum used in connection with the private
offering of the Class C Notes.
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
including the prospectus supplement to be used in connection
with the public offering of the Class A Notes as filed with
the Securities and Exchange Commission pursuant to Rule
424(b).
Rating Agency - Standard & Poor's a Division of
the Mc-Graw Hill Companies, Moody's Investors Service or
Duff & Phelps Credit Rating Co.
Registration Statement - the registration
statement (File No. -333-) filed with the Securities and
Exchange Commission for the registration of the Class A
Notes and the Class B Notes.
Related Person - any Person (whether or not
incorporated) which is under common control with the Seller
within the meaning of Section 414(c) of the Internal Revenue
Code of 1986, as amended, or of Section 4001(b) of ERISA.
Reportable Event - any of the events set forth in
Section 4043(b) 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.
47
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Reserve Account - Section 1.01 of the Indenture.
Residual Account - Section 1.01 of the Indenture.
Seller - Copelco Capital, Inc., a Delaware
corporation, and any successor.
Servicer - the corporation so identified in the
first paragraph of this Sales and Servicing Agreement and
any successor thereto in accordance with the provisions
hereof.
Servicer Event of Default - Section 8.01 hereof.
Servicing Fee - Section 3.04(a) hereof.
Similar Transaction Amount - Section 1.01 of the
Indenture.
Similar Transaction Payments - Section 1.01 of the
Indenture.
Stated Maturity of the Notes - _________________.
Termination Payment - Section 1.01 of the
Indenture.
Transaction Payment Amount - Section 1.01 of the
Indenture.
Trust Estate - Section 1.01 of the Indenture.
Trustee - Manufacturers and Traders Trust Company,
and any successor thereto, as trustee under the Indenture.
Underwriting Agreement - the Underwriting
Agreement dated August __, 1996 between the Company and
Lehman Brothers for the purchase and sale of the Class A
Notes and the Class B Notes.
Uniform Commercial Code or UCC - with respect to a
particular jurisdiction, the Uniform Commercial Code, as in
effect from time to time in such jurisdiction, or any
successor statute thereto.
Warranty Event - Section 9.01 hereof.
SECTION 13. INTER-COMPANY LOANS
13.01 Inter-Company Loans. With the purchase of
the Leases, the Company has acquired the right to hold and
apply in accordance with the provisions of certain of the
48
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Leases, security deposits in the amounts indicated on
Schedule II of Exhibit A to this Agreement and the right to
receive certain maintenance payments payable by the Lessees
under the Leases ("Maintenance Charges"). The Company may
from time to time lend such security deposits, Maintenance
Charges and any amounts disbursed to the Company pursuant to
Sections 3.03(b) or 6.06 of the Indenture to the Seller
(each such advance, an "Inter-Company Loan"). Each
Inter-Company Loan shall be on a demand basis, shall bear
interest at an annual rate equal to the Prime Rate plus one
percent, shall be in the form attached hereto as Exhibit B
and shall otherwise be on such arm's-length terms and
conditions as the Company and the Seller may agree.
SECTION 14. MISCELLANEOUS
14.01 Continuing Obligations. This Sales and
Servicing Agreement shall continue in full force and effect
until each of the Notes and any other amounts due to any
holder of the Notes have been paid in full and all other
obligations, if any, secured by the Lien of the Indenture
have been fully satisfied.
14.02 GOVERNING LAW. THIS SALES AND SERVICING
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK. IF ANY PROVISION OF THIS
SALES AND SERVICING AGREEMENT IS DEEMED INVALID, IT SHALL
NOT AFFECT THE BALANCE OF THIS SALES AND SERVICING
AGREEMENT.
14.03 Successors and Assigns. This Sales and
Servicing Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company, the
Seller, the Servicer and the Trustee and shall inure to the
benefit of the successors and assigns of the holders, from
time to time, of the Notes.
14.04 Modification. The terms of this Sales and
Servicing Agreement shall not be waived, modified or amended
without the written consent of the party against whom such
waiver, modification or amendment is claimed and, in any
case, the Trustee (acting upon the instructions of the
holders of 66-2/3% of the then aggregate unpaid Outstanding
Principal Amount of the Notes).
14.05 No Proceedings. The Seller and the
Servicer, each hereby agree that it will not, directly or
indirectly, institute, or cause to be instituted, against
the Company any proceeding of the type referred to in
Section 6.01(e) or (f) of the Indenture so long as there
49
<PAGE>
shall not have elapsed one year plus one day since the
latest maturing Notes have been paid in full in cash.
14.06 Notices. All notices and other
communications given in connection with this Sales and
Servicing Agreement shall be sufficient for every Person
hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid or certified
mail return receipt requested, or sent by private courier or
confirmed telecopy, in case of the parties hereto, to their
respective addresses set forth below or to such other
address as either party may specify to the other from time
to time in accordance with this Section 14.06 or, in the
case of 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.
14.07 Counterparts. This Sales and Servicing
Agreement may be executed in any number of counterparts,
each counterpart constituting an original, but all together
constituting only one Agreement.
50
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
executed this Sales and Servicing Agreement as of the date
and year first written above.
COPELCO CAPITAL, INC., as
Seller and Servicer
By:_____________________________
Name:
Title:
Address:
COPELCO CAPITAL FUNDING CORP. II
By:_____________________________
Name:
Title:
Address:
The undersigned hereby acknowledges
receipt of a copy of the foregoing
Sales and Servicing Agreement and
agrees to, and to be bound by, each
of the provisions thereof applicable
to the undersigned.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:_____________________________
Name:
Title:
Address:
51
<PAGE>
Schedule 1
SUBSIDIARIES OF COPELCO CAPITAL, INC.
1. Copelco Capital Funding Corp. I, a Delaware corporation.
2. Copelco Lease Funding Corp. I, a New Jersey corporation.
3. Copelco Lease Funding Corp. II, a New Jersey corporation.
4. Copelco Lease Funding Corp. III, a New Jersey corporation.
5. Copelco Lease Funding Corp. IV, a New Jersey corporation.
6. Copelco Lease Funding Corp. V, a New Jersey corporation.
7. Copelco Lease Funding Corp. VI, a New Jersey corporation.
8. Copelco Lease Receivables Corp., a New Jersey corporation.
9. Copelco Investment Services Corporation, a Delaware
corporation.
10. CDRI, Inc., a Delaware corporation.
11. Copelco Capital Funding Corp. II, a Delaware corporation.
12. Copelco Capital Funding Corp. III, a Delaware corporation.
[insert additional corporations]
<PAGE>
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
<PAGE>
EXHIBIT B
[FORM OF INTER-COMPANY LOAN NOTE]
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS PROMISSORY NOTE ON THE
PART OF COPELCO CAPITAL FUNDING CORP. II HAS BEEN ASSIGNED TO AND
IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF _______________, AS
TRUSTEE, UNDER AN INDENTURE DATED AS OF APRIL __, 1996, FOR THE
BENEFIT OF THE PERSONS REFERRED TO THEREIN.
$__________ [Date]
COPELCO CAPITAL, INC., a Delaware corporation (the
"Maker"), with its principal office at _____________________________
, FOR VALUE RECEIVED, hereby promises to pay to the
order of Copelco Capital Funding Corp. II, a corporation with its
offices located at ____________________________________________ or
its assignee (the "Payee"), for its account, at __________________,
the principal sum of _______________ Dollars ($____________) (or
such lesser amount as shall equal the aggregate unpaid principal
amount of the Loans made by the Payee to the Maker under the Sale
Agreement (as defined below)), together with interest per annum on
the unpaid principal amount hereof at the Prime Rate plus one per
cent, in lawful money of the United States of America and in
immediately available funds immediately on the demand of the Payee.
The date, amount and interest rate, of each Loan made by
the Payee to the Maker, and each payment made on account of the
principal thereof, shall be recorded by the Payee on its books and,
prior to any transfer of this Note, endorsed by the Payee on the
schedule attached hereto or any continuation thereof.
This Note evidences certain Inter-Company Loans from
Payee to Maker pursuant to Section 13.01 of that certain Sales and
Servicing Agreement dated as of August , 1996, between the Maker
and the Payee (the "Sale Agreement"). Capitalized terms used in
this Note have the respective meanings assigned to them in the Sale
Agreement.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
COPELCO CAPITAL, INC.
By_________________________
B-1
<PAGE>
SCHEDULE OF LOANS
This Note evidences demand Loans made under the
within-described Sale Agreement to the Maker, on the date, at the
interest rate, and in the principal amounts set forth below,
subject to the payments and prepayments of principal set forth
below:
Principal Amount Unpaid
Amount of Interest Paid or Principal Notation
Date Loan Rate Prepaid Amount Made By
- ---- --------- -------- ------- --------- ---------
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
<PAGE>
Form of Placement Agent Agreement
COPELCO CAPITAL FUNDING CORP. II
_____% CLASS C LEASE-BACKED NOTES
SERIES 1996-A
PLACEMENT AGENT AGREEMENT
August __, 1996
[PLACEMENT AGENT]
Ladies and Gentlemen:
Copelco Capital Funding Corp. II, a corporation
organized and existing under the laws of Delaware (the
"Issuer") and Copelco Capital, Inc., a corporation organized
and existing under the laws of Delaware ("Copelco"), hereby
agree with you as follows:
Section 1. Issuance and Sale of Notes. The Issuer
has authorized the issuance of $________ (the "Initial
Principal Amount") of ____% Class C Lease-Backed Notes, Series
1996-A (the "Notes"). The Notes will be issued on August __,
1996 or such other date as we shall mutually agree upon (the
"Closing Date") pursuant to an Indenture, dated as of August -
__, 1996 (the "Indenture"), between the Issuer and
Manufacturers and Traders Trust Company (the "Trustee"). The
Notes are more fully described in the Preliminary 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 healthcare 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.
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
<PAGE>
obligations to be performed hereunder, and to the completeness
and accuracy in all material respects of all of the
representations and warranties of the Issuer and Copelco
contained herein, you hereby accept such agency and agree on
the terms and conditions herein set forth to purchase, or to
find qualified purchasers ("Purchasers") for, all of the Notes
on the Closing Date. Your agency hereunder is not terminable,
except as provided herein, by the Issuer or Copelco without
your permission and shall continue until the close of business
on the Offering Termination Date.
(b) In the event the offering is commenced but no
Notes shall have been subscribed for prior to the Offering
Termination Date, your agency and this Agreement shall
terminate without obligation on your part or on the part of
the Issuer except as provided in Section 7 hereof and except
that the indemnification and contribution referred to in
Section 8 hereof shall continue after such termination of this
Agreement.
Section 3. Delivery. Delivery of the Notes to the
purchasers thereof (the "Purchasers") shall be made at your
office at ________________________ at 10:00 A.M., New York
time, on the Closing Date. The denominations of the Notes to
be delivered and the name in which each such Note is to be
registered will be set forth in a notice to be delivered by
you on behalf of the Purchasers to the Trustees. The Issuer
agrees to have the Notes available for inspection, checking
and packaging by the Placement Agent in New York, New York,
not later than 1:00 P.M., New York City time, on the Business
Day prior to the Issuance Date.
Section 4. Representations and Warranties. (a) The
Issuer hereby represents and warrants to, and agrees with you,
as follows:
(i) The Issuer, with your assistance, has
prepared and furnished to you a copy of a Preliminary
Private Placement Memorandum dated August __, 1996 relating
to the Notes (as supplemented and amended, the "Preliminary
Memorandum"), and prior to the Closing, the Issuer will,
with your assistance, prepare and furnish to you a copy of
an updated Private Placement Memorandum (the "Final
Memorandum") each relating to the Notes. The Preliminary
Memorandum does not, as of its date, and the Final
Memorandum, as of its date and as of the date hereof, will
not, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however,
that the Issuer makes no representations or warranties as to
the information contained in or omitted from the Final
Memorandum in reliance upon and in conformity with
2
<PAGE>
information furnished in each case, in writing to the Issuer
specifically for use in connection with the preparation of
the Final Memorandum by you.
(ii) This Agreement has been duly authorized,
executed and delivered by the Issuer and constitutes a
legal, valid and binding agreement of the Issuer enforceable
in accordance with its terms, except that the provisions
hereof relating to indemnification of the Placement Agent
may be subject to limitations of public policy.
(iii) Each of the Indenture and the Sales and
Servicing Agreement have been duly authorized by the Issuer,
and, when executed and delivered by the Issuer, will
constitute the legal, valid and binding obligation of the
Issuer, enforceable in accordance with its terms.
(iv) The issuance of the Notes has been duly
authorized by the Issuer and, when duly and validly
executed, authenticated and delivered in accordance with the
Indenture, will be the legal, valid and binding obligations
of the Issuer, enforceable in accordance with their terms,
and entitled to the benefits of the Indenture.
(v) The issue and sale of the Notes and the
performance of this Agreement, the Indenture and the Sales
and Servicing Agreement by the Issuer will (A) not conflict
with or result in a breach of, and will not constitute a
default under any of the provisions of, its certificate of
incorporation or any law, governmental rule or regulation,
or any judgment, decree or order binding on the Issuer or
its properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other agreement or
instrument to which the Issuer is a party or by which it is
bound or (B) not result in the creation or imposition of any
Adverse Claim and no consent, approval, authorization,
order, registration or qualification of or with any such
court or governmental agency or body is required for the
issue and sale of the Notes or the consummation by the
Issuer of the transactions contemplated by this Agreement,
except such consents, approvals, authorizations,
registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the
purchase of the Notes by the Purchasers.
(vi) The Issuer is not, and will not, as of the
Issuance Date, be an "investment company" under the
Investment Company Act of 1940, as amended (the "1940 Act").
(vii) The Issuer hereby makes and repeats each
of the representations and warranties set forth in Article
Eleven of the Indenture. Such representations and
warranties are incorporated by reference in this Section
3
<PAGE>
4(a) and the Placement Agent and the Purchasers may rely
thereon as if such representations and warranties were fully
set forth herein.
(b) Copelco hereby represents and warrants to and
agrees with the Placement Agent as follows:
(i) This Agreement has been duly authorized,
executed and delivered, the Sales and Servicing Agreement
and the Copelco Limited Guarantee have been duly authorized,
and this Agreement constitutes, and when executed and
delivered, the Sales and Servicing Agreement and the Copelco
Limited Guarantee will constitute, the legal, valid and
binding obligations of Copelco, enforceable in accordance
with their respective terms, except that the provisions
hereof relating to indemnification of the Placement Agent
may be subject to limitations of public policy.
(ii) The performance of this Agreement by
Copelco, and the consummation by Copelco of the transactions
herein contemplated, will (A) not conflict with or result in
a breach of, and will not constitute a default under any of
the provisions of its certificate of incorporation or
by-laws or any law, governmental rule or regulation, or any
judgment, decree or order binding on Copelco or its
properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other agreement or
instrument to which Copelco is a party or by which it is
bound or (B) not result in the creation or imposition of any
Adverse Claim and no consent, approval, authorization,
order, registration or qualification of or with any such
court or governmental agency or body is required for the
consummation by Copelco of the transactions contemplated by
this Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in
connection with the purchase of the Notes by the Purchasers.
(iii) Copelco hereby makes and repeats the
representations and warranties set forth in Section 2 of the
Sales and Servicing Agreement. Such representations and
warranties are incorporated by reference in this Section
4(b), and the Placement Agent and the Purchasers may rely
thereon as if such representations and warranties were fully
set forth herein.
(iv) Copelco represents and warrants it has
delivered to the Placement Agent complete and correct copies
of its balance sheet and statements of income and retained
earnings reported by Copelco Leasing Corporation, Copelco
Credit Corporation and Copelco Financial Services Group,
Inc. (the "Copelco Entities") for the year ended December
31, 1994. Except as set forth in or contemplated in the
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Final Memorandum, there has been no material adverse change
in the condition (financial or otherwise) of the Copelco
Entities since December 31, 1994.
(v) Any taxes, fees and other governmental
charges arising from the execution and delivery of this
Agreement, the Sales and Servicing Agreement and the
Indenture and in connection with the execution, delivery and
issuance of the Notes and with the transfer of the Leases
and the Equipment, have been paid or will be paid by
Copelco.
(c) Each of the Issuer and Copelco represents and
warrants to you that there is no pending or threatened action,
suit or proceeding against or affecting it in any court or
tribunal or before any arbitrator of any kind or before or by
any Governmental Authority (i) asserting the invalidity of
this Agreement, the Sales and Servicing Agreement, the
Indenture, the Copelco Limited Guarantee 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 Sales and Servicing Agreement, the Indenture or
the Copelco Limited Guarantee or (iii) seeking any
determination or ruling that might materially and adversely
affect (A) its performance of its obligations under this
Agreement, the Sales and Servicing Agreement, the Indenture or
the Copelco Limited Guarantee (as applicable) or (B) the
validity or enforceability of this Agreement, the Sales and
Servicing Agreement, the Indenture, the Copelco Limited
Guarantee 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 1933 Act, in reliance upon the
exemption provided in Section 4(2) of the 1934 Act, and it
hereby covenants and agrees that it will not offer or sell
the Notes in a manner that would cause such exemption to be
inapplicable. The 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 has delivered a Final Memorandum.
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<PAGE>
(iii) It is understood that Copelco and the
Issuer have only authorized the Placement Agent to
distribute the Preliminary Memorandum, the Final Memorandum,
the information specifically referred to therein and any
other documents authorized by Copelco or the Issuer and the
Placement Agent agrees and covenants to Copelco and the
Issuer that it shall offer and sell the Notes only pursuant
to delivery of such materials.
(iv) The Placement Agent shall advise Copelco
and the Issuer of the jurisdictions in which it desires to
sell the Notes.
Section 5. Covenants of the Issuer and Copelco. The
Issuer and Copelco, jointly and severally, hereby covenant and
agree with you as follows:
(a) The Issuer will promptly advise the Placement
Agent of the receipt by the Issuer of any notification with
respect to the suspension of the qualification of the Notes
for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Issuer will not
prepare any amendment or supplement to the Final Memorandum to
which the Placement Agent reasonably objects.
(b) If, at any time when a Final Memorandum relating
to the Notes is to be delivered to a potential Purchaser, any
event occurs as a result of which the Final Memorandum as then
supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, or if it shall be
necessary, in the opinion of the Placement Agent, to
supplement such Final Memorandum, the Issuer promptly will
prepare and deliver to the Placement Agent or any such
potential Purchaser, subject to paragraph (a) of this Section
5, a supplement which will correct such statement or omission.
(c) The Issuer understands that pursuant to its
Subscription Agreement each potential Purchaser may request
documents or information in addition to those referred to in
Section 5(b) relating to Copelco, the Issuer, and the Leases.
Copelco will provide to you and such Purchaser all such
documents and opportunities to meet with officials of Copelco
as such potential Purchasers shall reasonably request or have
requested; it being understood that all such documents and
disclosures may be subject to appropriate confidentiality
agreements. Upon request, Copelco and the Issuer will make
available to Noteholders and to the Placement Agent such
information as will satisfy the provisions of Rule 144A under
the Securities Act in order to effect resales of the Notes
pursuant thereto.
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<PAGE>
(d) Copelco and the Issuer will furnish to the
Placement Agent, so long as delivery of a placement memorandum
is desired by the Placement Agent, as many copies of each
Preliminary Memorandum relating to the Notes and the Final
Memorandum and any supplement thereto as the Placement Agent
may reasonably request.
(e) Copelco and the Issuer will take all reasonable
actions requested by the Placement Agent to arrange for the
qualification of the Notes for sale under the laws of such
jurisdictions within the United States and as the Placement
Agent may designate, will maintain such qualifications in
effect so long as required for the completion of the placement
of the Notes; provided, that the Issuer shall not be required
to register the Notes under the Securities Act in connection
therewith the Issuer shall not be required to qualify as a
foreign corporation doing business in any jurisdiction.
(f) For so long as the Notes are outstanding, the
Issuer and Copelco shall deliver to the Placement Agent by
first-class mail and as soon as practicable a copy of all
reports and notices delivered to the Trustee or the
Noteholders under the Indenture.
(g) For so long as the Notes are outstanding, the
Issuer and Copelco will furnish to the Placement Agent as soon
as practicable after filing any other information concerning
the Issuer or Copelco filed with any government or regulatory
authority which is otherwise publicly available.
(h) To the extent, if any, that any rating provided
with respect to the Notes set forth in Section 6(g) hereof is
conditional upon the furnishing of documents reasonably
available to the Issuer or Copelco, the Issuer and Copelco
shall furnish such documents.
Section 6. Conditions of 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 Sales and Servicing Agreement and in the
Indenture, to the performance by the Issuer and Copelco in all
material respects of their obligations hereunder and to the
following additional conditions:
(a) The Issuer and Copelco shall each have delivered
a certificate (an "Officer's Certificate"), dated the Closing
Date, signed by its President and its Chief Financial Officer
to the effect that:
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<PAGE>
(i) the representations and warranties made by
the Issuer or Copelco (as the case may be) in this
Agreement, the Indenture and the Sales and Servicing
Agreement are true and correct in all material respects at
and as of the date of such Officer's Certificate as if made
on and as of such date (except to the extent they expressly
relate to an earlier date);
(ii) the Issuer or Copelco (as the case may be)
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied under
this Agreement, the Indenture and the Sales and Servicing
Agreement at or prior to the date of such Officer's
Certificate;
(iii) nothing has come to such officer's
attention that would lead him to believe that the Final
Memorandum contains any untrue statement of a material fact
or omits to state any material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made, not misleading;
and
(iv) such officer is not aware of any
notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or
the envision or threatening of any proceeding for that
purpose.
(b) You shall have received from Spencer N. Lempert,
Esq., a favorable opinion (subject to customary and usual
qualifications), dated the Closing Date and reasonably
satisfactory in form and substance to the Placement Agent and
its counsel with respect to, or to the effect that: (i) the
due formation and qualification of each of the Issuer and
Copelco and that the Issuer and Copelco, as applicable, have
the corporate power and authority to perform this Agreement,
the Sales and Servicing Agreement, the Indenture and the
Copelco Limited Guarantee and the transactions contemplated
herein and therein; (ii) the due authorization, execution,
delivery and enforceability of this Agreement, the Sales and
Servicing Agreement, the Indenture and the Copelco Limited
Guarantee, as applicable, by the Issuer and Copelco; (iii)
each of this Agreement, the Sales and Servicing Agreement, the
Indenture and the Copelco Limited Guarantee 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
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<PAGE>
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, the Sales and Servicing Agreement
and the Copelco Limited Guarantee, as applicable, and the
consummation of the transactions contemplated herein and
therein will not conflict with the organizational documents of
the Issuer or Copelco, or to the best of such counsel's
knowledge, any other contracts to which the Issuer or Copelco
is party or by which either of them is bound; (vi) to the best
of such counsel's knowledge, there is no legal or governmental
proceeding threatened or pending against the Issuer or Copelco
which would have a material adverse effect on the issuance of
the Notes; (vii) (other than with respect to financial data,
as to which such counsel need not express an opinion) nothing
has come to such counsel's attention that leads such counsel
to believe that the Final Memorandum (as of its date or the
Closing Date) contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; (viii) in the event a court
disregarded the intent of the parties and characterized the
transfers of the Leases and the Equipment (or interests
therein) by Copelco to the Issuer as a pledge of collateral
rather than as a sale or absolute assignment, the Sales and
Servicing Agreement and accompanying documentation creates a
valid security interest in the Leases and the Equipment (or
interests therein) under New Jersey law; and (ix) assuming no
prior financing statements covering the Leases are in effect,
that financing statements covering the Leases and naming (A)
the Issuer as secured party and Copelco as debtor and (B) the
Issuer as debtor and the Trustee as secured party are being
filed in the appropriate filing offices of the State of New
Jersey, and that the Trustee has taken possession of the
Leases, the Trustee has a first priority perfected security
interest in all right, title and interest of Copelco and the
Issuer in the Leases. In rendering such opinion, counsel may
rely, to the extent deemed proper and as stated therein, as to
matters of fact on certificates of responsible officers of the
Issuer or Copelco and public officials and as to matters of
state law of jurisdictions other than the jurisdictions in
which such counsel is admitted to practice, on opinions of
local counsel satisfactory to the Placement Agent.
(c) The Placement Agent shall have received from Dewey
Ballantine, special counsel for the Placement Agent, such
opinion or opinions, dated the Issuance Date, with respect to
the validity of the Notes, the Final Memorandum, true sale,
nonconsolidation and other related matters as the Placement
Agent may require.
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<PAGE>
(d) On the date hereof and at the Closing Date, KMPG-
Peat Marwick shall have furnished to the Placement Agent a
letter or letters, dated the date of this Agreement and the
Closing Date, respectively, in form and substance satisfactory
to the Placement Agent.
(e) The Notes shall have been rated at least ___ by
_____________, which rating shall not have been reduced or
withdrawn as evidenced by the Officer's Certificate referred
to in Section 6(b).
(f) Counsel to the Trustee shall have delivered a
favorable opinion (subject to customary and usual exceptions),
dated the Closing Date, as the case may be, and satisfactory
in form and substance to the Placement Agent and counsel for
the Placement Agent and to the Issuer and Copelco and their
counsel with respect to, or to the effect that: (i) the due
incorporation and valid existence of the Trustee, (ii) the due
authorization, execution and delivery by the Trustee of the
Indenture, (iii) the Indenture is the legal, valid and binding
obligation of the Trustee, enforceable against the Trustee in
accordance with its terms (subject to customary and usual
exceptions) and (iv) the execution, delivery and performance
of the Indenture will not conflict with the Trustee's
organizational documents.
(g) All proceedings in connection with the
transactions contemplated by this Agreement and all documents
incident hereto shall be reasonably satisfactory in form and
substance to you, and you and your special counsel shall have
received such other information, certificates and documents as
you or they may reasonably request.
(h) The issuance and sale of the Class A Notes shall
have occurred.
Section 7. Fees and Expenses. In consideration of
the Placement Agent's 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 .25% of the
initial aggregate principal amount of the Notes. In the event
that (x) no closing of the sale of the Notes occurs by the
Closing Date through no fault of the Issuer or Copelco or (y)
the Placement Agent terminates the engagement pursuant to
Section 10 or because any conditions precedent in Section 6
(other than Section 6(d)) have not been fulfilled, then the
Issuer and Copelco's liability to the Placement Agent shall be
limited to the reimbursement of the Placement Agent's expenses
incurred through the date of termination for its reasonable
out-ofpocket 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 Standard &
Poor's Ratings Group and Duff & Phelps Credit Rating Co.
with respect to its ratings of the Notes;
(ii) Fees charged by the firm of independent
public accountants referred to in Section 6(e);
(iii) Filing fees in connection with the
transactions contemplated hereby;
(iv) Fees and expenses of counsel to the Placement
Agent;
(v) Trustee's fees and fees of counsel to the
Trustee;
(vi) the costs and expenses of printing any
Preliminary Memorandum and the Final Memorandum;
(vii) the costs of printing or reproducing this
Agreement, the Blue Sky Survey and any other documents in
connection with the offer, sale and delivery of the Notes;
(viii) all expenses in connection with the
qualification of the Notes under state securities laws as
provided in Section 4(a)(v), including the fees and
disbursements of counsel in connection with the Blue Sky
Survey;
(ix) the filing fees incident to securing any
required review with the National Association of Securities
Dealers, Inc.;
(x) the cost of preparing the Notes;
(xi) the cost or expenses of any transfer agent
or registrar; and
(xii) all other costs and expenses incident to
the performance of their obligations hereunder which are not
otherwise specifically provided for in this Section 7;
provided, however, that Copelco does not hereby waive any
rights to reimbursement from the Placement Agent in the
event of the Placement Agent's 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 Placement Agent will pay
securities transfer taxes on resale of any of the Notes by
them, and any expenses connected with any placements they
may make.
Section 8. Indemnification and Contribution. (a)
The Issuer and Copelco, jointly and severally, will indemnify
and hold harmless the Placement Agent against any losses,
claims, damages or liabilities, joint or several, to which
such Placement Agent may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Memorandum or
the Final Memorandum, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will promptly reimburse the Placement Agent
for any legal or other expenses reasonably incurred by the
Placement Agent in connection with investigating, preparing to
defend or defending, or appearing as a third party witness in
connection with, any such action or claim; provided, however,
(i) 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 any Preliminary Memorandum or the Final Memorandum or
any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Issuer or
Copelco by the Placement Agent expressly for use therein and
(ii) such indemnity with respect to any Preliminary Memorandum
shall not inure to the benefit of the Placement Agent from
whom the Person asserting any such action or claim purchased
the Notes which are the subject thereof if such Person did not
receive a copy of the Final Memorandum (or the Final
Memorandum as amended or supplemented) at or prior to the
confirmation of sale of such Note to such Person in any case
where such delivery is required by the Securities Act and the
untrue statement or omission of a material fact contained in
such Preliminary Memorandum was corrected in the Final
Memorandum (or the Final Memorandum as amended or
supplemented).
(b) The Placement Agent will indemnify and hold
harmless the Issuer and Copelco against any losses, claims,
damages or liabilities to which the Issuer or Copelco may
become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact
contained in the Preliminary Memorandum or the Final
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<PAGE>
Memorandum, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Memorandum or the
Final Memorandum or any such amendment or supplement in
reliance upon and in conformity with written information
furnished to the Issuer or Copelco by the Placement Agent
expressly for use therein; and will reimburse the Issuer or
Copelco for any legal or other expenses reasonably incurred by
the Issuer or Copelco in connection with the investigating,
preparing to defend or defending, or appearing as a third
party witness in connection with, any such action or claim.
The Issuer and Copelco acknowledge that the statements set
forth in the last paragraph of the cover page and under the
heading "Underwriting" relating to selling concessions and
reallowances in the prospectus contained in the Memorandum and
the Final Memorandum constitute the only information furnished
in writing by or on behalf of the Placement Agent for
inclusion in the Preliminary Memorandum or the Final
Memorandum, and you confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the
commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but
the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any
indemnified party otherwise than under such subsection. In
case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party
shall have been advised by counsel that representation of such
indemnified party and the indemnifying party may be
inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between
them, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of
such indemnified party or parties. It is understood that the
indemnifying party shall, in connection with any such action
or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable
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fees and expenses of only one separate firm of attorneys
together with appropriate local counsel at any time from all
indemnified parties not having actual or potential differing
interests with any other indemnified party. Upon receipt of
notice from the indemnifying party to such indemnified party
of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the
indemnifying party will not be liable for any settlement
entered into without its consent and will not be liable to
such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party
in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence,
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party
at the expense of the indemnifying party; and except that, if
clause (i) or (iii) is applicable, such liability shall be
only in respect of the counsel referred to in such clause (i)
or (iii). Notwithstanding the immediately preceding sentence
and the first sentence of this paragraph, if at any time an
indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of
counsel, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more
than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not
have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement.
(d) If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless
an indemnified party under subsection (a) or (b) above in
respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the
Issuer and Copelco on the one hand and the Placement Agent on
the other from the offering of the Notes. If, however, the
allocation provided by the immediately preceding 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
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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
on the one hand 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 (d) were determined by pro rata allocation or
by any other method of allocation which does not take into
account the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof)
referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating,
preparing to defend or defending, or appearing as a third
party witness in connection with, any such action or claim.
Notwithstanding the provisions of this subsection (d), the
Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the
Notes placed by it were offered to the public exceeds the
amount of damages which the Placement Agent has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section
10(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Issuer and Copelco under
this Section 8 shall be in addition to any liability which the
Issuer or Copelco may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who
controls the Placement Agent within the meaning of the
Securities Act; and the obligations of the Placement Agent
under this Section 8 shall be in addition to any liability
which the Placement Agent may otherwise have and shall extend,
upon the same terms and conditions, to each officer and
director of the Issuer and Copelco and to each person, if any,
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who controls the Issuer or Copelco within the meaning of the
Securities Act.
Section 9. Survival. The respective representations,
warranties and agreements of the Issuer, Copelco and the
Placement Agent set forth or made pursuant to this Agreement
will remain in full force and effect, notwithstanding any
investigation heretofore or hereafter made by or on behalf of
the Issuer, Copelco or the Placement Agent, and such
representations, warranties and agreements made by the Issuer
and Copelco shall survive the delivery and payment for the
Notes. The provisions of Section 7 and 8 shall survive the
termination or cancellation of this Agreement.
(a) No other person will have any right or obligation
hereunder, except that the provisions of this Agreement,
including, without limitation, the representations and
warranties and the covenants and agreements of the Issuer and
Copelco contained herein are intended to be for the benefit of
all Purchasers and shall be enforceable against Copelco by any
such Purchaser, whether or not an express assignment to such
Purchaser of rights under this Agreement has been made by you,
any intervening Purchaser or any of your or their successors
and assigns.
Section 10. Termination. (a) This Agreement may be
terminated by you at any time upon the giving of notice at any
time prior to the Closing Date: (i) if there has been, since
December 31, 1994, any material adverse change in the
condition, financial or otherwise, of Copelco or the Issuer,
or in the earnings, business affairs or business prospects of
Copelco or the Issuer, whether or not arising in the ordinary
course of business, or (ii) if there has occurred any outbreak
or escalation of hostilities or other calamity or crisis the
effect of which on the financial markets of the United States
is such as to make it, in your reasonable judgment,
impracticable to market the Notes or enforce contracts for the
sale of the Notes, or (iii) if trading generally on either the
American Stock Exchange or the New York Stock Exchange has
been suspended, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have
been required, by either of said exchanges or by order of the
Commission or any other governmental authority, or (iv) if a
banking moratorium has been declared by either federal or New
York authorities. In the event of any such termination, no
party will have any liability to any other party hereto,
except as otherwise provided in Section 7 or 8 hereof.
(b) This Agreement may not be terminated by the Issuer
or Copelco, except in accordance with law, without the written
consent of the Placement Agent.
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(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's
obligations hereunder may be immediately cancelled by the
Placement Agent by notice thereof to the Issuer or Copelco.
Any such cancellation shall be without liability of any party
to any other party except that the provisions of Sections 8
and 9 hereof shall survive any such cancellation.
Section 11. Notices. All communications provided for
or permitted hereunder shall be in writing and shall be deemed
to have been duly given if personally delivered to or mailed
by certified or registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar
mailed writing, if to you, addressed to you, at the address
first stated in this Agreement, or to such other address as
you may designate in writing to the Issuer and Copelco, if to
Copelco addressed to Copelco at 1700 Suckle Plaza, Pennsauken,
New Jersey 08110, and if to the Issuer addressed to the Issuer
at 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 NON-
EXCLUSIVE 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
17
<PAGE>
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
ISSUER OR COPELCO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION
OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE ISSUER AND COPELCO HEREBY WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 15. Counterparts. This Agreement may be
executed in two or more counterparts, each of which when so
executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
Section 16. Miscellaneous. Neither this Agreement nor
any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed
by the party against whom enforcement of the change, waiver,
discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof. If you are in
agreement with the foregoing, please sign a counterpart hereof
and return the same to the Issuer or Copelco, whereupon this
Agreement shall become a binding agreement between you, and
the Issuer and Copelco.
Very truly yours,
COPELCO CAPITAL, INC.
By: ____________________________
Name:
Title:
COPELCO CAPITAL FUNDING CORP. II
By: ____________________________
Name:
Title:
18
<PAGE>
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
[PLACEMENT AGENT]
As Placement Agent
BY: __________________________
Name:
Title:
19
<PAGE>
Registration No. 33-_______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
====================
FORM T-1
Statement of eligiblity under the Trust Indenture Act
of 1939 of a Corporation designated to act as Trustee
Check if an application to determine eligiblity of a trustee
pursuant to Section 305(b)(2) X
---
====================
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 14203
(Address of principal executive offices) (Zip Code)
====================
COPELCO CAPITAL FINDING CORP. II
(Exact name of obligor as specified in its charter)
DELAWARE 22-3323778
(State or other jurisidction of (I.R.S. employer
incorporation or organization) identification No.)
700 East Gate Drive
Mount Laurel, New Jersey 08110
(Address of principal executive offices) (Zip Code)
====================
LEASE-BACKED NOTES, SERIES 1996-A, CLASS A
LEASE-BACKED NOTES, SERIES 1996-A, CLASS 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 Exibits
Exhibit A. Organization Cetificate of the Trustee as now in effect
(incorporated herein by reference to Exhibit 1, Form T-1,
Registration Statement No. 33-7309).
Exhibit B. Certificate of Authority of the Trustee to commence
business (incorporated herein by reference to Exhibit 2,
Form T-1, Registration Statement No. 33-7309).
Exhibit C. Authorization of the Trustee to exercise corporate trust
powers (incorporated herein by reference to Exhibit 3,
Form T-1, Registration Statement No. 33-7309).
Exhibit D. Existing By-laws of the Trustee (incorporated herein by
reference to Exhibit 4, Form T-1, Registration Statement
No. 33-7309).
Exhibit E. Not Applicable.
Exhibit F. Consent of the Trustee (incorporated herein by reference
to Exhibit 6, Form T-1, Registration Statement No. 33-
7309).
Exhibit G. Report of Condition of the Trustee*
Exhibit H. Not Applicable.
Exhibit I. Not Applicable.
- --------------------------
*Filed Herewith
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Manufacturers and Traders Trust Company, a banking corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility and qualification to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of Buffalo, and
State of New York, on the __th day of August, 1996.
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ RUSSELL T. WHITLEY
-------------------------------------------------
Russell T. Whitley
Assistant Vice President
2
<PAGE>
Call Date: 6/30/96 ST-BK: 36-1300 FFIEC 031
Page 1
Legal Title of Bank: Manufacturers and Traders Trust Company
Address: One M&T Plaza
City, State, Zip: Buffalo, NY 14203-2399
FDIC Certificate No: 00588
Consolidated Report of Condition of Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC -- Balance Sheet
<TABLE>
<CAPTION>
==================================================================================================================================
C400
- ----------------------------------------------------------------------------------------------------------------------------------
Dollar Amounts in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS RCFD
1. Cash and balances due from depository institutions (from Schedule RC-A)
a. Noninterest-bearing balances and currency and coin(1)................................. 0081 428,635 1.a.
- ----------------------------------------------------------------------------------------------------------------------------------
b. Interest-bearing balances(2).......................................................... 0071 10,853 1.b.
- ----------------------------------------------------------------------------------------------------------------------------------
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 94,198 2.a.
- ----------------------------------------------------------------------------------------------------------------------------------
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 1,531,430 2.b.
- ----------------------------------------------------------------------------------------------------------------------------------
3. Federal funds sold and securities purchased under agreements to resell in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in TBPs:
- ----------------------------------------------------------------------------------------------------------------------------------
a. Federal funds sold.................................................................... 0276 7,228 3.a
- ----------------------------------------------------------------------------------------------------------------------------------
b. Securities purchased under agreements to resell....................................... 0277 78,794 3.b.
- ----------------------------------------------------------------------------------------------------------------------------------
4. Loans and lease financing receivables:
- ----------------------------------------------------------------------------------------------------------------------------------
a. Loans and leases, net of unearned income (from Schedule RC-C) 2122 8,477,381 4.a.
- ----------------------------------------------------------------------------------------------------------------------------------
b. LESS: Allowance for loan and lease losses............................................ 3123 234,836 4.b.
- ----------------------------------------------------------------------------------------------------------------------------------
c. LESS: Allocated transfer risk reserve................................................ 3128 0 4.c.
- ----------------------------------------------------------------------------------------------------------------------------------
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............................................. 2125 8,242,545 4.d.
- ----------------------------------------------------------------------------------------------------------------------------------
5. Trading assets (from Schedule RC-D)...................................................... 3545 32,481 5.
- ----------------------------------------------------------------------------------------------------------------------------------
6. Premises and fixed assets (including capitalized leases)................................. 2145 121,371 6.
- ----------------------------------------------------------------------------------------------------------------------------------
7. Other real estate owned (from Schedule RC-M)............................................. 2150 6,763 7.
- ----------------------------------------------------------------------------------------------------------------------------------
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M). 2130 0 8.
- ----------------------------------------------------------------------------------------------------------------------------------
9. Customers' liability to this bank on acceptances outstanding............................. 2155 1,361 9.
- ----------------------------------------------------------------------------------------------------------------------------------
10. Intangible assets (from Schedule RC-M)................................................... 2343 58,568 10.
- ----------------------------------------------------------------------------------------------------------------------------------
11. Other assets (from Schedule RC-F)........................................................ 2160 187,448 11.
- ----------------------------------------------------------------------------------------------------------------------------------
12. Total assets (sum of items 1 through 11)................................................. 2170 10,780,675 12.
==================================================================================================================================
</TABLE>
- --------
1 Includes cash items in process of collection and unposted debits.
2 Includes time certificates of deposit not held for trading.
3
<PAGE>
Call Date: 6/30/96 ST-BK: 36-1300 FFIEC 031
Page RC-2
Legal Title of Bank: Manufacturers and Traders Trust Company
Address: One M&T Plaza
City, State, Zip: Buffalo, NY 14203-2399
FDIC Certificate No: 00588
Schedule RC--Continued
<TABLE>
<CAPTION>
==================================================================================================================================
0400
- ----------------------------------------------------------------------------------------------------------------------------------
Dollar Amounts in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part I)......................................................... RCON 2200 7,820,383 13.a.
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Noninterest-bearing balances(1)........................................... 6631 1,163,718 13.a.(1)
- ----------------------------------------------------------------------------------------------------------------------------------
(2) Interest-bearing.......................................................... 6636 6,656,665 13.a.(2)
- ----------------------------------------------------------------------------------------------------------------------------------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II).................................................. RCFN 2200 274,974 13.b.
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Noninterest-bearing....................................................... 6631 0 13.b.(1)
- ----------------------------------------------------------------------------------------------------------------------------------
(2) Interest-bearing.......................................................... 6636 274,974 13.b.(2)
- ----------------------------------------------------------------------------------------------------------------------------------
14. Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
- ----------------------------------------------------------------------------------------------------------------------------------
a. Federal funds purchased........................................................ RCFD 0278 1,065,181 14.a.
- ----------------------------------------------------------------------------------------------------------------------------------
b. Securities sold under agreements to repurchase................................. RCFD 0279 449,270 14.b.
- ----------------------------------------------------------------------------------------------------------------------------------
15. a. Demand notes issued to the U.S. Treasury....................................... RCON 2810 124,299 15.a.
- ----------------------------------------------------------------------------------------------------------------------------------
b. Trading liabilities (from Schedule RC-D)....................................... RCFD 3548 29,070 15.b.
- ----------------------------------------------------------------------------------------------------------------------------------
16. Other borrowed money:
- ----------------------------------------------------------------------------------------------------------------------------------
a. With a remaining maturity of one year or less.................................. RCFD 2332 12,116 16.a.
- ----------------------------------------------------------------------------------------------------------------------------------
b. With a remaining maturity of more than one year................................ RCFD 2333 2,367 16.b.
- ----------------------------------------------------------------------------------------------------------------------------------
17. Mortgage indebtedness and obligations under capitalized leases.................... RCFD 2910 719 17.
- ----------------------------------------------------------------------------------------------------------------------------------
18. Bank's liability on acceptances executed and outstanding.......................... RCFD 2920 1,361 18.
- ----------------------------------------------------------------------------------------------------------------------------------
19. Subordinated notes and debentures................................................. RCFD 3200 175,000 19.
- ----------------------------------------------------------------------------------------------------------------------------------
20. Other liabilities (from Schedule RC-G)............................................ RCFD 2930 160,085 20.
- ----------------------------------------------------------------------------------------------------------------------------------
21. Total liabilities (sum of items 13 through 20).................................... RCFD 2948 10,114,945 21.
- ----------------------------------------------------------------------------------------------------------------------------------
22. Limited-life preferred stock and related surplus................................. RCFD 3282 0 22.
- ----------------------------------------------------------------------------------------------------------------------------------
EQUITY CAPITAL
- ----------------------------------------------------------------------------------------------------------------------------------
23. Perpetual preferred stock and related surplus.................................... RCFD 3830 0 23.
- ----------------------------------------------------------------------------------------------------------------------------------
24. Common stock..................................................................... RCFD 3230 120,635 24.
- ----------------------------------------------------------------------------------------------------------------------------------
25. Surplus (exclude all surplus related to preferred stock)......................... RCFD 3839 87,524 25.
- ----------------------------------------------------------------------------------------------------------------------------------
26. a. Undivided profits and capital reserves........................................ RCFD 3632 472,254 26.a.
- ----------------------------------------------------------------------------------------------------------------------------------
b. Net unrealized holding gains (losses) on available-for-sale securities........ RCFD 8434 (14,683) 26.b.
- ----------------------------------------------------------------------------------------------------------------------------------
27. Cumulative foreign currency translation adjustments.............................. RCFD 3284 0 27.
- ----------------------------------------------------------------------------------------------------------------------------------
28. Total equity capital (sum of items 23 through 27)................................ RCFD 3210 665,730 28.
- ----------------------------------------------------------------------------------------------------------------------------------
29. Total liabilities, limited-life preferred stock, and equity capital
(sum of items 21, 22, and 28)..................................................... RCFD 3300 10,780,675 29.
==================================================================================================================================
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<S> <C>
1. Indicate in the box at the right the number of the
statement below that best describes the most
comprehensive level of auditing work performed for the
bank by independent external auditors as of any date
during 1995 Number
------------------
RCFD 6724 N/A M.1
- --------
1 Includes total demand deposits and noninterest-bearing time and savings
deposits.
4
<PAGE>
1. Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2. Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3. Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4. Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5. Review of the bank's financial statements by external auditors
6. Compilation of the bank's financial statements by external auditors
7. Other audit procedures (excluding tax preparation work)
8. No external audit work
5
<PAGE>
Legal Title of Bank: Manufacturers and Traders Trust Company
Call Date: 6/30/96 St-BK: 36-1300
Address: One M&T Plaza
City, State, Zip: Buffalo, NY 14202-2399
FDIC Certificate No.: 00588
Consolidated Report of Conditon for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
</TABLE>
<TABLE>
<CAPTION>
====================
C400
--------------------
---------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
-----------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS //////////// //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////// //////////////////
a. Noninterest-bearing balances and currency and coin(1)........................ 0081 428,635 1.a.
b. Interest-bearing balances(2)................................................. 0071 10,853 1.b.
2. Securities: //////////// //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A)................... 1754 94,198 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)................. 1773 1,511,430 2.b.
3. Federal funds sold and securities purchased under agreements to resell in //////////// //////////////////
domestic offices of the bank and its Edge and Agreement subsidiaries, and in //////////// //////////////////
IBPs: //////////// //////////////////
a. Federal funds sold........................................................... 0276 7,228 3.a.
b. Securities purchased under agreements to resell.............................. 0277 78,794 3.b.
4. Loans and lease financing receivables: /////////////////////////////////
a. Loans and leases, net of unearned /////////////////////////////////
income (from Schedule RC-C).......... RCFD2122 8,477,381 ///////////////////////////////// 4.a.
b. LESS: allowance for loan and lease /////////////////////////////////
losses............................... RCFD3123 234,836 ///////////////////////////////// 4.b.
c. LESS: Allocated transfer risk reserve /////////////////////////////////
d. Loans and leases, net of unearned RCFD3128 0 ///////////////////////////////// 4.c.
income, allowance, and reserve (item /////////////////////////////////
4.a minus 4.b and 4.c)............... /////////////////////////////////
2125 8,242,545 4.d.
5. Trading assets (from Schedule RC-D)............................................. 3545 31,481 5.
6. Premises and fixed assets (including capitalized leases)........................ 2145 121,371 6.
7. Other real estate owned (from Schedule RC-M) 2150 6,763 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M).................................................................. 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding.................... 2155 1,361 9.
10. Intangible assets (from Schedule RC-M).......................................... 2143 58,568 10.
11. Other assets (from Schedule RC-F)............................................... 2160 187,448 11.
12. Total Assets (sum of items 1 through 11)........................................ 2170 10,780,675 12.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
1 Includes cash items in process of collection and unposted debits.
2 Includes time certificates of deposit not held for trading.
6
<PAGE>
<TABLE>
<CAPTION>
====================
C400
--------------------
---------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
-----------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES /////////////////////////////////
13. Deposits: /////////////////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC- /////////////////////////////////
E, part I)................................................................... RCON 2200 7,820,383 13.a.
(1) Noninterest-bearing(1).......... RCON 6631 1,163,718 ///////////////////////////////// 13.a.(1)
(2) Interest-bearing................ RCON 6636 6,656,665 ///////////////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement Subsidiaries, and IBFs (from /////////////////////////////////
Schedule RC-E, part II)...................................................... RCFN 2200 274,974 13.b.
(1) Noninterest bearing............. RCFN 6631 0 ///////////////////////////////// 13.b.(1)
(2) Interest-bearing................ RCFN 6636 274,974 ///////////////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in /////////////////////////////////
domestic offices of the bank and of its Edge and Agreement subsidiaries, and /////////////////////////////////
in IBFS: /////////////////////////////////
a. Federal funds purchased...................................................... RCFD 0278 1,065,181 14.a.
b. Securities sold under agreements to repurchase............................... RCFD 0279 449,270 14.b.
15. a. Demand notes issued to the U.S. Treasury..................................... RCON 2840 124,299 15.a.
b. Trading liabilities (from Schedule RC-D)..................................... RCFD 3548 29,070 15.b.
16. Other borrowed money: /////////////////////////////////
a. With a remaining maturity of one year or less................................ RCFD 2332 12,136 16.a.
b. With a remaining maturity of more than one year.............................. RCFD 2333 2,367 16.b.
17. Mortgage indebtedness and obligations under capitalized leases.................. RCFD 2910 719 17.
18. Bank's liability on acceptances executed and outstanding........................ RCFD 2920 1,361 18.
19. Subordinated notes and debentures............................................... RCFD 3200 175,000 19.
20. Other liabilities (from Schedule RC-G).......................................... RCFD 2930 160,085 20.
21. Total liabilities (sum of items 13 through 20).................................. RCFD 2948 10,114,945 21.
/////////////////////////////////
22. Limited-life preferred stock and related surplus................................ RCFD 3282 0 22.
EQUITY CAPITAL /////////////////////////////////
23. Perpetual preferred stock and related surplus................................... RCFD 3838 0 23.
24. Common stock.................................................................... RCFD 3230 120,635 24.
25. Surplus (exclude all surplus related to preferred stock)........................ RCFD 3839 87,524 25.
26. a. Undivided profits and capital reserves....................................... RCFD 3632 472,254 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities....... RCFD 8434 (14,683) 26.b.
27. Cumulative foreign currency translation adjustments............................. RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)............................... RCFD 3210 665,730 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items /////////////////////////////////
21, 22, and 28)................................................................. RCFD 3300 10,780,675 29.
-----------------------------------
</TABLE>
Memorandum
To be reported only with the March Report of Condition
1. Indicate in the box at the right the number of the
statement below that best describes the most
comprehensive level of auditing work performed for the
bank by independent external auditors as of any date
during 1995 RCFD 6724 N/A M.1.
1 - Independent audit of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 - Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company (but not on the bank separately)
3 - Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm (may be required by state chartering authority)
4 - Directors' examination of the bank peformed by other external
auditors (may be required by state chartering authority)
5 - Review of the bank's financial statements by external auditors
- --------
1 Includes total demand deposits and noninterest-bearing time and savings
deposits.
7
<PAGE>
6 - Compilation of the bank's financial statements by external auditors
7 - Other audit procedures (excluding tax preparation work)
8 - No external audit work
8
