-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PwGUZacO98Xp6NF/iwqh4PXAlCS8DTh0uLbdgbPt/u0Pgj8zOduIVJZJwWe5WEPN aqA/Bw/an9j4bqpyfmNR4Q== 0000893220-99-000273.txt : 19990302 0000893220-99-000273.hdr.sgml : 19990302 ACCESSION NUMBER: 0000893220-99-000273 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19990301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COPELCO CAPITAL FUNDING LLC 99-1 CENTRAL INDEX KEY: 0001075914 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-69983 FILM NUMBER: 99554515 BUSINESS ADDRESS: STREET 1: C/O COPELCO CAPITAL FUNDS STREET 2: 700 EAST GATE DR CITY: MOUNT LAUREL STATE: NJ ZIP: 08054-5404 MAIL ADDRESS: STREET 1: C/O COPELCO CAPITAL FUNDS STREET 2: 700 E GATE DR CITY: MOUNT LAUREL STATE: NJ ZIP: 08054-5404 S-1/A 1 COPELCO CAPITAL FUNDING LLC 99-1 S-1/A 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 1999 Registration No. 333-69983 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 COPELCO CAPITAL FUNDING LLC 99-1 (Exact name of registrant as specified in its charter) DELAWARE 6799 PENDING (State or other jurisdiction (Primary Standard (I.R.S. Employer of incorporation or organization) Industrial Classification Code Number) Identification No.)
COPELCO CAPITAL FUNDING LLC 99-1 700 EAST GATE DRIVE MOUNT LAUREL, NEW JERSEY 08054-5404 (609) 231-9600 (Name, address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Copies to: SPENCER LEMPERT, ESQ. PETER HUMPHREYS, ESQ. COPELCO CAPITAL FINANCIAL SERVICES GROUP, INC. DEWEY BALLANTINE 700 EAST GATE DRIVE 1301 AVENUE OF THE AMERICAS MOUNT LAUREL, NJ 08054 NEW YORK, NEW YORK 10019 (609) 231-9600 (212) 259-6730 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate Date of Commencement of Proposed Sale to the Public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE
- --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Title of each class of Amount to be Proposed maximum Proposed maximum securities to be registered registered offering aggregate offering Amount of price per unit(1) price(1) registration fee - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class A-1 Lease-Backed Notes............. $139,000,000.00 100% 100% $38,642.00 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class A-2 Lease-Backed Notes............. $ 95,000,000.00 100% 100% $26,410.00 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class A-3 Lease-Backed Notes............. $110,000,000.00 100% 100% $30,580.00 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class A-4 Lease-Backed Notes............. $ 90,000,000.00 100% 100% $25,020.00 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class A-5 Lease-Backed Notes............. $ 76,000,000.00 100% 100% $21,128.00 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class B Lease-Backed Notes............... $ 12,200,000.00 100% 100% $ 3,341.00 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class C Lease-Backed Notes............... $ 9,300,000.00 100% 100% $ 2,585.40 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------ Class D Lease-Backed Notes............... $ 16,000,000.00 100% 100% $ 4,448.00 - --------------------------------------------- ------------------------- --------------------- ------------------- ------------------
(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933. (2) In addition to the $152,349 paid on February 26, 1999, $1,946 was paid on December 30, 1999. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- 2 COPELCO CAPITAL FUNDING LLC 99-1 CROSS REFERENCE SHEET (PURSUANT TO RULE 404(A) AND ITEM 501 OF REGULATION S-K)
ITEM NO. NAME AND CAPTION IN FORM S-1 CAPTION IN PROSPECTUS --- ---------------------------- --------------------- 1. Forepart of the Registration Statement; Forepart of the Registration Statement; Front Cover Page of Front Cover Page of Prospectus Prospectus; Cross Reference Sheet 2. Inside Front and Outside Back Cover Pages Inside Front Cover and Outside Back Cover Pages of of the Prospectus Prospectus; Terms of the Notes; Available Information; Table of Contents 3. Summary Information; Risk Factors and Prospectus Summary; Risk Factors; Certain Legal Aspects; Ratio of Earnings to Fixed Charges Prepayment and Yield Considerations 4. Use of Proceeds Use of Proceeds 5. Determination of Offering Price * 6. Dilution * 7. Selling Security Holders * 8. Plan of Distribution Underwriting 9. Description of Securities to be Registered Prospectus Summary; Description of the Notes; 10. Interest of Named Experts and Counsel * 11. Material Changes * 12. Disclosure of Commission Position on * Indemnification for Securities Act Liabilities
* Not Applicable 3 The Information In this Prospectus is not complete and may be changed. This Prospectus is not an offer to sell these notes and it is not soliciting an offer to buy these notes in any state where the offer or sale is not permitted. (SUBJECT TO COMPLETION, DATED FEBRUARY 26, 1999) $548,701,000 COPELCO CAPITAL FUNDING LLC 99-1, ISSUER COPELCO CAPITAL, INC., SERVICER SERIES 1999-A $139,000,000 __% CLASS A-1 LEASE-BACKED NOTES $75,613,000 __% CLASS A-5 LEASE-BACKED NOTES $95,000,000 __% CLASS A-2 LEASE-BACKED NOTES $13,029,000 __% CLASS B LEASE-BACKED NOTES $110,000,000 __% CLASS A-3 LEASE-BACKED NOTES $10,134,000 __% CLASS C LEASE-BACKED NOTES $90,000,000 __% CLASS A-4 LEASE-BACKED NOTES $15,925,000 __% CLASS D LEASE-BACKED NOTES
YOU SHOULD READ THE SECTION ENTITLED --"RISK FACTORS" STARTING ON PAGE 6 OF THIS PROSPECTUS AND CONSIDER THESE FACTORS BEFORE MAKING A DECISION TO INVEST IN THE NOTES. The notes represent non-recourse obligations of the issuer only and are other person. The notes will not be insured or guaranteed by any governmental agency or instrumentality. THE ISSUER WILL ISSUE - - Eight classes of notes which are to be offered by this prospectus; - - Class E Lease-Backed Notes, which are not offered by this prospectus but serve as credit support to the notes offered by this prospectus; and - - Residual Notes which are not offered by this prospectus and which will not not interests in or obligations of any provide credit support to the other notes. THE NOTES -- - - Are backed by a pledge of assets of the Issuer. The assets of the Issuer securing the notes will include a pool of healthcare, manufacturing and business equipment leases, and all of its interest in the equipment underlying the leases; - - Receive distributions beginning on April 15, 1999; - - Represent debt obligations of Copelco Capital Funding LLC 99-1; and - - Currently have no trading market.
- -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Interest Rate Initial Initial Underwriting Proceeds to Final per annum Principal Public Issuer Scheduled Balance Offering Price (before Distribution deducting Date expenses) - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class A-1 Note % $139,000,000 % % % 3/15/2000 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class A-2 Note % $95,000,000 % % % 10/15/2001 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class A-3 Note % $110,000,000 % % % 9/15/2002 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class A-4 Note % $90,000,000 % % % 10/15/2003 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class A-5 Note % $75,613,000 % % % 1/15/2007 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class B Note % $13,029,000 % % % 1/15/2007 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class C Note % $10,134,000 % % % 1/15/2007 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Class D Note % $15,925,000 % % % 1/15/2007 - -------------------------- --------------- -------------- --------------- --------------- --------------- --------------- Total.................... % $ % % % ========================== =============== ============== =============== =============== =============== ===============
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PRUDENTIAL SECURITIES FIRST UNION CAPITAL MARKETS CORP. The date of this Prospectus is March ___, 1999 4 We include cross-references in this prospectus to captions in these materials where you can find further related discussions. The following table of contents provides the pages on which these captions are located. Some persons participating in this offering may engage in transactions that stabilize, maintain, or in some way affect the price of the notes. These types of transactions may include stabilizing the purchase price of notes to cover syndicate short positions and the imposition of penalty bids. For a description of these activities, please read the section entitled "Underwriting" in this prospectus. No dealer, salesman or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the offer made by this prospectus and, if given or made, the information or representations must not be relied upon. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the issuer or any affiliate thereof or the leases since the date hereof. TABLE OF CONTENTS Page ---- Prospectus Summary.........................................................4 Issuer.....................................................................4 Servicer...................................................................4 Trustee....................................................................4 The Pledged Assets.........................................................4 Leases.....................................................................4 Cut-off Date...............................................................4 Payment Date...............................................................4 Determination Date.........................................................5 Record Date................................................................5 Issuance Date..............................................................5 Denominations..............................................................5 Priority of Distributions..................................................5 Reserve Account............................................................6 Optional Redemption........................................................6 Final Scheduled Payment Date...............................................6 Federal Income Tax Consequences............................................6 ERISA Considerations.......................................................6 Ratings....................................................................6 Risk Factors...............................................................7 Use of Proceeds...........................................................12 The Series Pool...........................................................12 Copelco Capital's Underwriting and Servicing Practices....................22 The Issuer................................................................28 Management's Discussion and Analysis of Financial Condition...............28 Directors and Executive Officers of the Manager of the Issuer.............28 Description of the Notes..................................................29 Prepayment and Yield Considerations.......................................45 Security for the Notes....................................................50 The Indenture Trustee.....................................................50 Certain Legal Matters Affecting a Lessee's Rights and Obligations........50 Material Federal Income Tax Consequences..................................51 ERISA Considerations......................................................55 Underwriting..............................................................56 Experts...................................................................57 Legal Matters.............................................................57 Rating of the Offered Notes...............................................57 Index of Terms............................................................59 2 5 PROSPECTUS SUMMARY - - This summary highlights select information from this prospectus and does not contain all of the information that you need to consider in making your investment decision. This summary provides general, simplified descriptions of matters which, in some cases, are highly technical and complex. To understand all of the terms of the offering of the notes, carefully read this entire prospectus. - - This summary provides an overview of certain calculations, cash flows and other information to aid your understanding. To understand all of the terms of the offering, carefully read this entire document and, in particular, the full description of these calculations, cash flows and other information in this prospectus. LEASE-BACKED NOTES SERIES 1999-A The Issuer will issue the notes offered by this prospectus in book-entry form through the facilities of The Depository Trust Company. ISSUER - - Copelco Capital Funding LLC 99-1. The address of the issuer is 700 East Gate Drive, Mt. Laurel, NJ 08054. - - The issuer will be a limited liability company formed under the laws of the State of Delaware. SERVICER Copelco Capital, Inc. The address of the servicer is One International Boulevard, Mahwah, NJ 07430. TRUSTEE Manufacturers and Traders Trust Company. The address of the Trustee is One M&T Plaza, Buffalo, NY 14248. THE PLEDGED ASSETS The Issuer will pledge its property to secure payments on the notes. The pledged assets will include a pool of leases, cash on deposit in a reserve account and the collection account and other assets as described in detail elsewhere in this prospectus. LEASES - - On or about March 9, 1999, the issuer will receive, as a capital contribution, a pool of leases and the related equipment from Copelco Capital, Inc. Payments on the notes will be made from payments on these leases. - - The leases will include healthcare, manufacturing and business equipment leases. - - The lessees under the leases are primarily hospitals, non-hospital medical facilities, physicians, businesses and individual businesses. - - The leases are triple-net leases, which means that the lessee is required to pay all taxes, maintenance and insurance associated with the equipment. The leases are non-cancelable by the lessees. All payments under the leases are absolute, unconditional obligations of the lessees without right of offset for any reason. - - We will calculate the principal value of the pool of leases at any time by discounting their remaining payments (except for certain minor charges and delinquent payments) at a rate equal to ___. CUT-OFF DATE The opening of business on February 1, 1999. PAYMENT DATE The 15th day of each month if the fifteenth is a business day. If the fifteenth is not a business day, the payment date will be the following day that is a business day. The first payment date will be April 15, 1999. 3 6 DETERMINATION DATE Five business days before the payment date. The Trustee will calculate the amounts to be paid on the notes on this date. RECORD DATE The last business day preceding a payment date unless the notes are no longer book-entry notes. If the notes are definitive notes, the record date is the last business day of the month preceding a payment date. ISSUANCE DATE On or about March 9, 1999. DENOMINATIONS The notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000. One note of each class may be issued in another denomination. PRIORITY OF DISTRIBUTIONS Each month, the amounts received on the leases and any other collections available as property of the Issuer will be distributed as follows: Interest Distributions On each payment date you will be entitled to interest at the applicable interest rate that accrued during the prior interest accrual period. Principal Distributions On each payment date you will be entitled to principal in reduction of the outstanding principal balance of the notes. Principal will be paid to the noteholders in an amount usually equal to the decrease in the principal value of the leases between determination dates. Principal payments will be made in the following priority: - - to the Class A-1 Noteholders only, until the principal amount on the Class A-1 Notes has been reduced to zero; - - when the Class A-1 Notes have been paid in full: - to the Class A-2 Noteholders, until the principal amount on the Class A-2 Notes has been reduced to zero, an amount generally equal to 84.21% of the decrease in the principal value of the leases; - when the Class A-2 Notes have been paid in full, to the Class A-3 Noteholders, until the principal amount on the Class A-3 Notes has been reduced to zero, an amount generally equal to 84.21% of the decrease in the principal value of the leases; - when the Class A-3 Notes have been paid in full, to the Class A-4 Noteholders, until the principal amount on the Class A-4 Notes has been reduced to zero, an amount generally equal to 84.21% of the decrease in the principal value of the leases; - when the Class A-4 Notes have been paid in full, to the Class A-5 Noteholders, until the principal amount on the Class A-5 Notes has been reduced to zero, an amount generally equal to 84.21% of the decrease in the principal value of the leases; - to the Class B Noteholders, an amount generally equal to 2.96% of the decrease in the principal value of the leases; - to the Class C Noteholders, an amount generally equal to 2.30% of the decrease in the principal value of the leases; - to the Class D Noteholders, an amount generally equal to 3.62% of the decrease in the principal value of the leases; - to the Class E Noteholders, an amount generally equal to 3.95% of the decrease in the principal value of the leases. 4 7 This general description of distributions of principal to the notes is subject to certain targets and floors. We refer you to "Descriptions of the Notes -- Distributions" in this prospectus for further information regarding the payment of interest and principal on the notes. RESERVE ACCOUNT After interest and principal payments on the notes have been made on any payment date, any remaining collections received from the leases will be deposited in a reserve account held by the trustee until the balance in the reserve account is at the lesser of 1% of the principal value of the leases at February 1, 1999 and the outstanding principal amount of the notes. Amounts on deposit in the reserve account will be used to pay any shortfalls in amounts due to the noteholders on future payment dates. OPTIONAL REDEMPTION When the total lease principal balance of the performing leases is less than or equal to 5% of the total principal value of the leases as of February 1, 1999, the issuer may, on any payment date, redeem the notes if it fulfills certain conditions. If such an event occurs, you will receive a final distribution equaling the entire unpaid principal balance of the notes plus any accrued and unpaid interest. FINAL SCHEDULED PAYMENT DATE If the notes have not already been paid in full, the outstanding principal amount of the notes will be paid in full on the following payment dates: Class A-1 March 15, 2000 Class A-2 October 15, 2001 Class A-3 September 15, 2002 Class A-4 October 15, 2003 Class A-5 January 15, 2007 Class B January 15, 2007 Class C January 15, 2007 Class D January 15, 2007 Class E January 15, 2007 Final payment on the notes will probably be earlier than the final scheduled payment date set forth above for the related class of notes. FEDERAL INCOME TAX CONSEQUENCES For federal income tax purposes: - - Dewey Ballantine LLP, special tax counsel to the issuer and counsel to the underwriters, is of the opinion that the notes will be characterized as debt. By your acceptance of a note, you agree to treat the notes as debt. - - Dewey Ballantine LLP has prepared the discussion under "Material Federal Income Tax Consequences" and is of the opinion that such discussion is correct in all material respects. ERISA CONSIDERATIONS Subject to the important considerations described under "ERISA Considerations" in this prospectus, the notes are eligible for purchase by pension, profit-sharing and other employee benefit plans. You should consult with your counsel regarding the applicability of the provisions of the Employee Retirement Income Security Act of 1974, as amended, before purchasing a note. RATINGS - - The issuer will not issue the notes unless they have been assigned the following ratings: INITIAL RATING OF OFFERED NOTES CLASS MOODY'S DCR FITCH Class A-1......... P-1 D-1+ F1+/AAA Class A-2......... Aaa AAA AAA Class A-3......... Aaa AAA AAA Class A-4......... Aaa AAA AAA Class A-5......... Aaa AAA AAA Class B........... Aa2 AA AA Class C........... A2 A A Class D........... Baa2 BBB BBB - - You must not assume that the rating initially assigned to the notes will not subsequently be lowered, qualified or withdrawn by the rating agencies. 5 8 RISK FACTORS You should carefully consider, among other things, the following risk factors before deciding to invest in the notes offered by this prospectus. ABILITY TO SELL THE NOTES IS NOT There is currently no public market for the ASSURED notes. We offer no assurance that one will develop. The underwriters expect, but are not obligated, to make a market in the notes. There is no assurance that any such market will be created or, if created, will continue. If no public market develops, as a noteholder, you may not be able to liquidate your investment in the notes prior to maturity. PREPAYMENTS AND RELATED The rate of payment of principal cannot be REINVESTMENT RISK MAY REDUCE predicted. It is not predictable because the YIELD TO NOTEHOLDERS rate on the notes will depend on, among other things, the rate of payment on the underlying equipment leases. In addition to the normally scheduled payments on the leases, payments may come from a number of different sources. Payments on the leases will include the following: - prepayments permitted by the servicer; - payments as a result of leases which are defaulted; - payments as a result of leases accelerated by the servicer; - payments due to loss, theft, destruction or other casualty; and - payments upon repurchases by Copelco Capital, Inc. on account of a breach of certain representations and warranties. Copelco Capital, Inc. has the option, but not the obligation, to reinvest the proceeds of a lease which was partially or fully repaid or upgraded in one or more leases having similar characteristics to such terminated lease. The rate of early terminations of leases due to prepayments and various non-payments may be influenced by a variety of economic and other factors. For example, adverse economic conditions and certain natural disasters such as floods, hurricanes, earthquakes and tornadoes may affect prepayments. The risk of reinvesting unscheduled distributions resulting from prepayments of the notes will be borne by you as a noteholder. SECURITY INTERESTS IN THE Prior to February 1, 1999, Copelco Capital, EQUIPMENT; CERTAIN SECURITY Inc. will file Uniform Commercial Code INTERESTS NOT PERFECTED financing statements against lessees with respect to equipment with an original equipment cost equal to or more than $25,000. We expect that financing statements with respect to approximately 59.11% of the discounted present value of the leases will be filed. In addition, the indenture and the assignment and servicing agreement will require Uniform Commercial Code financing statements for all security interests in the equipment owned by the issuer which are pledged to the trustee to be filed (to the extent possible by central filing in a state) against the Issuer and Copelco Capital, Inc. 6 9 Copelco Capital, Inc. will not perfect its interest in any equipment if the original cost of the related equipment is less than $25,000. As a result, Copelco Capital, Inc. does not have a perfected security interest in such equipment, which represents approximately 40.89% of the discounted present value of the leases. In such cases, security interests in the equipment will also not be perfected in favor of Copelco Capital Funding LLC 99-1 or the trustee. Additionally, because the indenture and the assignment and servicing agreement will only require Uniform Commercial Code financing statements to be filed in central locations for any given state, security interests in the equipment will also not be perfected in favor of Copelco Capital Funding LLC 99-1 or the trustee in any state requiring other than central filings. Therefore, other creditors of Copelco Capital, Inc., may acquire rights in the equipment superior to those of Copelco Capital Funding LLC 99-1 or the trustee. The lack of a perfected security interest in certain equipment may adversely affect the ability of Copelco Capital Funding LLC 99-1 to recoup any moneys on such equipment. STATE LAW MAY IMPEDE State laws impose requirements and RECOVERY EFFORTS restrictions relating to foreclosure sales and obtaining deficiency judgments following such sales. In the event that Copelco Capital Funding LLC 99-1 must rely on repossession and sale of equipment to recover losses on non-performing leases, Copelco Capital Funding LLC 99-1 may not recoup the full amount due because of the application of those requirements and restrictions. Additional factors that may affect the ability of Copelco Capital Funding LLC 99-1 to recoup the full amount due on a lease include - - the failure to file financing statements to perfect Copelco Capital Funding LLC 99-1's security interest in the equipment against a lessee; - depreciation; - obsolescence; - damage or loss of any item of equipment; and - the application of federal and state bankruptcy and insolvency laws. As a result, the noteholders may be subject to delays in receiving payments and losses. 7 10 DEFAULT OR INSOLVENCY OF COPELCO Copelco Capital, Inc. believes that each CAPITAL, INC. MAY REDUCE contribution of the leases should be treated PAYMENTS TO NOTEHOLDERS as an absolute and unconditional assignment. However, in the event of an insolvency of Copelco Capital, Inc., a court could attempt to - - recharacterize the contribution of the related leases by Copelco Capital, Inc. to Copelco Capital Funding LLC 99-1 as a loan to Copelco Capital Funding LLC 99-1 from Copelco Capital, Inc., secured by a pledge of such leases or could allow Copelco Capital, Inc. in bankruptcy to repudiate the leases that are operating leases and all obligations thereunder; or - consolidate the assets of Copelco Capital Funding LLC 99-1 with those of Copelco Capital, Inc. since Copelco Capital, Inc. will indirectly own all of the membership interests in Copelco Capital Funding LLC 99-1. Either attempt, even if unsuccessful, could result in delays in payments to you. If such attempts were successful, such notes would be accelerated, and the trustee's recovery on behalf of you could be limited to the then current value of the leases or the underlying equipment. Thus, you could lose the right to future payments and you might incur reinvestment losses on amounts recovered. Although Copelco Capital, Inc. believes that the contribution of the leases should be treated as an absolute and unconditional assignment, for accounting and tax purposes, the leases will be treated as assets of Copelco Capital, Inc. on its consolidated financial statements and on the tax return for its consolidated group. Such treatment of the assets might increase the risk of recharacterization of the transfer to Copelco Capital Funding LLC 99-1 as a financing. NO RECOURSE AGAINST THE The Notes represent debt of Copelco Capital AFFILIATES OF COPELCO Funding LLC 99-1 secured primarily by the CAPITAL LLC 99-1 leases. If the lease payments and other assets pledged to secure the notes are insufficient to pay the notes in full, you have no rights to obtain payment from Copelco Capital, Inc. or any of its affiliates other than Copelco Capital Funding LLC 99-1. Copelco Capital Funding LLC 99-1 is a limited liability company with limited assets. Consequently, the noteholders must rely solely upon the leases, the equipment and funds in the reserve account and in the collection account for repayment. GEOGRAPHIC CONCENTRATION OF As of February 1, 1999, approximately LEASES MAY ADVERSELY AFFECT 18.24%, 5.53%, 13.95% and 8.28% of the THE LEASES leases (based on the statistical discounted present value of the leases) were located in California, Florida, New York and Texas, respectively. No other state accounts for more than 5% of the leases. Accordingly, adverse economic conditions or other factors particularly affecting any of these regions could adversely affect the performance on the leases. The Issuer is unable to determine and has no basis to predict, with respect to any state or region, whether any such events have occurred or may occur, or to what extent any such events may affect the leases or the repayment of amounts due under the notes. 8 11 COMMINGLING OF FUNDS WITH COPELCO Under the Indenture, the servicer is CAPITAL, INC. MAY RESULT IN required to deposit all periodic lease REDUCED OR DELAYED PAYMENTS TO payments, payments resulting from loss, NOTEHOLDERS theft or other casualty and payments as a result of early termination received after February 1, 1999 to the collection account within two business days of receipt of those payments. If bankruptcy or reorganization proceedings were commenced with respect to the servicer, those funds held by the servicer and not transferred to the collection account may be subject to an automatic stay resulting in a delay in the transfer of such funds to the trustee. This could result in delayed or reduced payments to you. DEFAULT OR INSOLVENCY OF To the extent lessees default on the leases, LESSEES MAY REDUCE including through insolvency, lease payments PAYMENTS TO NOTEHOLDERS will decrease and, accordingly, funds available for payment to you, as a noteholder, will be reduced. RISKS ASSOCIATED WITH YEAR The servicer is faced with the task of 2000 COMPLIANCE completing its goals for compliance in connection with the year 2000 issue. The year 2000 issue is the result of prior computer programs being written using two digits to define the applicable year. Any computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. Any such occurrence could result in major computer system failure or miscalculations. Although the servicer reasonably believes that its servicing system will be year 2000 compliant prior to the year 2000, it is presently engaged in various procedures to determine if its computer systems and software, and those of its material suppliers, customers, brokers and agents will be year 2000 compliant. In the event that the servicer, any subservicer or any of their suppliers, customers, brokers or agents do not successfully and timely achieve year 2000 compliance, the servicer's performance of its obligations under the Assignment and Servicing Agreement could be adversely affected. This could result in delays in processing payments on the leases and could cause a delay in distributions to you. 9 12 WHERE YOU CAN FIND MORE INFORMATION Federal securities law requires the filing of certain information with the Securities and Exchange Commission, including annual, quarterly and special reports, proxy statements and other information. You can read and copy these documents at the public reference facility maintained by the SEC at Judiciary Plaza, 450 Fifth Street, NW, Room 1024, Washington, DC 20549. You can also copy and inspect such reports, proxy statements and other information at the following regional offices of the SEC: New York Regional Office Chicago Regional Office Seven World Trade Center Citicorp Center Suite 1300 500 West Madison Street, Suite 1400 New York, NY 10048 Chicago, Illinois 60661 Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. SEC filings are also available to the public on the SEC's web site at http://www.sec.gov. This prospectus is part of a registration statement filed by the Sponsor with the SEC (Registration No. 333-69983). You may request a free copy of this filing by writing or calling: Copelco Capital, Inc. 700 East Gate Drive Mount Laurel, New Jersey 08054-5404 Attention: Stephen W. Shippie (609) 231-9600 You should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus is accurate as of any date other than the date on the cover page of this prospectus. You can find a listing of the pages where capitalized terms used in this prospectus are defined under "Index of Terms" beginning on page 53 in this prospectus. 10 13 USE OF PROCEEDS The net proceeds from the sale of the Notes will be distributed to the owners of Copelco Capital Funding LLC 99-1 (the "Issuer"). The distribution will occur after the contribution from Copelco Capital, Inc. ("Copelco Capital" or the "Servicer") of the healthcare, manufacturing and business equipment lease contracts (each a "Lease Contract", collectively the "Lease Contracts"), including payments due thereunder (the "Lease Receivables", together with the Lease Contracts, the "Leases") and interests in the related equipment (the "Equipment") to the Issuer. The net proceeds will be utilized to repay bank debt and for general corporate purposes. THE SERIES POOL THE LEASES. As of the opening of business on February 1, 1999 (the "Cut-Off Date"), the Notes will be secured by a pool (the "Series Pool") of healthcare, manufacturing and business equipment lease contracts. The Lessees (as defined herein) are primarily hospitals, medical facilities, physicians and business owners throughout the United States. The Leases were originated or acquired by the Business Technology Group, the Healthcare Group and the Commercial & Industrial Group of Copelco Capital (or their predecessors) (collectively, the "Origination Groups"). See "Risk Factors," "Security for the Notes" and "Certain Legal Matters Affecting a Lessee's Rights and Obligations." Unless otherwise noted, the statistical information included herein was computed using the Statistical Discounted Present Value of the Leases as of the Cut-Off Date. The actual principal value of the Leases on March 9, 1999 (the "Issuance Date") will be calculated using the Discounted Present Value of the Leases (as defined herein). The Statistical Discounted Present Value of the Leases as of the Cut-Off Date will not vary materially from the Discounted Present Value of the Leases as of the Cut-Off Date. The Leases are triple-net leases, which means that the terms of the leases require the lessees to pay all taxes, maintenance and insurance associated with the Equipment, and impose no affirmative obligations on the lessor, and are non-cancelable by the Lessees (as defined herein). Under certain conditions, however, Copelco Capital may consent to prepayment of the Leases. Generally, Copelco Capital will consent to a prepayment of a Lease where the Lessee is upgrading the Equipment. All payments under the Leases are absolute, unconditional obligations of the hospitals, non-hospital medical facilities, physicians, businesses and individual business owners who lease the Equipment (each, a "Lessee," and collectively, the "Lessees"). Lessees are without right of offset for any reason. Such payments will be made by the Lessees to Copelco Capital, as servicer, for the account of Copelco Capital Funding LLC 99-1. Each Lessee entered into its Lease for specified Equipment which may be designated in schedules incorporated into the Lease. To the extent not set forth in the Lease Contract, the schedules, among other things, establish the periodic payments and the term of the Lease with respect to such Equipment. The Leases follow one of several different forms of lease agreement, with occasional modifications which do not materially affect the basic terms of the Leases. The weighted average remaining term of the Series Pool is 46.954 months. Copelco Capital will represent and warrant that, as of the Cut-Off Date, all Leases will be current or less than 63 days delinquent and, as of the initial Determination Date (as defined herein), all Lessees will have made at least one payment. Lessees covenant to maintain the Equipment and install it at a place of business agreed upon with Copelco Capital. Delivery, transportation, repairs and maintenance are the obligation of the Lessees, and all Lessees are required to carry, at their respective expense, liability and replacement cost insurance under terms acceptable to Copelco Capital. Such insurance proceeds will constitute Casualty Payments (as defined herein). Subject to certain exceptions, if the Lessee does not provide evidence of insurance coverage within 90 days of the commencement of the Lease, Copelco Capital may obtain such insurance and invoice the Lessee for the cost thereof. Any defaults under a Lease (as such, a "Non-Performing Lease," as defined herein) permit a declaration, as immediately due and payable, of all remaining Lease payments under the Lease and the immediate return of the Equipment. Generally, any payments received six days after the scheduled payment date are subject to late charges. "Non-Performing Leases" are (a) Leases that have become more than 123 days delinquent or (b) Leases that have been accelerated by the Servicer or Leases that the Servicer has determined to be uncollectible in accordance with its customary practices. 11 14 The Servicer's customary practices with respect to Non-Performing Leases include such action as is necessary to cause, or attempt to cause, the Lessee thereunder to cure such non-performance or to terminate such lease and recover the outstanding amount owed under the lease and all damages resulting from any default on the Non-Performing Leases. The Servicer will take action that is consistent with the customary practices of servicers in the equipment leasing industry. In addition, the Servicer will use its best efforts to sell or lease any Equipment that is subject to a Non-Performing Lease in a timely manner and upon the most favorable terms and conditions available at the time in order to recoup any amounts still due on the Lease. At the end of the Lease term, the Lessee must return the Equipment with certification from the manufacturer that the Equipment is in good working order, normal wear and tear excepted, unless the Lease is renewed or the Equipment is purchased by the Lessee. Historically, approximately 90% of the Equipment leased by the Origination Groups is purchased or re-leased by the original lessee at the expiration of the lease term. Pursuant to the terms of the Leases, the Lessee is generally required to advise Copelco Capital 90 to 120 days prior to the Lease termination of its intent to return the Equipment at the expiration of the Lease. In most cases, the failure by a Lessee to so advise Copelco Capital results in an automatic renewal of the Lease for a specified period. For Equipment which is returned to Copelco Capital by the Lessees, Copelco Capital participates in an active secondary market for the sale of used Equipment. THE EQUIPMENT. The Equipment subject to the Leases is purchased by Copelco Capital under direct specifications and instructions from the Lessees. As of the Cut-Off Date, the Series Pool had approximately 91 equipment categories. CERTAIN INFORMATION WITH RESPECT TO THE LEASES AND THE LESSEES. The following tables summarize certain information with respect to the Leases and the Lessees as of the Cut-Off Date. THE PLEDGED ASSETS. The assets pledged to secure the Notes (the "Pledged Assets") will consist of a pool of healthcare, manufacturing and business equipment lease contracts, including payments due thereunder and certain interests in the related leased equipment acquired or originated by Copelco Capital and transferred to the Issuer. The Pledged Assets will, in addition, include the funds on deposit in Collection Account (as defined herein) and the Reserve Account (as defined herein). 12 15 DISTRIBUTION OF LEASES BY STATE
PERCENTAGE OF STATISTICAL PERCENTAGE STATISTICAL DISCOUNTED OF AGGREGATE PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT STATE LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST ----- ------ --------- --------- ------ -------------- ---- Alaska 38 0.105% $ 629,328.70 0.109% $ 698,584.49 0.112% Alabama 252 0.699 4,101,671.77 0.708 4,482,672.28 0.717 Arkansas 62 0.172 4,036,402.01 0.697 3,931,536.13 0.628 Arizona 420 1.166 8,518,039.36 1.471 9,363,133.71 1.497 California 6,321 17.544 105,627,694.23 18.240 113,286,210.11 18.108 Colorado 749 2.079 10,322,675.69 1.783 11,089,877.23 1.773 Connecticut 758 2.104 9,045,712.08 1.562 9,773,060.27 1.562 District of Columbia 260 0.722 4,380,171.96 0.756 4,837,286.73 0.773 Delaware 76 0.211 1,056,181.81 0.182 1,162,769.43 0.186 Florida 2,003 5.559 32,029,403.74 5.531 34,368,582.58 5.494 Georgia 989 2.745 17,933,966.76 3.097 18,950,301.41 3.029 Hawaii 52 0.144 788,053.14 0.136 817,866.26 0.131 Iowa 74 0.205 1,001,510.12 0.173 1,067,787.51 0.171 Idaho 68 0.189 599,665.76 0.104 634,636.74 0.101 Illinois 1,499 4.161 21,695,549.35 3.746 23,243,596.46 3.715 Indiana 433 1.202 5,763,119.26 0.995 6,424,314.92 1.027 Kansas 139 0.386 3,962,800.14 0.684 4,005,123.87 0.640 Kentucky 201 0.558 3,349,691.35 0.578 3,975,821.94 0.636 Louisiana 1,137 3.156 10,392,923.89 1.795 13,007,123.36 2.079 Massachusetts 1,177 3.267 14,884,810.10 2.570 15,960,476.12 2.551 Maryland 406 1.127 6,224,124.90 1.075 6,691,705.12 1.070 Maine 320 0.888 3,309,967.98 0.572 3,455,903.69 0.552 Michigan 383 1.063 7,253,190.74 1.252 8,102,519.49 1.295 Minnesota 191 0.530 4,910,196.52 0.848 5,601,404.94 0.895 Missouri 334 0.927 7,294,605.49 1.260 7,405,179.69 1.184 Mississippi 193 0.536 2,847,752.01 0.492 2,948,199.35 0.471 Montana 59 0.164 873,373.40 0.151 931,235.95 0.149 North Carolina 666 1.849 10,415,591.40 1.799 11,101,323.80 1.775 North Dakota 4 0.011 30,102.05 0.005 33,402.41 0.005 Nebraska 74 0.205 1,133,218.89 0.196 1,227,253.14 0.196 New Hampshire 252 0.699 3,000,375.37 0.518 3,255,954.65 0.520 New Jersey 1,851 5.138 27,739,453.31 4.790 30,175,612.07 4.823 New Mexico 143 0.397 5,265,763.44 0.909 5,911,245.03 0.945 Nevada 330 0.916 4,327,404.63 0.747 4,590,473.55 0.734 New York 5,436 15.088 80,809,149.44 13.954 88,937,803.48 14.216 Ohio 1,014 2.814 18,326,823.00 3.165 19,546,904.48 3.124 Oklahoma 189 0.525 6,153,399.96 1.063 6,236,443.35 0.997 Oregon 358 0.994 5,455,494.76 0.942 6,025,066.27 0.963 Pennsylvania 1,390 3.858 23,606,739.24 4.076 25,285,699.41 4.042 Puerto Rico 4 0.011 352,667.29 0.061 357,279.64 0.057 Rhode Island 236 0.655 4,283,473.59 0.740 4,392,229.47 0.702 South Carolina 266 0.738 3,312,135.78 0.572 3,813,693.83 0.610 South Dakota 14 0.039 147,939.72 0.026 159,060.04 0.025 Tennessee 280 0.777 5,055,224.40 0.873 5,401,918.77 0.863 Texas 2,754 7.644 47,940,745.52 8.278 50,919,574.36 8.139 Utah 218 0.605 3,697,977.33 0.639 3,883,623.92 0.621 Virginia 733 2.034 9,909,546.40 1.711 10,917,639.91 1.745 Vermont 33 0.092 426,822.78 0.074 452,067.84 0.072 Washington 848 2.354 13,611,079.04 2.350 14,758,291.37 2.359 Wisconsin 211 0.586 9,534,673.73 1.646 10,129,593.02 1.619 West Virginia 119 0.330 1,546,068.41 0.267 1,674,924.47 0.268 Wyoming 12 0.033 190,925.27 0.033 197,902.50 0.032 ================================================================================================================== Total 36,029 100.00% $579,105,376.99 100.00% $625,601,890.56 100.00% ==================================================================================================================
13 16 DISTRIBUTION OF LEASES BY LEASE BALANCE
PERCENTAGE OF STATISTICAL PERCENTAGE STATISTICAL DISCOUNTED OF AGGREGATE PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL STATISTICAL DISCOUNTED NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT PRESENT VALUE OF THE LEASES LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST --------------------------- ------ --------- --------- ------ -------------- ---- $ 0.01 - 5,000.00 13,245 36.762% $ 37,327,809.53 6.446% $45,732,625.75 7.310% 5,000.01 - 10,000.00 9,090 25.230 65,855,255.63 11.372 73,776,533.44 11.793 10,000.01 - 15,000.00 4,850 13.461 59,483,189.73 10.272 65,238,482.06 10.428 15,000.01 - 20,000.00 2,751 7.636 47,545,164.01 8.210 50,980,068.69 8.149 20,000.01 - 25,000.00 1,637 4.544 36,550,419.35 6.312 39,313,580.37 6.284 25,000.01 - 30,000.00 1,032 2.864 28,210,382.60 4.871 30,228,935.61 4.832 30,000.01 - 35,000.00 673 1.868 21,776,321.12 3.760 23,235,106.83 3.714 35,000.01 - 40,000.00 424 1.177 15,821,223.21 2.732 16,520,678.05 2.641 40,000.01 - 45,000.00 344 0.955 14,543,684.13 2.511 15,279,910.17 2.442 45,000.01 - 50,000.00 274 0.760 12,954,807.26 2.237 13,913,936.20 2.224 50,000.01 - 60,000.00 391 1.085 21,419,472.19 3.699 22,397,259.09 3.580 60,000.01 - 70,000.00 281 0.780 18,155,025.75 3.135 19,291,034.06 3.084 70,000.01 - 80,000.00 196 0.544 14,711,000.53 2.540 15,789,581.94 2.524 80,000.01 - 90,000.00 141 0.391 11,953,617.66 2.064 12,459,756.55 1.992 90,000.01 - 100,000.00 93 0.258 8,843,510.32 1.527 9,853,853.68 1.575 100,000.01 - 125,000.00 176 0.488 19,508,129.01 3.369 20,591,878.95 3.292 125,000.01 - 150,000.00 108 0.300 14,903,495.41 2.574 16,326,784.34 2.610 150,000.01 - 175,000.00 60 0.167 9,627,953.07 1.663 10,068,077.44 1.609 175,000.01 - 200,000.00 52 0.144 9,701,713.75 1.675 10,474,791.21 1.674 200,000.01 - 300,000.00 73 0.203 17,744,491.08 3.064 19,283,108.68 3.082 300,000.01 - 400,000.00 45 0.125 15,594,570.62 2.693 16,712,088.23 2.671 400,000.01 - 500,000.00 29 0.080 12,983,107.75 2.242 13,708,203.11 2.191 500,000.01 - 600,000.00 15 0.042 8,212,540.34 1.418 9,089,861.67 1.453 600,000.01 - 700,000.00 13 0.036 8,732,300.17 1.508 8,886,114.23 1.420 700,000.01 - 800,000.00 6 0.017 4,426,118.94 0.764 4,782,921.98 0.765 800,000.01 - 900,000.00 2 0.006 1,711,244.87 0.295 1,676,079.00 0.268 900,000.01 -1,000,000.00 6 0.017 5,683,745.42 0.981 5,626,494.71 0.899 1,000,000.01 -1,500,000.00 16 0.044 18,668,159.85 3.224 18,936,950.67 3.027 1,500,000.01 -2,000,000.00 2 0.006 3,715,484.23 0.642 3,416,250.00 0.546 greater than2,000,000.00 4 0.011 12,741,439.46 2.200 12,010,943.85 1.920 ===================================================================================================================== Total 36,029 100.00% $579,105,376.99 100.00% $625,601,890.56 100.00% =====================================================================================================================
DISTRIBUTION OF LEASES BY REMAINING TERM TO MATURITY
PERCENTAGE OF STATISTICAL PERCENTAGE STATISTICAL DISCOUNTED OF AGGREGATE PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT REMAINING TERM LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST -------------- ------ --------- --------- ------ -------------- ---- 0 - 12 1,323 3.672% $ 7,447,405.73 1.286% $16,248,199.65 2.597% 13 - 24 2,647 7.347 18,971,848.45 3.276 26,935,964.07 4.306 25 - 36 16,022 44.470 152,681,866.61 26.365 174,022,920.62 27.817 37 - 48 5,160 14.322 82,536,829.93 14.252 88,426,560.80 14.135 49 - 60 10,614 29.460 281,652,759.58 48.636 285,871,185.19 45.695 61 - 72 207 0.575 19,182,085.65 3.312 18,568,395.52 2.968 73 - 84 56 0.155 16,632,581.05 2.872 15,528,664.71 2.482 ================================================================================================================= Totals: 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000% =================================================================================================================
14 17 DISTRIBUTION OF LEASES BY ORIGINAL TERM TO MATURITY
PERCENTAGE OF PERCENTAGE STATISTICAL OF STATISTICAL DISCOUNTED AGGREGATE PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL NUMBER OF OF NUMBER PRESENT VALUE OF VALUE OF ORIGINAL EQUIPMENT ORIGINAL TERM LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST ------------- ------ --------- ------ ------ -------------- ---- 0 - 12 237 0.658% $ 2,116,299.09 0.365% $2,705,498.42 0.432% 13 - 24 1,095 3.039 8,900,516.36 1.537 11,187,095.37 1.788 25 - 36 3,503 9.723 37,957,386.80 6.554 45,934,304.61 7.342 37 - 48 15,656 43.454 144,905,047.84 25.022 166,226,218.12 26.571 49 - 60 6,484 17.997 142,977,578.86 24.689 152,031,550.42 24.302 61 - 72 8,972 24.902 217,248,058.67 37.514 223,244,176.41 35.685 73 - 84 72 0.200 18,716,309.40 3.232 17,869,682.99 2.856 85 - 96 10 0.028 6,284,179.97 1.085 6,403,364.22 1.024 ==================================================================================================================== Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000% ====================================================================================================================
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
PERCENTAGE OF PERCENTAGE STATISTICAL OF STATISTICAL DISCOUNTED AGGREGATE PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT LEASE TYPE LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST - ---------- ------ --------- --------- ------ -------------- ---- Finance Lease 35,938 99.747% $569,341,250.88 98.314% $612,670,878.20 97.933% Operating Lease 91 0.253 9,764,126.12 1.686 12,931,012.36 2.067 ==================================================================================================================== Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000% ====================================================================================================================
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
PERCENTAGE OF PERCENTAGE STATISTICAL OF STATISTICAL DISCOUNTED AGGREGATE PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT PURCHASE OPTION LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST - --------------- ------ --------- --------- ------ -------------- ---- Fixed Purchase Option 3,283 9.112% $71,715,198.61 12.384% $79,439,976.44 12.698% Fair Market Value 24,276 67.379 307,906,221.51 53.169 338,334,820.24 54.081 Nominal Buyout 8,470 23.509 199,483,956.87 34.447 207,827,093.88 33.220 ==================================================================================================================== Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000% ====================================================================================================================
15 18 DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
PERCENTAGE OF PERCENTAGE STATISTICAL OF STATISTICAL DISCOUNTED AGGREGATE NUMBER PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT EQUIPMENT TYPE LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST - -------------- ------ --------- --------- ------ -------------- ---- Multiple Product 141 0.391% $ 2,553,602.71 0.441% $ 4,212,218.19 0.673% Anesthesia Equipment 13 0.036 558,211.61 0.096 784,352.44 0.125 Automated Chemistry Systems 168 0.466 6,721,582.38 1.161 7,613,215.53 1.217 Automated Hematology Systems 249 0.691 5,591,379.54 0.966 6,072,774.59 0.971 Automated Test Equipment 8 0.022 113,023.46 0.020 170,741.16 0.027 Automobile Shop 6 0.017 92,442.92 0.016 80,515.00 0.013 C.T. Systems 4 0.011 1,791,003.81 0.309 2,038,020.70 0.326 Carts, Stretchers, Wheel 56 0.155 863,385.57 0.149 902,062.46 0.144 Chairs Cash Registers 83 0.230 2,345,494.84 0.405 2,488,156.83 0.398 Cobalt and X-Ray Therapy 1 0.003 16,354.80 0.003 16,500.00 0.003 Equipment Communication Equipment 22 0.061 686,218.56 0.118 719,554.01 0.115 Computer Systems-Doctors & 579 1.607 13,829,672.61 2.388 14,427,473.74 2.306 Hospitals Computer 2,440 6.772 28,999,010.93 5.008 34,413,680.87 5.501 Construction Equipment 7 0.019 326,643.70 0.056 292,638.73 0.047 Copiers 25,562 70.948 299,580,916.86 51.732 323,872,861.44 51.770 Cranes and Derricks 2 0.006 29,954.26 0.005 25,800.00 0.004 Data Processing 1 0.003 63,030.75 0.011 56,085.00 0.009 Dental Operatory Equipment 477 1.324 10,782,993.68 1.862 10,820,841.99 1.730 Digital Cameras 1 0.003 5,667.88 0.001 6,213.39 0.001 Document Imaging Equipment 353 0.980 6,647,848.43 1.148 7,128,829.46 1.140 ECG (EKG) and Defibrillators 99 0.275 1,720,973.79 0.297 1,829,466.76 0.292 EEG 2 0.006 24,265.99 0.004 24,754.00 0.004 Electronics Production 181 0.502 30,914,636.05 5.338 36,417,060.37 5.821 Equipment Fabrication Equipment 4 0.011 1,019,672.09 0.176 1,081,561.72 0.173 Facsimiles 1,853 5.143 6,559,439.96 1.133 7,389,237.53 1.181 Food Processing 2 0.006 108,416.80 0.019 95,834.29 0.015 Furniture and Fixtures 14 0.039 566,965.12 0.098 543,446.59 0.087 Gamma Cameras 27 0.075 4,499,304.47 0.777 4,982,225.05 0.796 Heating and Air 2 0.006 29,125.53 0.005 25,870.00 0.004 Holter Monitors 39 0.108 619,056.78 0.107 648,810.99 0.104 Hosp Beds; Elec. Stryker 25 0.069 320,368.91 0.055 331,594.93 0.053 FRMS, Burn Beds Image Setters 1 0.003 92,509.50 0.016 121,195.00 0.019 Industrial Production 3 0.008 171,501.38 0.030 149,531.25 0.024 Jukeboxes/storage 2 0.006 27,817.13 0.005 28,400.00 0.005 Laminating Devices 2 0.006 16,157.08 0.003 15,626.69 0.002 Lasers 27 0.075 1,734,880.74 0.300 1,921,502.30 0.307 Laundry, Kitchen, Food Srvc 3 0.008 50,880.81 0.009 43,485.10 0.007 Eqp., Central Supply Laundry Equipment Lift Trucks 1 0.003 115,925.91 0.020 120,000.00 0.019 Lift Trucks 2 0.006 21,931.69 0.004 43,067.22 0.007 Linear Accelerators 1 0.003 535,390.95 0.092 960,012.50 0.153 Lithotripters and Dialysis 6 0.017 621,047.95 0.107 649,049.00 0.104 Equipment Machine Tools 2 0.006 245,529.86 0.042 247,015.00 0.039 Mailing Equipment 39 0.108 407,569.49 0.070 407,532.91 0.065 Mammography 11 0.031 1,178,601.28 0.204 1,380,290.54 0.221 Materials Handling 1 0.003 5,385.47 0.001 4,858.00 0.001 Mobile X-Ray Systems 4 0.011 314,313.59 0.054 352,376.31 0.056 Medical Equipment 11 0.031 630,771.92 0.109 622,355.87 0.099 Microfilm Equipment 4 0.011 76,099.89 0.013 92,866.12 0.015 Micrographics 2 0.006 41,509.23 0.007 41,673.00 0.007 Misc. Comm. & Indus. Equip. 84 0.233 1,528,605.43 0.264 1,776,955.28 0.284 Misc. Hospital Equipment 286 0.794 $ 61,742,560.58 10.662 $ 60,451,330.80 9.663
16 19
PERCENTAGE OF PERCENTAGE STATISTICAL OF STATISTICAL DISCOUNTED AGGREGATE NUMBER PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT EQUIPMENT TYPE LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST - -------------- ------ --------- --------- ------ -------------- ---- Misc Lab Eqp 7 0.019 191,352.06 0.033 184,913.42 0.030 Misc Vet Eqp; Cages, Scales, 4 0.011 36,119.74 0.006 59,793.00 0.010 Tables Misc X-Ray Eqp 14 0.039 774,590.25 0.134 828,802.16 0.132 Miscellaneous 121 0.336 1,861,701.66 0.321 1,879,393.86 0.300 MRI Systems 4 0.011 1,807,076.92 0.312 2,056,507.07 0.329 Office Furniture & Equipment 31 0.086 656,191.69 0.113 638,707.31 0.102 Operating Microscopes 7 0.019 139,323.16 0.024 222,546.31 0.036 Opthlmc Diag Eqp (Slit Lamps, 150 0.416 3,198,659.98 0.552 3,337,217.75 0.533 Tonometers) Opt Eqp; Lens Grinding, 386 1.071 4,719,383.80 0.815 5,215,735.15 0.834 Resurfacing Packaging Equipment 42 0.117 1,403,419.91 0.242 1,602,221.75 0.256 Patient Monitoring Systems 122 0.339 4,394,101.66 0.759 4,688,692.91 0.749 Patient Room Furnishing & 5 0.014 34,905.65 0.006 53,216.45 0.009 Fixtures Phone, TV, Comm Equipment 18 0.050 220,405.02 0.038 225,225.14 0.036 Photo Equipment 2 0.006 29,389.25 0.005 26,395.00 0.004 Photocopy Equipment 3 0.008 92,409.66 0.016 104,897.35 0.017 Phys Misc Medical Eqp & Exam 882 2.448 21,429,056.23 3.700 22,334,278.53 3.570 Tables Physician Office Furn, 24 0.067 434,642.73 0.075 522,730.49 0.084 Fixtures and Phones Podiatry Equipment 2 0.006 29,724.97 0.005 29,650.00 0.005 Printing Equipment 200 0.555 6,838,084.06 1.181 6,776,333.97 1.083 Processing Equipment 4 0.011 208,962.35 0.036 214,505.00 0.034 Pulse Oximetry Equipment 2 0.006 25,044.27 0.004 30,235.50 0.005 Radiographic Fluoroscopic 3 0.008 318,084.44 0.055 336,670.00 0.054 Systems Respiratory Therapy Equipment 753 2.090 20,388,913.25 3.521 22,189,415.91 3.547 Restaurant, Motel Equipment 3 0.008 120,341.03 0.021 109,170.73 0.017 Sales Tax 1 0.003 42,417.87 0.007 42,325.75 0.007 Scanners 8 0.022 140,029.79 0.024 153,230.85 0.024 Security Systems 3 0.008 37,473.64 0.006 34,743.67 0.006 Standard Printers 41 0.114 580,318.63 0.100 635,318.14 0.102 Standard Test Systems 1 0.003 2,554.69 0.000 2,708.48 0.000 Standard X-Ray Systems 28 0.078 1,380,892.41 0.238 1,466,565.70 0.234 Surgical Equip. Scopes, 9 0.025 174,476.45 0.030 171,598.28 0.027 Electrosurgical Telephone 45 0.125 816,197.09 0.141 832,829.94 0.133 Telex 1 0.003 8,466.19 0.001 15,221.00 0.002 Transportation 1 0.003 5,599.92 0.001 5,950.00 0.001 Ultrasound 126 0.350 7,195,679.48 1.243 7,887,466.31 1.261 Vending Machines 8 0.022 102,038.24 0.018 82,500.00 0.013 Wide Format Printers 1 0.003 13,582.83 0.002 20,034.48 0.003 Woodworking 1 0.003 26,747.66 0.005 23,320.00 0.004 Working Capital 51 0.142 1,461,160.75 0.252 1,408,745.89 0.225 X-Ray Spec Systems; 2 0.006 226,202.96 0.039 210,556.66 0.034 Angiography =================================================================================================================== Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000% ===================================================================================================================
1 The following abbreviations used in this table have the following meanings: "Eqp." -- Equipment "Misc." -- Miscellaneous 17 20 HISTORICAL DELINQUENCY INFORMATION. Lease receivables are generally evaluated by Copelco Capital for write-down when they become over 92 days delinquent. General delinquency information for equipment leases not written down in the Origination Groups that are owned by Copelco Capital is set forth below. HISTORICAL DELINQUENCY EXPERIENCE COPELCO CAPITAL COMBINED PORTFOLIO
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Total Receivables $2,000,113,149 $1,732,009,721 $1,503,055,810 $1,238,424,241 $1,000,488,313 - ------------------------------------------------------------------------------------------------------------------------------------ Balance (1) No. of Delinquent Days 30-59 days 43,823,866 2.19% 38,610,259 2.23% 34,481,668 2.29% 26,255,335 2.12% 14,846,559 60-89 days 16,739,163 0.84 11,999,057 0.69 8,136,578 0.54 4,976,920 0.40 3,971,389 90 Days+ 5,720,230 0.29 10,437,965 0.60 7,587,972 0.50 6,703,063 0.54 6,748,827 Total Delinquencies $66,283,259 3.31% $61,047,281 3.52% $50,206,218 3.34% $37,935,318 3.06% $25,566,775 - ------------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1993 ---- Total Receivables $736,373,700 - --------------------------------------------------------- Balance (1) No. of Delinquent Days 30-59 days 1.48% 9,184,216 1.25% 60-89 days 0.40 1,886,765 0.26 90 Days+ 0.67 5,099,200 0.69 Total Delinquencies 2.56% $16,170,181 2.20% - ---------------------------------------------------------
(1) The Total Receivables Balance is equal to the aggregate future rent owing on the leases. BUSINESS TECHNOLOGY
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Total $1,137,122,973 $964,765,984 $812,719,952 $669,800,055 $543,197,213 Receivables Balance (1) - ------------------------------------------------------------------------------------------------------------------------------------ No. of Delinquent Days 30-59 days 24,718,601 2.18% 21,036,692 2.17% 24,072,598 2.96% 18,298,832 2.73% 8,636,836 1.59% 60-89 days 7,367,101 0.57 5,451,379 0.65 5,249,429 0.65 3,492,843 0.52 2,281,428 0.42 90 Days+ 3,438,342 0.67 6,432,173 0.30 4,940,285 0.61 4,867,482 0.73 3,096,224 0.57 - ------------------------------------------------------------------------------------------------------------------------------------ Total Delinquencies $35,524,044 3.41% $32,920,244 3.12% $34,262,311 4.22% $26,659,157 3.98% $14,014,488 2.58%
DECEMBER 31, 1993 ---- Total $ 385,838,619 Receivables Balance (1) - ------------------------------------------- No. of Delinquent Days 30-59 days 5,401,741 1.40% 60-89 days 1,234,684 0.32 90 Days+ 2,315,032 0.60 - ------------------------------------------- Total Delinquencies $8,951,457 2.32%
(1) The Total Receivables Balance is equal to the aggregate future rent owing on the leases. HEALTHCARE COMMERCIAL & INDUSTRIAL GROUP
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Total $862,990,176 $767,243,737 $690,335,858 $568,624,186 $457,291,099 Receivables Balance (1) - ------------------------------------------------------------------------------------------------------------------------------------ No. of Delinquent Days 30-59 days 19,105,265 2.21% 17,573,567 2.29% 10,409,069 1.51% 7,956,503 1.40% 6,209,723 1.36% 60-89 days 9,372,062 1.09 6,547,678 0.85 2,887,149 0.42 1,484,077 0.26 1,689,961 0.37 90 Days+ 2,281,888 0.26 4,005,792 0.53 2,647,688 0.38 1,835,581 0.32 3,652,603 0.80 - ------------------------------------------------------------------------------------------------------------------------------------ Total Delinquencies $30,759,215 3.56% $28,127,037 3.67% $15,943,906 2.31% $11,276,161 1.98% $11,552,287 2.53%
DECEMBER 31, 1993 ---- Total $350,535,081 Receivables Balance (1) - ------------------------------------------ No. of Delinquent Days 30-59 days 3,782,475 1.08% 60-89 days 652,082 0.19 90 Days+ 2,784,168 0.79 - ------------------------------------------ Total Delinquencies $7,218,725 2.06%
(1) The Total Receivables Balance is equal to the aggregate future rent owing on the leases. 18 21 HISTORICAL DEFAULT EXPERIENCE. All accounts assessed over 92 days past due automatically become non-accruing accounts. Any subsequent recoveries offset net losses. General charge-off information for Leases in the Origination Groups that are owned and serviced by Copelco Capital for the period January 1, 1993 to September 30, 1998 is set forth below. HISTORICAL CHARGE-OFF EXPERIENCE (DOLLARS IN THOUSANDS) COPELCO CAPITAL COMBINED PORTFOLIO
SEPTEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER 30, 1998 31, 1997 31, 1996 31, 1995 31, 1994 31, 1993 -------- -------- -------- -------- -------- -------- Average Receivables Outstanding (1) $1,866,061 $1,617,532 $1,370,740 $1,119,456 $ 868,431 $ 649,278 - -------------------------------------------------------------------------------------------------------------- Net Losses $ 21,476 $ 22,138 $ 15,713 $ 11,457 $ 10,328 $ 8,842 Net Losses as a % of Avg. 1.53%(2) 1.37% 1.15% 1.02% 1.19% 1.36% Receivables
(1) Equals the arithmetic average of the beginning of the period Receivable Balance and the end of the period Receivable Balance. The Receivables Balance is equal to the aggregate future rent owing on the leases. (2) Annualized BUSINESS TECHNOLOGY (DOLLARS IN THOUSANDS)
SEPTEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER 30, 1998 31, 1997 31, 1996 31, 1995 31, 1994 31, 1993 -------- -------- -------- -------- -------- -------- Average Receivables Outstanding (1) $1,050,944 $ 888,742 $ 741,260 $ 606,499 $ 464,518 $ 321,439 - --------------------------------------------------------------------------------------------------------- Net Losses $ 16,326 $ 16,295 $ 13,386 $ 9,969 $ 7,415 $ 5,307 Net Losses as a % of Avg. 2.07%(2) 1.83% 1.81% 1.64% 1.60% 1.65% Receivables
(1) Equals the arithmetic average of the beginning of the period Receivable Balance and the end of the period Receivable Balance. The Receivables Balance is equal to the aggregate future rent owing on the leases. (2) Annualized HEALTHCARE COMMERCIAL & INDUSTRIAL GROUP (DOLLARS IN THOUSANDS)
SEPTEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER 30, 1998 31, 1997 31, 1996 31, 1995 31, 1994 31, 1993 -------- -------- -------- -------- -------- -------- Average Receivables Outstanding (1) $ 815,117 $ 728,790 $ 629,480 $ 512,958 $ 403,913 $ 327,840 - ----------------------------- ------------- ------------ ------------ ------------ ------------ ------------- Net Losses $ 5,150 $ 5,843 $ 2,327 $ 1,488 $ 2,913 $ 3,535 Net Losses as a % of Avg. 0.84%(2) 0.80% 0.37% 0.29% 0.72% 1.08% Receivables
(1) Equals the arithmetic average of the beginning of the period Receivable Balance and the end of the period Receivable Balance. The Receivables Balance is equal to the aggregate future rent owing on the leases. (2) Annualized There can be no assurance that the levels of delinquency and loss reflected in the above tables are or will be indicative of the performance of the Leases in the future. 19 22 COPELCO CAPITAL'S UNDERWRITING AND SERVICING PRACTICES GENERAL. Copelco Capital, a Delaware corporation, was incorporated in October 1986. Copelco Capital is a wholly-owned subsidiary of Copelco Financial Services Group, Inc. ("Copelco Financial"). Copelco Capital's primary business consists of originating and servicing leases to healthcare providers, businesses, business owners and individuals in the United States and Canada. Copelco Capital has multiple locations and is headquartered at One International Boulevard, Mahwah, New Jersey 07430 and its phone number is (609) 231-9600. In May 1993, Copelco Financial (which was incorporated in July 1982) reorganized its two primary operating subsidiaries, Copelco Credit Corporation ("Copelco Credit") and Copelco Leasing Corporation ("Copelco Leasing"), into six strategic business units (each, an "SBU"). Then, effective July 1994, Copelco Leasing was merged into Copelco Credit with Copelco Credit as the surviving legal entity; Copelco Credit then changed its name to Copelco Capital, Inc., merging all of Copelco Leasing's and Copelco Capital's leasing operations. Copelco Capital currently consists of three separate operating groups (each, a "Group") the Business Technology Group, the Healthcare Group and the Commercial & Industrial Group. The Business Technology Group, the Healthcare Group and the Commercial & Industrial Group originated 61.96%, 32.41% and 5.63%, respectively, of the Leases to be included in the subject transaction (based upon the Statistical Discounted Present Value of the Leases as of the Cut-Off Date). The Business Technology Group leases small-ticket office equipment, primarily photocopiers and computers, to businesses and business owners throughout the United States and Canada through multiple manufacturer, vendor and dealer programs. The Business Technology Group is the successor Group to Copelco Capital's Document Imaging, Major Accounts, Computer and Canadian SBUs. Copelco Capital merged these four units in January 1997 in order to achieve greater operating and marketing efficiencies. The Healthcare Group provides a diversified range of leasing services for the financing of healthcare equipment through multiple manufacturer, vendor and dealer programs, with particular emphasis upon the acquisition, leasing and remarketing of high-technology medical equipment to hospitals, other healthcare facilities, healthcare providers and physicians. The Healthcare Group is the successor of the Hospital and Healthcare SBU and the Healthcare Vendor SBU which were consolidated in June 1995 and the Ambulatory Care SBU which was merged into the Healthcare Group in November 1996. The rationale for the consolidation of the Healthcare Group was to achieve greater operating efficiencies and eliminate certain operating and marketing redundancies. The Commercial & Industrial Group is segmented into three distinct business units: the Manufacturing Technology Group, the Financial Intermediary Group and the Material Handling Group. The Manufacturing Technology Group provides equipment leasing services through multiple manufacturer, vendor and dealer programs, primarily to mid-sized companies. The equipment financed through this group includes high technology equipment for the electronics manufacturing service industry, such as printed circuit board assembly and test equipment. The Financial Intermediary Group purchases equipment lease transactions from third parties involved in the electronics and other industrial equipment industries. The Material Handling Group, established in 1998, provides retail equipment leasing and financing specifically for vendors and manufacturers in the material handling industry. As of September 30, 1998, Copelco Capital had total assets of $2,525,448,000 compared with $2,083,256,000 as of December 31, 1997, total liabilities of $2,342,868,000 compared with $1,927,558,000 as of December 31, 1997, shareholder's equity of $182,580,000 compared with $155,698,000 as of December 31, 1997 and total revenues and net income of $217,683,000 and $26,382,000, respectively, for the nine months ended September 30, 1998, compared with $253,787,000 and $32,137,000, respectively, for the year ended December 31, 1997. Since 1986, Copelco Capital and its predecessors have participated in 38 equipment lease securitizations involving the issuance of in excess of $3.8 billion in securities. Copelco Capital and its predecessors performed all servicing functions in each of these prior transactions, 9 of which remain outstanding. 20 23 ORIGINATIONS. The Business Technology Group leases small-ticket office equipment, primarily photocopiers and computers, to businesses and business owners throughout the United States. The Business Technology Group originates substantially all of its leases through marketing programs which are directed at major manufacturers and various distributors of copier equipment (each, a "Vendor") with the balance obtained through new leases with existing lessees and referrals. The Business Technology Group establishes both formal and informal relationships with Vendors, several of which provide Copelco Capital with a right of first refusal on all equipment leases with the Vendor's customers. This arrangement provides the Business Technology Group with a steady flow of lease referrals from Vendors which frequently use lease financing as a marketing tool. In the majority of these vendor programs, Copelco Capital generally owns the equipment subject to each lease and bills and collects lease payments in its own name. For some select private label vendor programs, Copelco Capital will bill and collect in the vendor's name. The Business Technology Group also offers a cost per copy program ("Cost per Copy"), introduced in late 1990, pursuant to which lessees pay a fixed monthly payment (the "Fixed Payment") for which they are allowed a certain minimum monthly copy usage. The monthly Fixed Payment represents equipment financing (the "Equipment Financing Portion") and a monthly maintenance charge (the "Maintenance Charge"). Copelco Capital funds the Vendors on the basis of the Equipment Financing Portion of the Fixed Payment and remits the Maintenance Charge to the Vendors as it is collected every month. Copelco Capital calculates usage monthly using automated dialed-in copier meter readings. To the extent that the usage has exceeded the monthly copy allowance, Copelco Capital bills the lessee incremental charges for the excess copy usage ("Excess Copy Charge"). This Excess Copy Charge is remitted to the Vendors upon collection by Copelco Capital. Only the Equipment Financing Portion will be included in the Discounted Present Value of the Leases. Vendors may choose to use a Copelco Capital lease form or they may use their own lease agreement. In either case, the credit approval remains with Copelco Capital. Lease documents for all leasing programs are either identical to Copelco Capital's standard lease documents or are reviewed by Copelco Capital to ensure substantial compliance with its standard terms. Terms of Copelco Capital's lease documents are standard for virtually all leases, as is documentation for virtually all private label programs. The Healthcare Group provides a range of leasing services for the financing of healthcare equipment with emphasis on the acquisition, leasing and remarketing of high-technology medical equipment to hospitals, other healthcare facilities, healthcare providers and physicians. The Healthcare Group originates leases through five sales groups: National Accounts, Medical Business, Vendor Services, Home Care, and Ambulatory Care. The National Accounts sales group solicits contractual arrangements with major medical equipment manufacturers and distributors throughout the United States. These contracts usually give Copelco exclusive rights to handle the financing needs of the manufacturers' customers. Most manufacturers are publicly-held or subsidiaries of international medical conglomerates. The Medical Business sales group provides leasing services directly to hospitals and to physician group practices rather than through vendors or manufacturers. The Medical Business marketing unit operates Copelco Capital's Hospital Instant Lease Line ("HILL") program which grants hospitals a pre-approved leasing line of credit for the leasing of medium-ticket medical equipment such as computed topography scanners, radiographic and other imaging equipment, laboratory and patient monitoring systems. The Vendor Services sales group solicits exclusive contractual arrangements and informal non-exclusive arrangements with local and regional vendors. Such vendors sell medical equipment to physician group medical practices and to individual physicians who finance the acquisition of the equipment by leasing it from Copelco Capital. The Vendor Services marketing unit operates Copelco Capital's Physician's Instant Lease Line ("PILL") program, which grants individual physicians and physician group practices a pre-approved leasing line of credit for use in leasing small- and medium-ticket medical equipment. Approximately 25% of all leases originated by the Healthcare Group are made to individual physicians. The average size of such Leases are generally less than or equal to $50,000. Copelco Capital requires individual physicians to meet the same rigorous criteria and credit scores as a physician group. 21 24 The Home Care sales group leases durable medical equipment such as respiratory care equipment, patient monitoring devices and medication delivery systems for use by people who are being treated on an out-patient or in-home basis for either temporary or chronic health problems. Lessees are typically wholesalers, distributors and service providers that rent the equipment to patients who are reimbursed for the rental payments by their health care insurers. The Ambulatory Care sales group provides equipment leasing to out-patient sites providing healthcare services such as diagnostic imaging, surgical procedures and radiation therapy. Customers range from start-up centers (typically managed by established organizations) to publicly-held companies. Transactions may involve new equipment or refinancing of existing equipment, often in conjunction with expansion or upgrading. In addition to making fixed payments with respect to certain health care equipment leases, lessees may pay incremental monthly charges to the extent the scan usage exceeds the monthly scan allowance ("Fee Per Scan Charges"). Fee Per Scan Charges will not be included in the Discounted Present Value of the Leases. The Fee Per Scan Charges are remitted to the Vendors upon collection by Copelco Capital. The Commercial & Industrial Group: The Manufacturing Technology Group and the Financial Intermediary Group provide equipment leasing services primarily to mid-sized companies. Since early 1993, the Group has focused on marketing through manufacturers and distributors in the electronics manufacturing service industry. Currently, approximately 90% of the leases originated by this Group relate to the electronics manufacturing service industry and approximately 10% represents machine tools and other production equipment. The Material Handling Group originates a majority of its business through its relationship with distributors of material handling equipment. The Material Handling Group establishes both formal and informal relationships with vendors, manufacturers, and distributors of material handling equipment and provides retail leasing and financing for the end-user customers. CREDIT REVIEW. Copelco Capital, in conjunction with the parent holding company, provides organizational oversight for investment/risk management policy, compliance, credit underwriting and due diligence standards, and coordinates portfolio concentration guidelines and credit personnel training for each of its Groups. Within the parameters established by Copelco Capital, each Group tailors its underwriting policies to reflect their unique customers and markets. Certain credit requests are evaluated under credit scoring models utilized by Copelco Capital. All credit requests not subject to automated credit scoring must be underwritten by a credit officer. Applicants declined by credit scoring may be reviewed by a credit officer. Each credit officer has a specific assigned lending limit based upon experience and seniority. Credit approval limits, applicable to single transaction size and individual lessee exposure, are also assigned to assistant credit managers, group credit officers, the president of Copelco Capital, and the chief credit officer of Copelco Capital. In general, transactions in excess of $3,000,000 must be approved by the senior management of Copelco Financial. Business Technology Group: Prior to a lease being approved by the Business Technology Group, the vendor's sales personnel are required to obtain from the prospective lessee historical financial data and/or bank and trade references. New and repeat applicants must either complete a comprehensive credit application or provide bank and trade references. Credit data are submitted for credit review in Mahwah, New Jersey and Moberly, Missouri. Credit review is performed and lease approvals are given at these locations, utilizing a computer system designed to handle applications which are telephoned or telecopied from vendors. Using the computer system, the applicant's credit is investigated and a credit decision is made. Lessee evaluation includes an analysis of credit payment history, business structure, banking history and relationships, and economic conditions as they relate to the prospective lessee. In the case of a credit request for equipment having a cost greater than approximately $50,000, the information collected includes the prospect's most recent financial statements. If individual guarantors are involved, a consumer credit bureau report is generally obtained for the guarantors. Potential lessees should generally have been in business for at least two years and a minimum of two trade references are required. 22 25 The Business Technology Group has also implemented an automated credit scoring system. The system, designed by Dun & Bradstreet Information Services ("Dun & Bradstreet") specifically for the Business Technology Group, was in development over a two-year period and was formally implemented on January 4, 1994. The system utilizes various filters for adapting "approve" and "decline" threshold scores based upon criteria such as credit exposure, payment history (by SIC code), Vendor and state. The model is consistent with the Business Technology Group's traditional credit decision-making criteria (i.e., Dun & Bradstreet data, consumer credit bureau information, and bank and trade references). Healthcare Group: For leases originated by the Medical Business sales group, full financial statements are required for credit review, and a thorough history of past payment patterns is examined. Other items such as a hospital's location, utility to its community and ownership (public or private) are also considered. Certain of these transactions are credit scored under HILL credit scoring parameters. The HILL credit scoring parameters include, without limitation, the number of beds of the potential lessee, its occupancy rate and Dun & Bradstreet financial highlight information. Certain of the leases originated by the Vendor Services group are credit scored under PILL credit scoring parameters. The PILL credit scoring parameters include, without limitation, the length of time in practice of the potential lessee, the potential lessee's medical specialty and a consumer bankruptcy predictor model acquired by Copelco Capital. The credit review process for physicians is similar to that of personal lending because the lessees are predominantly individual physicians (or groups of physicians). Many of the leases to physicians have personal guarantees associated with them and spousal guarantees as well. Lessees are not required, however, to give Copelco Capital liens on property. The predominant reason for delinquencies in such leases is cash flow deficiencies and, to a lesser extent, death of the lessee, in which case settlement with the lessee's estate can take several months. Such leases are typically processed under the PILL program. For inexpensive equipment, credit review of physician lessees involves analysis of credit bureau reports, bank references, duration of practice and medical specialty. For more expensive equipment, the credit review involves analysis of personal income tax returns and financial statements of the practice in addition to credit bureau reports and bank references. There is also a focus on the length of time that the physician has maintained his or her private practice. The PILL and the HILL programs afford Copelco Capital the ability to analyze physician, physician group practice and hospital credit quality in advance of the lease decision, thus providing a means by which physicians in certain medical specialties and certain hospitals may be pre-approved for a leasing line of credit. They also provide rapid turnaround of a specific application when it is submitted. National Accounts, Home Care and Ambulatory Care generally utilize a combination of transactional credit analysis and credit scoring. Transactions not eligible for credit scoring are reviewed by the Healthcare Group's credit staff under the supervision of a senior credit officer. Commercial & Industrial Group: In the Manufacturing Technology Group and Financial Intermediary Group, all credit decisions are made by credit analysts. Credit scoring is not used. In general, transactions in excess of $50,000 require financial statement disclosure consisting of at least the three most recent fiscal year-end financial statements and interim financial statements. Additionally, Dun & Bradstreet reports, bank and other credit references, trade references, and other information may be evaluated. Transactions involving small, privately held companies exhibiting limited financial resources require the financial disclosure and personal guaranty of the principals. Consideration will also be given to the value of the equipment securing the transaction, based upon a review by the Group's Asset Management department. An approval might contain restrictive conditions, including, but not limited to, a reduced term, guaranties, security deposits, down payments, or a letter of credit. The Material Handling Group utilizes a credit review system similar to and based upon that of the Business Technology Group. The majority of business is originated through dealer/vendor networks, with retail and wholesale credit applications submitted via fax. The assessment of creditworthiness is determined through both automated systems and credit officer analysis with emphasis on the following factors: time in business, financial strength, payment/credit history, transaction structure, collateral and industry outlook. The evaluation of creditworthiness for retail end-user customers will be accomplished through a modified version of the Business Technology Group's credit scoring model, in which the filters and scoring 23 26 thresholds are adapted to the needs of the Material Handling Group. Retail lease applicants will generally have been in business for at least two years with evidence of satisfactory bank and/or comparable secured lender references. Consumer credit bureau reports will be obtained if individual guarantors or sole proprietors are considered in the transaction. The terms of the Leases originated by each of the Groups require the Lessees to maintain the equipment and install it at a place of business approved by Copelco Capital. Delivery, transportation, repairs and maintenance are obligations of Lessees, and Lessees are required to carry, at their own expense, liability and replacement cost insurance under terms acceptable to Copelco Capital. Any Lease payment defaults permit Copelco Capital to declare immediately due and payable all remaining lease payments. At the end of a lease term, lessees must return the leased equipment to Copelco Capital in good working order unless the lease is renewed or the leased equipment is purchased by the Lessee. COLLECTIONS. Collection procedures have been instituted by Copelco Capital and are uniformly utilized throughout Copelco Capital's Groups. A late charge is generally assessed to Lessees 6 days after the payment due date. Telephone contact is normally initiated when an account is 15 days past due, but may be initiated more quickly. All collection activity is entered into the computerized collection system. Activity notes are input directly into the collection system in order to facilitate routine collection activity. Collectors have available at their computer terminals the latest status and collection history on each account. Generally, on the day on which a Lease becomes 10 days delinquent, Copelco Capital's credit and collection review system automatically generates a computerized late notice which is sent directly to the lessee. When an account becomes 30 days past due, a default letter is generally sent out to the Lessee and to anyone providing personal guarantees on the Leases. An acceleration letter is sent to the lessee and any guarantors when a Lease becomes 45 days past due, as circumstances warrant. Telephone contact will be continued throughout the delinquency period. Accounts which become over 90 days past due are subject to repossession of Equipment and action by collection agencies and attorneys. Prior to being written down (which is generally prior to the lease being 123 days delinquent), each lease is evaluated on the merits of the individual situation, with equipment value being considered as well as the current financial strength of the Lessee. ADDITIONS, SUBSTITUTIONS AND ADJUSTMENTS. Although the Leases will be non-cancelable by the Lessees, Copelco Capital has, from time to time, permitted early termination by Lessees ("Early Lease Termination") or other modifications of the lease terms in certain circumstances more fully specified in the Assignment and Servicing Agreement, including, without limitation, in connection with a full or partial buy-out or equipment upgrade. In the event of an Early Lease Termination which has been prepaid in full or in part, the Issuer will have the option to reinvest the proceeds of such Early Termination Lease in one or more Leases having similar characteristics for such terminated Lease (each, an "Additional Lease"). In addition, Copelco Capital will have the option to substitute one or more leases having similar characteristics (each, a "Substitute Lease") for (a) Non-Performing Leases, (b) Leases subject to repurchase as a result of a breach of representation and warranty (each a "Warranty Lease") and (c) Leases following a modification or adjustment to the terms of such Lease (each, an "Adjusted Lease"). The aggregate Discounted Present Value of the Non-Performing Leases for which Copelco Capital may substitute Substitute Leases is limited to an amount not in excess of 10% of the aggregate Discounted Present Value of the Leases as of the Cut-Off Date. The aggregate Discounted Present Value of Adjusted Leases and Warranty Leases for which Copelco Capital may substitute Substitute Leases is limited to an amount not in excess of 10% of the aggregate Discounted Present Value of the Leases as of the Cut-Off Date. The terms of a Lease may be modified or adjusted for administrative reasons or at the request of the lessee, vendor or lessor due to a variety of circumstances, including changes to the delivery date of equipment, the cost of equipment, the components of leased equipment or to correct information when a Lease is entered into Copelco Capital's servicing system. Such modifications may result in adjustments to the lease commencement date, the monthly payment date, the amount of the monthly payment or the equipment subject to a Lease. 24 27 Additional Leases and Substitute Leases will be originated using the same credit criteria as the initial Leases. To the extent material, information with respect to such Additional or Substitute Leases will be included in periodic reports filed with the Commission as are required under the Exchange Act. In no event will the aggregate scheduled payments of the Leases, after the inclusion of the Substitute Leases and Additional Leases be materially less than the aggregate scheduled payments of the Leases prior to such substitution or reinvestment. In addition, after giving effect to such additions and substitutions, the aggregate Booked Residual Value of the Leases will not be materially less than the aggregate Booked Residual Value of the Leases immediately prior to such substitutions or additions. Additionally, either the final payment on such Substitute Lease or Additional Lease will be on or prior to December 30, 2005, or, to the extent the final payment on such Lease is due subsequent to December 30, 2005, only scheduled payments due on or prior to such date may be included in the Discounted Present Value of such Lease for the purpose of making any calculation under the Indenture. In the event that an Early Lease Termination is allowed by Copelco Capital and an Additional Lease is not provided, the amount prepaid will be equal to at least the Discounted Present Value of the terminated Lease, plus any delinquent payments. See "The Series Pool -- The Leases." ASSIGNMENT AND SERVICING AGREEMENT. Copelco Capital will enter into an agreement (the "Assignment and Servicing Agreement") with Copelco Capital Funding LLC 99-1 as Transferor (in such capacity, the "Transferor") and Manufacturers and Traders Trust Company, a New York banking corporation, as indenture trustee (the " Trustee"), pursuant to which Copelco Capital will, among other things, service the Leases, make Servicer Advances and forward Excess Copy Charges, Maintenance Charges and Fee Per Scan Charges to Vendors. In the Assignment and Servicing Agreement, Copelco Capital will make certain representations and warranties regarding the Leases and the Equipment. In the event that (a) any of such representations and warranties made by Copelco Capital proves at any time to have been inaccurate in any material respect as of the Issuance Date or (b) any Lease shall be terminated in whole or in part by a Lessee, or any amounts due with respect to any Lease shall be reduced or impaired, as a result of any action or inaction by Copelco Capital (other than any such action or inaction of Copelco Capital, when acting as Servicer, in connection with the enforcement of any Lease (other than those leases Copelco Capital permitted to be terminated early (an "Early Lease Termination") in a manner consistent with the provisions of the Assignment and Servicing Agreement) or any claim by any Lessee against Copelco Capital and, in any such case, the event or condition causing such inaccuracy, termination, reduction, impairment or claim shall not have been cured or corrected within 30 days after the earlier of the date on which Copelco Capital is given notice thereof by Copelco Capital Funding LLC 99-1 or the Trustee or the date on which Copelco Capital otherwise first has notice thereof), Copelco Capital will repurchase such Lease (a "Warranty Lease") and the Equipment subject thereto by paying to the Trustee for deposit into the Collection Account, not later than the Determination Date next following the expiration of such 30-day period, an amount at least equal to the Discounted Present Value of such Lease plus any amounts previously due and unpaid thereon. In the alternative, subject to the satisfaction of certain requirements set forth in the Assignment and Servicing Agreement, Copelco Capital will have the option to substitute one or more Substitute Leases (as defined herein) for such Warranty Lease. Any inaccuracy in any representation or warranty with respect to (i) the priority of the lien of the Indenture with respect to any Lease or (ii) the amount (if less than represented) of the Lease Payments, Casualty Payments, Termination Payments or Booked Residual Value under any Lease shall be deemed to be material. "Booked Residual Value" means the amount booked by Copelco Capital as expected to be realized upon scheduled termination of a Lease through sale or other disposition of the related Equipment. SERVICING FEE. The Servicing Fee with respect to the Notes will be paid monthly on the Payment Date from amounts in the Collection Account and will be calculated by multiplying one-twelfth of 0.75% times the Discounted Present Value of the Performing Leases, as of the prior Payment Date (the "Servicing Fee"). The Servicing Fee will be paid to the Servicer for servicing the Series Pool and for certain administrative expenses in connection with the Notes, including Trustee fees. 25 28 THE ISSUER GENERAL. Copelco Capital Funding LLC 99-1 is a limited liability company formed in accordance with the laws of the State of Delaware, pursuant to the limited liability company agreement between Copelco Capital, Inc. and Copelco Manager, Inc., dated as of February 23, 1999, solely for the purpose of effectuating the transactions described herein. Prior to formation, the Issuer will have had no assets or obligations and no operating history. Upon formation, the Issuer is structured to insulate it from bankruptcy risk and will not engage in any business activity other than (i) acquiring, holding and pledging the Leases and related interests and property related thereto, (ii) issuing the Notes and (iii) distributing payments thereon. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION As of the date of this Prospectus, the Issuer has had no operating history. The net proceeds of the sale of the Notes will be distributed to the owners of the Issuer. See "Use of Proceeds". The Issuer is prohibited by its Limited Liability Company Agreement from engaging in business other than (i) the purchase of equipment leases and lease receivables (including equipment) from Copelco Capital and its affiliates , (ii) the issuance of notes collateralized by its assets and (iii) engaging in acts incidental, necessary or convenient to the foregoing and permitted under Delaware law. The Issuer's ability to incur, assume or guaranty indebtedness for borrowed money is also restricted by its Limited Liability Company Agreement. DIRECTORS AND EXECUTIVE OFFICERS OF THE MANAGER OF THE ISSUER The following table sets forth the executive officers and directors of Copelco Manager, Inc., the manager of the Issuer ("Manager") and their ages and positions as of February 26, 1999. Because the Issuer is organized as a special purpose company and will be largely passive, it is expected that the officers and directors of the Manager will participate in the management of the Issuer to a limited extent. Most of the actions related to maintaining and servicing the assets will be performed by the Servicer.
- --------------------------------------------------------------------------------------------------------- Name Age Position - --------------------------------------------------------------------------------------------------------- Ian J. Berg 55 Chairman of the Board (Principal Executive Officer), Director Robert J. Lemenze, Jr. 39 President, Chief Operating Officer John Hakemian 58 Director Nicholas Antonaccio 50 Vice President - Finance Tadeyuki Seki 47 Director Stephen W. Shippie 47 Vice President Spencer Lempert 52 Secretary
Ian J. Berg has served as Chairman of the Board, (Principal Executive Officer) and Director of the Manager since being appointed/elected on February 23, 1999. Mr. Berg founded Copelco Financial in October 1972 and has continuously served as its President and CEO from inception. Prior to founding Copelco Financial, Mr. Berg served as Senior Vice President and Director of MDC Corporation (an AMEX listed corporation) and as President and Director of MDC Leasing Corporation from 1967 through 1972. He is a past Vice President and Director of the Equipment Leasing Association (the industry trade association) and a founder, past officer and Director of the Eastern Association of Equipment Lessors. Robert J. Lemenze, Jr. has served as President of the Manager since being appointed/elected on February 23, 1999. Mr. Lemenze was elected President and Chief Operating Officer of Copelco Capital in January 1997. Prior to this he served as Vice President of Sales and head of the Document Imaging Sales Group since joining Copelco Capital in 1987. John Hakemian has served as Director since being elected on February 23, 1999. For the last five years, Mr. Hakemian has served, initially, as the chief financial officer for a subsidiary of Itochu International (the 26 29 Issuer's ultimate parent company in the United States) and, more recently, as the Vice President - Finance of Itochu International Enterprise. Nicholas Antonaccio has served as Vice President - Finance and Treasurer since being elected on February 23, 1999. Mr. Antonaccio joined Copelco Capital as a Senior Vice President and Chief Financial Officer in September 1995. He formerly served as the Treasurer of Concord Leasing Company. Tadeyuki Seki has served as Director since being elected on February 23, 1999. For the last six months, Mr. Seki has served as the Vice President and Treasurer of Itochu International and for the year and a half prior, as Assistant Senior Manager and for the three years prior to that, as General Manager of the Credit Finance Department of the Itochu Corporation in Japan. Stephen W. Shippie has served as Vice President since being elected on February 23, 1999. For the last five years, Mr. Shippie has served as the Vice President-Finance of Copelco Financial. Spencer Lempert has served as Secretary since being elected on February 23, 1999. For the last five years, Mr. Lempert has served as the General Counsel for Copelco Financial. None of the above-listed directors and officers of the Manager will be compensated directly by the Issuer or the Manager nor with any funds or assets of the Issuer or the Manager nor will any such directors and officers receive compensation in the capacities in which they act for the Manager of the Issuer. DESCRIPTION OF THE NOTES The ___% Class A-1 Lease-Backed Notes (the "Class A-1 Notes"), ____% Class A-2 Lease-Backed Notes (the "Class A-2 Notes"), ___% Class A-3 Lease-Backed Notes (the "Class A-3 Notes"), % Class A-4 Lease-Backed Notes (the "Class A-4 Notes") and ____% Class A-5 Lease-Backed Notes (the "Class A-5 Notes, together with the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, the "Class A Notes"), ____% Class B Lease-Backed Notes (the "Class B Notes"), _____% Class C Lease-Backed Notes (the "Class C Notes") and _____% Class D Lease-Backed Notes (the "Class D Notes", together with the Class A Notes, the Class B Notes and the Class C Notes, the "Offered Notes") and the % Class E Lease-Backed Notes (the "Class E Notes", together with the Offered Notes, the "Notes") will be issued pursuant to the Indenture (the "Indenture") between the Issuer and the Trustee. The following statements with respect to the Notes is a summary of all material terms relating to a description of the Offered Notes. However, investors in the Offered Notes should review the Indenture, the form of which is filed as an exhibit to the registration statement of which this Prospectus forms a part. Whenever any particular section of the Indenture or any term used therein is referred to, the section in the Indenture or the term used therein should be reviewed by you in order to fully understand this offering. The Offered Notes represent secured debt obligations of the Issuer secured by the Pledged Assets and the privately placed Class E Notes represent subordinated debt obligations of the Issuer secured by certain assets in the Pledged Assets as provided in the related Indenture. The Class E Notes are subordinated to the Offered Notes for the purpose of, among other things, offsetting losses and other shortfalls. Neither represents an interest in or recourse obligation of Copelco Capital or any of its other affiliates other than the Issuer. The Issuer is a Delaware limited liability company with limited assets. Consequently, Noteholders must rely solely upon the Leases, the interests in the Equipment, funds on deposit in the Collection Account and the Reserve Account, for payment of principal of and interest on the Offered Notes. The combined aggregate principal amount of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes will comprise the initial principal amount (the "Initial Principal Amount") of the Notes. The Discounted Present Value of the Leases, at any given time, shall equal the future remaining scheduled payments from the related Leases (including Non-Performing Leases), discounted at the Discount Rate, as set forth in the Indenture. The Notes will bear interest from the Issuance Date at the applicable interest rate for the respective class as set forth below. The Interest Rate is calculated on the basis of a year of 360 days comprised of twelve 30-day months, except in the case of the Class A-1 Notes, for which interest will be calculated on the basis of a year of 27 30 360 days and the actual number of days in such interest accrual period, payable on the fifteenth day of each month (or if such day is not a business day the next succeeding business day), to the person in whose name the Note was registered at the close of business on the preceding Record Date (as defined herein). The interest rate for the Notes is as follows: ____% per annum on the Class A-1 Notes (the "Class A-1 Interest Rate"), ____% per annum on the Class A-2 Notes (the "Class A-2 Interest Rate"), ____% per annum on the Class A-3 Notes (the "Class A-3 Interest Rate"), ____% per annum on the Class A-4 Notes (the "Class A-4 Interest Rate"), _____% per annum on the Class A-5 Notes (the "Class A-5 Interest Rate"), ____% per annum on the Class B Notes (the "Class B Interest Rate") , ____% per annum on the Class C Notes (the "Class C Interest Rate"), ____% per annum on the Class D Notes (the "Class D Interest Rate") and ____% per annum on the Class E Notes (the "Class E Interest Rate"). With respect to any particular Class, the "Interest Rate" refers to the applicable rate indicated in the immediately preceding sentence. Principal will be payable as set forth under "Distributions on Notes." Notes may be presented to the corporate trust office of the Trustee for registration of transfer or exchange (Section 2.03). Notes may be exchanged without a service charge, but the Issuer may require payment to cover taxes or other governmental charges (Section 2.03). BOOK-ENTRY REGISTRATION. The holders of the Class A-1 Notes (the "Class A-1 Noteholders"), the holders of the Class A-2 Notes (the "Class A-2 Noteholders"), the holders of the Class A-3 Notes (the "Class A-3 Noteholders"), the holders of the Class A-4 Notes ( the "Class A-4 Noteholders"), the holders of the Class A-5 Notes (the "Class A-5 Noteholders," together with the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, and the Class A-4 Noteholders, the "Class A Noteholders"), the holders of the Class B Notes (the "Class B Noteholders"), the holders of the Class C Notes (the "Class C Noteholders") and the holders of the Class D Notes the ("Class D Noteholders," together with the Class A Noteholders, the Class B Noteholders and the Class C Noteholders, the "Offered Noteholders") may hold their notes through The Depository Trust Company ("DTC") (in the United States) or Cedel Bank ("CEDEL") and the Euroclear System ("Euroclear") (in Europe) if they are participants of such systems, or indirectly through organizations which are participants in such systems. Cede & Co. ("Cede"), as nominee for DTC, will hold the global Class A Note or Notes, global Class B Note or Notes, global Class C Note or Notes and the global Class D Note or Notes. CEDEL and Euroclear will hold omnibus positions on behalf of their participants through customers' securities accounts in CEDEL's and Euroclear's names on the books of their respective Depositaries (as defined herein) which in turn will hold such positions in customers' securities accounts in the Depositaries' names on the books of DTC. Citibank will act as depositary for CEDEL, and Morgan Guaranty Trust will act as depositary for Euroclear (in such capacities, the "Depositaries"). DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the UCC and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participating organizations ("Participants") and facilitate the settlement of securities transactions between Participants through electronic book-entry changes in accounts of its Participants, thereby eliminating the need for physical movement of notes. Participants include the Underwriters, securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). Transfers between Participants will occur in accordance with DTC rules. Transfers between Cedel Participants (as defined herein) and Euroclear Participants (as defined herein) will occur in accordance with their respective rules and operating procedures. Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Cedel Participants or Euroclear Participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing systems by its Depositary. Cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its Depositary to take action to effect final settlement on its 28 31 behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Cedel Participants and Euroclear Participants may not deliver instructions directly to the Depositaries. Because of time-zone differences, credits of securities received in Cedel or Euroclear as a result of a transaction with a Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Euroclear or Cedel Participants on such business day. Cash received in Cedel or Euroclear as a result of sales of securities by or through a Cedel Participant or a Euroclear Participant to a Participant will be received with value on the DTC settlement date but will be available in the relevant Cedel or Euroclear cash account only as of the business day following settlement in DTC. For information with respect to tax documentation procedures relating to the Offered Notes, see "Material Federal Income Tax Considerations." Offered Noteholders that are not Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, Offered Notes may do so only through Participants and Indirect Participants. In addition, Offered Noteholders will receive all distributions of principal and interest on the Offered Notes from the Trustee through DTC and its Participants. Under a book-entry format, Offered Noteholders will receive payments after the related Distribution Date, as the case may be, because, while payments are required to be forwarded to Cede, as nominee for DTC, on each such date, DTC will forward such payments to its Participants which thereafter will be required to forward them to Indirect Participants or holders of beneficial interests in the Offered Notes. It is anticipated that the only Noteholder of the Offered Notes will be Cede, as nominee of DTC, and that holders of beneficial interests in the Offered Notes, under the Indenture will only be permitted to exercise rights under the Indenture indirectly through DTC and its Participants who in turn will exercise their rights through DTC. Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers among Participants on whose behalf it acts with respect to the Offered Notes and is required to receive and transmit distributions of principal of and interest on the Offered Notes. Participants and Indirect Participants with which holders of beneficial interests in the Offered Notes have accounts similarly are required to make book-entry transfers and receive and transmit such payments on behalf of these respective holders. Because DTC can only act on behalf of Participants, who in turn act on behalf of Indirect Participants and certain banks, the ability of holders of beneficial interests in the Offered Notes to pledge Offered Notes to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such Offered Notes, may be limited due to the lack of a Definitive Note for such Offered Notes. DTC has advised the Issuer that it will take any action permitted to be taken by a Class A Noteholder, Class B Noteholder, Class C Noteholder or Class D Noteholder under the Indenture only at the direction of one or more Participants to whose account with DTC the Class A Notes, Class B Notes, Class C Notes or Class D Notes are credited. Additionally, DTC has advised the Issuer that it may take actions with respect to the applicable Offered Notes that conflict with other of its actions with respect thereto. Cedel is incorporated under the laws of Luxembourg as a professional depository. Cedel holds securities for its participating organizations ("Cedel Participants") and facilitates the clearance and settlement of securities transactions between Cedel Participants through electronic book-entry changes in accounts of CEDEL Participants, thereby eliminating the need for physical movement of certificates. Transactions may be settled in CEDEL in any of 38 currencies, including United States dollars. CEDEL provides to CEDEL Participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. CEDEL interfaces with domestic markets in several countries. As a professional depository, CEDEL is subject to regulation by the Luxembourg Monetary Institute. CEDEL Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the Underwriters. Indirect access to CEDEL is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a CEDEL Participant, either directly or indirectly. 29 32 Euroclear was created in 1968 to hold securities for participants of Euroclear ("Euroclear Participants") and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Transactions may now be settled in any of 37 currencies, including United States dollars. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described above. Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are conducted by the Euroclear Operator and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the Underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly. The Euroclear Operator is the Belgian branch of a New York banking corporation which is a member bank of the Federal Reserve System. As such, it is regulated and examined by the Board of Governors of the Federal Reserve System and the New York Banking Department, as well as the Belgian Banking Commission. Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants, and has no record of or relationship with persons holding through Euroclear Participants. Distributions with respect to Offered Notes held through CEDEL or Euroclear will be credited to the cash accounts of CEDEL Participants or Euroclear Participants in accordance with the relevant system's rules and procedures, to the extent received by its Depositary. Such distributions will be subject to tax reporting in accordance with relevant United States tax laws and regulations. See "Material Federal Income Tax Considerations." CEDEL or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by an Offered Noteholder under the Indenture on behalf of a CEDEL Participant or Euroclear Participant only in accordance with its relevant rules and procedures and subject to its Depositary's ability to effect such actions on its behalf through DTC. Although DTC, CEDEL and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of Offered Notes among participants of DTC, CEDEL and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time. DTC management is aware that some computer applications, systems, and the like for processing data ("SYSTEMS") that are dependent upon calendar dates, including dates before, on, and after January 1, 2000, may encounter "Year 2000 problems." DTC has informed its Participants and other members of the financial community (the "Industry") that it has developed and is implementing a program so that its Systems, as the same relate to the timely payment of distributions (including principal and interest payments) to security holders, book-entry deliveries, and settlement of trades within DTC ("DTC Services"), continue to function appropriately. This program includes a technical assessment and a remediation plan, each of which is complete. Additionally, DTC's plan includes a testing phase, which is expected to be completed within appropriate time frames. However, DTC's ability to properly perform its services is also dependent upon other parties, including, but not limited to, issuers and their agents, as well as third party vendors from whom DTC licenses software and hardware, and third party vendors on whom DTC relies for information and the provision of services, including telecommunications and electrical utility service providers, among others. DTC has informed the Industry that it is contacting (and will continue to contact) third party vendors from whom DTC acquires services to: (i) impress upon them the importance of such services being Year 2000 compliant; and (ii) determine the extent of their 30 33 efforts for Year 2000 remediation (and, as appropriate, testing) of their services. In additional, DTC is in the process of developing such contingency plans as it deems appropriate. According to DTC, the foregoing information with respect to DTC has been provided to the Industry for informational purposes only and is not intended to serve as a representation, warranty, or contract modification of any kind. DEFINITIVE NOTES. The Offered Notes will be issued in fully registered, authenticated form to Beneficial Owners or their nominees (the "Definitive Notes"), rather than to DTC or its nominee, only if (a) the Issuer advises the Trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as Depository with respect to such Notes, and the Trustee or the Issuer is unable to locate a qualified successor or (b) the Issuer at its option elects to terminate the book-entry system through DTC (Section 2.07). Upon the occurrence of any of the events described in the immediately preceding paragraph, the Trustee is required to notify all Beneficial Owners through DTC of the availability of Definitive Notes for such Class. Upon surrender by DTC of the Definitive Note representing the Notes and instructions for reregistration, the Trustee will issue such Definitive Notes, and thereafter the Trustee will recognize the holders of such Definitive Notes as Offered Noteholders under the related Indenture (the "Holders") (Section 2.07). The Trustee will also notify the Holders of any adjustment to the Record Date with respect to the Notes necessary to enable the Trustee to make distributions to Holders of the Definitive Notes for such Class of record as of each Payment Date. Additionally, upon the occurrence of any such event described above, distribution of principal of and interest on the Offered Notes will be made by the Trustee directly to Holders in accordance with the procedures set forth herein and in the Indenture. Distributions will be made by check, mailed to the address of such Holder as it appears on the Note register upon at least 10 days notice to Noteholders for such Class; however, the final payment on any Note (whether the Definitive Notes or the Note for such Class registered in the name of Cede representing the Notes of such Class) will be made only upon presentation and surrender of such Note at the office or agency specified in the notice of final distribution to Noteholders. Definitive Notes of each Class will be transferable and exchangeable at the offices of the Trustee or its agent in New York, New York, which the Trustee shall designate on or prior to the issuance of any Definitive Notes with respect to such Class. No service charge will be imposed for any registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith (Section 2.03(e)). INITIAL PRINCIPAL AMOUNT. $139,000,000 for the Class A-1 Notes (the "Class A-1 Initial Principal Amount"), $95,000,000 for the Class A-2 Notes (the "Class A-2 Initial Principal Amount"), $110,000,000 for the Class A-3 Notes (the "Class A-3 Initial Principal Amount"), $90,000,000 for the Class A-4 Notes (the "Class A-4 Initial Principal Amount"), $75,613,000 for the Class A-5 Notes (the "Class A-5 Initial Principal Amount," together with the Class A-1 Initial Principal Amount, the Class A-2 Initial Principal Amount, the Class A-3 Initial Principal Amount and the Class A-4 Initial Principal Amount, the "Class A Initial Principal Amount"), $13,029,000 for the Class B Notes (the "Class B Initial Principal Amount"), $10,134,000 for the Class C Notes (the "Class C Initial Principal Amount"), $15,925,000 for the Class D Notes (the "Class D Initial Principal Amount") and $17,373,000 for the Class E Notes (the "Class E Initial Principal Amount"). See "Description of the Notes." DISCOUNTED PRESENT VALUE OF THE LEASES. The discounted present value of the leases (the "Discounted Present Value of the Leases"), at any given time, shall equal the future remaining scheduled payments (not including delinquent amounts, Excess Copy Charges, Maintenance Charges and Fee Per Scan Charges) from the Leases (including non-performing leases), discounted at a rate equal to ______%, (the "Discount Rate") which rate is equal to the sum of (a) the weighted average interest rate of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes, each weighted by (i) the initial principal amount of the Class A-1 Notes, the initial principal amount of the Class A-2 Notes, the initial principal amount of the Class A-3 Notes, the initial principal amount of the Class A-4 Notes, the initial principal amount of the Class A-5 Notes, the initial principal amount of the Class B Notes, the initial principal amount of the Class C Notes, the initial principal amount of the Class D Notes, and the initial principal amount of the Class E Notes, as applicable, and (ii) the expected weighted average life (under a zero prepayment, and no loss scenario) of each class of Notes, as applicable, and (b) the servicing fee rate of 0.75% per 31 34 annum. The discounted present value of the Performing Leases (the "Discounted Present Value of the Performing Leases") equals the Discounted Present Value of the Leases, reduced by all future remaining scheduled payments on the Non-Performing Leases (not including delinquent amounts, Excess Copy Charges, Maintenance Charges or Fee Per Scan Charges), discounted at the Discount Rate. See "Description of the Notes --General." Each of the Indenture and the Assignment and Servicing Agreement will provide that any calculation of future remaining scheduled payments made on a Determination Date or with respect to a Payment Date will be calculated after giving effect to any payments received prior to such date of calculation to the extent such payments relate to scheduled payments due and payable by the Lessees with respect to the related Due Period (defined herein) and all prior Due Periods. "Statistical Discounted Present Value of the Leases" means an amount equal to the future remaining scheduled payments (not including delinquent amounts, Excess Copy Charges, Maintenance Charges and Fee Per Scan Charges) from the Leases as of the Cut-Off Date, discounted at a rate equal to ______% (the "Statistical Discount Rate"). The Statistical Discounted Present Value of the Leases as of the Cut-Off Date is $579,105,376.99 and will not vary materially from the Discounted Present Value of the Leases as of the Cut-Off Date. See "The Series Pool -- The Equipment." The aggregate Discounted Present Value of the Leases as of the Cut-Off Date, calculated at the Discount Rate is $_____________. "Non-Performing Leases" are (a) Leases that have become more than 123 days delinquent or (b) Leases that have been accelerated by the Servicer or Leases that the Servicer has determined to be uncollectible in accordance with its customary practices. See "The Series Pool -- The Leases." The Transferor will represent in the Assignment and Servicing Agreement that at the time of transfer of any Lease to Copelco Capital Funding LLC 99-1, such Lease was not a Non-Performing Lease. EXPECTED MATURITY; STATED MATURITY. The expected maturity dates with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class A-5 Notes are the Payment Dates on January 15, 2000, October 15, 2000, September 15, 2001, October 15, 2002, and December 15, 2003, respectively. The expected maturity date with respect to the Class B Notes, Class C Notes and Class D Notes are the Payment Dates on January 15, 2004, February 15, 2004 and June 15, 2004, respectively. The stated maturity date with respect to the Class A-1 Notes is the Payment Date on March 15, 2000 (the "Class A-1 Stated Maturity Date"), the stated maturity date with respect to the Class A-2 Notes is the Payment Date on October 15, 2001 (the "Class A-2 Stated Maturity Date"), the stated maturity date with respect to the Class A-3 Notes is the Payment Date on September 15, 2002 (the "Class A-3 Stated Maturity Date"), the stated maturity date with respect to the Class A-4 Notes is the Payment Date on October 15, 2003 (the "Class A-4 Stated Maturity Date"), the stated maturity with respect to the Class A-5 Notes is the Payment Date on January 15, 2007 (the "Class A-5 Stated Maturity Date") the stated maturity date with respect to the Class B Notes is the Payment Date on January 15, 2007 (the "Class B Stated Maturity Date"), the stated maturity date with respect to the Class C Notes is the Payment Date on January 15, 2007 (the "Class C Stated Maturity Date") and the stated maturity date with respect to the Class D Notes is the Payment Date in January 15, 2007 (the "Class D Stated Maturity Date"). However, if all payments on the Leases are made as scheduled, final payment with respect to the Notes would occur prior to stated maturity. DETERMINATION DATE. The fifth day prior to each Payment Date (or the preceding business day, if such day is not a business day). On such date (each, a "Determination Date"), the Servicer will determine the amount of payments received on the Leases in respect of the immediately preceding calendar month (each such period, a "Due Period") which will be available for distribution on the Payment Date. See "Description of the Notes -- Distributions on Notes." PAYMENT DATE. Payments on the Notes will be made on the fifteenth day of each month (or if such day is not a business day, the next succeeding business day), commencing on April 15, 1999, to holders of record on the last day of the immediately preceding calendar month (each, a "Record Date"). See "Description of the Notes -- Distributions on Notes." INTEREST PAYMENTS. On each Payment Date, the interest due (the "Interest Payments") with respect to the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes since the last Payment Date will be the interest that has accrued on such Notes since the last Payment Date (or in the case of the first Payment Date, since the Issuance Date) (the "Interest Accrual Period") at the applicable Interest Rate applied to the then unpaid principal amounts (the "Outstanding Principal Amounts") of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes 32 35 and the Class E Notes, respectively, after giving effect to payments of principal to the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, the Class A-4 Noteholders, the Class A-5 Noteholders, the Class B Noteholders, the Class C Noteholders, the Class D Noteholders and the Class E Noteholders, respectively, on the preceding Payment Date. See "Description of the Notes -- General" and "Distributions on Notes." PRINCIPAL PAYMENTS. For each Payment Date, each of the Class A Noteholders, the Class B Noteholders, the Class C Noteholders, the Class D Noteholders and the Class E Noteholders will be entitled to receive payments of principal ("Principal Payments"), to the extent funds are available therefor, in the priorities set forth in the Indenture and described herein below and under "Description of the Notes -- Distributions on Notes." On each Payment Date, to the extent funds are available therefor, the Principal Payment will be paid to the Noteholders in the following priority: (a) (i) to the Class A-1 Noteholders only, until the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the Class A Principal Payment, then (ii) to the Class A-2 Noteholders only, until the Outstanding Principal Amount on the Class A-2 Notes has been reduced to zero, the Class A Principal Payment, then (iii) to the Class A-3 Noteholders only, until the Outstanding Principal Amount on the Class A-3 Notes has been reduced to zero, the Class A Principal Payment, (iv) to the Class A-4 Noteholders, until the Outstanding Principal Amount on the Class A-4 Notes has been reduced to zero, the Class A Principal Payment and (v) to the Class A-5 Noteholders, until the Outstanding Principal Amount on the Class A-5 Notes has been reduced to zero, the Class A Principal Payment, (b) to the Class B Noteholders, the Class B Principal Payment, (c) to the Class C Noteholders, the Class C Principal Payment, (d) to the Class D Noteholders, the Class D Principal Payment, (e) to the Class E Noteholders, the Class E Principal Payment and (f) to the extent that the Class B Floor exceeds the Class B Target Investor Principal Amount, the Class C Floor exceeds the Class C Target Investor Principal Amount, the Class D Floor exceeds the Class D Target Investor Principal Amount and/or the Class E Floor exceeds the Class E Target Investor Principal Amount, Additional Principal (defined below) shall be distributed, sequentially, as an additional principal payment on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes as applicable, until the Outstanding Principal Amount of each Class has been reduced to zero. "Additional Principal" with respect to each Payment Date equals (a) zero if each of the Class Target Investor Principal Amounts for Classes B, C, D and E exceed their respective Class Floors on such Payment Date and (b) in each other case, the excess, if any, of (i)(A) the Outstanding Principal Balance of the Notes plus the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to payments on such Payment Date, minus (B) the Discounted Present Value of the Performing Leases as of the related Determination Date, over (ii) the sum of the Class A Principal Payment, the Class B Principal Payment, the Class C Principal Payment, the Class D Principal Payment and the Class E Principal Payment to be paid on such Payment Date. The "Class A Principal Payment" shall equal (a) while the Class A-1 Notes are outstanding, (i) on all Payment Dates prior to the March 2000 Payment Date, the lesser of (1) the amount necessary to reduce the Outstanding Principal Amount on the Class A-1 Notes to zero and (2) the difference between (A) the Discounted Present Value of the Performing Leases as of the previous Determination Date and (B) the Discounted Present Value of the Performing Leases as of the related Determination Date, and (ii) on and after the March 2000 Payment Date, the entire Outstanding Principal Amount on the Class A-1 Notes and (b) after the Class A-1 Notes have been paid in full, the amount necessary to reduce the aggregate Outstanding Principal Amount on the Class A Notes to the Class A Target Investor Principal Amount. The "Class B Principal Payment" shall equal (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the Outstanding Principal Amount of the Class B Notes to the greater of the Class B Target Investor Principal Amount and the Class B Floor. The "Class C Principal Payment" shall equal (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the Outstanding Principal Amount of the Class C Notes to the greater of the Class C Target Investor Principal Amount and the Class C Floor. The "Class D Principal Payment" shall equal (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount 33 36 necessary to reduce the Outstanding Principal Amount of the Class D Notes to the greater of the Class D Target Investor Principal Amount and the Class D Floor. The "Class E Principal Payment" shall equal (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the Outstanding Principal Amount of the Class E Notes to the greater of the Class E Target Investor Principal Amount and the Class E Floor. The "Class A Target Investor Principal Amount" with respect to each Payment Date is an amount equal to the product of (a) the Class A Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. The "Class B Target Investor Principal Amount" with respect to each Payment Date is an amount equal to the product of (a) the Class B Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. The "Class C Target Investor Principal Amount" with respect to each Payment Date is an amount equal to the product of (a) the Class C Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. The "Class D Target Investor Principal Amount" with respect to each Payment Date is an amount equal to the product of (a) the Class D Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. The "Class E Target Investor Principal Amount with respect to each Payment Date is an amount equal to the product of (a) the Class E Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. The "Class Floors" means the Class B Floor, the Class C Floor, the Class D Floor or the Class E Floor. The "Class Target Investor Principal Amounts" means the Class A Target Investor Principal Amount or the Class B Target Investor Principal Amounts or the Class C Target Investor Principal Amount or the Class D Target Investor Principal Amount or the Class E Target Investor Principal Amounts, respectively. The "Class A Percentage" will be equal approximately to 84.21%. The "Class B Percentage" will be equal approximately to 2.96%. The "Class C Percentage" will be equal approximately to 2.30%. The "Class D Percentage" will be equal approximately to 3.62%. The "Class E Percentage" will be equal approximately to 3.95%. The "Class B Floor" with respect to each Payment Date means (a) 2.7% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum of the Outstanding Principal Amount of the Class C Notes, the Outstanding Principal Amount of the Class D Notes, the Outstanding Principal Amount of the Class E Notes, and the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date. The "Class C Floor" with respect to each Payment Date means (a) 2.2% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum of the Outstanding Principal Amount of the Class D Notes, the Outstanding Principal Amount of the Class E Notes, and the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date; provided, however, that if the Outstanding Principal Amount of the Class B Notes is less than or equal to the Class B Floor on such Payment Date, the Class C Floor will equal the Outstanding Principal Amount of the Class C Notes utilized in the calculation of the Class B Floor for such Payment Date. 34 37 The "Class D Floor" with respect to each Payment Date means (a) 1.8% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum of the Outstanding Principal Amount of the Class E Notes, and the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date; provided, however, that if the Outstanding Principal Amount of the Class C Notes is less than or equal to the Class C Floor on such Payment Date, the Class D Floor will equal the Outstanding Principal Amount of the Class D Notes utilized in the calculation of the Class C Floor for such Payment Date. The "Class E Floor" with respect to each Payment Date means (a) 1.2% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date; provided, however, that if the Outstanding Principal Amount of the Class D Notes is less than or equal to the Class D Floor on such Payment Date, the Class E Floor will equal the Outstanding Principal Amount of the Class E Notes utilized in the calculation of the Class D Floor for such Payment Date. The "Overcollateralization Balance" with respect to each Payment Date is an amount equal to the excess, if any, of (a) the Discounted Present Value of Performing Leases as of the related Determination Date over (b) the Outstanding Principal Amount of the Notes as of such Payment Date after giving effect to all principal payments made on that day. The "Cumulative Loss Amount" with respect to each Payment Date is an amount equal to the excess, if any, of (a) the total of (i) the Outstanding Principal Amount of the Notes as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, plus (ii) the Overcollateralization Balance as of the immediately preceding Payment Date, minus (iii) the lesser of (A) the Discounted Present Value of the Performing Leases as of the Determination Date relating to the immediately preceding Payment Date minus the Discounted Present Value of the Performing Leases as of the related Determination Date and (B) Available Funds remaining after the payment of amounts owing the Servicer and in respect of interest on the Notes on such Payment Date, over (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. COLLECTION ACCOUNT. The Trustee will establish and maintain an Eligible Account (as defined herein) (the "Collection Account") into which the Servicer will deposit all Lease Payments, Casualty Payments, Termination Payments, certain proceeds from repurchases by Copelco Capital of Leases as a result of breaches of representations and warranties, and recoveries from Non-Performing Leases to the extent Copelco Capital has not substituted a Substitute Lease for such Non-Performing Lease (except to the extent required to reimburse unreimbursed Servicer Advances) (each as defined herein) on or in respect of each Lease included in the Series Pool within two Business Days of receipt thereof; provided that Residual Realizations (as defined herein) will not be deposited in the Collection Account. All Lease Payments, Casualty Payments, Termination Payments and other payments relating to a Lease received and so deposited in the Collection Account shall constitute property of the Issuer, securing payments on the related Notes (Section 3.02(a)). An "Eligible Account" means either (a) an account maintained with a depository institution or trust company acceptable to each of the Rating Agencies, or (b) a trust account or similar account maintained with a federal or state chartered depository institution, which may be an account maintained with the Trustee. A "Casualty Payment" is any payment pursuant to a Lease on account of the loss, theft, condemnation, governmental taking, destruction, or damage beyond repair (each, a "Casualty") of any item of Equipment subject thereto which results, in accordance with the terms of the Lease, in a reduction in the number or amount of any future Lease Payments due thereunder or in the termination of the Lessee's obligation to make future Lease Payments thereunder. A "Lease Payment" is each periodic installment of rent payable by a Lessee under a Lease. Casualty Payments, Termination Payments, prepayments of rent required pursuant to the terms of a Lease at or before the commencement of the Lease, payments becoming due before the applicable Cut-Off Date and 35 38 supplemental or additional payments required by the terms of a Lease with respect to taxes, insurance, maintenance (including, without limitation any Maintenance Charges), or other specific charges, (including, without limitation, any Excess Copy Charges and Fee Per Scan Charges), shall not be Lease Payments hereunder. A "Termination Payment" is a payment payable by a Lessee under a Lease upon the early termination of such Lease (but not on account of a casualty or a Lease default) which may be agreed upon by the Servicer, acting in the name of the Issuer, and the Lessee. The Trustee shall deposit within two Business Days of receipt the following funds, as received, into the Collection Account (Section 3.03(a)), including any funds deposited into the Collection Account from the Reserve Account, ("Available Funds"): a) Lease Payments due during the prior Due Period (net of any Excess Copy Charges, Maintenance Charges and Fee Per Scan Charges); b) recoveries from Non-Performing Leases to the extent Copelco Capital has not substituted Substitute Leases for such Non-Performing Leases (except to the extent required to reimburse unreimbursed Servicer Advances); c) late charges received on delinquent Lease payments not advanced by the Servicer; d) proceeds from repurchases by Copelco Capital of Leases as a result of breaches of representations and warranties to the extent Copelco Capital has not substituted Substitute Leases for such Leases other than, with respect to a Warranty Lease, the Residual Warranty Payments. "Residual Warranty Payments" means the excess of (a) the repurchase price related to the Warranty Lease over (b) the Discounted Present Value of the remaining Lease Payments related to the Warranty Lease as of the beginning of the Due Period relating to such date of determination (plus any amounts previously due and unpaid); e) proceeds from investment of funds in the Collection Account and the Reserve Account, if any; f) Casualty Payments other than residual casualty payments ("Residual Casualty Payments") which are, at any date of determination with respect to a Lease, the excess of (a) the Casualty Payment related to the Lease over (b) the Discounted Present Value of the remaining Lease Payments related to the Lease as of the beginning of the Due Period relating to such date of determination (plus any amounts previously unpaid); g) Servicer Advances (as defined herein); h) Termination Payments to the extent the Issuer does not reinvest such Termination Payments in Additional Leases (as defined herein) other than Residual Prepayments (as defined below); and i) proceeds received once the Issuer exercises its right to redeem the Notes; j) to the extent there occurs an Available Funds Shortfall (as defined below), funds, if any, on deposit in the Reserve Account to the extent of such Available Funds Shortfall. Available Funds will not include (a) cash flows realized from the sale or release of the Equipment following the expiration dates of the Leases, other than Equipment subject to Non-Performing Leases, (b) Residual Warranty Payments, (c) Residual Casualty Payments and (d) Residual Prepayments (as defined below) ("Residual Realizations"). "Residual Prepayments" means, at any date of determination with respect to a Terminated Lease, the excess of (a) the payment related to the Terminated Lease over (b) the Discounted Present Value of the remaining Lease Payments of the Terminated Lease as of the beginning of the Due Period relating to such date of determination (plus any amounts previously due and unpaid). 36 39 RESERVE ACCOUNT. The Trustee will establish and maintain an Eligible Account (the "Reserve Account"). On the Issuance Date, the Issuer will make an initial deposit in an amount equal to 1% of the Discounted Present Value of the Leases as of the Cut-Off Date into the Reserve Account. In the event that Available Funds (exclusive of amounts on deposit in the Reserve Account) are insufficient to pay the amounts owing the Servicer, Interest Payments (as defined herein) on the Notes and the Class A Principal Payment, the Class B Principal Payment, the Class C Principal Payment, the Class D Principal Payment and the Class E Principal Payment (such payments, the "Required Payments" and such shortfall, an "Available Funds Shortfall"), the Trustee will withdraw from the Reserve Account an amount equal to the lesser of the funds on deposit in the Reserve Account (the "Available Reserve Amount") and such deficiency. In addition, on each Payment Date, Available Funds remaining after the payment of the Required Payments will be deposited into the Reserve Account to the extent that the Required Reserve Amount exceeds the Available Reserve Amount. The "Required Reserve Amount" equals the lesser of (a) 1.00% of the Discounted Present Value of the Leases as of the Cut-Off Date and (b) the then unpaid principal amounts (the "Outstanding Principal Amount") of the Notes. Any amounts on deposit in the Reserve Account in excess of the Required Reserve Amount will be released to the Issuer (Section 3.05(c)). DISTRIBUTIONS ON NOTES. Payments on the Notes will commence on April 15, 1999. On each Determination Date, the Servicer will determine the Available Funds and the Required Payments. For each Payment Date, the interest due with respect to the Notes will be the interest that has accrued on such Notes since the last Payment Date (or, in the case of the first Payment Date, since the Issuance Date), at the applicable Interest Rates applied to the Outstanding Principal Amount of each Class, after giving effect to payments of principal to Noteholders on the preceding Payment Date (or, in the case of the first Payment Date, the Issuance Date), plus all previously accrued and unpaid interest on the Notes (Section 2.01(c)). Funds in the Collection Account, together with reinvestment earnings thereon, will be used by the Trustee to make required payments of principal and interest on the related Notes (Section 3.03(b)). For each Payment Date, Principal Payments due with respect to the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes will be the Class A Principal Payment, the Class B Principal Payment, the Class C Principal Payment, the Class D Principal Payment and the Class E Principal Payment, respectively. In addition, to the extent that the Class B Floor exceeds the Class B Target Investor Principal Amount, the Class C Floor exceeds the Class C Target Investor Principal Amount, the Class D Floor exceeds the Class D Target Investor Principal Amount and/or the Class E Floor exceeds the Class E Target Investor Principal Amount, Additional Principal shall be distributed, sequentially, as an additional principal payment on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes until the Outstanding Principal Amount of each Class has been reduced to zero (Section 3.03(b)). Unless an Event of Default (as defined herein) and acceleration of the Notes has occurred, on or before each Payment Date, the Servicer will instruct the Trustee to apply or cause to be applied the Available Funds to make the following payments in the following priority (Section 3.03(b)): (a) to pay the Servicing Fee; (b) to reimburse unreimbursed Servicer Advances (as defined herein) in respect of a prior Payment Date; (c) to make Interest Payments, owing on the Class A Notes concurrently to the Class A-1 Noteholders, Class A-2 Noteholders, Class A-3 Noteholders, Class A-4 Noteholders and Class A-5 Noteholders; (d) to make Interest Payments on the Class B Notes; (e) to make Interest Payments on the Class C Notes; (f) to make Interest Payments on the Class D Notes; (g) to make Interest Payments on the Class E Notes; 37 40 (h) to make the Class A Principal Payment to (i) the Class A-1 Noteholders only, until the Outstanding Principal Amount on the Class A-1 Notes is reduced to zero, then (ii) to the Class A-2 Noteholders only, until the Outstanding Principal Amount on the Class A-2 Notes is reduced to zero, then (iii) to the Class A-3 Noteholders only, until the Outstanding Principal Amount on the Class A-3 Notes is reduced to zero, then (iv) to the Class A-4 Noteholders, until the Outstanding Principal Amount on the Class A-4 Notes is reduced to zero, and finally (v) to the Class A-5 Noteholders, until the Outstanding Principal Amount on the Class A-5 Notes is reduced to zero; (i) to make the Class B Principal Payment to the Class B Noteholders; (j) to make the Class C Principal Payment to the Class C Noteholders; (k) to make the Class D Principal Payment to the Class D Noteholders; (l) to make the Class E Principal Payment to the Class E Noteholders; (m) to pay the Additional Principal, if any, as an additional reduction of principal to the Class A Noteholders, as provided in Clause (h) above, until the Outstanding Principal Amount on all of the Class A Notes has been reduced to zero, then to Class B Noteholders until the Outstanding Principal Amount on the Class B Notes has been reduced to zero, then to the Class C Noteholders until the Outstanding Principal Amount on the Class C Notes has been reduced to zero, then to the Class D Noteholders until the Outstanding Principal Amount on the Class D Notes has been reduced to zero, and finally to the Class E Noteholders, until the Outstanding Principal Amounts on the Class E Notes has been reduced to zero; (n) to make a deposit to the Reserve Account in an amount equal to the excess of the Required Reserve Amount over the Available Reserve Amount; and (o) to the Issuer, the balance, if any. ADVANCES BY THE SERVICER. Prior to any Payment Date, the Servicer may, but will not be required to, advance (each, a "Servicer Advance") to the Trustee an amount sufficient to cover delinquencies on some or all Leases with respect to prior Due Periods. The Servicer will be reimbursed for such Servicer Advances from Available Funds on the following Payment Date. See "Distribution on Notes" above. REDEMPTION. The Issuer may, at its option, redeem the Notes, as a whole, at their principal amount, without premium, together with interest accrued to the date fixed for redemption if on any payment date the Discounted Present Value of the Performing Leases is less than or equal to 5% of the Discounted Present Value of the Leases as of the Cut-Off Date (Sections 2.01). The Issuer will give notice of such redemption to each Noteholder and the Trustee at least 30 days before the Payment Date fixed for such prepayment. Upon deposit of funds necessary to effect such redemption, the Trustee shall pay the remaining unpaid principal amount on the Notes and all accrued and unpaid interest as of the Payment Date fixed for redemption. See "Description of the Notes -- Redemption." EVENTS OF DEFAULT AND NOTICE THEREOF. The following events will be defined in the Indenture as "Events of Default" with respect to the Notes: (a) default in making Interest Payments when such become due and payable; (b) default in making Principal Payments at Stated Maturity; or (c) insolvency or bankruptcy events relating to the Issuer. (Section 6.01) The Indenture will provide that the Trustee shall give the Noteholders notice of all uncured defaults known to it (the term "default" to include the events specified above without grace periods) (Sections 6.03 and 7.02). 38 41 If an Event of Default occurs, the unpaid principal amount of the related Notes shall automatically become due and payable together with all accrued and unpaid interest thereon. The Trustee may, however, if the Event of Default involves other than non-payment of principal or interest on the Notes, not sell the related Leases and Equipment unless such sale is for an amount greater than or equal to the Outstanding Principal Amount of the Notes unless directed to do so by the holders of 66 - 2/3% of the then Outstanding Principal Amount of the Notes (Section 6.03). Subsequent to an Event of Default and following any acceleration of the Notes pursuant to the Indenture, any moneys that may then be held or thereafter received by the Trustee shall be applied in the following order of priority, at the date or dates fixed by the Trustee and, in case of the distribution of the entire amount due on account of principal or interest, upon presentation of the Notes and surrender thereof: First to the payment of all costs and expenses of collection incurred by the Trustee and the Noteholders (including the reasonable fees and expenses of any counsel to the Trustee and the Noteholders); Second if the person then acting as Servicer under the Assignment and Servicing Agreement is not Copelco Capital or an affiliate of Copelco Capital, to the payment of all Servicer's Fees then due to such person; Third first, to the payment of all accrued and unpaid interest on the Outstanding Principal Amount of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class A-5 Notes pro rata to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class A-1 Interest Rate, Class A-2 Interest Rate, Class A-3 Interest Rate, Class A-4 Interest Rate and Class A-5 Interest Rate respectively, second to the payment of all accrued and unpaid interest on the Outstanding Principal Amount of the Class B Notes to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class B Interest Rate, third, to the payment of all accrued and unpaid interest on the Outstanding Principal Amount of the Class C Notes to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class C Interest Rate, fourth, to the payment of all accrued and unpaid interest on the Outstanding Principal Amount of the Class D Notes to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class D Interest Rate, fifth to the payment of all accrued and unpaid interest on the Outstanding Principal Amount of the Class E Notes to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class E Interest Rate, sixth to the payment of the Outstanding Principal Amount of the Class A-1 Notes, seventh, to the payment of the Outstanding Principal Amount of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class A-5 Notes pro rata to the date of payment thereof, eighth, to the payment of the Outstanding Principal Amount of the Class B Notes to the date of payment thereof, ninth, to the payment of the Outstanding Principal Amount of the Class C Notes, tenth, to the payment of the Outstanding Principal Amount of the Class D Notes, eleventh, to the payment of the Outstanding Principal Amount of the Class E Notes; provided, that the Noteholders may allocate such payments for interest, principal and premium at their own discretion, except that no such allocation shall affect the allocation of such amounts or future payments received by any other Noteholder; Fourth to the payment of amounts due under the Class R-1 Lease-Residual Backed Notes (the "Class R-1 Notes") and the Class R-2 Lease-Residual Backed Notes (the "Class R-2 Notes" together with the Class R-1 Notes, the "Residual Notes"); Fifth to the payment of amounts then due the Trustee under the Indenture; 39 42 Sixth if the person then acting as servicer is Copelco Capital or an affiliate of Copelco Capital, to the payment of all Servicer's Fees then due to such Person; and Seventh to the payment of the remainder, if any, to the Issuer or any other person legally entitled thereto (Section 6.06). The Issuer will be required to furnish annually to the Trustee, a statement of certain officers of the Issuer to the effect that to the best of their knowledge the Issuer is not in default in the performance and observance of the terms of the Indenture or, if the Issuer is in default, specifying such default (Section 8.09). The Indenture will provide that the holders of 66 - 2/3% in aggregate principal amount of the Notes then outstanding will have the right to waive certain defaults and, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee (Sections 6.12 and 6.13). The Indenture will provide that in case an Event of Default shall occur (which shall not have been cured or waived), the Trustee will be required to exercise such of its rights and powers under such Indenture and to use the degree of care and skill in their exercise that a prudent man would exercise or use in the conduct of his own affairs (Section 7.01(b)). Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under such Indenture at the request of any of the Noteholders unless they shall have offered to the Trustee reasonable security or indemnity (Section 6.12). Upon request of a Noteholder, the Trustee will provide information as to the outstanding principal amount of each Class of Notes. MODIFICATION OF THE INDENTURE. With certain exceptions, under the Indenture, the rights and obligations of the Issuer and the rights of the Noteholders may be modified by the Issuer with the consent of the holders of not less than 66 - 2/3% in aggregate principal amount of the Notes then outstanding under the Indenture; but no such modification may be made which would (a) extend the fixed maturity of any Note, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of principal or interest thereon, without the consent of the holder of each Note so affected or (b) reduce the above-stated percentage of Notes, without the consent of the holders of all Notes then outstanding under such Indenture (Section 9.02). SERVICER EVENTS OF DEFAULT. The following events and conditions shall be defined in the Assignment and Servicing Agreement as "Servicer Events of Default": (a) failure on the part of the Servicer to remit to the Trustee within three Business Days following the receipt thereof any monies received by the Servicer required to be remitted to the Trustee under the Assignment and Servicing Agreement; (b) so long as Copelco Capital is the Servicer, failure on the part of Copelco Capital to pay to the Trustee on the date when due, any payment required to be made by Copelco Capital pursuant to the Assignment and Servicing Agreement; (c) default on the part of either the Servicer or (so long as Copelco Capital is the Servicer) Copelco Capital in its observance or performance in any material respect of certain covenants or agreements in the Assignment and Servicing Agreement which failure continues unremedied for a period of 30 days after the earlier of (i) the date it first becomes known to any officer of Copelco Capital or the Servicer, as the case may be, and (ii) the date on which written notice thereof requiring the same to be remedied shall have been given to the Servicer or Copelco Capital, as the case may be, by the Trustee, or to the Servicer or Copelco Capital, as the case may be, and the Trustee by any holder of the Notes; (d) if any representation or warranty of Copelco Capital made in the Assignment and Servicing Agreement shall prove to be incorrect in any material respect as of the time made; provided, however, that the breach of any representation or warranty made by Copelco Capital in such Assignment and Servicing Agreement will be deemed to be "material" only if it affects the Noteholders, the enforceability of the Indenture or of the Notes; and provided, further, that such material breach of any representation or warranty made by Copelco Capital in such Assignment and Servicing Agreement with respect to any of the Leases or the Equipment 40 43 subject thereto will not constitute a Servicer Event of Default if Copelco Capital repurchases such Lease and Equipment in accordance with the Assignment and Servicing Agreement to the extent provided therein; (e) certain insolvency or bankruptcy events relating to the Servicer; (f) the failure of the Servicer to make one or more payments due with respect to aggregate recourse debt or other obligations exceeding $5,000,000, or the occurrence of any event or the existence of any condition, the effect of which event or condition is to cause (or permit one or more persons to cause) more than $5,000,000 of aggregate recourse debt or other obligations of the Servicer to become due before its (or their) stated maturity or before its (or their) regularly scheduled dates of payment so long as such failure, event or condition shall be continuing and shall not have been waived by the person or persons entitled to performance; (g) a final judgment or judgments (or decrees or orders) for the payment of money aggregating in excess of $5,000,000 and any one of such judgments (or decrees or orders) has remained unsatisfied and in effect for any period of 60 consecutive days without a stay of execution. SERVICER TERMINATION. So long as a Servicer Event of Default under the Assignment and Servicing Agreement is continuing, the Trustee shall, upon the instructions of the holders of 66 2/3% in principal amount of the Notes, by notice in writing to the Servicer terminate all of the rights and obligations of the Servicer (but not Copelco Capital's obligations which shall survive any such termination) under the Assignment and Servicing Agreement (Section 5.01). Upon the receipt by the Servicer of such written notice, all authority and power of the Servicer under the Assignment and Servicing Agreement to take any action with respect to any Lease or Equipment will cease and the same will pass to and be vested in the Trustee pursuant to and under the Assignment and Servicing Agreement and the Indenture. PREPAYMENT AND YIELD CONSIDERATIONS The rate of principal payments on the Notes, the aggregate amount of each interest payment on such Notes and the yield to maturity of such Notes are directly related to the rate of payments on the underlying Leases. The payments on such Leases may be in the form of scheduled payments, prepayments or liquidations due to default, casualty and other events, which cannot be specified at present. Any such payments may result in distributions to Noteholders of amounts which would otherwise have been distributed over the remaining term of the Leases. In general, the rate of such payments may be influenced by a number of other factors, including general economic conditions. The rate of Principal Payments with respect to any Class may also be affected by any repurchase of the underlying Leases by Copelco Capital pursuant to the Assignment and Servicing Agreement. In such event, the repurchase price will decrease the Discounted Present Value of the Performing Leases, causing the corresponding weighted average life of the Notes to decrease. See "Risk Factors - -- Prepayments." In the event a Lease becomes a Non-Performing Lease, a lease subject to repurchase as a result of a breach of representation and warranty (a "Warranty Lease") or a lease following a modification or adjustment to the terms of such Lease (an "Adjusted Lease"), Copelco Capital will have the option to substitute for the terminated lease another lease of similar characteristics (a "Substitute Lease") in an aggregate amount not to exceed 10% of the Discounted Present Value of the Leases as of the Cut-Off Date with respect to Non-Performing Leases and in an aggregate amount not to exceed 10% of the Discounted Present Value of the Leases as of the Cut-Off Date with respect to Adjusted Leases and Warranty Leases. In addition, in the event of an Early Lease Termination which has been prepaid in full, Copelco Capital will have the option to transfer an additional lease of similar characteristics (an "Additional Lease"). The Substitute Leases and Additional Leases will have a Discounted Present Value of the Leases equal to or greater than that of the Leases being modified and replaced and the monthly payments on the Substitute Leases or Additional Leases will be at least equal to those of the terminated Leases through the term of such terminated Leases. In the event that an Early Lease Termination is allowed by Copelco Capital and a Substitute Lease is not provided, the amount prepaid will be equal to at least the Discounted Present Value of the terminated Lease, plus any delinquent payments. 41 44 The effective yield to holders of the Notes will depend upon, among other things, the amount of and rate at which principal is paid to such Noteholders. The after-tax yield to Noteholders may be affected by lags between the time interest income accrues to Noteholders and the time the related interest income is received by the Noteholders. The following chart sets forth the percentage of the Initial Principal Amount of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class B, Class C, Class D, and Class E Notes which would be outstanding on the Payment Dates set forth below assuming a Conditional Prepayment Rate ("CPR") of 0% and 12%, respectively, and were calculated using the Discount Rate. Such information is hypothetical and is set forth for illustrative purposes only. The CPR assumes that a fraction of the outstanding Series Pool is prepaid on each Distribution Date, which implies that each Lease in the Series Pool is equally likely to prepay. This fraction, expressed as a percentage, is annualized to arrive at the Conditional Payment Rate for the Series Pool. The CPR measures prepayments based on the outstanding Discounted Present Value of the Leases, after the payment of all Scheduled Payments on the Leases during such Due Period. The CPR further assumes that all Leases are the same size and amortize at the same rate and that each Lease will be either paid as scheduled or prepaid in full. The amounts set forth below are based upon the timely receipt of scheduled monthly Lease payments as of the Cut-Off Date, assume that the Issuer exercises its option to redeem the Notes and assume the Issuance Date is March 9, 1999 and the first Payment Date is April 15, 1999. 42 45 PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE RESPECTIVE CPR SET FORTH BELOW
0% CPR ---------------------------------------------------------------------------------------------------- PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS B CLASS C CLASS D CLASS E ------------ --------- --------- --------- --------- --------- ------- ------- ------- ------- ISSUANCE DATE - ------------- March 9,1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% April 15, 1999 82.14 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 May 15, 1999 73.07 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 June 15, 1999 63.89 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 July 15, 1999 54.66 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 August 15, 1999 45.34 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 September 15, 1999 35.97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 October 15, 1999 26.67 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 November 15, 1999 17.45 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 December 15, 1999 8.26 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 January 15, 2000 0.00 99.05 100.00 100.00 100.00 99.76 99.76 99.76 99.76 February 15, 2000 0.00 87.81 100.00 100.00 100.00 96.88 96.88 96.88 96.88 March 15, 2000 0.00 76.68 100.00 100.00 100.00 94.02 94.02 94.02 94.02 April 15, 2000 0.00 65.54 100.00 100.00 100.00 91.17 91.17 91.17 91.17 May 15, 2000 0.00 54.34 100.00 100.00 100.00 88.30 88.30 88.30 88.30 June 15, 2000 0.00 43.12 100.00 100.00 100.00 85.42 85.42 85.42 85.42 July 15, 2000 0.00 31.96 100.00 100.00 100.00 82.56 82.56 82.56 82.56 August 15, 2000 0.00 20.80 100.00 100.00 100.00 79.70 79.70 79.70 79.70 September 15, 2000 0.00 9.70 100.00 100.00 100.00 76.85 76.85 76.85 76.85 October 15, 2000 0.00 0.00 98.79 100.00 100.00 74.01 74.01 74.01 74.01 November 15, 2000 0.00 0.00 89.25 100.00 100.00 71.18 71.18 71.18 71.18 December 15, 2000 0.00 0.00 79.74 100.00 100.00 68.35 68.35 68.35 68.35 January 15, 2001 0.00 0.00 70.27 100.00 100.00 65.54 65.54 65.54 65.54 February 15, 2001 0.00 0.00 60.74 100.00 100.00 62.71 62.71 62.71 62.71 March 15, 2001 0.00 0.00 51.29 100.00 100.00 59.91 59.91 59.91 59.91 April 15, 2001 0.00 0.00 41.81 100.00 100.00 57.10 57.10 57.10 57.10 May 15, 2001 0.00 0.00 32.32 100.00 100.00 54.28 54.28 54.28 54.28 June 15, 2001 0.00 0.00 22.82 100.00 100.00 51.46 51.46 51.46 51.46 July 15, 2001 0.00 0.00 13.48 100.00 100.00 48.69 48.69 48.69 48.69 August 15, 2001 0.00 0.00 4.49 100.00 100.00 46.02 46.02 46.02 46.02 September 15, 2001 0.00 0.00 0.00 95.05 100.00 43.48 43.48 43.48 43.48 October 15, 2001 0.00 0.00 0.00 85.17 100.00 41.08 41.08 41.08 41.08 November 15, 2001 0.00 0.00 0.00 75.87 100.00 38.83 38.83 38.83 38.83 December 15, 2001 0.00 0.00 0.00 67.17 100.00 36.71 36.71 36.71 36.71 January 15, 2002 0.00 0.00 0.00 59.11 100.00 34.76 34.76 34.76 34.76 February 15, 2002 0.00 0.00 0.00 51.47 100.00 32.90 32.90 32.90 32.90 March 15, 2002 0.00 0.00 0.00 44.12 100.00 31.12 31.12 31.12 31.12 April 15, 2002 0.00 0.00 0.00 36.85 100.00 29.35 29.35 29.35 29.35 May 15, 2002 0.00 0.00 0.00 29.61 100.00 27.59 27.59 27.59 27.59 June 15, 2002 0.00 0.00 0.00 22.42 100.00 25.85 25.85 25.85 25.85 July 15, 2002 0.00 0.00 0.00 15.30 100.00 24.12 24.12 24.12 24.12 August 15, 2002 0.00 0.00 0.00 8.35 100.00 22.43 22.43 22.43 22.43 September 15, 2002 0.00 0.00 0.00 1.58 100.00 20.79 20.79 20.79 20.79 October 15, 2002 0.00 0.00 0.00 0.00 94.01 19.18 19.18 19.18 19.18 November 15, 2002 0.00 0.00 0.00 0.00 86.36 17.62 17.62 17.62 17.62 December 15, 2002 0.00 0.00 0.00 0.00 78.92 16.10 16.10 16.10 16.10 January 15, 2003 0.00 0.00 0.00 0.00 71.82 14.65 14.65 14.65 14.65 February 15, 2003 0.00 0.00 0.00 0.00 64.05 13.24 13.24 14.58 14.65 March 15, 2003 0.00 0.00 0.00 0.00 55.88 13.24 13.24 14.58 14.65 April 15, 2003 0.00 0.00 0.00 0.00 46.49 13.24 13.24 14.58 14.65 May 15, 2003 0.00 0.00 0.00 0.00 38.45 13.24 13.24 14.58 14.65 June 15, 2003 0.00 0.00 0.00 0.00 30.52 13.24 13.24 14.58 14.65 July 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 WEIGHTED AVERAGE LIFE(1)(YEARS) To Call: 0.44 1.26 2.07 3.01 4.07 2.51 2.51 2.52 2.52 To Maturity 0.44 1.26 2.07 3.01 4.12 2.57 2.58 2.63 2.69
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 Note, Class A-5 Note, Class B Note, Class C Note, Class D Note, and Class E Note is determined by (a) multiplying the amount of cash distributions in reduction of the Outstanding Principal Amount of the respective Offered Note by the number of years from the Issuance Date to such Payment Date, (b) adding the results, and (c) dividing the sum by the respective Initial Principal Amount. 43 46 PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE RESPECTIVE CPR SET FORTH BELOW
12% CPR ----------------------------------------------------------------------------------------------------- PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS B CLASS C CLASS D CLASS E ------------ --------- --------- --------- --------- --------- ------- ------- ------- ------- ISSUANCE DATE - ------------- March 9, 1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% April 15, 1999 77.91 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 May 15, 1999 64.85 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 June 15, 1999 51.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 July 15, 1999 39.17 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 August 15, 1999 26.56 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 September 15, 1999 14.14 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 October 15, 1999 2.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 November 15, 1999 0.00 87.88 100.00 100.00 100.00 96.89 96.89 96.89 96.89 December 15, 1999 0.00 73.58 100.00 100.00 100.00 93.23 93.23 93.23 93.23 January 15, 2000 0.00 59.72 100.00 100.00 100.00 89.68 89.68 89.68 89.68 February 15, 2000 0.00 46.02 100.00 100.00 100.00 86.16 86.16 86.16 86.16 March 15, 2000 0.00 32.67 100.00 100.00 100.00 82.74 82.74 82.74 82.74 April 15, 2000 0.00 19.54 100.00 100.00 100.00 79.38 79.38 79.38 79.38 May 15, 2000 0.00 6.62 100.00 100.00 100.00 76.06 76.06 76.06 76.06 June 15, 2000 0.00 0.00 94.73 100.00 100.00 72.80 72.80 72.80 72.80 July 15, 2000 0.00 0.00 84.01 100.00 100.00 69.62 69.62 69.62 69.62 August 15, 2000 0.00 0.00 73.48 100.00 100.00 66.50 66.50 66.50 66.50 September 15, 2000 0.00 0.00 63.19 100.00 100.00 63.44 63.44 63.44 63.44 October 15, 2000 0.00 0.00 53.10 100.00 100.00 60.45 60.45 60.45 60.45 November 15, 2000 0.00 0.00 43.24 100.00 100.00 57.52 57.52 57.52 57.52 December 15, 2000 0.00 0.00 33.57 100.00 100.00 54.65 54.65 54.65 54.65 January 15, 2001 0.00 0.00 24.14 100.00 100.00 51.85 51.85 51.85 51.85 February 15, 2001 0.00 0.00 14.83 100.00 100.00 49.09 49.09 49.09 49.09 March 15, 2001 0.00 0.00 5.75 100.00 100.00 46.39 46.39 46.39 46.39 April 15, 2001 0.00 0.00 0.00 96.13 100.00 43.75 43.75 43.75 43.75 May 15, 2001 0.00 0.00 0.00 85.43 100.00 41.15 41.15 41.15 41.15 June 15, 2001 0.00 0.00 0.00 74.93 100.00 38.60 38.60 38.60 38.60 July 15, 2001 0.00 0.00 0.00 64.77 100.00 36.13 36.13 36.13 36.13 August 15, 2001 0.00 0.00 0.00 55.12 100.00 33.79 33.79 33.79 33.79 September 15, 2001 0.00 0.00 0.00 46.07 100.00 31.59 31.59 31.59 31.59 October 15, 2001 0.00 0.00 0.00 37.59 100.00 29.53 29.53 29.53 29.53 November 15, 2001 0.00 0.00 0.00 29.69 100.00 27.61 27.61 27.61 27.61 December 15, 2001 0.00 0.00 0.00 22.36 100.00 25.83 25.83 25.83 25.83 January 15, 2002 0.00 0.00 0.00 15.62 100.00 24.20 24.20 24.20 24.20 February 15, 2002 0.00 0.00 0.00 9.30 100.00 22.66 22.66 22.66 22.66 March 15, 2002 0.00 0.00 0.00 3.31 100.00 21.21 21.21 21.21 21.21 April 15, 2002 0.00 0.00 0.00 0.00 97.00 19.79 19.79 19.79 19.79 May 15, 2002 0.00 0.00 0.00 0.00 90.22 18.41 18.41 18.41 18.41 June 15, 2002 0.00 0.00 0.00 0.00 83.62 17.06 17.06 17.06 17.06 July 15, 2002 0.00 0.00 0.00 0.00 77.20 15.75 15.75 15.75 15.75 August 15, 2002 0.00 0.00 0.00 0.00 71.03 14.49 14.49 14.49 14.49 September 15, 2002 0.00 0.00 0.00 0.00 64.32 13.29 13.81 14.49 14.49 October 15, 2002 0.00 0.00 0.00 0.00 57.59 13.29 13.81 14.49 14.49 November 15, 2002 0.00 0.00 0.00 0.00 51.16 13.29 13.81 14.49 14.49 December 15, 2002 0.00 0.00 0.00 0.00 45.01 13.29 13.81 14.49 14.49 January 15, 2003 0.00 0.00 0.00 0.00 39.23 13.29 13.81 14.49 14.49 February 15, 2003 0.00 0.00 0.00 0.00 33.69 13.29 13.81 14.49 14.49 March 15, 2003 0.00 0.00 0.00 0.00 28.30 13.29 13.81 14.49 14.49 April 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 May 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 June 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 July 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 WEIGHTED AVERAGE LIFE(1)(YEARS) To Call: 0.33 0.96 1.68 2.55 3.72 2.14 2.15 2.15 2.15 To Maturity 0.33 0.96 1.68 2.55 3.77 2.21 2.22 2.24 2.29
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 Note, Class A-5 Note, Class B Note, Class C Note, Class D Note, and Class E Note is determined by (a) multiplying the amount of cash distributions in reduction of the Outstanding Principal Amount of the respective Offered Note by the number of years from the Issuance Date to such Payment Date, (b) adding the results, and (c) dividing the sum by the respective Initial Principal Amount. 44 47 SECURITY FOR THE NOTES GENERAL. Repayment of the Notes will be secured by (a) a first priority security interest in the underlying Leases perfected both by filing UCC financing statements against the Issuer and Copelco Capital and by taking possession of the respective Lease documents, (b) a security interest in the related Equipment owned by the Issuer and an assignment of the Issuer's security interest in such Equipment subject to Nominal Buy-Out Leases, which security interest was originally perfected by Copelco Capital (for Equipment with an original cost in excess of $25,000 which assignment will be recorded in the manner described below) and (c) all funds in the Collection Account and the Reserve Account. THE INDENTURE TRUSTEE Manufacturers and Traders Trust Company will be the Trustee under the Indenture. Copelco Capital, as Transferor or Servicer, and its affiliates may from time to time enter into normal banking and Trustee relationships with the Trustee and its affiliates. The Trustee, the Servicer and any of their respective affiliates may hold Notes in their own names. In addition, for purposes of meeting the legal requirements of certain local jurisdictions, the Trustee shall have the power to appoint a co-Trustee or a separate Trustee under the Indenture. In the event of such appointment, all rights, powers, duties and obligations conferred or imposed upon the Trustee by the Indenture will be conferred or imposed upon the Trustee and such separate Trustee or co-Trustee jointly, or in any jurisdiction in which the Trustee shall be incompetent or unqualified to perform certain acts, singly upon such separate Trustee or co-Trustee, who shall exercise and perform such rights, powers, duties and obligations solely at the direction of the Trustee. The Trustee may resign at any time, in which event the Issuer will be obligated to appoint a successor Trustee. The Issuer may also remove each Trustee if such Trustee ceases to be eligible to continue as such under the Indenture, fails to perform in any material respect its obligations under such Indenture, or becomes insolvent. In such circumstances, the Issuer will be obligated to appoint a successor Trustee. Any resignation or removal of a Trustee and appointment of a successor Trustee will not become effective until acceptance of the appointment by the successor Trustee. CERTAIN LEGAL MATTERS AFFECTING A LESSEE'S RIGHTS AND OBLIGATIONS GENERAL. The Leases are triple-net leases, requiring the Lessees to pay all taxes, maintenance and insurance associated with the Equipment, and are primarily non-cancelable by the Lessees. The Leases are "hell or high water" leases, under which the obligations of the Lessee is absolute and unconditional, regardless of any defense, setoff or abatement which the Lessee may have against Copelco Capital, as Transferor or Servicer, the Issuer, or any other person or entity whatsoever. Defaults under the Leases are generally the result of failure to pay amounts when due, failure to observe other covenants in the Lease, misrepresentations by, or the insolvency, bankruptcy or appointment of a trustee or receiver for the Lessee under a Lease. The remedies of the lessor (and the Issuer as assignee) following a notice and cure period are generally to seek to enforce the performance by the Lessee of the terms and covenants of the Lease (including the Lessee's obligation to make scheduled payments) or recover damages for the breach thereof, to accelerate the balance of the remaining scheduled payments paid to terminate the rights of the Lessee under such Lease. Although the Leases permit the lessor to repossess and dispose of the related Equipment in the event of a lease default, and to credit such proceeds against the Lessee's liabilities thereunder, such remedies may be limited where the Lessee thereunder is subject to bankruptcy, or other insolvency proceedings. UCC AND BANKRUPTCY CONSIDERATIONS. Pursuant to the Assignment and Servicing Agreement, Copelco Capital will sell the Leases to the Issuer, make a capital contribution to the Issuer of the Leases and Equipment owned by Copelco Capital and subject to the Leases, and assign its security interests in the Equipment subject to Nominal Buy-Out Leases. Copelco Capital will warrant that each of the contribution of the Leases from 45 48 Copelco Capital to the Issuer is an absolute assignment, that the contributions of its rights in the Equipment is a valid transfer of Copelco Capital's title to the Equipment and that Copelco Capital is either the owner of the Equipment or has a valid perfected first priority security interest in the Equipment (for Leases with leased Equipment having an original equipment cost in excess of $25,000), including Equipment subject to Nominal Buy-Out Leases, and accordingly, Copelco Capital has filed UCC financing statements in its favor against Lessees in respect of all Equipment in the Series Pool with an original Equipment cost in excess of $25,000. No action will be taken to perfect the interest of Copelco Capital in any Equipment in the Series Pool with an original Equipment cost of less than $25,000. In addition, UCC financing statements identifying security interests in the Equipment as transferred to, or obtained by, the Issuer or the Trustee and UCC financing statements identifying equipment owned by Copelco Capital, transferred to the Issuer and pledged to the Trustee will be filed in favor of the Issuer or the Trustee in the central filing location for any given state. In the event of the repossession and resale of Equipment subject to a superior lien, the senior lienholder would be entitled to be paid the full amount of the indebtedness owed to it out of the sale proceeds before such proceeds could be applied to the payment of claims by the Servicer on behalf of the Issuer. Certain statutory provisions, including federal and state bankruptcy and insolvency laws, may limit the ability of the Servicer to repossess and resell collateral or obtain a deficiency judgment in the event of a Lessee default. In the event of the bankruptcy or reorganization of a Lessee, or Copelco Capital, as Transferor or Servicer, various provisions of the Bankruptcy Code of 1978, 11 U.S.C Section 101-1330 (the "Bankruptcy Code"), and related laws may interfere with, delay or eliminate the ability of Copelco Capital or the Issuer to enforce its rights under the Leases. In the case of operating leases, the Bankruptcy Code grants to the bankruptcy trustee or the debtor-in-possession a right to elect to assume or reject any executory contract or unexpired lease. Any rejection of such a lease or contract constitutes a breach of such lease or contract, entitling the nonbreaching party to a claim for damages for breach of contract. The net proceeds from any resulting judgment would be deposited by the Servicer into the Collection Account and allocated to the Noteholders as more fully described herein. Upon the bankruptcy of a Lessee, if the bankruptcy trustee or debtor-in-possession elected to reject a Lease, the flow of scheduled payments to Noteholders would cease. In the event that, as a result of the bankruptcy of a Lessee, the Servicer is prevented from collecting scheduled payments with respect to Leases and such Leases become Non-Performing Leases, no recourse would be available against Copelco Capital (except for misrepresentation or breach of warranty) and the Noteholders could suffer a loss with respect to the Notes. Similarly, upon the bankruptcy of the Issuer, if the bankruptcy trustee or debtor-in-possession elected to reject a Lease, the flow of Lease payments to the Issuer and the Noteholders would cease. As noted above, however, the Issuer has been structured so that the filing of a bankruptcy petition with respect to it is unlikely. See "The Issuer." These UCC and bankruptcy provisions, in addition to the possible decrease in value of a repossessed item of Equipment, may limit the amount realized on the sale of Equipment to less than the amount due on the related Lease. MATERIAL FEDERAL INCOME TAX CONSEQUENCES The following is a summary of the material federal income tax consequences to the original purchasers of the Offered Notes of the purchase, ownership and disposition of the Offered Notes. Tax Counsel's opinion does not purport to deal with all federal tax considerations applicable to all categories of investors. Certain holders, including insurance companies, tax-exempt organizations, financial institutions or broker dealers, taxpayers subject to the alternative minimum tax, and holders that will hold the Offered Notes as other than capital assets, may be subject to special rules that are not discussed below. In particular, this discussion applies only to institutional investors that purchase Offered Notes directly from the Issuer and hold the Offered Notes as capital assets. The discussion that follows, and the opinion set forth below of Dewey Ballantine LLP, special tax counsel to the Issuer ("Tax Counsel"), are based on the provisions of the Internal Revenue Code of 1986, as amended (the "Code") and treasury regulations promulgated thereunder as in effect on the date hereof and on existing judicial and administrative interpretations thereof. These authorities are subject to change and to differing interpretations, which could apply retroactively. The opinion of Tax Counsel is not binding on the courts or the Internal Revenue Service (the "IRS"). Potential investors should consult their own tax advisors in determining the 46 49 federal, state, local, foreign and any other tax consequences to them of the purchase, ownership and disposition of the Offered Notes. Tax Counsel has prepared the following discussion and is of the opinion that such discussion is correct in all material respects. CHARACTERIZATION OF THE OFFERED NOTES AS INDEBTEDNESS. In the opinion of Tax Counsel, although no transaction closely comparable to that contemplated herein has been the subject of any treasury regulation, revenue ruling or judicial decision, based on the application of existing law to the facts as set forth in the applicable agreements, the proper treatment of the Offered Notes is as indebtedness for federal income tax purposes. Although it is the opinion of Tax Counsel that the Offered Notes are properly characterized as indebtedness for federal income tax purposes, no assurance can be given that such characterization of the Offered Notes will prevail. If the Offered Notes were treated as an ownership interest in the Leases, all income on such Leases would be income to the holders of the Offered Notes, and related fees and expenses would generally be deductible (subject to certain limitations on the deductibility of miscellaneous itemized deductions by individuals) and certain market discount and premium provisions of the Code might apply to a purchase of the Offered Notes. If, alternatively, the Offered Notes were treated as an equity interest in the Issuer, distributions on the Offered Notes probably would not be deductible in computing the taxable income of the Issuer and all or a part of distributions to the holders of the Offered Notes probably would be treated as partnership income to those holders. Such an Issuer-level tax could result in a reduced amount of cash available for distributions to the holders of the Offered Notes. TAXATION OF INTEREST INCOME OF NOTEHOLDERS. If characterized as indebtedness, interest on the Offered Notes will be taxable as ordinary income for federal income tax purposes when received by Noteholders using the cash method of accounting and when accrued by Noteholders using the accrual method of accounting. Noteholders using the accrual method of accounting may be required to report income for tax purposes in advance of receiving a corresponding cash distribution with which to pay the related tax. Interest received on the Offered Notes also may constitute "investment income" for purposes of certain limitations of the Code concerning the deductibility of investment interest expense. Original Issue Discount. It is not anticipated that the Offered Notes will have any original issue discount ("OID") other than possibly OID within a de minimis exception and that accordingly the provisions of sections 1271 through 1273 and 1275 of the Code generally will not apply to the Offered Notes. OID will be considered de minimis if it is less than 0.25% of the principal amount of Note multiplied by its expected weighted average life. Market Discount. A subsequent purchaser who buys a Note for less than its principal amount may be subject to the "market discount" rules of Sections 1276 through 1278 of the Code. If a subsequent purchaser of a Note disposes of such Note (including certain nontaxable dispositions such as a gift), or receives a principal payment, any gain upon such sale or other disposition will be recognized, or the amount of such principal payment will be treated, as ordinary income to the extent of any "market discount" accrued for the period that such purchaser holds the Note. Such holder may instead elect to include market discount in income as it accrues with respect to all debt instruments acquired in the year of acquisition of the Offered Notes and thereafter. Market discount generally will equal the excess, if any, of the then-current unpaid principal balance of the Note over the purchaser's basis in the Note immediately after such purchaser acquired the Note. In general, market discount on a Note will be treated as accruing over the term of such Note in the ratio of interest for the current period over the sum of such current interest and the expected amount of all remaining interest payments, or at the election of the holder, under a constant yield method. At the request of a holder of a Note, information will be made available that will allow the holder to compute the accrual of market discount under the first method described in the preceding sentence. The market discount rules also provide that a holder who incurs or continues indebtedness to acquire a Note at a market discount may be required to defer the deduction of all or a portion of the interest on such indebtedness until the corresponding amount of market discount is included in income. 47 50 Notwithstanding the above rules, market discount on a Note will be considered to be zero if it is less than a de minimis amount, which is 0.25% of the remaining principal balance of the Note multiplied by its expected weighted average remaining life. If OID or market discount is de minimis, the actual amount of discount must be allocated to the remaining principal distributions on the Note and, when each such distribution is received, capital gain equal to the discount allocated to such distribution will be recognized. Market Premium. A subsequent purchaser who buys a Note for more than its principal amount generally will be considered to have purchased the Note at a premium. Such holder may amortize such premium, using a constant yield method, over the remaining term of the Note and, except as future regulations may otherwise provide, may apply such amortized amounts to reduce the amount of interest income reportable with respect to such Note over the period from the purchase date to the date of maturity of the Note. Legislative history of the Tax Reform Act of 1986 indicates that the amortization of such premium on an obligation that provides for partial principal payments prior to maturity should be governed by the methods for accrual of market discount on such an obligation (described above). A holder that elects to amortize such premium must reduce tax basis in the related obligation by the amount of the aggregate deductions (or interest offsets) allowable for amortizable premium. If a debt instrument purchased at a premium is redeemed in full prior to its maturity, a purchaser who has elected to amortize premium should be entitled to a deduction for any remaining unamortized premium in the taxable year of redemption. SALE OR EXCHANGE OF OFFERED NOTES. If a Note is sold or exchanged, the Transferor of the Note will recognize gain or loss equal to the difference between the amount realized on the sale or exchange and the adjusted basis of the Note. The adjusted basis of a Note will generally equal its cost, increased by any OID or market discount includible in income with respect to the Note through the date of sale and reduced by any principal payments previously received with respect to the Note, any payments allocable to previously accrued OID or market discount and any amortized market premium. Subject to the market discount rules, gain or loss will generally be capital gain or loss if the Note was held as a capital asset. Capital losses generally may be used only to offset capital gains. BACKUP WITHHOLDING WITH RESPECT TO OFFERED NOTES. Payments of interest and principal, together with payments of proceeds from the sale of Offered Notes, may be subject to the "backup withholding tax" under Section 3406 of the Code at a rate of 31% if recipients of such payments fail to furnish to the payor certain information, including their taxpayer identification numbers, or otherwise fail to establish an exemption from such tax. Any amounts deducted and withheld from a payment to a recipient would be allowed as a credit against such recipient's federal income tax. Furthermore, certain penalties may be imposed by the IRS on a recipient of payments that is required to supply information but that does not do so in the proper manner. FOREIGN INVESTORS IN OFFERED NOTES; CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS. A beneficial owner of Offered Notes holding securities through CEDEL of Euroclear (or through DTC if the holder has an address outside the U.S.) will be subject to the 30% U.S. withholding tax that generally applies to payments of interest (including original issue discount) on registered debt issued by U.S. Persons (as defined below), unless (i) each clearing system, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business in the chain of intermediaries between such beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements and (ii) such beneficial owner takes one of the following steps to obtain an exemption or reduced tax rate: Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners of Offered Notes that are Non-U.S. Persons (as defined below) can obtain a complete exemption from the withholding tax by filing a signed Form W-8 (Certificates of Foreign Status). If the information shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such change. Exemption for Non-U.S. Persons with effectively connected income (Form 4224). A Non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, can obtain an exemption from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States). 48 51 Exemption or reduced rate for non-U.S. Persons resident in treaty countries (Form 1001). Non-U.S. Persons residing in a country that has a tax treaty with the United States can obtain an exemption or reduced tax rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificates). If the treaty provides only for a reduced rate, withholding tax will be imposed at that rate unless the filer alternatively files Form W-8. Form 1001 may be filed by Certificate Owners or their agent. Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). U.S. Federal Income Tax Reporting Procedure. The Owner of a Note or, in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting the appropriate form to the person through whom it holds (the clearing agency, in the case of persons holding directly on the books of the clearing agency). Form W-8 and Form 1001 are effective for three calendar years and Form 4224 is effective for one calendar year. On April 22, 1996 the IRS issued proposed regulations relating to withholding, backup withholding and information reporting that, if adopted in their current form would, among other things, unify current certification procedures and forms and clarify certain reliance standards. The regulations are proposed to be effective for payments made after December 31, 1997 but provide that certificates issued on or before the date that is 60 days after the proposed regulations are made final will continue to be valid until they expire. Proposed regulations, however, are subject to change prior to their adoption in final form. The term "U.S. Person" means (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate that is subject to U.S. federal income tax regardless of the source of its income. The term "Non-U.S. Person" means any person who is not a U.S. Person. This summary does not deal with all aspects of U.S. federal income tax withholding that may be relevant to foreign holders of the Offered Notes. Investors are advised to consult their own tax advisors for specific tax advice concerning their holding and disposing of the Offered Notes. STATE, LOCAL AND OTHER TAXES. Investors should consult their own tax advisors regarding whether the purchase of the Offered Notes, either alone or in conjunction with an investor's other activities, may subject an investor to any state or local taxes based on an assertion that the investor is either "doing business" in, or deriving income from a source located in, any state or local jurisdiction. Additionally, potential investors should consider the state, local and other tax consequences of purchasing, owning or disposing of a Note. State and local tax laws may differ substantially from the corresponding federal tax law, and the foregoing discussion does not purport to describe any aspect of the tax laws of any state or other jurisdiction. Accordingly, potential investors should consult their own tax advisors with regard to such matters. THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE OFFERED NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS OR IN THE INTERPRETATIONS THEREOF. ERISA CONSIDERATIONS The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), imposes certain requirements and restrictions on those pension, profit-sharing and other employee benefits plans to which it applies and on those persons who are fiduciaries with respect to such plans. In accordance with ERISA's fiduciary standards, before purchasing the Offered Notes, a fiduciary should determine whether such an investment is permitted under the documents and instruments governing the plan and is appropriate for the plan in view of its overall investment policy and the composition of its portfolio. Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of certain plans subject thereto (each, a "Benefit Plan") and persons who are "parties in interest," within the 49 52 meaning of ERISA, or "disqualified persons," within the meaning of the Code. Certain transactions involving the purchase, holding or transfer of the Offered Notes might be deemed to constitute prohibited transactions under ERISA and the Code if assets of the Issuer were deemed to be assets of a Benefit Plan. Under regulations issued by the United States Department of Labor set forth in 29 C.F.R. Section 2510.3101 (the "Plan Asset Regulations"), the assets of the Issuer would be treated as plan assets of a Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan acquired an "equity interest" in the Issuer and none of the exceptions contained in the Plan Asset Regulations is applicable. An equity interest is defined under the Plan Asset Regulations as an interest other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. It is anticipated that the Offered Notes should be treated as indebtedness without substantial equity features for purposes of the Plan Asset Regulations. However, even if the Offered Notes are treated as indebtedness for such purposes, the acquisition or holding of Offered Notes by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the Issuer or any of its affiliates is or becomes a party in interest or disqualified person with respect to such Benefit Plan. In this event, certain exemptions from the prohibited transaction rules could be applicable depending on the type and circumstances of the plan fiduciary making the decision to acquire a Note. Included among these exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance company pooled separate accounts; PTCE 91-38 regarding investments by bank collective investment funds; PTCE 84-14, regarding transactions effected by "qualified professional asset managers;" PTCE 95-60, regarding investments by insurance company general accounts; and PTCE 96-23 regarding transactions effected by "in-house asset managers". Each investor using assets of a Benefit Plan which acquires the Offered Notes, or to whom the Offered Notes are transferred, will be deemed to have represented that the acquisition and continued holding of the Offered Notes will be covered by one of the exemptions listed above or another Department of Labor class exemption. Insurance companies considering the purchase of the Offered Notes should also consult their own counsel as to the application of the decision by the United States Supreme Court in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank (510 U.S. 86) to such a purchase. Under that decision, assets held in an insurance company's general account may be deemed assets of ERISA plans under certain circumstances. Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are not subject to ERISA requirements; however, governmental plans may be subject to comparable federal, state or local law restrictions. Due to the complexity of these rules and the penalties imposed upon persons involved in prohibited transactions, it is particularly important that a fiduciary investing assets of an ERISA plan consult with counsel regarding the consequences under ERISA of the acquisition and holding of Offered Notes, including the availability of any administrative exemptions from the prohibited transaction rules. The sale of Notes to a Benefit Plan is in no respect a representation by the Issuer or the Underwriters that this investment meets all relevant legal requirements with respect to investments by Benefit Plans generally or by a particular Benefit Plan, or that this investment is appropriate for Benefit Plans generally or any particular Benefit Plan. UNDERWRITING Under the terms and subject to the conditions set forth in the underwriting agreement (the "Underwriting Agreement") for the sale of the Offered Notes, the Issuer has agreed to sell and Prudential Securities Incorporated ("Prudential Securities") and First Union Capital Markets Corp. ("First Union", and together with Prudential Securities, the "Underwriters") have agreed to purchase the principal amount of the Offered Notes set forth below: 50 53 Prudential Securities First Union Totals --------------------- ----------- ------ Class A-1 Notes Class A-2 Notes Class A-3 Notes Class A-4 Notes Class A-5 Notes Class B Notes Class C Notes Class D Notes In the Underwriting Agreement, the Underwriters have agreed to purchase the Offered Notes in the amounts set forth above, subject to the terms and conditions set forth therein. The Issuer has been advised by Prudential Securities, as the representative of the Underwriters, that the Underwriters propose initially to offer the Notes to the public at the respective public offering prices set forth on the cover page of this Prospectus, and to certain dealers at such price, less a selling concession not in excess of ___% per Class A-1 Note, ___% per Class A-2 Note, ___% per Class A-3 Note, ___% per Class A-4 Note, ___% per Class A-5 Note, ___% per Class B Note, ___% per Class C Note and ___% per Class D Note. The Underwriters may, allow and such dealers may reallow to other dealers, a discount not in excess of ___% per Class A-1 Note, ___% per Class A-2 Note, ___% per Class A-3 Note, ___% per Class A-4 Note, ___% per Class A-5 Note, ___% per Class B Note, ___% per Class C Note and ___% per Class D Note. After the initial public offering, the public offering price and such concessions may be changed. The Underwriters will each represent and agree that: (a) it has not offered or sold, and, prior to the expiration of six months from the Issuance Date, will not offer or sell, any Offered Notes to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for purposes of their business, or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (b) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Offered Notes in, from or otherwise involving the United Kingdom; and (c) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Offered Notes to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or persons to whom such document may otherwise lawfully be issued, distributed or passed on. The Issuer and Copelco Capital, Inc. have agreed to jointly and severally indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Issuer has been advised by the Underwriters that the Underwriters presently intend to make a market in the Offered Notes, as permitted by applicable laws and regulations. The Underwriters are not obligated, however, to make a market in the Offered Notes and any such market making may be discontinued at any time at the sole discretion of the Underwriters. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Offered Notes. In connection with the offering of the Offered Notes, certain Underwriters and selling group members and their respective affiliates may engage in transactions that stabilize, maintain or otherwise affect the market price of the Offered Notes. Such transactions may include stabilization transactions effected in accordance with Rule 104 of Regulation M, pursuant to which such person may bid for or purchase the Offered Notes for the purpose of stabilizing its market price. In addition, Prudential Securities, on behalf of the Underwriters, may impose 51 54 "penalty bids" under contractual arrangements with the Underwriters whereby it may reclaim from an Underwriter (or dealer participating in the offering) for the account of the other Underwriters, the selling concession with respect to the Offered Notes that it distributed in the offering but subsequently purchased for the account of the Underwriters in the open market. Any of the transactions described in this paragraph may result in the maintenance of the price of the Offered Notes at a level above that which might otherwise prevail in the open market. None of the transactions described in this paragraph is required, and, if they are taken, may be discontinued at any time without notice. Prudential Securities is also serving as the placement agent for the Class E Notes and the Residual Notes. EXPERTS The balance sheet of Copelco Capital Funding LLC 99-1 as of February 24, 1999, has been included herein and in the Registration Statement in reliance upon the report of KPMG LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in auditing and accounting. LEGAL MATTERS Certain legal matters relating to the Notes will be passed upon for Copelco Capital, Inc., the Servicer and the Issuer by Spencer N. Lempert, General Counsel of Copelco Financial Services Group, Inc., and for Copelco Capital, the Issuer and the Underwriters by Dewey Ballantine LLP, New York, New York. RATING OF THE OFFERED NOTES It is a condition to the issuance of the Offered Notes that the Class A-1 Notes be rated at least "P-1", "D-1+" and "F1+/AAA" , that the Class A-2, A-3, A-4 and A-5 Notes be rated at least "Aaa", "AAA" and "AAA", that the Class B Notes be rated at least "Aa2", "AA" and "AA", that the Class C Notes be rated at least "A2", "A" and "A" and that the Class D Notes be rated at least "Baa2", "BBB" and "BBB" by Moody's Investors Service ("Moody's"), Duff & Phelps Credit Ratings Co. ("DCR") and Fitch IBCA, Inc. ("Fitch"), respectively (each a "Rating Agency"). Such rating will reflect only the views of the Rating Agencies and will be based primarily on the amount of subordination, the availability of funds on deposit in the Reserve Account and the value of the Leases and Equipment. The ratings are not a recommendation to purchase, hold or sell the related Offered Notes, inasmuch as such ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any such rating will continue for any period of time or that it will not be lowered or withdrawn entirely by the Rating Agencies if, in its judgment, circumstances so warrant. A revision or withdrawal of such rating may have an adverse affect on the market price of the Offered Notes. The rating of the Offered Notes addresses the likelihood of the timely payment of interest and the ultimate payment of principal on the Offered Notes by the Stated Maturity Date. The rating does not address the rate of Prepayments that may be experienced on the Leases and, therefore, does not address the effect of the rate of Lease Prepayments on the return of principal to the Offered Noteholders. 52 55 INDEX OF TERMS TERM PAGE(S) Additional Lease....................................... 24, 41 Additional Principal................................... 33 Adjusted Lease......................................... 24, 41 Assignment and Servicing Agreement..................... 25 Available Funds........................................ 36 Available Funds Shortfall.............................. 37 Available Reserve Amount............................... 37 Bankruptcy Code........................................ 46 Benefit Plan........................................... 49 Booked Residual Value.................................. 25 Casualty............................................... 35 Casualty Payment....................................... 35 Cede................................................... 28 CEDEL.................................................. 28 Cedel Participants..................................... 29 Class A Initial Principal Amount....................... 31 Class A Noteholders.................................... 28 Class A Notes.......................................... 27 Class A Percentage..................................... 34 Class A Principal Payment.............................. 33 Class A-Stated Maturity Date........................... 32 Class A Target Investor Principal Amount............... 34 Class A-1 Initial Principal Amount..................... 31 Class A-1 Interest Rate................................ 28 Class A-1 Noteholders.................................. 28 Class A-1 Notes........................................ 27 Class A-1 Stated Maturity Date......................... 32 Class A-2 Initial Principal Amount..................... 31 Class A-2 Interest Rate................................ 28 Class A-2 Noteholders.................................. 28 Class A-2 Notes........................................ 27 Class A-2 Stated Maturity Date......................... 32 Class A-3 Initial Principal Amount..................... 31 Class A-3 Interest Rate................................ 28 Class A-3 Noteholders.................................. 28 Class A-3 Notes........................................ 27 Class A-3 Stated Maturity Date......................... 32 Class A-4 Initial Principal Amount..................... 31 Class A-4 Interest Rate................................ 28 Class A-4 Noteholders.................................. 28 Class A-4 Notes........................................ 27 Class A-4 Stated Maturity Date......................... 32 Class A-5 Initial Principal Amount..................... 31 Class A-5 Interest Rate................................ 28 Class A-5 Noteholders.................................. 28 Class A-5 Notes........................................ 27 Class B Floor.......................................... 34 Class B Initial Principal Amount....................... 31 Class B Interest Rate.................................. 28 Class B Noteholders.................................... 28 53 56 Class B Notes.......................................... 27 Class B Percentage..................................... 34 Class B Principal Payment.............................. 33 Class B Stated Maturity Date........................... 32 Class B Target Investor Principal Amount............... 34 Class C Floor.......................................... 34 Class C Initial Principal Amount....................... 31 Class C Interest Rate.................................. 28 Class C Noteholders.................................... 28 Class C Notes.......................................... 27 Class C Percentage..................................... 34 Class C Principal Payment.............................. 33 Class C Stated Maturity Date........................... 32 Class C Target Investor Principal Amount............... 34 Class D Floor.......................................... 35 Class D Initial Principal Amount....................... 31 Class D Interest Rate.................................. 28 Class D Noteholders.................................... 28 Class D Notes.......................................... 27 Class D Percentage..................................... 34 Class D Principal Payment.............................. 33 Class D Stated Maturity Date........................... 32 Class D Target Investor Principal Amount............... 34 Class E Floor.......................................... 35 Class E Initial Principal Amount....................... 31 Class E Interest Rate.................................. 28 Class E Noteholders.................................... 33 Class E Notes.......................................... 27 Class E Percentage..................................... 34 Class E Principal Payment.............................. 34 Class Floors........................................... 34 Class R-1 Notes........................................ 39 Class R-2 Notes........................................ 39 clearing agency........................................ 28 clearing corporation................................... 28 Closing Date........................................... 11 Code................................................... 46 Collection Account..................................... 35 Cooperative............................................ 30 Copelco Capital........................................ 11 Copelco Credit......................................... 20 Copelco Financial...................................... 20 Copelco Leasing........................................ 20 Cost per Copy.......................................... 21 CPR.................................................... 42 Cumulative Loss Amount................................. 35 Cut-Off Date........................................... 11 DCR.................................................... 52 Definitive Notes....................................... 31 Depositaries........................................... 28 Determination Date..................................... 32 Discount Rate.......................................... 31 Discounted Present Value of the Leases................. 31 Discounted Present Value of the Performing Leases...... 32 DTC.................................................... 28 Due Period............................................. 32 54 57 Dun & Bradstreet....................................... 23 Early Lease Termination................................ 24, 25 Eligible Account....................................... 35 Equipment.............................................. 11 Equipment Financing Portion............................ 21 ERISA.................................................. 49 Euroclear.............................................. 28 Euroclear Operator..................................... 30 Euroclear Participants................................. 30 Events of Default...................................... 38 Excess Copy Charge..................................... 21 Fee Per Scan Charges................................... 22 First Union............................................ 50 Fitch.................................................. 52 Fixed Payment.......................................... 21 Group.................................................. 20 HILL................................................... 21 Holders................................................ 31 Indenture.............................................. 27 Indirect Participants.................................. 28 Industry............................................... 30 Initial Principal Amount............................... 27 Interest Accrual Period................................ 32 Interest Payments...................................... 32 Interest Rate.......................................... 28 IRS.................................................... 46 Issuer................................................. 11 Lease Contract......................................... 11 Lease Payment.......................................... 35 Lease Receivables...................................... 11 Leases................................................. 11 Lessee................................................. 11 Lessees................................................ 11 Maintenance Charge..................................... 21 Manager................................................ 26 Moody's................................................ 52 Non-Performing Leases.................................. 11, 32 Non-U.S. Person........................................ 49 Notes.................................................. 27 Offered Noteholders.................................... 28 Offered Notes.......................................... 27 OID.................................................... 47 Origination Divisions.................................. 11 Outstanding Principal Amount........................... 37 Outstanding Principal Amounts.......................... 32 Overcollateralization Balance.......................... 35 Participants........................................... 28 Payment Date........................................... 25 PILL................................................... 21 Plan Asset Regulations................................. 50 Pledged Assets......................................... 12 Principal Payments..................................... 33 Prudential Securities.................................. 50 PTCE................................................... 50 Rating Agency.......................................... 52 Record Date............................................ 32 55 58 Required Payments...................................... 37 Required Reserve Amount................................ 37 Reserve Account........................................ 37 Residual Casualty Payments............................. 36 Residual Notes......................................... 39 Residual Prepayments................................... 36 Residual Realizations.................................. 36 Residual Warranty Payments............................. 36 SBU.................................................... 20 Series Pool............................................ 11 Servicer............................................... 11 Servicer Advance....................................... 38 Servicer Events of Default............................. 40 Servicing Fee.......................................... 25 Statistical Discount Rate.............................. 32 Statistical Discounted Present Value of the Leases..... 32 Substitute Lease....................................... 24, 41 SYSTEMS................................................ 30 Tax Counsel............................................ 46 Termination Payment.................................... 36 Terms and Conditions................................... 30 Transferor............................................. 25 Trustee................................................ 25 U.S. Person............................................ 49 Underwriters........................................... 50 Underwriting Agreement................................. 50 Vendor................................................. 21 Warranty Lease......................................... 24, 25, 41 56 59 $548,701,000 Copelco Capital Funding LLC 99-1 P R O S P E C T U S PRUDENTIAL SECURITIES FIRST UNION CAPITAL MARKETS CORP. Dated March ___, 1999 Until 90 days after the date of this prospectus, all dealers that effect transactions in the Offered Notes, whether or not $13,029,000 ___% Class B participating in this offering, may be required to deliver a Lease-Backed Notes prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. $139,000,000 ___% Class A-1 Lease-Backed Notes $95,000,000 ___% Class A-2 Lease-Backed Notes $110,000,000 ___% Class A-3 Lease-Backed Notes $90,000,000 ___% Class A-4 Lease-Backed Notes $75,613,000 ___% Class A-5 Lease-Backed Notes $10,134,000 ___% Class C Lease-Backed Notes $15,925,000 ___% Class D Lease-Backed Notes 60 PART II - INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions. Registration Fee.................................................. $ 155,000.00 Printing and Engraving Expenses................................... 60,000.00 Trustee's Fees.................................................... 30,000.00 Legal Fees and Expenses........................................... 175,000.00 Blue Sky Fees and Expenses........................................ 15,000.00 Accountants' Fees and Expenses.................................... 35,000.00 Rating Agency Fees................................................ 230,000.00 Miscellaneous Fees................................................ 30,000.00 ================== .................................................................. Total. $ 730,000.00
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Delaware Limited Liability Company Act (Section 18-108) gives Delaware limited liability companies broad powers to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. The Company shall, to the fullest extent permitted by the Act, indemnify and hold harmless, and advance expenses to, each member or manager against any losses, claims, damages or liabilities to which the Indemnified party may become subject in connection with any matter arising from, related to, or in connection with, the Company's business or affairs. Copelco Financial Services Group, Inc. has also purchased liability policies which indemnify the Registrant's [manager(s)] against loss arising from claims by reason of their legal liability for acts as officers and directors, subject to limitations and conditions as set forth in the policies. Pursuant to agreements which the Registrant may enter into with underwriters or agents (forms of which will be included as exhibits to this Registration Statement), officers and directors of the Registrant, and affiliates thereof, may be entitled to indemnification by such underwriters or agents against certain liabilities, including liabilities under the Securities Act of 1933, arising from information which has been or will be furnished to the Registrant by such underwriters or agents that appears in the Registration Statement or any Prospectus. II-1 61 ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS (a) Exhibits 1.1 -- Form of Underwriting Agreement for the Offered Notes. 3.1 -- Certificate of Formation of the Issuer. 3.2 -- Form of Limited Liability Company Agreement of the Issuer 4.1 -- Form of Indenture, including forms of the Notes and certain other related agreements as Exhibits thereto. 5.1 -- Opinion of Dewey Ballantine LLP regarding the securities being registered. 8.1 -- Opinion of Dewey Ballantine LLP regarding the tax treatment of the Notes. 10.1 -- Form of Assignment and Servicing Agreement. 10.2 -- Form of Placement Agent Agreement. 23.1 -- Consent of Dewey Ballantine LLP is included in the opinion filed as Exhibit 5.1 hereto. 23.2 -- Consent of Independent Auditor. 24.1 -- Power of Attorney (Included on Page II-4 hereof). 25.1 -- Statement of Eligibility and Qualification of Trustee (Form T-1). 99.1 -- Computational Materials. 99.2 -- Audited Financial Statements of the Issuer. *To Be Completed by Amendment (b) All financial statements, schedules and historical financial information have been omitted as they are not applicable. ITEM 17. UNDERTAKINGS The undersigned Registrants hereby undertake: (a) That insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of II-2 62 1933 shall be deemed to be part of this Registration Statement as of the time it was declared effective. (c) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 63 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mount Laurel, State of New Jersey, on March 1, 1999. COPELCO CAPITAL FUNDING LLC 99-1, Registrant By: COPELCO MANAGER, INC. as Manager of the Registrant By /s/ Ian J. Berg --------------------- Name: Ian J. Berg Title: Chief Executive Officer and Acting Chief Financial Officer Each person whose signature appears below constitutes and appoints Stephen W. Shippie as his/her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him/her in his/her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Form S-1 and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent or his substitute may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-1 has been signed by the following persons in the capacities indicated on the dates indicated below.
Signature Title Date --------- ----- ---- /s/ Ian J. Berg Chairman of the Board March 1, 1999 - -------------------------------- Director Ian J. Berg /s/ John Hakemian Director March 1, 1999 - -------------------------------- John Hakemian /s/ Tadayuki Seki Director March 1, 1999 - -------------------------------- Tadayuki Seki
II-4 EX-1.1 2 UNDERWRITING AGREEMENT 1 COPELCO CAPITAL FUNDING LLC 99-1 $_________ - _____% Class A-1 Lease-Backed Notes, Series 1999-A $_________ - _____% Class A-2 Lease-Backed Notes, Series 1999-A $_________ - _____% Class A-3 Lease-Backed Notes, Series 1999-A $_________ - _____% Class A-4 Lease-Backed Notes, Series 1999-A $_________ - _____% Class B Lease-Backed Notes, Series 1999-A $_________ - _____% Class C Lease-Backed Notes, Series 1999-A $_________ - _____% Class D Lease-Backed Notes, Series 1999-A UNDERWRITING AGREEMENT PRUDENTIAL SECURITIES INCORPORATED One New York Plaza, 14th Floor New York, New York 10292-2014 FIRST UNION CAPITAL MARKETS CORP. 301 S. College Street One First Union Center, TW 9 Charlotte, NC 28288 Ladies and Gentlemen: Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (the "Issuer") and Copelco Capital, Inc., a corporation organized and existing under the laws of Delaware ("Copelco"), hereby agree with you as follows: Section 1. Issuance and Sale of Notes. The Issuer has authorized the issuance of $___________ (the "Class A-1 Initial Principal Amount") of _____% Class A-1 Lease-Backed Notes, Series 1999-A (the "Class A-1 Notes"); $___________ (the "Class A-2 Initial Principal Amount") of _____% Class A-2 Lease-Backed Notes, Series 1999-A (the "Class A-2 Notes"); $___________ (the "Class A-3 Initial Principal Amount") of _____% Class A-3 Lease-Backed Notes, Series 1999-A (the "Class A-3 Notes"); $___________ (the "Class A-4 Initial Principal Amount"; together with the Class A-1 Initial Principal Amount, Class A-2 Initial Principal Amount and Class A-3 Initial Principal Amount, the "Class A Initial Principal Amount") of _____% Class A-4 Lease-Backed Notes, Series 1999-A (the "Class A-4 Notes"; together with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the "Class A Notes"); $___________ (the "Class B Initial Principal Amount") of _____% Class B Lease-Backed Notes, Series 1999-A (the "Class B Notes"); $___________ (the "Class C Initial Principal Amount") of _____% Class C Lease-Backed Notes, Series 1999-A (the "Class C Notes"); $___________ (the "Class D Initial Principal Amount") of _____% Class D Lease-Backed Notes, Series 1999-A (the "Class D Notes"; together with the Class A Notes, the 2 Class B Notes and the Class C Notes, the "Offered Notes"); $___________ (the "Class E Initial Principal Amount") of _____% Class E Lease-Backed Notes (the "Class E Notes"); $___________ (the "Class R-1 Initial Principal Amount") of _____% Class R-1 Lease Residual-Backed Notes (the "Class R-1 Notes"); and ___________ (the "Class R-2 Initial Principal Amount"; together with the Class A Initial Principal Amount, the Class B Initial Principal Amount, the Class C Initial Principal Amount, the Class D Initial Principal Amount, the Class E Initial Principal Amount and the Class R-1 Initial Principal Amount, the "Initial Principal Amount") _____% Class R-2 Lease Residual-Backed Notes (the "Class R-2 Notes"; together with the Class E Notes, the Class R-1 Notes and the Offered Notes, the "Notes"). The Notes will be issued pursuant to an Indenture, dated as of March 1, 1999 (the "Indenture"), among the Issuer, Copelco and Manufacturers and Traders Trust Company (the "Trustee"). The Notes are more fully described in the Final Prospectus (as defined below), a copy of which the Issuer is furnishing to you. The Notes will evidence secured debt obligations of the Issuer. The assets of the Issuer will include a pool of primarily business equipment and medical equipment lease contracts, including all payments due thereunder (the "Leases") and certain interests in the underlying equipment (the "Equipment"). Capitalized terms used and not defined herein shall have the meanings specified in the Indenture. The Offered Notes will be sold by the Issuer to you as underwriters in the amounts set forth on Schedule I hereto. The terms which follow, when used in this Underwriting Agreement (the "Agreement"), shall have the meanings indicated: "Effective Date" means each date that the Registration Statement and any post-effective amendment or amendments thereto became or become effective under the Securities Act. "Execution Time" means the date and time that this Agreement is executed and delivered by the parties hereto. "Final Prospectus" means any prospectus delivered to purchasers of the Offered Notes at or before the time of confirmation of their purchases. "Preliminary Prospectus" means any preliminary prospectus included in the Registration Statement, and which, as of the Effective Date, omits Rule 430A Information. "Registration Statement" means the registration statement referred to in the preceding paragraph and any registration statement required to be filed under the Securities Act or rules thereunder, including amendments, incorporated documents, exhibits and financial statements, in the form in which it has or shall become effective and, in the event that any post-effective amendment thereto becomes effective prior to the Issuance Date, shall also mean such registration statement as so amended. Such term shall include Rule 430A Information deemed to be included therein at the Effective Date as provided by Rule 430A. 2 3 "Rule 424" and "Rule 430A" refer to such rules under the Securities Act. "Rule 430A Information" means information with respect to the Offered Notes and the offering thereof permitted, pursuant to Rule 430A, to be omitted from the Registration Statement when it becomes effective. "Underwriters" means Prudential Securities Incorporated and First Union Capital Markets Corp. "Underwriting Information" has the meaning given to such term in Section 8(b) hereof. Section 2. Purchase and Sale of Offered Notes. (a) Subject to the terms and conditions and in reliance upon the covenants, representations and warranties set forth herein, the Underwriters agree to purchase from the Issuer the Class A Initial Principal Amount of the Class A Notes, Class B Initial Principal Amount of the Class B Notes, Class C Initial Principal Amount of the Class C Notes and Class D Initial Principal Amount of the Class D Notes pursuant to the terms of this Agreement on the Issuance Date at the purchase price or prices (the "Purchase Price") set forth on Schedule A attached hereto. (b) The obligations of each of the Underwriters hereunder to purchase the respective Offered Notes of each Class shall be several and not joint. Each Underwriter's obligation shall be to purchase the aggregate principal amount of Offered Notes of the related Class as is indicated with respect to each Underwriter on Schedule A attached hereto. The rights of the Issuer, Copelco and the non-defaulting Underwriter shall be as set forth in Section 13 hereof. (c) It is understood that the Underwriters propose to offer the Offered Notes for sale to the public in the manner set forth in the Final Prospectus. Section 3. Delivery and Payment. (a) Delivery of and payment for the Offered Notes to be purchased by the Underwriters shall be made at the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New York, at 10:00 A.M., New York time, on March __, 1999 (the "Issuance Date"). The Offered Notes shall be registered in the names of the Underwriters against payment by the Underwriters of the Purchase Price therefor, to or upon the order of the Issuer by one or more wire transfers in immediately available funds. Following the Effective Date, at the request of the Underwriters, delivery of one or more global notes (the "Global Notes") representing the Offered Notes shall be made to the respective accounts of the Underwriters against delivery to the Trustee of the originally issued Offered Notes (the date of such delivery being hereinafter referred to as the "Exchange Date"). The Global Notes to be so delivered shall be registered in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"). The interests of beneficial owners of the Offered Notes will be represented by book entries on the records of DTC 3 4 and participating members thereof. Definitive Notes representing the Offered Notes will be available under the circumstances described in the Indenture. Section 4. Representations and Warranties. (a) The Issuer hereby represents and warrants to, and agrees with, the Underwriters as follows: (i) The Issuer meets the requirements for use of Form S-1 under the Securities Act of 1933, as amended (the "Securities Act") and has filed with the Securities and Exchange Commission (the "Commission") a registration statement (Registration No. 333-69983), including the Preliminary Prospectus relating to the Offered Notes, on such Form S-1 for the registration under the Securities Act of the Offered Notes. The Issuer may have filed one or more amendments thereto, including the related Preliminary Prospectus, each of which has previously been furnished to you. The Issuer will file with the Commission either, (A) prior to the effectiveness of such Registration Statement, a further amendment thereto (including the form of Final Prospectus) or, (B) after effectiveness of such Registration Statement, a Final Prospectus in accordance with Rules 430A and 424(b)(1) or (4). In the case of clause (B), the Issuer will include in such Registration Statement, as amended at the Effective Date, all information (other than Rule 430A Information) required by the Securities Act and the rules thereunder to be included with respect to the Offered Notes and the offering thereof. As filed, such amendment and form of Final Prospectus, or such Final Prospectus, shall include all Rule 430A Information and, except to the extent you shall agree in writing to a modification, shall be in all substantive respects in the form furnished to you prior to the Execution Time or, to the extent not completed at the Execution Time, shall contain only such specific additional information and other changes (beyond that contained in the latest Preliminary Prospectus which has previously been furnished to you) as the Issuer has advised you, prior to the Execution Time, will be included or made therein. (ii) On the Effective Date, the Registration Statement did or will comply in all material respects with the applicable requirements of the Securities Act and the rules thereunder; on the Effective Date and when the Final Prospectus is first filed (if required) in accordance with Rule 424(b) and on the Issuance Date, the Final Prospectus will comply in all material respects with the applicable requirements of the Securities Act and the rules thereunder; on the Effective Date, the Registration Statement did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and the Final Prospectus, as of its date and on the Issuance Date, did not or will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Issuer makes no representations or warranties as to the Underwriting Information. 4 5 (iii) This Agreement has been duly authorized, executed and delivered by the Issuer and constitutes a legal, valid and binding agreement of the Issuer enforceable in accordance with its terms, except that the provisions hereof relating to indemnification of the Underwriters may be subject to limitations of public policy. (iv) Each of the Indenture and the Assignment and Servicing Agreement (the "Assignment and Servicing Agreement") has been duly authorized by the Issuer and, when executed and delivered by the Issuer, will constitute the legal, valid and binding obligation of the Issuer, enforceable in accordance with its terms. (v) The issuance of the Offered Notes has been duly authorized by the Issuer and, when duly and validly executed, authenticated and delivered in accordance with the Indenture and this Agreement, will be the legal, valid and binding obligations of the Issuer, enforceable in accordance with their terms, and entitled to the benefits of the Indenture. (vi) The issue and sale of the Offered Notes and the performance of this Agreement, the Indenture and the Assignment and Servicing Agreement by the Issuer will (A) not conflict with or result in a breach of, and will not constitute a default under any of the provisions of, its certificate of incorporation or any law, governmental rule or regulation, or any judgment, decree or order binding on the Issuer or its properties, or any of the provisions of any indenture, mortgage, deed of trust, contract or other agreement or instrument to which the Issuer is a party or by which it is bound or (B) not result in the creation or imposition of any adverse claim and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Offered Notes or the consummation by the Issuer of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, registrations or qualifications as may be required under the Securities Act and under state securities or Blue Sky laws in connection with the purchase and distribution of the Offered Notes by the Underwriters. (vii) The Issuer is not, and will not, as of the Issuance Date, be an "investment company" under the Investment Company Act of 1940, as amended (the "1940 Act"). (b) Copelco hereby represents and warrants to and agrees with the Underwriters as follows: (i) This Agreement has been duly authorized, executed and delivered, the Assignment and Servicing Agreement has been duly authorized, and this Agreement constitutes, and when executed and delivered, the Assignment and Servicing Agreement will constitute the legal, valid and binding obligations of Copelco, enforceable in accordance with their respective terms, except that the 5 6 provisions hereof relating to indemnification of the Underwriters may be subject to limitations of public policy. (ii) The performance of this Agreement by Copelco, and the consummation by Copelco of the transactions herein contemplated, will (A) not conflict with or result in a breach of, and will not constitute a default under any of the provisions of its certificate of incorporation or by-laws or any law, governmental rule or regulation, or any judgment, decree or order binding on Copelco or its properties, or any of the provisions of any indenture, mortgage, deed of trust, contract or other agreement or instrument to which Copelco is a party or by which it is bound or (B) not result in the creation or imposition of any Adverse Claim and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the consummation by Copelco of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, registrations or qualifications as may be required under the Securities Act and under state securities or Blue Sky laws in connection with the purchase and distribution of the Offered Notes by the Underwriters. As used herein, "Adverse Claim" means a lien, pledge, security interest or other charge or encumbrance. (iii) Copelco hereby makes and repeats the representations and warranties set forth in Section 2 of the Assignment and Servicing Agreement. Such representations and warranties are incorporated by reference in this Section 4(b), and the Underwriters may rely thereon as if such representations and warranties were fully set forth herein. (iv) Copelco represents and warrants it has delivered to the Underwriters complete and correct copies of its balance sheet and statements of income and retained earnings reported by Copelco Capital Inc. and Copelco Financial Services Group, Inc. (the "Copelco Entities") for the year ended December 31, 1997 and the period ended September 30, 1998. Except as set forth in or contemplated in the Registration Statement and the Final Prospectus, there has been no material adverse change in the condition (financial or otherwise) of the Copelco Entities since September 30, 1998. (v) Any taxes, fees and other governmental charges arising from the execution and delivery of this Agreement, the Assignment and Servicing Agreement and the Indenture and in connection with the execution, delivery and issuance of the Offered Notes and with the transfer of the Leases and the Equipment, have been paid or will be paid by the Issuer. (vi) KMPG Peat Marwick is an independent public accountant with respect to the Copelco Entities and the Issuer within the meaning of the Securities Act and the rules and regulations promulgated thereunder. (vii) Each of the Issuer and Copelco represents and warrants to you that there is no pending or threatened action, suit or proceeding against or 6 7 affecting it in any court or tribunal or before any arbitrator of any kind or before or by any governmental authority (i) asserting the invalidity of this Agreement, the Assignment and Servicing Agreement, the Indenture or the Offered Notes, (ii) seeking to prevent the issuance of the Offered Notes or the consummation of any of the transactions contemplated by this Agreement, the Assignment and Servicing Agreement or the Indenture or (iii) seeking any determination or ruling that might materially and adversely affect (A) its performance of its obligations under this Agreement, the Assignment and Servicing Agreement or the Indenture (as applicable) or (B) the validity or enforceability of this Agreement, the Assignment and Servicing Agreement, the Indenture or the Offered Notes. Section 5. Covenants of the Issuer and Copelco. The Issuer and Copelco, jointly and severally, hereby covenant and agree with you as follows: (a) To use best efforts to cause the Registration Statement, and any amendment thereto, if not effective as of the date hereof, to become effective. If the Registration Statement has become or becomes effective pursuant to Rule 430A, or filing of the Final Prospectus is otherwise required under Rule 424(b), the Issuer will file the Final Prospectus, properly completed, pursuant to Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Underwriters of such timely filing. The Issuer will promptly advise the Underwriters (i) when the Registration Statement shall have become effective, (ii) when any amendment thereof shall have become effective, (iii) of any request by the Commission for any amendment or supplement of the Registration Statement or the Final Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose, and (v) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Offered Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Issuer will not file any amendment of the Registration Statement or supplement to the Final Prospectus to which the Underwriters reasonably object. The Issuer and Copelco will use their best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (b) If, at any time when a Final Prospectus relating to the Offered Notes is required to be delivered under the Securities Act, any event occurs as a result of which the Final Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or, if it shall be necessary to supplement such Final Prospectus to comply with the Securities Act or the rules thereunder, the Issuer promptly will prepare and file with the Commission, subject to paragraph (a) of this Section 5, a supplement which will correct such statement or omission or an amendment which will effect such compliance. (c) As soon as practicable, the Issuer will make generally available to Offered Noteholders and to the Underwriters an earnings statement or statements of the 7 8 Issuer which will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act. (d) The Issuer will furnish to the Underwriters and counsel for the Underwriters, without charge, a signed copy of the Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus by any of the Underwriters or any dealer may be required by the Securities Act, as many copies of each Final Prospectus relating to the Offered Notes and any supplement thereto as the Underwriters may reasonably request. (e) Copelco and the Issuer will take all reasonable actions requested by the Underwriters to arrange for the qualification of the Offered Notes for sale under the laws of such jurisdictions within the United States or as necessary to qualify for DTC and as the Underwriters may designate, will maintain such qualifications in effect so long as required for the completion of the distribution of the Offered Notes; provided, in connection therewith the Issuer shall not be required to qualify as a foreign corporation doing business in any jurisdiction. (f) For so long as the Offered Notes are outstanding, the Issuer and Copelco shall deliver to the Underwriters by first-class mail and as soon as practicable a copy of all reports and notices delivered to the Trustee or the Offered Noteholders under the Indenture. (g) For so long as the Offered Notes are outstanding, the Issuer and Copelco will furnish to the Underwriters as soon as practicable after filing any other information concerning the Issuer or Copelco filed with any government or regulatory authority which is otherwise publicly available. (h) To the extent, if any, that any rating provided with respect to the Notes set forth in Section 6(g) hereof is conditional upon the furnishing of documents reasonably available to the Issuer or Copelco, the Issuer and Copelco shall furnish such documents. Section 6. Conditions of Underwriters' Obligation. The obligations of the Underwriters to purchase and pay for the Offered Notes on the Issuance Date shall be subject to the accuracy in all material respects of the representations and warranties of the Issuer and Copelco herein, in the Assignment and Servicing Agreement and in the Indenture, to the performance by the Issuer and Copelco in all material respects of their obligations hereunder and to the following additional conditions: (a) The Issuer and Copelco shall each have delivered a certificate (an "Officer's Certificate"), dated the Issuance Date, signed by its Vice President and its Chief Financial Officer, to the effect that: (i) the representations and warranties made by the Issuer or Copelco (as the case may be) in this Agreement, the Indenture and the Assignment and Servicing Agreement are true and correct in all material respects 8 9 at and as of the date of such Officer's Certificate as if made on and as of such date (except to the extent they expressly relate to an earlier date); (ii) the Issuer or Copelco (as the case may be) has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under this Agreement, the Indenture and the Assignment and Servicing Agreement at or prior to the date of such Officer's Certificate; (iii) nothing has come to such officer's attention that would lead him to believe that the Final Prospectus contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (iv) such officer is not aware of (A) any request of the Commission for further amendment of the Registration Statement or the Final Prospectus for any additional information, (B) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation or threatening of any proceeding for that purpose or (C) any notification with respect to the suspension of the qualification of the Offered Notes for sale in any jurisdiction or the threatening of any proceeding for that purpose. (b) You shall have received from Spencer N. Lempert, Esq., a favorable opinion (subject to customary and usual qualifications) with respect to Copelco and the Issuer, dated the Issuance Date and reasonably satisfactory in form and substance to the Underwriters and their counsel with respect to, or to the effect that: (i) the due formation and qualification of each of the Issuer and Copelco and that the Issuer and Copelco, as applicable, have the corporate power and authority to perform this Agreement, the Assignment and Servicing Agreement, the Indenture and the Placement Agreement (the "Transaction Documents") and the transactions contemplated herein and therein; (ii) the due authorization, execution, delivery and enforceability of this Agreement and the other Transaction Documents as applicable, by the Issuer and Copelco; (iii) each of this Agreement and the other Transaction Documents are the legal, valid and binding obligation of the Issuer and Copelco, as applicable, enforceable against each of them in accordance with its terms (subject to customary exceptions relating to bankruptcy and laws affecting creditors' rights); (iv) the Offered Notes have been duly authorized, executed and delivered by the Issuer and constitute the legal, valid and binding obligations of the Issuer, enforceable in accordance with their terms (subject to customary exceptions as to bankruptcy and laws affecting creditors' rights) and are entitled to the benefits of the Indenture; (v) the issuance and sale of the Offered Notes by the Issuer, the performance of this Agreement by the Issuer and Copelco and the compliance by the Issuer and Copelco with the terms of the Transaction Documents, as applicable, and the consummation of the transactions contemplated herein and therein will not conflict with the organizational documents of the Issuer or Copelco, or to the best of such counsel's knowledge, any other contracts to which the Issuer or Copelco is a party or by which either of them is bound; (vi) to the best of such counsel's knowledge, there is no legal or governmental proceeding threatened or pending against the Issuer or Copelco 9 10 which would have a material adverse effect on the issuance of the Offered Notes; (vii) in the event a court disregarded the intent of the parties and characterized the transfers as a pledge of collateral, the Assignment and Servicing Agreement and accompanying documentation creates a valid security interest in the Leases and the Equipment (or interests therein) under applicable law; (viii) assuming no prior financing statements covering the Leases are in effect based on a review of certain UCC searches, that financing statements covering the Leases and naming (A) the Issuer as secured party and Copelco as debtor and (B) the Issuer as debtor and the Trustee as secured party are being filed in the appropriate filing offices of the State of New Jersey, and assuming that the Trustee has taken possession of the Leases, the Trustee has a first priority perfected security interest in all right, title and interest of Copelco and the Issuer in the Leases; and (ix) on the Issuance Date the Registration Statement is effective, and, that to the best of such counsel's knowledge no stop order suspending the effectiveness of the Registration Statement has been issued or is threatened, and that although such counsel is not passing on the factual accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus, nothing came to such counsel's attention that leads such counsel to believe that either the Registration Statement or the Prospectus (as of the Effective Date or the date of the Prospectus) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made not misleading. In rendering such opinion, counsel may rely, to the extent deemed proper and as stated therein, as to matters of fact on certificates of responsible officers of the Issuer or Copelco and public officials and as to matters of state law of jurisdictions other than the jurisdictions in which such counsel is admitted to practice, on opinions of local counsel satisfactory to the Underwriters. (c) The Underwriters shall have received from Dewey Ballantine LLP, special counsel for the Underwriters, such opinion or opinions, dated the Issuance Date, with respect to the validity of the Offered Notes, the Registration Statement, the Final Prospectus, true sale, nonconsolidation and other related matters as the Underwriters may require. (d) At the Execution Time and at the Issuance Date, KMPG-Peat Marwick shall have furnished to the Underwriters a letter or letters, dated the date of this Agreement and the Issuance Date, respectively, in form and substance satisfactory to the Underwriters. (e) The Class A-1 Notes shall have been rated at least "P-1", "D-1+", and "F1+", that the Class A-2, A-3 and A-4 notes be rated at least "Aaa", "AAA", and "AAA", that the Class B Notes be rated at least "Aa2", "AA", and "AA", that the Class C Notes be rated at least "A2", "A", and "A", and that the Class D Notes be rated at least "Baa2", "BBB", and "BBB" by Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps Credit Ratings Co. ("DCR"), and Fitch IBCA, Inc. ("Fitch"), respectively, which ratings shall not have been reduced or withdrawn as evidenced by the Officer's Certificate referred to in Section 6(b). 10 11 (f) Counsel to the Trustee shall have delivered a favorable opinion (subject to customary and usual exceptions), dated the Issuance Date, as the case may be, and satisfactory in form and substance to the Underwriters and counsel for the Underwriters and to the Issuer and Copelco and their counsel with respect to, or to the effect that: (i) the due incorporation and valid existence of the Trustee, (ii) the due authorization, execution and delivery by the Trustee of the Indenture, (iii) the Indenture is the legal, valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms (subject to customary and usual exceptions) and (iv) the execution, delivery and performance of the Indenture will not conflict with the Trustee's organizational documents. (g) The Underwriters shall have received the approval of each of their respective investment committees with respect to the execution, delivery and performance of this Agreement. (h) All proceedings in connection with the transactions contemplated by this Agreement and all documents incident hereto shall be reasonably satisfactory in form and substance to you, and your special counsel shall have received such other information, certificates and documents as you or they may reasonably request. Section 7. Reimbursement of Expenses. In the event that (x) no closing of the sale of the Offered Notes occurs by the Issuance Date through no fault of the Issuer or Copelco or because the conditions set forth in Sections 6(c), 6(d), 6(e), 6(f) and 6(g) have not been met, or (y) the Underwriters terminate the engagement pursuant to Section 10 or because any conditions precedent in Section 6 (other than Section 6(d)) have not been fulfilled, then the Issuer and Copelco's liability to the Underwriters shall be limited to the reimbursement of the Underwriters' expenses incurred through the date of termination for its reasonable out-of-pocket and incidental expenses. In addition, whether or not the Offered Notes are issued or sold: (a) The Issuer or Copelco shall pay the reasonable fees and expenses associated with the transactions contemplated hereby not paid by the Underwriters in accordance with the provisions of Section 7(b), including, without limitation, the following fees and expenses: (i) Rating Agency fees payable with respect to their ratings of the Notes; (ii) fees charged by the firm of independent public accountants referred to in Section 6(e); (iii) filing fees in connection with the transactions contemplated hereby, including, but not limited to, the Commission; (iv) fees and expenses of counsel to the Underwriters; (v) Trustee's fees and fees of counsel to the Trustee; 11 12 (vi) the costs and expenses of printing the Registration Statement and the Prospectus; (vii) the costs of printing or reproducing this Agreement, the Blue Sky Survey and any other documents in connection with the offer, sale and delivery of the Offered Notes; (viii) all expenses in connection with the qualification of the Offered Notes under state securities laws as provided in section 4(a)(vi), including the fees and disbursements of counsel in connection with the Blue Sky Survey; (ix) the cost of preparing the Offered Notes; (x) the cost or expenses of any transfer agent or registrar; and (xi) all other costs and expenses incident to the performance of their obligations hereunder which are not otherwise specifically provided for in this Section 7; provided, however, that Copelco does not hereby waive any rights to reimbursement from the Underwriters in the event of any of the Underwriters' failure to perform in accordance with this Agreement. (b) It is understood and agreed that, except as provided in Sections 8 and 9, the Underwriters will pay securities transfer taxes on the resale of any of the Offered Notes by them, and any advertising expenses connected with any offers they may make. Section 8. Indemnification and Contribution. (a) The Issuer and Copelco, jointly and severally, will indemnify and hold harmless each Underwriter, the officer's and directors of each Underwriter, and each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages or liabilities, joint or several, to which such Underwriter or any such controlling person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or is based upon (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Final Prospectus, or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading, and will promptly reimburse each such Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating, preparing to defend or defending, or appearing as a third-party witness in connection with, any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Issuer and Copelco shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement or the Final Prospectus or any such amendment or supplement, in reliance upon and in conformity with the Underwriting Information (defined below). The 12 13 foregoing indemnity agreement is in addition to any liability which each of the Issuer and Copelco may otherwise have to you or any person who controls you. (b) Each Underwriter agrees severally, and not jointly, to indemnify and hold harmless the Issuer and Copelco against any losses, claims, damages or liabilities to which the Issuer or Copelco may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Final Prospectus, or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement or the Final Prospectus or any such amendment or supplement, in reliance upon and in conformity with written information furnished to the Issuer or Copelco by or on behalf of such Underwriter expressly for use therein and provided that such written information was not based upon Company-Provided Information (as defined herein); and will reimburse the Issuer or Copelco for any legal or other expenses reasonably incurred by the Issuer or Copelco in connection with the investigating, preparing to defend or defending, or appearing as a third-party witness in connection with, any such loss, claim, damage, liability or action as such expenses are incurred. The Issuer and Copelco acknowledge that the statements set forth in the last paragraph of the cover page and under the heading "Underwriting" in the Registration Statement, the Preliminary Prospectus and the Final Prospectus constitute the only information furnished in writing by or on behalf of the Underwriters for inclusion in the Registration Statement, the Preliminary Prospectus or the Final Prospectus (the "Underwriting Information"), and each of you confirm that such statements are correct. The foregoing indemnity agreement is in addition to any liability which you may otherwise have to each of the Issuer and Copelco. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the claim or commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by counsel that representation of such indemnified party and the indemnifying party may be inappropriate under applicable standards of professional conduct due to actual or potential differing interests between them, the indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. It is understood that 13 14 the indemnifying party shall, in connection with any such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys together with appropriate local counsel at any time from all indemnified parties not having actual or potential differing interests with any other indemnified party. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to appoint counsel to defend such action and approval by the indemnified party of such counsel, the indemnifying party will not be liable for any settlement entered into without its consent and will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). Notwithstanding the immediately preceding sentence and the first sentence of this paragraph, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. (d) You agree to deliver to the Issuer or Copelco no later than the date on which the Prospectus Supplement is required to be filed pursuant to Rule 424 with a copy of its Derived Information (defined below) for filing with the Commission on Form 8-K. (e) You agree, assuming all Company-Provided Information (defined below) is accurate and complete in all material respects, to indemnify and hold harmless the Issuer and Copelco against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in the Derived Information provided by you, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by him, her or it in connection with investigating or defending or preparing to defend any such loss, claim, damage, liability or action as such expenses are incurred. Your obligations under this Section 8(e) shall be in addition to any liability which you may otherwise have. 14 15 (f) Each of the Issuer and Copelco agrees to indemnify and hold harmless the Underwriters, each of the Underwriters' officers and directors and each person who controls the Underwriters within the meaning of Section 15 of the 1933 Act against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in the Company-Provided Information provided by the Issuer or Copelco, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by him, her or it in connection with investigating or defending or preparing to defend any such loss, claim, damage, liability or action as such expenses are incurred. Your obligation under this Section 8(f) shall be in addition to any liability which you may otherwise have. The procedures set forth in Section 8(c) shall be equally applicable to Sections 8(e) and 8(f). (g) For purposes of this Section 8, the term Derived Information means such portion, if any, of the information delivered to the Issuer or Copelco by the Underwriters pursuant to Section 8(d) for filing with the Commission on Form 8-K as: (i) is not contained in the Final Prospectus without taking into account information incorporated therein by reference; (ii) does not constitute Company-Provided Information; and (iii) is of the type of information defined as Collateral Term Sheets, Structural Term Sheets or Computational Materials (as such terms are interpreted in the No-Action Letters). "Company-Provided Information" means any computer tape furnished to the Underwriters by the Company concerning the Leases or any other information furnished by the Company to the Underwriters that is relied on or is reasonably anticipated by the parties hereto to be relied on by the Underwriters in the course of the Underwriters' preparation of its Derived Information or the written information to be included in the Final Prospectus or Preliminary Prospectus by the Underwriters as set forth in Section 8(b) herein. The terms "Collateral Term Sheet" and "Structural Term Sheet" shall have the respective meanings assigned to them in the February 13, 1995 letter (the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public Securities Association (which letter, and the SEC staff's response thereto, were publicly available February 17, 1995). The term "Collateral Term Sheet" as used herein includes any subsequent Collateral Term Sheet that reflects a substantive change in the information presented. The term "Computational Materials" has the meaning assigned to it in the 15 16 May 17, 1994 letter (the "Kidder letter" and together with the PSA Letter, the "No-Action Letters") of Brown & Wood on behalf of Kidder, Peabody & Co., Inc. (which letter, and the SEC staff's response thereto, were publicly available May 20, 1994). (h) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Issuer and Copelco on the one hand and the Underwriters on the other from the offering of the Offered Notes. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Issuer or Copelco on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Issuer or Copelco on the one hand and the Underwriters on the other shall be deemed to be in the same proportion that the total net proceeds from the offering (before deducting expenses) received by the Issuer and Copelco bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Final Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer or Copelco on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuer, Copelco and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (h) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (h). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this subsection (h) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending, or appearing as a third-party witness in connection with, any such action or claim. Notwithstanding the provisions of this subsection (h), neither of the Underwriters shall be required to contribute any amount in excess of the underwriting discount as set forth on the cover page of the Prospectus paid to the respective Underwriter. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 16 17 (i) The obligations of the Issuer and Copelco under this Section 8 shall be in addition to any liability which the Issuer or Copelco may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any of the Underwriters within the meaning of the Securities Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Issuer and Copelco and to each person, if any, who controls the Issuer or Copelco within the meaning of the Securities Act. Section 9. Survival. The respective representations, warranties and agreements of the Issuer, Copelco and the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, notwithstanding any investigation heretofore or hereafter made by or on behalf of the Issuer, Copelco or the Underwriters, and such representations, warranties and agreements made by the Issuer and Copelco shall survive the delivery and payment for the Offered Notes. The provisions of Sections 7 and 8 shall survive the termination or cancellation of this Agreement. Section 10. Termination. (a) This Agreement may be terminated by you in your absolute discretion at any time upon the giving of notice at any time prior to the Issuance Date: (i) if there has been any material adverse change in the condition, financial or otherwise, of Copelco or the Issuer, or in the earnings, business affairs or business prospects of Copelco or the Issuer, whether or not arising in the ordinary course of business, or (ii) if there has occurred any outbreak or escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it, in your reasonable judgment, impracticable to market the Offered Notes or enforce contracts for the sale of the Offered Notes, or (iii) if trading generally on either the American Stock Exchange or the New York Stock Exchange has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or (iv) if a banking moratorium has been declared by either federal or New York authorities. In the event of any such termination, no party will have any liability to any other party hereto, except as otherwise provided in Section 7 or 8 hereof. (b) This Agreement may not be terminated by the Issuer or Copelco without the written consent of the Underwriters, except in accordance with law. (c) Notwithstanding anything herein to the contrary, in the event the Issuer or Copelco does not perform any obligation under this Agreement or any representation and warranty hereunder is incomplete or inaccurate in any material respect, this Agreement and all of the Underwriters' obligations hereunder may be immediately cancelled by the Underwriters by notice thereof to the Issuer or Copelco. Any such cancellation shall be without liability of any party to any other party except that the provisions of Sections 8 and 9 hereof shall survive any such cancellation. 17 18 Section 11. Notices. All communications provided for or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered to or mailed by certified or registered mail, postage prepaid, or transmitted by telex or telegraph and confirmed by a similar mailed writing, if to you, addressed to you, at the addresses first stated in this Agreement, or to such other address as you may designate in writing to the Issuer and Copelco; if to Copelco, addressed to Copelco at East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey 08054-5400, if to the Issuer, addressed to Copelco at East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey 08054-5400, or such other address as Copelco or the Issuer may have designated in writing to you. Section 12. Successors. This Agreement will inure to the benefit of and be binding upon the Issuer and Copelco and their successors and assigns and the Underwriters and their respective successors and assigns. Section 13. Default by One of the Underwriters. If one of the Underwriters shall fail on the Closing Date to purchase the Class A Notes, Class B Notes, Class C Notes or Class D Notes, as the case may be, which it is obligated to purchase hereunder (the "Defaulted Notes"), the remaining Underwriter(s) (the "Non-Defaulting Underwriter(s)") shall have the right, but not the obligation, within one (1) Business Day thereafter, to make arrangements to purchase all, but not less than all, of the Defaulted Notes upon the terms herein set forth; if, however, the Non-Defaulting Underwriter(s) shall not have completed such arrangements within such one (1) Business Day period, then this Agreement shall terminate without liability on the part of the Non-Defaulting Underwriter(s). No action taken pursuant to this Section 13 shall relieve the defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, any of the Non-Defaulting Underwriters or the Company shall have the right to postpone the Closing Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. Section 14. Entire Agreement. This Agreement and the documents referred to herein and to be delivered pursuant hereto constitute the entire agreement between the parties pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. Section 15. Governing Law. (a) THIS AGREEMENT IS TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK. 18 19 (b) THE ISSUER AND COPELCO HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 11 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U. S. MAILS, POSTAGE PREPAID. THE ISSUER AND COPELCO HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE ISSUER OR COPELCO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION. (c) THE ISSUER AND COPELCO HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. Section 16. Counterparts. This Agreement may be executed in two or more counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. Section 17. Miscellaneous. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. If you are in agreement with the foregoing, please sign a counterpart hereof and return the same to the Issuer or Copelco, whereupon this Agreement shall become a binding agreement between the Underwriters, and the Issuer and Copelco. 19 20 Very truly yours, COPELCO CAPITAL, INC. By:________________________________ Name: Title: COPELCO CAPITAL FUNDING LLC 99-1 By:________________________________ as manager By:________________________________ Name: Title: The foregoing Agreement is hereby accepted and entered into as of the date hereof. FIRST UNION CAPITAL MARKETS CORP. By:________________________________ Name: Title: PRUDENTIAL SECURITIES INCORPORATED By:________________________________ Name: Title: [Signature Page to the Underwriting Agreement] 21 SCHEDULE A All Class A Notes, Class B Notes, Class C Notes and Class D Notes will be purchased by Prudential Securities Incorporated.
Principal Amount Purchase Price ---------------- -------------- Class A-1 Notes ____________ ____________ Class A-2 Notes ____________ ____________ Class A-3 Notes ____________ ____________ Class A-4 Notes ____________ ____________ Class B Notes ____________ ____________ Class C Notes ____________ ____________ Class D Notes ____________ ____________
EX-3.1 3 CERTIFICATE OF FORMATION 1 CERTIFICATE OF FORMATION OF COPELCO CAPITAL FUNDING LLC 99-1 1. The name of the limited liability company is Copelco Capital Funding LLC 99-1 (the "LLC"). 2. The address of its registered office in the State of Delaware is Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805. The name of its registered agent at such address is The Corporation Service Company. 3. This Certificate of Formation shall be effective as of December 29, 1998. 4. The period of duration of the LLC is perpetual. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Copelco Capital Funding LLC 99-1 this 29th day of December, 1998. ________________________________ Ian J. Berg Authorized Signatory EX-3.2 4 LIMITED LIABILITY COMPANY AGREEMENT 1 Exhibit 3.2 LIMITED LIABILITY COMPANY AGREEMENT OF COPELCO CAPITAL FUNDING LLC 99-1 This Limited Liability Company Agreement, dated as of February __, 1999, is adopted by Copelco Capital, Inc., a Delaware corporation ("COPELCO"), and Copelco Manager, Inc., a Delaware corporation ("Copelco Manager"), as the Members (the "Members"), and Copelco Manager (in such capacity, the "Manager"), acting as the initial Manager. WHEREAS, the Members and the Manager desire to form a limited liability company pursuant to the terms hereof; NOW, THEREFORE, the Members and the Manager in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby covenant and agree as follows: ARTICLE I DEFINITIONS Section 1.1. Defined Terms. "Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Sections 18-101 et seq., as amended from time to time. "Affiliate" when used with respect to a Person shall mean any other Person controlling, controlled by, or under common control with, such Person. "Agreement" shall mean this Limited Liability Company Agreement, as the same may be amended, supplemented or otherwise modified from time to time. Assignment and Servicing Agreement" shall mean that certain Assignment and Servicing Agreement dated as of March 1, 1999 between COPELCO and the Company. "Associate" shall mean, with respect to the definition of Independent Person, (1) a corporation or organization of which such Independent Person is an officer, director, member or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities, (2) any trust or other estate in which an Independent Person serves as trustee or in a similar capacity, or (3) any relative or spouse of an Independent Person, or any relative of such spouse, who has the same home as an Independent Person. 2 "Capital Contributions" shall mean the amount of cash and the fair market value of property (as determined by the Manager and net of any liabilities to which such property is subject or which is deemed assumed by the Company) contributed to the Company by a Member (or the predecessor holder of the Interest of such Member). "Company" shall mean the limited liability company formed hereby. "COPELCO" shall have the meaning set forth in the preamble to this Agreement. "Dissolution and Termination" shall be deemed to have occurred upon the earlier of the adoption of a plan of liquidation by the Manager and the Members in accordance with this Agreement or the effective date of dissolution in accordance with the Act. "Indemnified Party" means the Members, the Manager, any officer, agent, shareholder, director, employee or incorporator of the Members or the Manager, or any officer, manager, employee, organizer or agent of the Company. "Indenture" shall mean that certain Indenture dated as of March 1, 1999 between the Company, COPELCO and the Trustee. "Independent Director" shall mean a director of the Manager, not less than two (2) in number, who shall not be, and for the continuation of his or her service as Independent Director, is not: (1) a member, stockholder, director, officer, employee, Affiliate, Associate, customer or supplier of, or a Person that has received any benefit in any form whatever from, the Company or any of its Affiliates or Associates, (2) a Person owning beneficially, directly or indirectly, any interest in the Company, or a stockholder, director, officer, employee, Affiliate, Associate, customer or supplier thereof, or a Person that has received any direct economic benefit in any form whatever from, or a Person that has provided any service in any form whatever to, such beneficial owner or any of such beneficial owner's Affiliates or Associates; provided, however, that no Person shall be excluded from qualifying as an Independent Person solely by reason of serving as a director or manager of one or more other Affiliates of COPELCO that are special purpose, bankruptcy remote entities. "Insolvency Event" shall mean with respect to a Member: (i) the entry of a decree or order by a court or agency for a receiver or liquidator for such Member, in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of such Member's affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; (ii) the consent by such Member to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to such Member or of or relating to substantially all of such Member's property; or (iii) such Member shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage 2 3 of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations. "Interest" shall mean the Members' ownership interest in the Company. "Manager" shall initially have the meaning set forth in the preamble to this Agreement, and thereafter, as applicable, shall mean the Person selected by the Members pursuant to Section 5.1 as the manager) of the Company. "Members" shall initially have the meaning set forth in the preamble to this Agreement. Thereafter, "Member" shall mean a Person admitted as a member of the Company as provided under Section 18-301 of the Act. "Net Cash Flow" shall mean, as of any date, any and all amounts received by the Company on or before such date (other than Capital Contributions), less (i) amounts previously distributed under Section 4.1, (ii) unpaid costs and accrued expenses pursuant to Section 4.2 and (iii) all other cash expenditures made by or on behalf of the Company. "Person" shall mean any individual, partnership, corporation, trust, limited liability company, association, joint venture, estate, governmental entity or other legal person. "Secretary" means the Secretary of State of Delaware. "Trustee" shall mean Manufacturers and Traders Trust Company, as Trustee under the Indenture. ARTICLE II DEFINITIONS Section 2.1 Formation of Limited Liability Company. The Members have resolved to form a limited liability company (the "Company") pursuant to the Act. For that purpose, COPELCO has caused a Certificate of Formation to be executed and filed with the Secretary. Each Person from time to time serving as a Manager or as an agent of the Manager shall be, and hereby is, designated as an "authorized person" within the meaning of Section 18-204 of the Act, and is authorized and empowered to execute certificates to be filed with the Secretary under the Act. The Manager may assign, in writing, titles (including, without limitation, President, Vice President, Secretary and Treasurer) to any such person. Unless the Manager withholds the same in such written assignment of title or the delegation is otherwise precluded by this Agreement, if the title is commonly used for officers of a business corporation formed under the Delaware General Corporation Law, the assignment of such title shall constitute the delegation to such person of the power, authority and duties that are normally associated with that office. Each of the Members shall be, and hereby is, admitted as a member of the Company, and each of the Members' Interest in the Company shall be, and hereby is, 3 4 authorized and issued. The Company is authorized to issue 1000 Membership Interests of which 99 such units have been issued to COPELCO and 1 unit has been issued to Copelco Manager. All Membership Interests in the Company may be evidenced by a certificate of limited liability company interest issued by the Company. Nothing contained herein shall preclude the Members from pledging its Membership Interests to the Trustee. Notwithstanding anything to the contrary herein, no Membership Interest may be issued or transferred to (i) an "employee benefit plan" (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is subject to Title I of ERISA, (ii) a "plan" (within the meaning of Section 4975 (e)(1) of the Internal Revenue Code of 1986, as amended (the "Code")) that is subject to Section 4975 of the Code, or (iii) any person acting on behalf of or investing the assets a plan described in (i) or (ii). Section 2.2. Company Name and Principal Office. The name of the Company shall be "COPELCO CAPITAL Funding LLC 99-1". The Manager shall have the power and authority and is hereby authorized and empowered, at any time to change the name of the Company. The principal business and chief executive office of the Company shall be 700 East Gate Drive, Mount Laurel, New Jersey 08054. The business of the Company may also be conducted at such additional place or places as the Members may determine. Section 2.3. Office of and Agent for Service of Process. The registered office of the Company in Delaware shall be maintained at Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805-1297. The Company's agent for service of process at such address shall be Corporation Service Company. The Manager shall have the power and the authority, and is hereby authorized and empowered to change, at any time and from time to time, the location of such registered office and/or such registered agent upon compliance with the Act. Section 2.4. Term. The Company has been formed and shall commence on the date the Certificate of Formation was filed with the Secretary, namely December 29, 1998. The Company shall have a perpetual existence until cancellation of the Company's Certificate of Formation. Section 2.5. Purpose of Company. The purpose to be conducted or promoted by the Company is to engage in the following activities: (a) to acquire and own lease contracts of healthcare, manufacturing and business equipment (together with all accessories, additions, repairs and parts constituting a part thereof and all accessions thereto, the "Equipment"), the monies due thereunder, the Equipment and interests therein, insurance policies related thereto or rights to receive the proceeds thereof, and other related rights and assets, and beneficial interests in any or all of the foregoing (collectively, "Assets"); (b) to acquire, own, hold, service, lease, re-lease, transfer, sell, assign, pledge, invest, lend and otherwise deal with Assets and interests in Assets, cash, marketable securities, deposit or investment accounts, demand notes and any proceeds or further rights associated with any of the foregoing; (c) to issue and sell notes collateralized by any or all of the Assets pursuant to the Indenture; 4 5 (d) to hold and enjoy all of the rights and privileges as the owner or otherwise of the Assets; (e) to enter into, execute, deliver and perform its obligations under the Assignment and Servicing Agreement, the Indenture or other agreement related to the Assets (the "Securitization Agreements"); (f) to enter into and perform obligations under any intercompany services agreement or management agreement with the Members, the Manager or any affiliate of either thereof; and (g) to engage in any activity and to exercise any powers permitted to limited liability companies under the laws of the State of Delaware that are related or incidental to the foregoing and necessary, convenient or advisable to accomplish the foregoing. The Company shall have the power and authority, and is hereby authorized and empowered, to engage in the activities set forth in this Section 2.5, and activities that are required or convenient for the performance of any of its obligations pursuant to any of the agreements to which it is a party referred to in this Section 2.5 and other activities approved in accordance with Section 5.5. Section 2.6. Addresses of the Members and the Manager. The addresses of the Members and the Manager are set forth in EXHIBIT A. Section 2.7. Exclusivity. No Person may be admitted to the Company as an additional or substitute member, except as expressly set forth in this Agreement. ARTICLE III CAPITAL CONTRIBUTIONS Section 3.1. Contributions. The Members shall contribute concurrently with the execution of this Agreement or has already contributed such amount as is represented by the property described in EXHIBIT B as its Capital Contribution to the Company. Such contribution is an absolute transfer and assignment of such property to the Company, without recourse or warranty. The Manager has not made and shall not make any Capital Contributions to the Company. Section 3.2. Additional Contributions. The Members shall have no obligation to make additional contributions after the date hereof, but may elect to do so from time to time. 5 6 ARTICLE IV DISTRIBUTIONS Section 4.1. Distributions of Net Cash Flow. Distributions of Net Cash Flow shall be made to the Members by the Manager at such times and in such amounts as determined by the Manager, provided such distributions are not prohibited by any agreement to which the Company is a party or the Act. Section 4.2. Expenses of the Company. The Company shall pay all costs and expenses incurred in connection with the Company's affairs (or shall reimburse the Manager for having incurred any such out-of-pocket expenses), including, without limitation, all expenses of conducting the business of the Company. The obligation to pay such costs and expenses shall be limited to the available assets of the Company. ARTICLE V MANAGEMENT Section 5.1. Manager. (a) The Members shall appoint the Manager and hereby appoint the Copelco Manager as the initial Manager. (b) The Manager, without the approval or authorization of any Member, shall have full and exclusive management and control of the business and affairs of the Company, including, without limitation, the power and authority to appoint Persons to act on behalf of the Company, to hire employees and agents and appoint officers to perform such functions as from time to time shall be delegated to such employees, agents, and officers by the Manager and to determine the compensation of any employees, agents and officers of the Company or to delegate some or all compensation decisions to officers or employees of the Company. Except as otherwise expressly provided in this Agreement, in the event that more than one (1) Manager is appointed and acting in such capacity at any time, the Manager shall in all cases act as a group, with a majority vote or majority consent of the Managers then in office required to take any action. The Manager) may adopt such rules and regulations for the conduct of their meetings and the management of the Company not inconsistent with this Agreement and the Act. (c) There shall be no change of Manager without prior confirmation from Moody's Investor Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA, Inc. that such change will not result in either a downgrade or withdrawal of the then current ratings of the outstanding notes issued by the Company. Section 5.2. Resignation. The Manager may resign at any time by giving written notice to the Members; provided that the Manager may resign only after (a) a successor Manager meeting the requirements and having similar restrictions in its certificate or other charter documents as the resigning manager and meets the requirements set forth in Section 5.1 and (b) the successor Manager has executed a counterpart to this Agreement and has assumed the duties and obligations of the resigning Manager. 6 7 Section 5.3. Removal. Any Manager may be removed with or without cause by the Members by written notice to the Manager being removed at any time. Such removal shall become effective only upon acceptance of appointment by a successor Manager meeting the requirements set forth in Section 5.1. Section 5.4. Compensation. The Manager shall receive such compensation as shall from time to time be determined by the Members and shall be reimbursed by the Company for any reasonable out-of-pocket expenses incurred by the Manager on behalf of the Company. Section 5.5. Limitation on Actions. Notwithstanding any other provision of this Agreement and, to the fullest extent permitted by law, any provision of law that otherwise so empowers the Manager, the Manager shall not have the power or authority, and shall not be authorized or empowered, without the prior written unanimous consent of all of the Manager and the prior written consent of all of the Members, and any consent of any third party required under any agreement(s) referred to in Section 2.5, to cause the Company to do any of the following: (a) engage in any business or activity, including, without limitation, the incurrence of any indebtedness, other than described in Section 2.5 or amend, alter, change or repeal Section 2.5 of this Agreement hereto or this Section 5.5; (b) incur any indebtedness, or assume or guaranty any indebtedness of any other entity, other than (i) indebtedness incurred or guaranteed pursuant to transactions set forth in Section 2.5 in connection with the issuance and sale of the notes referred to in Section 2.5(c) and the performance of its obligations under the agreements referred to in Section 2.5; and (ii) indebtedness incurred in the ordinary course of the business of the Company; (c) consolidate, convert or merge with or into any other Person or convey or transfer all or substantially all of its properties and assets to any other Person except as permitted by or in compliance with the provisions of the agreement(s) referred to in Section 2.5; or (d) dissolve or liquidate, in whole or in part, except as set forth in Article IX, file a voluntary petition that commences a case under Title 11 of the United States Code (or any successor statutes) with respect to the Company, or consent to the institution of bankruptcy or insolvency proceedings against the Company or file a petition seeking, or consent to, relief under any applicable Federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or a substantial part of the property of the Company, or make any assignment for the benefit of creditors, or admit in writing its inability to pay the debts of the Company generally as they become due, or take action in furtherance of any of the foregoing. 7 8 Section 5.6. Conduct of Business. The Company shall conduct its affairs in accordance with the following provisions: (a) it shall maintain separate records and books of account from those of any direct or ultimate parent of any Affiliate and any other Person; (b) it shall not commingle the Company's assets with those of any Affiliate; (c) its Members shall hold meetings, as appropriate to authorize all action on behalf of the Company and observe all other organizational formalities of the Company; (d) it shall not become involved in the day to day management of any Affiliate; (e) it shall operate so as not to be substantively consolidated with any Affiliate; (f) it shall maintain its assets separately from those of any Affiliate or any other Person (including through the maintenance of a separate bank account); (g) it shall hold itself out as a separate entity from any Affiliate and shall conduct business in its own name on its own stationary; (h) it shall not act as the agent of any Affiliate; (i) it shall pay its own expenses from its own funds, including fairly allocating expenses shared with an affiliate; (j) it shall maintain adequate capital in light of its contemplated business activities; and (k) it shall ensure that any financial transaction between the Company and any of its affiliates shall be on commercially reasonable terms. Section 5.7. Binding Authority. Only the Manager (and any officers appointed pursuant to Section 2.1 hereof) shall have the power and authority (subject to the terms and conditions of this Agreement) to bind the Company. ARTICLE VI OBLIGATIONS AND/OR RIGHTS OF THE MEMBERS AND THE MANAGER Section 6.1. Liability of the Members and the Manager. Neither the Members nor the Manager shall be personally liable for any of the debts, liabilities, contracts or other 8 9 obligations of the Company solely by reason of being a Members or a Manager of the Company. Section 6.2. No Management Responsibility. The Members shall not take part in the management of the business or the affairs, or transact any business for, the Company, except to the extent that its approval or consent is expressly required under this Agreement for the taking of any actions by or on behalf of the Company. Section 6.3. No Authority to Act. The Members shall not have the authority to act on behalf of or bind the Company. ARTICLE VII INDEMNIFICATION Section 7.1. Exculpation and Indemnification of the Members and the Manager. (a) No Indemnified Party shall be liable to the Company for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Party in connection with any matter arising from, or related to, or in connection with this Agreement or the Company's business or affairs; provided, however, that the foregoing shall not eliminate or limit the liability of any Indemnified Party if a judgment or other final adjudication adverse to the Indemnified Party establishes that the Indemnified Party's acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that the Indemnified Party personally gained a financial profit or other advantage to which the Indemnified Party was not legally entitled. (b) The Company shall, to the fullest extent permitted by the Act, indemnify and hold harmless, and advance expenses to, each Indemnified Party against any losses, claims, damages or liabilities to which the Indemnified Party may become subject in connection with any matter arising from, related to, or in connection with, this Agreement or the Company's business or affairs; provided, however, that no indemnification may be made to or on behalf of any Indemnified Party if a judgment or other final adjudication adverse to the Indemnified Party establishes (i) that the Indemnified Party's acts or omissions giving rise to such losses, claims, damages or liabilities were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated or (ii) that the Indemnified Party personally gained a financial profit or other advantage to which the Indemnified Party was not legally entitled; provided, further, that such indemnification shall be subject to the terms of, and shall be subordinate to the obligations (if any) payable under, the agreements referred to in Section 2.5 to which the Company is a party. (c) Notwithstanding anything else contained in this Agreement, the indemnity obligations of the Company under paragraph (b) above shall: (i) be in addition to any liability that the Company may otherwise have; 9 10 (ii) inure to the benefit of the successors, assigns, heirs and personal representatives of each Indemnified Party; and (iii) be limited to the assets of the Company. (d) This Article VII shall survive any termination of this Agreement and the dissolution of the Company. ARTICLE VIII TRANSFERABILITY OF MEMBER'S INTERESTS Section 8.1. Restriction on Transfer. No Member may sell or otherwise transfer its Interest unless such transfer is: (i) involuntary, (ii) by operation of law, (iii) is not prohibited by any agreement referred to in Section 2.5 hereof or (iv) is expressly permitted pursuant to Section 2.1 hereof. Section 8.2. Transfer for Security. Except (i) as otherwise permitted pursuant to Section 2.1 hereof, or (ii) as permitted by or in compliance with the provisions of the agreements referred to in Section 2.5, no Member may pledge, mortgage or otherwise hypothecate all or any part of its right, title and interest in distributions to be received from the Company. ARTICLE IX DISSOLUTION AND LIQUIDATION Section 9.1. Dissolution. The Company shall be dissolved and its affairs shall be wound up solely upon the occurrence of any of the following events: (a) the happening of any event that makes it unlawful to carry on the business of the Company; (b) judicial dissolution pursuant to the Act; or (c) subject to the requirements of each agreement referred to in Section 2.5 to which the Company is a party, the Company is dissolved by the unanimous written consent of the Manager) and the Members as provided in Section 5.5. Neither the Members acting alone or the Members acting with less than all of the Manager (if more than one (1) is appointed pursuant to Section 5.1 of this Agreement) shall have the power or authority, to dissolve the Company and wind up its affairs; or (d) there is no Member. Section 9.2. Continuation of Company. In the event of the dissolution, bankruptcy or Insolvency Event of the Members, the Company shall continue and shall not dissolve, but Copelco Financial Services Group, Inc., or any other entity designated by Copelco Financial Services Group, Inc., shall, effective immediately prior to the happening of such event, be admitted as a Member of the Company, but shall not have 10 11 any Membership Interest or any portion thereof. The Manager shall not have the power or authority to dissolve the Company pursuant to Section 18-801(b) of the Act. Section 9.3. Winding Up and Liquidation of the Company. Upon dissolution, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of creditors and the Members. In so doing, a full accounting of the assets and liabilities of the Company shall be taken and the Company's assets shall be distributed as promptly as possible as hereinafter provided: (a) to the payment (or the making of reasonable provision for the payment) of such debts and liabilities of the Company (or reserves therefor), including any necessary expenses of liquidation, except any debts, liabilities and loans that may be due to the Members, in the order of priority as provided by law; and (b) to the payment (or the making of reasonable provision for the payment) of any debts and liabilities that may be due to the Members and to the payment (or the making of reasonable provision for the payment) of the unpaid principal balance and the interest accrued thereon on loans, if any, made by the Members to the Company. All of the assets of the Company shall be distributed on dissolution. ARTICLE X POWER OF ATTORNEY Section 10.1. Manager as Attorney-In-Fact. Subject, at all times and in all cases to the provisions of Section 5.5, each of the Members hereby makes, constitutes, and appoints the Manager, with full power of substitution and resubstitution, its true and lawful attorneys-in-fact for it and in its name, place, and stead and for its use and benefit, to sign, execute, certify, acknowledge, swear to, file, and record (a) all limited liability company certificates, assumed name or similar certificates, and other certificates and instruments (including counterparts of this Agreement) which the Manager deems necessary in its reasonable discretion to be filed by the Company under the laws of the State of Delaware or any other state or jurisdiction in which the Company is doing or intends to do business; (b) any and all amendments or changes to the instruments described in clause (a), as now or hereafter amended, which the Manager may deem necessary in its reasonable discretion to effect a change or modification of the Company in accordance with the terms of this Agreement, including, without limitation, amendments or changes to reflect any amendments adopted by the Members in accordance with the terms of this Agreement; (c) all certificates of cancellation and other instruments which the Manager deems necessary in its reasonable discretion to effect the dissolution and termination of the Company pursuant to the terms of this Agreement; and (d) any other instrument which is now or may hereafter be required by law to be filed on behalf of the Company or is deemed necessary by the Manager in its reasonable discretion to carry out fully the provisions of this Agreement in accordance with its terms. Each of the Members authorizes such attorney-in-fact to take any further action which such attorney-in-fact shall reasonably consider necessary in connection with any of the 11 12 foregoing, hereby giving such attorney-in-fact full power and authority to do and perform each and every act or thing whatsoever requisite or advisable to be done in connection with the foregoing as fully as the Members might or could do personally, and hereby ratifying and confirming all that any such attorneys-in-fact shall lawfully do or cause to be done by virtue thereof or hereof. Section 10.2. Nature of Special Power. The power of attorney granted pursuant to this Article X: (a) is a special power of attorney coupled with an interest and is irrevocable; (b) may be exercised by all such attorney-in-fact by identifying the Members executing any agreement, certificate, instrument or other document with the signature of a duly authorized officer of such attorneys-in-fact for such Members; and (c) shall not be affected by and shall survive the bankruptcy, insolvency, dissolution, disability, incapacity or cessation of existence of the Members and shall survive the delivery of an assignment by the Members of its interest in the Company, except that where an assignee of the Members is admitted as a substituted Members, the power of attorney shall survive the delivery of such assignment for the sole purpose of enabling all such attorney-in-fact to effect such substitution. ARTICLE XI MISCELLANEOUS PROVISIONS Section 11.1. Notices. Any notices or communications hereunder shall be in writing, and may be either delivered personally (which shall include deliveries by courier), by facsimile transmission or mailed, postage prepaid, by certified or registered mail, return receipt requested, directed to the parties at their respective addresses or fax numbers set forth in EXHIBIT A. Any party hereto may designate a different address to which notices and demands shall thereafter be directed by written notice given in the same manner and directed to the Company at its office hereinabove set forth. Section 11.2. Amendments. This Agreement shall be amended only by the written consent of the Members and the Manager; provided, however, that this Section 11.2 and Sections 5.1, 5.2 and 5.4 may not be amended Section 11.3. Headings. The headings of the various Articles and Sections herein are for the convenience of reference only and shall not define or limit any of the terms or provisions hereof. Section 11.4. Severability. If any one or more of the provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such provisions or terms shall be deemed severable from the remaining provisions or terms of this Agreement and 12 13 shall in no way affect the validity or enforceability of the other provisions of this Agreement. Section 11.5. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 11.6. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Section 11.7. Effect of Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns. Section 11.8. Integration. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings and contemporaneous agreements and understandings pertaining thereto. IN WITNESS WHEREOF, this Limited Liability Company Agreement has been executed as of the date first above written. COPELCO CAPITAL, INC., as a Member By:________________________________________ Nicholas Antonaccio Vice President, Chief Financial Officer and Treasurer COPELCO MANAGER, INC., as a Member and the Manager By:________________________________________ Stephen Shippie Vice President 13 14 EXHIBIT A ADDRESSES OF THE MEMBERS AND THE MANAGER Copelco Capital, Inc., as a Member One International Boulevard Mahwah, New Jersey 07430 Copelco Manager, Inc., as a Member and the Manager 700 East Gate Drive Mt. Laurel, New Jersey 08054 14 15 EXHIBIT "B" CAPITAL CONTRIBUTION OF MEMBERS Copelco Capital, Inc.: [$ 990.00] Copelco Manager, Inc.: [$ 10.00] 15 EX-4.1 5 INDENTURE 1 COPELCO CAPITAL FUNDING LLC 99-1, Issuer MANUFACTURERS AND TRADERS TRUST COMPANY, Trustee and COPELCO CAPITAL, INC., Servicer ---------------------- INDENTURE Dated as of March 1, 1999 ---------------------- $____________ in aggregate principal amount of Receivables Notes, and $____________ in aggregate principal amount of Class R Notes, Series 1999-A, consisting of: $______________% Class A-1 Lease-Backed Notes $______________% Class A-2 Lease-Backed Notes $______________% Class A-3 Lease-Backed Notes $______________% Class A-4 Lease-Backed Notes $_________________% Class B Lease-Backed Notes $_________________% Class C Lease-Backed Notes $_________________% Class D Lease-Backed Notes $_________________% Class E Lease-Backed Notes $_______________% Class R-1 Lease Residual-Backed Notes $_______________% Class R-2 Lease Residual-Backed Notes 2 COPELCO CAPITAL FUNDING LLC 99-1 Reconciliation and Tie between the Indenture dated as of March 1, 1999 and the Trust Indenture Act of 1939, as amended Trust Indenture Act Section Indenture Section - --------------------------- ----------------- Section 310 (a)(1).................... Section 7.08 (a)(2).................... 7.08 (a)(3).................... Not Applicable (a)(4).................... Not Applicable (b)....................... 7.08; 7.09; 6.07; 1.05; 1.06 (c)....................... Not Applicable 311 (a)....................... 7.14 (b)....................... 7.14 312 (a)....................... 2.11 (b)....................... 11.02 (c)....................... 11.02 313 (a)....................... 7.15 (b)(1).................... Not Applicable (b)(2).................... 7.15 (c)....................... 7.15; 1.06 (d)....................... 7.15 314 (a)....................... 8.12; 8.09; 1.06 (b)....................... Not Applicable (c)(1).................... 11.03 (c)(2).................... 11.03 (c)(3).................... 11.01 (d)....................... 11.01 (e)....................... 11.04 (f)....................... Not Applicable 315 (a)....................... 7.01(a) (b)....................... 7.02; 1.06 (c)....................... 7.01(b) (d)....................... 7.01(c) (e)....................... 6.14 316 (a) (last sentence)....... 2.12 (a)(1)(A)................. 6.12 (a)(1)(B)................. 6.13 (a)(2).................... Not Applicable 317 (a)(1).................... 6.03(c) (a)(2).................... 6.04 (b)....................... 8.03(c) 318 (a)....................... 11.01, 11.02 (c)....................... 11.01 i 3 INDENTURE This INDENTURE dated as of March 1, 1999, is among COPELCO CAPITAL FUNDING LLC 99-1, a Delaware limited liability company (herein called the "Issuer"), MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation, as trustee (herein called the "Trustee"), and COPELCO CAPITAL, INC., as servicer (herein called the "Servicer"). RECITALS The Issuer has duly authorized the issuance of $__________ in aggregate principal amount of its Lease-Backed Notes, and $_________ in aggregate principal amount of its Lease Residual-Backed-Notes, Series 1999-A, consisting of $_________ aggregate principal amount of ___% Class A-1 Lease-Backed Notes (the "Class A-1 Notes"), $__________ aggregate principal amount of ____% Class A-2 Lease-Backed Notes (the "Class A-2 Notes"), $___________ aggregate principal amount of ____% Class A-3 Lease-Backed Notes (the "Class A-3 Notes"), $____________ aggregate principal amount of _____% Class A-4 Lease-Backed Notes (the "Class A-4 Notes", together with the Class A-1 Notes, Class A-2 Notes, and Class A-3 Notes, the "Class A Notes"), $____________ aggregate principal amount of _____% Class B Lease-Backed Notes (the "Class B Notes"), $__________ aggregate principal amount of ____% Class C Lease-Backed Notes (the "Class C Notes"), $____________ aggregate principal amount of _____% Class D Lease-Backed Notes (the "Class D Notes"), $____________ aggregate principal amount of ____% Class E Lease-Backed Notes (the "Class E Notes", together with the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are referred to collectively as the "Receivable Notes"), $__________ aggregate principal amount of _____%, Class R-1 Residual Notes (the "Class R-1 Notes"), and $___________ aggregate principal amount of ____% Class R-2 Residual Notes (the "Class R-2 Notes"; together with the Class R-1 Notes, the Class R Notes); the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class R Notes are referred to collectively as the "Notes"), of substantially the tenor hereinafter set forth, and to provide therefor the Issuer has duly authorized the execution and delivery of this Indenture. The Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class R Notes shall be entitled to payments of interest and principal as set forth herein. All things necessary to make the Notes, when executed by the Issuer and authenticated and delivered hereunder, the valid obligations of the Issuer, and to make this Indenture a valid agreement of the Issuer, in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the holders thereof, it is mutually covenanted and agreed, for the benefit of all Noteholders, as follows: 1 4 GRANTING CLAUSE The Issuer hereby Grants to the Trustee on the Issuance Date, for the benefit and security of the Noteholders, all of the Issuer's right, title and interest in and to (a) the Leases and all Lease Payments, Casualty Payments, Lease Repurchase Amounts, Termination Payments, Residual Realizations and other amounts now due or becoming due with respect thereto since the Cut-Off Date (other than any prepayments of rent required pursuant to the terms of any Lease at or before the commencement of the Lease and any payments due before the Cut-Off Date) and all Additional Leases and Substitute Leases and all Lease Payments, Casualty Payments, Lease Repurchase Amounts, Termination Payments, Residual Realizations and other amounts due or becoming due with respect thereto since the effective date of their respective addition or substitution (other than any prepayments of rent required by the terms of any Lease at or before the commencement of the Lease and any payments due before the effective date of such addition or substitution), (b) all rights of the Issuer to or under any guarantees of collateral (including all rights of the Issuer in any security deposits and the Issuer's right to repayment by Copelco Capital, Inc. ("Copelco") of any Inter-Company loans pursuant to Section 13.01 of the Assignment and Servicing Agreement) for the Lessee's obligations under any Lease, (c) all interests of the Issuer in the Equipment at any time subject to any Lease, including any security interest of Copelco in the Equipment, (d) all moneys from time to time held by the Trustee pursuant to Section 3.01(a) hereof pending deposit in one of the accounts referred to therein, (e) all moneys from time to time on deposit in any of the Trust Accounts, including all investments and income from the investment of such moneys, (f) all rights of the Issuer under the Assignment and Servicing Agreement, and (g) all proceeds of the conversion, whether voluntary or involuntary, of any of the foregoing into cash or other property (collectively, the "Granted Assets"). Such Grant is made in trust to secure (i) the payment of all amounts due on the Notes, in accordance with their terms, equally and ratably without prejudice, priority, or distinction among any of the Notes, respectively, by reason of differences in time of issuance or otherwise, (ii) the payment of all other sums payable under this Indenture with respect to the Notes and (iii) compliance with the provisions of this Indenture with respect to the Notes. The Trustee acknowledges such Grant, accepts the trusts hereunder in accordance with the provisions hereof, and agrees to perform the duties herein required to the best of its ability and to the end that the interests of the Noteholders may be adequately and effectively protected as hereinafter provided. ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. General Definitions. Except as otherwise specified or as the context may otherwise require, the following terms have the meanings set forth below for all purposes of this Indenture, and 2 5 the definitions of such terms are applicable to the singular as well as to the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Accredited Investor: as defined in Section 2.03 of this Agreement. Act: with respect to any Noteholder, as defined in Section 1.04. Additional Lease: as defined in Section 12 of the Assignment and Servicing Agreement. Additional Principal: with respect to each Payment Date equals (a) zero if each of the Class Target Investor Principal Amounts for Classes B, C, D, and E exceed their respective Class Floors on such Payment Date and (b) in each other case the excess, if any, of (i)(A) the Outstanding Principal Balance of the Notes plus the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to payments on such Payment Date minus (B) the Discounted Present Value of the Performing Leases as of the related Determination Date, over (ii) the sum of the Class A Principal Payment, the Class B Principal Payment, the Class C Principal Payment, the Class D Principal Payment and the Class E Principal Payment to be paid on such Payment Date. Affiliate: with respect to any specified Person, any other Person which directly or indirectly controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. Assignment and Servicing Agreement: the Assignment and Servicing Agreement dated as of March 1, 1999 between the Issuer and Copelco, as the same may be amended or modified from time to time in accordance with the provisions hereof and thereof. Authorized Officer: with respect to any matter, any officer of or other Person representing the Issuer, Copelco or the Servicer, as the case may be, who is authorized to act for the Issuer, Copelco or the Servicer, as the case may be. Available Funds: with respect to any Payment Date, the amount on deposit in the Collection Account with respect to the immediately preceding Due Period, including, without limitation, (a) Lease Payments due during the immediately preceding Due Period (net of any Excess Copy Charges, Maintenance Charges and Fee Per Scan Charges), (b) recoveries from Non-Performing Leases to the extent Copelco has not substituted Substitute Leases for such Non-Performing Leases (except to the extent required to reimburse unreimbursed Servicer Advances pursuant to Section 5 of the Assignment and Servicing Agreement); (c) proceeds from repurchases by Copelco of Leases as a result of breaches of representations and warranties to the extent Copelco has not substituted Substitute Leases for such Leases other than Residual Warranty Payments; (d) proceeds from the investment of funds in the Collection Account and the 3 6 Reserve Account, if any; (e) Casualty Payments other than Residual Casualty Payments; (f) Servicer Advances; (g) Termination Payments other than Residual Prepayments; (h) late charges on delinquent Lease Payments not advanced by the Servicer and (i) to the extent there occurs an Available Funds Shortfall, funds, if any, on deposit in the Reserve Account; provided that Available Funds shall not include Residual Realizations. Available Reserve Amount: the amount on deposit in the Reserve Account. Available Funds Shortfall: as defined in Section 3.05(b). Book-Entry Class A-1 Notes: beneficial interests in the Class A-1 Notes, the ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class A-2 Notes: beneficial interests in the Class A-2 Notes, the ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class A-3 Notes: beneficial interests in the Class A-3 Notes, the ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class A-4 Notes: beneficial interests in the Class A-4 Notes, the ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class B Notes: beneficial interests in the Class B Notes, the ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class C Notes: beneficial interests in the Class C Notes, the ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class D Notes: beneficial interests in the Class D Notes, the ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class R-1 Notes: beneficial interests in the Class R-1 Notes, the ownership and transfers by which shall be made through book entries by a Clearing Agency as described in Section 2.05. Book-Entry Class R-2 Notes: beneficial interests in the Class R-2 Notes, the ownership and transfers of which shall be made through book-entries by a Clearing Agency as described in Section 2.05. 4 7 Booked Residual Value - the estimated residual value of the Equipment recorded on the books of the Transferor as of the Cut-Off Date in the case of the initial Leases, and as of the date of substitution in the case of a Substitute Lease. Business Day: any day that is not a Saturday, Sunday or other day on which commercial banking institutions in the city in which the Corporate Trust Office and the Servicer is located are authorized or obligated by law or executive order to remain closed. Casualty Payment: any payment pursuant to a Lease on account of the loss, theft, condemnation, governmental taking, destruction, or damage beyond repair of any item of Equipment subject thereto which results, in accordance with the terms of the Lease, in a reduction in the number or amount of any future Lease Payments due thereunder or in the termination of the Lessee's obligation to make future Lease Payments thereunder. Cede & Co.: the initial registered holder of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class R-1 Notes and the Class R-2 Notes, acting as nominee of The Depository Trust Company. Class A Notes: as defined in the Recitals hereto. Class A Percentage: _______% (approximately). Class A Principal Payment: (a) while the Class A-1 Notes are outstanding, (i) on all Payment Dates prior to the _____ 1999 Payment Date, the lesser of (1) the amount necessary to reduce the Outstanding Principal Amount on the Class A-1 Notes to zero and (2) the difference between (a) the Discounted Present Value of the Performing Leases as of the previous Determination Date and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date, and (ii) on and after the ______ 1999 Payment Date, the entire Outstanding Principal Amount on the Class A-1 Notes, and (b) after the Class A-1 Notes have been paid in full, the amount necessary to reduce the aggregate Outstanding Principal Amount on the Class A Notes to the Class A Target Investor Principal Amount. Class A Target Investor Principal Amount: with respect to each Payment Date, an amount equal to the product of (a) the Class A Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. Class A-1 Initial Principal Amount: $_______________. Class A-1 Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class A-1 Notes, which rate shall be equal to ___% per annum. Class A-1 Note Owner: with respect to a Book-Entry Class A-1 Note, the Person who is the beneficial owner of such Book-Entry Class A-1 Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account 5 8 with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class A-1 Noteholder: Cede & Co. or a holder of a Definitive Class A-1 Note. Class A-1 Notes: as defined in the Recitals hereto. Class A-2 Initial Principal Amount: $______________. Class A-2 Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class A-2 Notes, which rate shall be equal to ________% per annum. Class A-2 Note Owner: with respect to a Book-Entry Class A-2 Note, the Person who is the beneficial owner of such Book-Entry Class A-2 Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class A-2 Noteholder: Cede & Co. or a holder of a Definitive Class A-2 Note. Class A-2 Notes: as defined in the Recitals hereto. Class A-3 Initial Principal Amount: $____________. Class A-3 Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class A-3 Notes, which rate shall be equal to _____% per annum. Class A-3 Note Owner: with respect to a Book-Entry Class A-3 Note, the Person who is the beneficial owner of such Book-Entry Class A-3 Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class A-3 Noteholder: Cede & Co. or a holder of a Definitive Class A-3 Note. Class A-3 Notes: as defined in the Recitals hereto. Class A-4 Initial Principal Amount: $___________. Class A-4 Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class A-4 Notes, which rate shall be equal to _____% per annum. 6 9 Class A-4 Note Owner: with respect to a Book-Entry Class A-4 Note, the Person who is the beneficial owner of such Book-Entry Class A-4 Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class A-4 Noteholder: Cede & Co. or a holder of a Definitive Class A-4 Note. Class A-4 Notes: as defined in the Recitals hereto. Class B Initial Principal Amount: $___________. Class B Floor: with respect to each Payment Date, an amount equal to the total of (a) ______% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum of the Outstanding Principal Amount of the Class C Notes, the Outstanding Principal Amount of the Class D Notes, the Outstanding Principal Amount of the Class E Notes and the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date. Class B Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class B Notes, which rate shall be ______% per annum. Class B Note Owner: with respect to a Book-Entry Class B Note, the Person who is the beneficial owner of such Book-Entry Class B Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class B Noteholder: Cede & Co. or a holder of a Definitive Class B Note. Class B Notes: as defined in the Recitals hereto. Class B Percentage: _______% (approximately). Class B Principal Payment: (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the Outstanding Principal Amount of the Class B Notes to the greater of the Class B Target Investor Principal Amount and the Class B Floor. Class B Target Investor Principal Amount: with respect to each Payment Date, an amount equal to the product of (a) the Class B Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. 7 10 Class C Initial Principal Amount: $_________. Class C Floor: With respect to each Payment Date, the amount equal to the total of (a) ______% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum of the Outstanding Principal Amount of the Class D Notes, the Outstanding Principal Amount of the Class E Notes, and the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date; provided, however, that if the Outstanding Principal Amount of the Class B Notes is less than or equal to the Class B Floor on such Payment Date, the Class C Floor will equal the Outstanding Principal Amount of the Class C Notes utilized in the calculation of the Class B Floor for such Payment Date. Class C Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class C Notes, which rate shall be ______% per annum. Class C Note Owner: with respect to a Book-Entry Class C Note, the Person who is the beneficial owner of such Book-Entry Class C Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class C Noteholder: Cede & Co. or a holder of a Definitive Class C Note. Class C Notes: as defined in the Recitals hereto. Class C Percentage: ________% (approximately). Class C Principal Payment: (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the Outstanding Principal Amount of the Class C Notes to the greater of the Class C Target Investor Principal Amount and the Class C Floor. Class C Target Investor Principal Amount: with respect to each Payment Date, an amount equal to the product of (a) the Class C Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. Class D Initial Principal Amount: $_________. Class D Floor: with respect to each Payment Date, an amount equal to the total of (a) _____% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum of the Outstanding Principal Amount of the Class E Notes, and the Overcollateralization Balance as of the immediately preceding Payment Date after giving 8 11 effect to all principal payments made on that day minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date; provided, however, that if the Outstanding Class C Principal Amount is less than or equal to the Class C Floor on such Payment Date, the Class D Floor will equal the Outstanding Class D Principal Amount utilized in the calculation of the Class C Floor Amount for such Payment Date. Class D Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class D Notes, which rate shall be ______% per annum. Class D Note Owner: with respect to a Book-Entry Class D Note, the Person who is the beneficial owner of such Book-Entry Class D Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class D Noteholder: Cede & Co. or a holder of a Class D Note. Class D Notes: as defined in the Recitals hereto. Class D Percentage: _______% (approximately). Class D Principal Payment: (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the Outstanding Principal Amount of the Class D Notes to the greater of the Class D Target Investor Principal Amount and the Class D Floor. Class D Target Investor Principal Amount: with respect to each Payment Date, an amount equal to the product of (a) the Class D Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. Class E Initial Principal Amount: $_________. Class E Floor: With respect to each Payment Date, an amount equal to the total of (a) ____% of the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date; provided, however, that if the Outstanding Principal Amount of the Class D Notes is less than or equal to the Class D Floor on such Payment Date, the Class E Floor will equal the Outstanding Principal Amount of the Class E Notes utilized in the calculation of the Class D Floor for such Payment Date. 9 12 Class E Note Interest Rate: with respect to any Interest Accrual Period, the rate at which interest accrues on the Class E Notes, which rate shall be ____% per annum. Class E Noteholder: a holder of a Class E Note. Class E Notes: as defined in the Recitals hereto. Class E Percentage: _____% (approximately). Class E Principal Payment: (a) while the Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the Outstanding Principal Amount of the Class E Notes to the greater of the Class E Target Investor Principal Amount and the Class E Floor. Class E Target Investor Principal Amount: with respect to each Payment Date, an amount equal to the product of (a) the Class E Percentage and (b) the Discounted Present Value of the Performing Leases as of the related Determination Date. Class R Notes: as defined in the Recitals hereto. Class R-1 Initial Principal Amount: $___________. Class R-1 Notes: as defined in the Recitals hereto. Class R-1 Note Interest Rate: with respect to any Interest Accrual Period, the rate of which interest accrues on the Class R-1 Notes, which rate shall be _____% per annum. Class R-1 Note Owner: with respect to a Book-Entry Class R-1 Note, the Person who is the beneficial owner of such Book-Entry Class R-1 Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class R-1 Noteholder: Cede & Co. or a holder of a Definitive Class R-1 Note. Class R-2 Initial Principal Amount: $__________. Class R-2 Notes: as defined in the Recitals hereto. Class R-2 Note Interest Rate: with respect to any Interest Accrual Period, the rate of which interest accrues on the Class R-2 Notes, which rate shall be _____% per annum. 10 13 Class R-2 Noteholder: Cede & Co. or a holder of a Definitive Class R-2 Note. Class R-2 Note Owner: with respect to a Book-Entry Class R-2 Note, the Person who is the beneficial owner of such Book-Entry Class R-2 Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). Class Target Investor Principal Amounts: means the Class A Target Investor Principal Amount or the Class B Target Investor Principal Amounts or the Class C Target Investor Principal Amounts or the Class D Target Investor Principal Amounts or the Class E Target Investor Principal Amounts, respectively. Clearing Agency: an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant: a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. Collection Account: the account or accounts by that name established and maintained by the Trustee pursuant to Section 3.01. Commission: the Securities and Exchange Commission. Copelco: As defined in the Granting Clause. Corporate Trust Office: the principal corporate trust office of the Trustee located at One M&T Plaza, 7th Floor, Buffalo, New York 14203, or at such other address as the Trustee may designate from time to time by notice to the Noteholders, the Issuer and Copelco. Cumulative Loss Amount: with respect to each Payment Date, an amount equal to the excess, if any, of (a) the total of (i) the Outstanding Principal Amount of the Receivable Notes as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, plus (ii) the Overcollateralization Balance as of the immediately preceding Payment Date, minus (iii) the lesser of (A) the Discounted Present Value of the Performing Leases as of the Determination Date relating to the immediately preceding Payment Date minus the Discounted Present Value of the Performing Leases as of the related Determination Date and (B) Available Funds for such Payment Date remaining after the payment of amounts owing the Servicer and in respect of interest on the Receivable Notes on such Payment Date over (b) the Discounted Present Value of Performing Leases as of the related Determination Date. Cut-Off Date: the close of business on January 31, 1999. DCR: Duff & Phelps Credit Rating Co, and any such successor. 11 14 Default: any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default. Definitive Note: a definitive, fully registered Note issued pursuant to Section 2.07. Delinquent Lease: as of any Determination Date, any Lease (other than a Lease which became a Non-Performing Lease prior to such Determination Date) with respect to which the Lessee has not paid all Lease Payments then due. Depository Agreement: the letter of representations, between the Issuer and the Depository Trust Company, as Clearing Agency. Determination Date: with respect to any Payment Date, the fifth Business Day immediately preceding such Payment Date. Discount Rate: with respect to any Determination Date, ______%, which equals the sum of (a) the weighted-average interest rate of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes on the Issuance Date weighted by (i) the Class A-1 Initial Principal Amount, the Class A-2 Initial Principal Amount, the Class A-3 Initial Principal Amount, the Class A-4 Initial Principal Amount, the Class B Initial Principal Amount, the Class C Initial Principal Amount, the Class D Initial Principal Amount or the Class E Initial Principal Amount, as applicable, and (ii) the expected weighted average life (under a zero prepayment and no loss scenario) of each Class of Notes and (b) the Servicing Fee rate of 0.75% per annum. Discounted Present Value of the Leases: with respect to any Lease as of the Cut-Off Date or any date thereafter, an amount equal to the net present value of all Lease Payments (not including delinquent amounts, Excess Copy Charges, Maintenance Charges and Fee Per Scan Charges) to become due thereunder following the Cut-Off Date or during the Due Period preceding the following Payment Date, as the case may be (determined by discounting on a monthly basis (assuming a calendar year consisting of twelve 30-day months)), at a rate equal to the Discount Rate, each such Lease Payment from the Payment Date following the date such Lease Payment was due). In determining the Discounted Present Value of the Leases on any Determination Date or with respect to a Payment Date, the future remaining Lease Payments will be calculated after giving effect to any payments received prior to such date of calculation to the extent such payments relate to Lease Payments due and payable by the Lessees with respect to the related Due Period and any prior Due Period. Discounted Present Value of the Delinquent Leases: with respect to any Payment Date or Determination Date, the Discounted Present Value of the Leases that are not Non-Performing Leases as to which a Lease Payment, or any portion thereof, was 63 or more days overdue as of the last day of the Due Period immediately preceding such Payment Date. 12 15 Discounted Present Value of the Performing Leases: the Discounted Present Value of the Leases, reduced by the present value of all future remaining scheduled payments on the Non-Performing Leases (not including delinquent amounts, Excess Copy Charges, Maintenance Charges or Fee Per Scan Charges) discounted at the Discount Rate. In determining the Discounted Present Value of the Performing Leases on any Determination Date or with respect to a Payment Date, the future remaining Lease Payments will be calculated after giving effect to any payments received prior to such date of calculation to the extent such payments relate to Lease Payments due and payable by the Lessees with respect to the related Due Period and any prior Due Period. Due Period: with respect to any Payment Date and the Determination Date with respect thereto, the period beginning on the first day and ending on the last day of the calendar month prior to the month in which such Payment Date and such Determination Date occurs. Eligible Account: either (a) an account maintained with a depository institution or trust company acceptable to each of the Rating Agencies or (b) a trust account or similar account maintained in the corporate trust department with a federal or state chartered depository institution, which may be an account maintained with the Trustee. Eligible Investments: any one or more of the following obligations or securities: (a) direct non-callable obligations of, and non-callable obligations fully guaranteed by, the United States of America, or any agency or instrumentality of the United States of America the obligations of which are backed by the full faith and credit of the United States of America; (b) demand and time deposits in, certificates of deposits of, and bankers' acceptances issued by, any depository institution or company (including the Trustee acting in its commercial capacity) incorporated under the laws of the United States of America or any state thereof, having a combined capital and surplus of at least $100,000,000, and subject to supervision and examination by federal and/or state banking authorities, so long as at the time of such investment or contractual commitment providing for such investment the commercial paper or other short-term debt obligations of such depository institution or company (or, in the case of a depository institution that is the principal subsidiary of a holding company, the commercial paper or other short-term debt obligations of such holding company) have the highest short-term credit ratings available from Moody's and, to the extent rated by DCR and Fitch, DCR and Fitch; (c) repurchase obligations with respect to and collateralized by (i) any security described in clause (a) above or (ii) any other security issued or guaranteed by an agency or instrumentality of the United States of America, in each case entered into with a depository institution or company (acting as 13 16 principal) of the type described in clause (b) above; provided that the Trustee has taken delivery of such security; (d) commercial paper (including both non-interest bearing discount obligations and interest-bearing obligations) payable on demand or on a specified date not more than one year after the date of issuance thereof having the highest short-term credit ratings from Moody's and, to the extent rated by DCR and Fitch, DCR and Fitch at the time of such investment; (e) money market funds that redeem their shares on demand, invest only in other Eligible Investments, and are rated Aaa by Moody's; (f) demand notes payable on demand issued by an institution rated "P-1" by Moody's, and to the extent rated by DCR and Fitch, DCR and Fitch at the time of such investment; (g) funding agreements or guaranteed investment contracts provided by issuers rated "P-1" by Moody's (and to the extent rated by DCR and Fitch, DCR and Fitch at the time of such investment) which provide, by their terms, for receipt by the trustee on or prior to the next Payment Date of a predetermined fixed dollar amount which cannot vary or change; and (h) such other investments as may be approved by Moody's, DCR and Fitch. Equipment: each item of personal property, together with any replacement parts, additions, and repairs thereto, any replacements thereof, and any accessories incorporated therein and/or affixed thereto, subject to a Lease or, following expiration or termination of the Lease to which the same was previously subject, remaining subject to the lien of this Indenture in accordance with the provisions hereof. Event of Default: as defined in Section 6.01. Exchange Act: the Securities Exchange Act of 1934, as amended. Excess Copy Charge: with respect to any Lease, means the amount owing by such Lessee under such Lease reflecting usage of the related Equipment in excess of a specified copy amount per month. Fee Per Scan Charge: with respect to any Lease, means the amount owing by such Lessee under such Lease reflecting usage of the related Equipment in excess of a specified scan amount per month. Financing Statement: as defined in Section 12 of the Assignment and Servicing Agreement. Fitch: Fitch IBCA, Inc. 14 17 Governmental Authority: Any court or federal or state regulatory body, administrative agency or other tribunal or other governmental instrumentality. Grant: grant, bargain, sell, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of set-off against, deposit, set over and confirm. The Grant of the Trust Estate effected by this Indenture shall include all rights, powers, and options (but none of the obligations) of the Issuer with respect thereto, including, without limitation, the immediate and continuing right to claim for, collect, receive, and give receipts for Lease Payments in respect of the Leases and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring judicial proceedings in the name of the Issuer or otherwise, and generally to do and receive anything that the Issuer is or may be entitled to do or receive thereunder or with respect thereto. Granted Assets: as defined in the Granting Clause. Holder: a holder of a Note. Indenture: this instrument as originally executed and as from time to time supplemented or amended pursuant to the applicable provisions hereof. Initial ADRB: the Initial Aggregate Discounted Residual Balance of the Leases is equal to $_____________. Initial ADRB means the sum of the discounted present value of 145% of the Booked Residual Values of all Leases, as of the Cut-Off Date, discounted monthly at one twelfth the Residual Discount Rate. Initial Booked Residual Value: $___________. Initial Payment Date: March 15, 1999. Inter-Company Loans: as defined in Section 13.01 of the Assignment and Servicing Agreement. "Interest Accrual Period": With respect to any Payment Date for the Class A-1 Notes, the period from and including the prior Payment Date (or, in the case of the first Payment Date, from and including the Issuance Date) to, but excluding, the current Payment Date, with interest being computed on the basis of the actual number of days in such Interest Accrual Period and a 360-day year. With respect to any Payment Date for the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class R-1 Notes and the Class R-2 Notes, the period from and including the first day of the prior calendar month (or in the case of the first Payment Date, from and including February 15, 1999) to but excluding the first day of the calendar month in which such Payment Date occurs, with interest being computed on the basis of a 30-day month and a 360-day year. 15 18 Interest Payments: as defined in Section 2.01(c). Issuance Date: __________, 1999. Issuer: the Person named as the "Issuer" in the first paragraph of this instrument. Lease: at any time, each separate lease agreement and each lease schedule or supplement (and each master lease agreement insofar as the same relates to any such schedule or supplement) described in Schedule 1 hereto, as the same may be amended or modified from time to time in accordance with the provisions hereof and thereof unless and until released from the lien of this Indenture. Lease Delinquency Payment: any payment made with respect to a Lease in an amount equal to all or part of any specific Lease Payment due with respect to such Lease (a) by the Servicer pursuant to Section 4.01 of the Assignment and Servicing Agreement, (b) by a transfer from the Reserve Account pursuant to Section 3.05, or (c) by the Issuer in its sole discretion. Lease Payment: each periodic installment of rent payable by a Lessee under a Lease. Casualty Payments, Termination Payments, prepayments of rent required pursuant to the terms of a Lease, at or before the commencement of the Lease, payments becoming due on or before the Cut-Off Date and supplemental or additional payments required by the terms of a Lease with respect to taxes, insurance, maintenance (including, without limitation, any Maintenance Charges), or other specific charges shall not be Lease Payments hereunder. For purposes of calculating the Discounted Present Value of the Leases and the Discounted Present Value of the Performing Leases, the amount of any Excess Copy Charges and Fee Per Scan Charges that may be payable under such Lease shall not be included in such calculation. Lease Repurchase Amount: at any date of determination with respect to any Lease, means an amount equal to the sum of (a) the sum of (i) the Discounted Present Value of the Lease as of the Due Period relating to such date of determination (plus any amounts previously due and unpaid) and (ii) the product of (x) the amount described in the foregoing clause (i) and (y) one-twelfth of the Discount Rate and (b) the product of (i) the Initial ADRB and (ii) the ratio, as of the Cut-Off Date, that the Booked Residual Value of the Lease bears to the aggregate Booked Residual Value of all Leases. Lessee: with respect to any Lease, the lessee thereunder. Lien: as defined in Section 12 of the Assignment and Servicing Agreement. Liquidity Reserve Account: the account by that name established and maintained by the Trustee pursuant to Section 3.01. 16 19 Maintenance Charges: with respect to any Lease, the amount owing by the Lessee under the terms of the related Lease in respect of maintenance services being provided in connection therewith. Maturity: with respect to any installment of principal of or interest on any Note, the date on which such installment is due and payable as therein or herein provided, whether at the Stated Maturity, by declaration of acceleration, or otherwise. Moody's: Moody's Investors Services, Inc. and any successors thereto. Nominal Buy-Out Lease: as defined in Section 12 of the Assignment and Servicing Agreement. Non-Performing Lease: as of any Determination Date, any Lease with respect to which at any time following the Cut-Off Date or related Transfer Date, as the case may be, either (a) a Lease Payment, or any portion thereof, was 123 or more days overdue as of the last day of the Due Period with respect to such Determination Date, unless on or before such Determination Date such Lease Payment (or portion thereof) has been paid or (b) the Servicer has accelerated the remaining payments or has determined such Lease to be uncollectible in accordance with the Servicer's customary practices prior to the last day of the Due Period with respect to such Determination Date. Noteholder: at any time, any Person in whose name a Note is registered in the Note Register. Note Interest Rate: the Class A-1 Note Interest Rate, the Class A-2 Note Interest Rate, the Class A-3 Note Interest Rate, the Class A-4 Interest Rate, the Class B Note Interest Rate, the Class C Note Interest Rate, the Class D Note Interest Rate, the Class E Note Interest Rate, the Class R-1 Note Interest Rate or the Class R-2 Note Interest Rate, as the case may be. Note Owner: the owner of a Note issued hereunder. Note Register: as defined in Section 2.03. Notes: any notes authorized by, and authenticated and delivered under, this Indenture. Officers' Certificate: a certificate delivered to the Trustee and signed by the Chairman, the President, or a Vice President of the Issuer, and by another Vice President, the Treasurer, and Assistant Treasurer, the Secretary, or an Assistant Secretary of the Issuer who is not the same Person as the other officer signing such certificate. Opinion of Counsel: a written opinion, which shall be satisfactory in form and substance to the Trustee, of counsel who may, except as otherwise expressly provided in this Indenture, be inside or outside counsel for the Issuer and who shall be satisfactory to the Trustee. 17 20 Other Lease Payments: all payments on or in respect of leases which are not Lease Payments, Lease Delinquency Payments, Casualty Payments, Termination Payments, Similar Transaction Payments or Residual Realizations. Outstanding: with respect to the Notes, as of any date of determination, all Notes theretofore authenticated and delivered under this Indenture except: (a) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Notes or portions thereof for whose payment money in the necessary amount has been theretofore irrevocably deposited with the Trustee in trust for the holders of such Notes; and (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture unless proof satisfactory to the Trustee is presented that any such Notes are held by a Person in whose hands the Note is a valid obligation; provided, however, that in determining whether the holders of the requisite percentage of the Outstanding Principal Amount of the Notes have given any request, demand, authorization, direction, notice, consent, or waiver hereunder, Notes owned by the Issuer or any Affiliate of the Issuer shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only Notes that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Outstanding Class A Principal Amount: The aggregate principal amount of the Class A Notes Outstanding at any time. Outstanding Class A-1 Principal Amount: the aggregate principal amount of the Class A-1 Notes Outstanding at any time. Outstanding Class A-2 Principal Amount: the aggregate principal amount of the Class A-2 Notes Outstanding at any time. Outstanding Class A-3 Principal Amount: the aggregate principal amount of the Class A-3 Notes Outstanding at any time. Outstanding Class A-4 Principal Amount: the aggregate principal amount of the Class A-4 Notes Outstanding at any time. Outstanding Class B Principal Amount: the aggregate principal amount of the Class B Notes Outstanding at any time. Outstanding Class C Principal Amount: the aggregate principal amount of the Class C Notes Outstanding at any time. 18 21 Outstanding Class D Principal Amount: the aggregate principal amount of the Class D Notes Outstanding at any time. Outstanding Class E Principal Amount: the aggregate principal amount of the Class E Notes Outstanding at any time. Outstanding Class R-1 Principal Amount: the aggregate principal amount of the Class R-1 Notes Outstanding at any time. Outstanding Class R-2 Principal Amount: the aggregate principal amount of the Class R-2 Notes Outstanding at any time. Outstanding Principal Amount: the aggregate unpaid principal amount of the Notes Outstanding at any time. Overcollateralization Balance: with respect to each Payment Date is an amount equal to the excess, if any, of (a) the Discounted Present Value of Performing Leases as of the related Determination Date over (b) the Outstanding Principal Amount of the Receivable Notes as of such Payment Date after giving effect to all principal payments made on that day. Paying Agent: each agent of the Issuer appointed for the purpose of making payments on the Notes, including the Trustee. Payment Date: the 15th day of each month (or the next Business Day thereafter if such day is not a Business Day), commencing on the Initial Payment Date, and ending on the latest Stated Maturity. Person: any individual, corporation, partnership, joint venture, association, limited liability company, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof. Placement Agent Agreement: the Placement Agent Agreement, among the Issuer, Copelco, and Prudential. Predecessor Notes: with respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.04 in lieu of a lost, destroyed or stolen Note (or a mutilated Note surrendered to the Trustee) shall be deemed to evidence the same debt as the lost, destroyed or stolen Note (or a mutilated Note surrendered to the Trustee). Principal Payments: as defined in Section 2.01(b). Rating Agency: DCR, Fitch and Moody's. 19 22 Receivable Noteholder: at any time, any Person in whose name a Receivable Note is registered in the Note Register. Receivable Notes: as defined in the Recitals hereto. Record Date: with respect to any Payment Date, the last day of the calendar month immediately preceding such Payment Date. The Record Date will be the Issuance Date with respect to the first Payment Date. Required Deposit Date: as defined in Section 3.03(a). Required Liquidity Reserve: during the first ____ months from the Cut-Off Date, $_________ and thereafter, $________. Required Payment: as defined in Section 3.05(b). Required Reserve Amount: shall equal the lesser of (a) $__________ and (b) the Outstanding Principal Amount of the Receivable Notes. Reserve Account: the account or accounts by that name established and maintained by the Trustee pursuant to Section 3.01. Residual Account: the account or accounts by that name established and maintained by the Trustee pursuant to Section 3.01. Residual Casualty Payments: at any date of determination with respect to a Lease, means the excess of (a) the Casualty Payment related to the Lease over (b) the Discounted Present Value of the remaining Lease Payments related to the Lease as of the Due Period relating to such date of determination (plus any amounts previously due and unpaid). Residual Discount Rate: Residual Discount Rate equals _______%. The Residual Discount Rate is equal to the sum of (a) the weighted average Coupon Rate of the Class R-1 and the Class R-2 Notes, each weighted by (i) the initial principal balances of each Class of Class R Notes, and (ii) the weighted average life of each Class of Class R Notes under a zero prepayment and no loss scenario, as applicable, and (b) the Residual Servicing Fee expressed as percentage. Residual Event of Default: as defined in Section 6.13. Residual Prepayments: at any date of determination with respect to a Terminated Lease, means the excess of (a) the payment related to the Terminated Lease over (b) the Discounted Present Value of the remaining Lease Payments related to the Terminated Lease as of the Due Period relating to such date of determination (plus any amounts previously due and unpaid). Residual Realizations: the sum of (a) the aggregate cash flows realized from the sale (including pursuant to a Lessee's purchase option) or re-lease of any 20 23 Equipment following the termination of the related Lease other than Equipment subject to Non-Performing Leases; (b) Residual Warranty Payments; (c) Residual Casualty Payments and (d) Residual Prepayments. Residual Servicer Advances: as defined in Section 4.01(b) of the Assignment and Servicing Agreement. Residual Servicing Fee: with respect to any Payment Date, the Residual Servicing Fee payable pursuant to the Assignment and Servicing Agreement. Residual Warranty Payments: at any date with respect to a Warranty Lease, means the excess of (a) the Lease Repurchase Amount related to the Warranty Lease over (b) the Discounted Present Value of the remaining Lease Payments related to the Warranty Lease as of the Due Period relating to such date of determination (plus any amounts previously due and unpaid). Responsible Officer: with respect to the Trustee, any person regularly engaged in the administration or supervision of corporate trust accounts (including, in the case of the original Trustee hereunder, any officer in its Corporate Trust Administration) and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. S&P: Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies Inc. and any successor thereto. Securities Act: the Securities Act of 1933, as amended. Servicer: Copelco and any successor Servicer appointed pursuant to the terms hereof and of the Assignment and Servicing Agreement and, to the extent that it at any time is performing the functions of the Servicer, the Trustee, subject to the terms of Section 5.01 hereof. Servicer Advance: as defined in Section 4.01(a) of the Assignment and Servicing Agreement. Servicer Event of Default: as defined in Section 8.01 of the Assignment and Servicing Agreement. Servicer Order: a written order or request delivered to the Trustee and signed in the name of the Servicer by an Authorized Officer. Servicing Fee: with respect to any Payment Date, the Servicing Fee payable pursuant to the Assignment and Servicing Agreement. Servicing Report: as defined in Section 5.01(b) of the Assignment and Servicing Agreement. 21 24 Similar Transaction Agreement: an indenture between the Trustee and a wholly-owned special purpose subsidiary of Copelco other than the Issuer, substantially similar to this Indenture, pursuant to which notes, substantially similar to the Notes, have been issued. Similar Transaction Amount: for each Required Deposit Date, the amount of all Similar Transaction Payments received by the Servicer and deposited in the Collection Account pursuant to Section 3.02(a) and reported by the Servicer for such Required Deposit Date pursuant to Section 5.01(a) of the Assignment and Servicing Agreement. Similar Transaction Payments: all payments on or in respect of leases subject to the lien of any Similar Transaction Agreement. Stated Maturity: The stated maturity date with respect to the Class A-1 Notes is the Payment Date in __________ (the "Class A-1 Stated Maturity Date"), the stated maturity date with respect to the Class A-2 Notes is the Payment Date in ____________ (the "Class A-2 Stated Maturity Date"), the stated maturity date with respect to the Class A-3 Notes is the Payment Date in ___________ (the "Class A-3 Stated Maturity Date"), the stated maturity date with respect to Class the A-4 Notes is the Payment Date in _________ (the "Class A-4 Stated Maturity Date"), the stated maturity date with respect to the Class B Notes is the Payment Date in ___________ (the "Class B Stated Maturity Date"), the stated maturity date with respect to the Class C Notes is the Payment Date in __________ (the "Class C Stated Maturity Date"), the stated maturity date with respect to the Class D Notes is the Payment Date in __________ (the "Class D Stated Maturity Date"), the stated maturity date with respect to the Class E Notes is the Payment Date in __________ (the "Class E Stated Maturity Date") and the stated maturity date with respect to the Class R-1 and Class R-2 Notes is ____________ (the "Class R Stated Maturity Date", together with the Class A-1 Stated Maturity Date, the Class A-2 Stated Maturity Date, the Class A-3 Stated Maturity Date, the Class A-4 Stated Maturity Date, the Class B Stated Maturity Date, the Class C Stated Maturity Date, the Class D Stated Maturity Date and the Class E Stated Maturity Date, the "Stated Maturity Dates"). Substitute Lease: as defined in Section 12 of the Assignment and Servicing Agreement. Terminated Lease: a lease that is terminated prior to its original stated maturity (but not on account of casualty or a Lease default). Termination Payment: a payment payable by a Lessee under a Lease upon the early termination of such Lease (but not on account of a casualty or a Lease default) which may be agreed upon by the Servicer, acting in the name of the Issuer, and the Lessee in accordance with the provisions of Section 4.02 of the Assignment and Servicing Agreement. 22 25 Transaction Payment Amount: for each Required Deposit Date, the amount of all Lease Payments, Lease Delinquency Payments, Non-Performing Lease Payments, Casualty Payments, Termination Payments and other payments on or in respect of a Lease received by the Servicer and deposited in the Collection Account pursuant to Section 3.02(a) and reported by the Servicer for such Required Deposit Date in accordance with Section 5.01(c) of the Assignment and Servicing Agreement. Trust Accounts: the Collection Account, the Reserve Account, the Residual Account and the Liquidity Reserve Account. Trust Estate: all money, instruments and other property subject to or intended to be subject to the lien of this Indenture including all proceeds thereof. Trustee: the Person named as the "Trustee" in the first paragraph of this instrument until a successor Person shall have become the Trustee pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Person; provided, that the provisions of Section 7.07 and Section 8.11, as applicable to any Person at any time serving as Trustee hereunder, shall survive the termination of such Person's status as Trustee hereunder and the succession of any other Person to such status. Trust Indenture Act: the Trust Indenture Act of 1939 as in effect on the date on which this Indenture is qualified under the Trust Indenture Act, except as provided in Section 9.06 hereof. Trust Order or Trust Request: a written order or request delivered to the Trustee and signed in the name of the Issuer by an Authorized Officer. Underwriting Agreement: the Underwriting Agreement, among the Issuer, Copelco and Prudential Securities Incorporated ("Prudential"). Uniform Commercial Code: with respect to a particular jurisdiction, the Uniform Commercial Code, as in effect from time to time in such jurisdiction, or any successor statute thereto. Warranty Lease: a Lease subject to repurchase by the Transferor as a result of a breach of a representation or warranty in accordance with the provisions of Section 4 of the Assignment and Servicing Agreement. SECTION 1.02 Compliance Certificates and Opinions. Upon any written application or request (or oral application with prompt written or telecopied confirmation) by the Issuer to the Trustee to take any action under any provision of this Indenture, other than any request that (a) the Trustee authenticate the Notes specified in such request, (b) the Trustee invest moneys in any of the Trust Accounts pursuant to the written directions specified in such request, or (c) the Trustee pay moneys due and payable to the Issuer hereunder to the Issuer's assignee specified in such request, the Trustee shall require the Issuer to furnish to the Trustee an Officers' 23 26 Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and that the request otherwise is in accordance with the terms of the Indenture, and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such requested action as to which other evidence of satisfaction of the conditions precedent thereto is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. SECTION 1.03 Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Issuer delivered to the Trustee may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such Officer's Certificate or opinion and any Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Issuer as to such factual matters unless such officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Any Opinion of Counsel may be based on the written opinion of other counsel, in which event such Opinion of Counsel shall be accompanied by a copy of such other counsel's opinion and shall include a statement to the effect that such counsel believes that such counsel and the Trustee may reasonably rely upon the opinion of such other counsel. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Wherever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Trustee's right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Section 7.01(a)(ii). 24 27 Whenever in this Indenture it is provided that the absence of the occurrence and continuation of a Default or Event of Default or Servicer Event of Default is a condition precedent to the taking of any action by the Trustee at the request or direction of the Issuer, then, notwithstanding that the satisfaction of such condition is a condition precedent to the Issuer's right to make such request or direction, the Trustee shall be protected in acting in accordance with such request or direction if it does not have knowledge of the occurrence and continuation of such Default or Event of Default or Servicer Event of Default. For all purposes of this Indenture, the Trustee shall not be deemed to have knowledge of any Default or Event of Default nor shall the Trustee have any duty to monitor or investigate to determine whether a default has occurred (other than an Event of Default of the kind described in Section 6.01(a)) or Servicer Event of Default unless a Responsible Officer of the Trustee shall have actual knowledge thereof or shall have been notified in writing thereof by the Issuer, the Servicer, or any Noteholder. SECTION 1.04 Acts of Noteholders, etc. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 1.04. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the holder of any Note shall bind every future holder of the same Note and the holder of every Note issued upon the registration of transfer thereof or in exchange therefore or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note. 25 28 (d) By accepting the Notes issued pursuant to this Indenture, each Noteholder irrevocably appoints the Trustee hereunder as the special attorney-in-fact for such Noteholder vested with full power on behalf of such Noteholder to effect and enforce the rights of such Noteholder and the revisions pursuant hereto for the benefit of such Noteholder; provided that nothing contained in this Section 1.04(d) shall be deemed to confer upon the Trustee any duty or power to vote on behalf of the Noteholders with respect to any matter on which the Noteholders have a right to vote pursuant to the terms of this Indenture. SECTION 1.05 Notices, etc., to Trustee, Servicer, Issuer and Rating Agencies. Any request, demand, authorization, direction, notice, consent, waiver, Act of Noteholders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Trustee, the Issuer or the Servicer shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid or certified mail return receipt requested, or sent by private courier or confirmed telecopy. Unless otherwise specifically provided herein, no such request, demand, authorization, direction, notice, consent, waiver, Act of Noteholders or other document shall be effective until received and any provision hereof requiring the making, giving, furnishing, or filing of the same on any date shall be interpreted as requiring the same to be sent or delivered in such fashion that it will be received on such date. Any such request, demand, authorization, direction, notice, consent, waiver, Act of Noteholders, or other document shall be sent or delivered to the following addresses: a) if to the Trustee, at the Corporate Trust Office, Attention: Corporate Trust Administration (Number for telecopy: (716) 842-4474), or at any other address previously furnished in writing to the Issuer and the Servicer by the Trustee; or b) if to the Issuer, at East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey 08054-5400, Attention: Stephen W. Shippie (Number for telecopy: 609-273-9288), or at any other address previously furnished in writing to the Trustee and the Issuer by the Servicer; or c) if to the Servicer, at East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey 08054-5400, Attention: Stephen W. Shippie (Number for telecopy: 609-273-9288), or at any other address previously furnished in writing to the Trustee and the Issuer by the Servicer. d) if to the Rating Agencies: to Duff & Phelps Credit Rating Co., 55 East Monroe Street, Chicago, Illinois 60603, Attention: Structured Finance Monitoring Group, to Fitch IBCA, Inc., One State Street Plaza, New York, NY 10004, Attention: ABS Surveillance, and to Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention: ABS Monitoring Department. 26 29 SECTION 1.06 Notice to Noteholders; Waiver. (a) Where this Indenture provides for notice to Noteholders of any event, or the mailing of any report to Noteholders, such notice or report shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid or certified mail return receipt requested, or sent by private courier or confirmed telecopy to each Noteholder affected by such event or to whom such report is required to be mailed, at its address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice or the mailing of such report. In any case where a notice or report to Noteholders is mailed, neither the failure to mail such notice or report, nor any defect in any notice or report so mailed, to any particular Noteholder shall affect the sufficiency of such notice or report with respect to other Noteholders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. (b) In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to mail or send notice to Noteholders, in accordance with Section 1.06(a), of any event or any report to Noteholders when such notice or report is required to be delivered pursuant to any provision of this Indenture, then such notification or delivery as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. SECTION 1.07 Effect of Headings and Table of Contents. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.08 Successors and Assigns. All covenants and agreements in this Indenture by the Issuer or the Trustee shall bind its respective successors and permitted assigns, whether so expressed or not. SECTION 1.09 GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS INDENTURE IS SUBJECT TO THE TRUST INDENTURE ACT OF 1939 AND SHALL BE GOVERNED THEREBY AND CONSTRUED IN ACCORDANCE THEREWITH. SECTION 1.10 Legal Holidays. In any case where any Payment Date or the Stated Maturity or any other date on which principal of or interest on any Note is proposed to be paid shall not be a 27 30 Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) such payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Payment Date, Stated Maturity, or other date on which principal of or interest on any Note is proposed to be paid, provided that no interest shall accrue for the period from and after such Payment Date, Stated Maturity, or any other date on which principal of or interest on any Note is proposed to be paid, as the case may be, until such next succeeding Business Day. SECTION 1.11 Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 1.12 Inspection. The Issuer agrees that, on reasonable prior notice, it will permit the representatives of the Trustee or any Noteholder holding Notes, or a beneficial interest therein, evidencing at least 25% of the Outstanding Principal Amount of the Receivable Notes or 25% of the Outstanding Principal Amount of the Class R Notes, during the Issuer's normal business hours, to examine all of the books of account, records, reports and other papers of the Issuer, to make copies thereof and extracts therefrom, to cause such books to be audited by independent accountants selected by the Issuer and reasonably acceptable to the Trustee or such Noteholder, as the case may be, and to discuss its affairs, finances and accounts with its officers, employees and independent accountants (and by this provision the Issuer hereby authorizes its accountants to discuss with such representatives such affairs, finances and accounts), all at such reasonable times and as often as may be reasonably requested for the purpose of reviewing or evaluating the financial condition or affairs of the Issuer or the performance of and compliance with the covenants and undertakings of the Issuer in this Indenture, the Assignment and Servicing Agreement or any of the other documents referred to herein or therein. Any expense incident to the exercise by the Trustee at any time or any Noteholder during the continuance of any Default or Event of Default, of any right under this Section 1.12 shall be borne by the Issuer. SECTION 1.13 Survival of Representations and Warranties. The representations, warranties and certifications of the Issuer made in this Indenture or in any certificate or other writing delivered by the Issuer pursuant hereto shall survive the authentication and delivery of the Notes hereunder. 28 31 ARTICLE II. THE NOTES SECTION 2.01 General Provisions. (a) The Notes shall consist of $__________ principal amount of Class A-1 Notes, $___________ principal amount of Class A-2 Notes, $___________ principal amount of Class A-3 Notes, $___________ principal amount of Class A-4 Notes, $___________ principal amount of Class B Notes, $___________ principal amount of Class C Notes, $___________ principal amount of Class D Notes, $__________ principal amount of Class E Notes, $__________ principal amount of Class R-1 Notes, and $___________ principal amount of Class R-2 Notes and the forms thereof and of the Trustee's certificate of authentication shall be in substantially the forms set forth in Exhibit A hereto, with such appropriate insertions, omissions, substitutions, and other variations as are required or permitted by this Indenture. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is limited to $___________ of Receivable Notes and $___________ of Class R Notes, except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 2.03, 2.04, or 9.05. The Notes shall be issuable only in registered form and only in minimum denominations of at least $1,000,000 with respect to the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class R Notes; provided that the foregoing shall not restrict or prevent the transfer in accordance with Section 2.03 of any Note having a remaining Outstanding Principal Amount of other than an integral multiple of $1,000,000, or the issuance of a single Note of each Class, with a denomination less than $1,000,000. (b) For each Payment Date, payments of principal (the "Principal Payments") on the Notes will be made in accordance with Sections 3.03(b), 3.04(b) or 6.06, as applicable. Except as otherwise provided in Section 6.02, no part of the principal of any Note shall be paid prior to the Payment Date on which such principal is due in accordance with the preceding provisions of this Section 2.01(b), except that the Issuer may redeem the Notes in their entirety (including any unpaid interest due), without premium, as of any Payment Date on which the Discounted Present Value of the Performing Leases is less than or equal to five percent (5%) of the aggregate Discounted Present Value of the Leases as of the Cut-Off Date (after giving effect to all Principal Payments on such Payment Date). The Issuer will give notice of any such redemption to each Noteholder and the Trustee at least 30 days before the Payment Date fixed for such prepayment by certified mail return receipt requested, hand delivery or overnight courier. Notice of such prepayment having been so given, the remaining unpaid principal as of the Payment Date fixed for prepayment together with all interest accrued and unpaid to such Payment Date, shall become due and payable on such Payment Date. (c) For each Payment Date, the interest due and payable (the "Interest Payments") with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class 29 32 A-4 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class R-1, and the Class R-2 Notes will be the interest that has accrued on the respective Notes since the last Payment Date or, in the case of the first Payment Date, since the Issuance Date for the Class A-1 Notes and February 15, 1999 for all other Notes, at the Class A-1 Interest Rate, Class A-2 Interest Rate, Class A-3 Interest Rate, Class A-4 Interest Rate, Class B Interest Rate, Class C Interest Rate, Class D Interest Rate, Class E Interest Rate, Class R-1 Interest Rate and Class R-2 Interest Rate respectively, applied to the then Outstanding Principal Amounts of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, the Class C Notes, Class D Notes, Class E Notes, Class R-1 Notes, and Class R-2 Notes respectively, on the preceding Payment Date. With respect to the Class A-1 Notes, the interest will be calculated on the basis of a year of 360 days and the actual number of days in the related interest accrual period. With respect to all other Notes, the interest will be calculated on the basis of a year of 360 days comprised of twelve 30-day months. Interest Payments will be made in accordance with Sections 3.03(b), 3.04(b) and 6.06, as applicable. (d) All payments made with respect to any Note shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts and shall be applied first to the interest then due and payable on such Notes, then to the principal thereof, and finally to premium, if any. (e) All Class A-1 Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class A-1 Notes shall be made pro rata among all Outstanding Class A-1 Notes, without preference or priority of any kind. (f) All Class A-2 Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class A-2 Notes shall be made pro rata among all Outstanding Class A-2 Notes, without preference or priority of any kind. (g) All Class A-3 Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class A-3 Notes shall be made pro rata among all Outstanding Class A-3 Notes, without preference or priority of any kind. (h) All Class A-4 Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and 30 33 interest on the Class A-4 Notes shall be made pro rata among all Outstanding Class A-4 Notes, without preference or priority of any kind. (i) The Class B Notes shall be subordinated to the Class A Notes to the extent set forth herein. All Class B Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class B Notes shall be made pro rata among all Outstanding Class B Notes, without preference or priority of any kind. (j) The Class C Notes shall be subordinated to the Class A Notes and the Class B Notes to the extent set forth herein. All Class C Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class C Notes shall be made pro rata among all Outstanding Class C Notes, without preference or priority of any kind. (k) The Class D Notes shall be subordinated to the Class A Notes, the Class B Notes and Class C Notes to the extent set forth herein. All Class D Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class D Notes shall be made pro rata among all Outstanding Class D Notes, without preference or priority of any kind. (l) The Class E Notes shall be subordinated to the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes to the extent set forth herein. All Class E Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class E Notes shall be made pro rata among all Outstanding Class E Notes, without preference or priority of any kind. (m) Except as provided in Section 6.06, the Class R Notes shall not be subordinated to the Class A Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes, but shall have priority with respect to any Residual Realizations received hereunder. The Class R-2 Notes shall be subordinated to the Class R-1 Notes to the extent set forth herein. (n) All Class R-1 Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and 31 34 interest on the Class R-1 Notes shall be made pro rata among all Outstanding Class R-1 Notes, without preference or priority of any kind. (o) The Class R-2 Notes shall be subordinated to the Class R-1 Notes to the extent set forth herein. All Class R-2 Notes issued under this Indenture shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture. Payments of principal and interest on the Class R-2 Notes shall be made pro rata among all Outstanding Class R-2 Notes, without preference or priority of any kind. SECTION 2.02 Execution, Authentication, Delivery, and Dating. (a) The Notes shall be manually executed by the Issuer. (b) Any Note bearing the signature of an individual who was at the time of execution thereof a proper officer of the Issuer shall bind the Issuer, notwithstanding that such individual ceases to hold such office prior to the authentication and delivery of such Note or did not hold such office at the date of such Note. (c) No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Each Note shall be dated the date of its authentication. (d) The Notes may from time to time be executed by the Issuer and delivered to the Trustee for authentication together with a Trust Request to the Trustee directing the authentication and delivery of such Notes and thereupon the same shall be authenticated and delivered by the Trustee in accordance with such Trust Request. SECTION 2.03 Transfer and Exchange. (a) The Issuer shall cause to be kept at the Corporate Trust Office a register (the "Note Register") in which, subject to such reasonable regulations as the Trustee may prescribe, the Issuer shall provide for the registration of Notes and of transfers of Notes. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. No transfer of any Class E Note may be made unless that transfer is made pursuant to an effective registration statement under the Securities Act and an effective registration or a qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification because the transfer satisfies one of the following: (i) such transfer is in compliance with Rule 144A under the Securities Act, to a person who the transferor reasonably believes is a Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that such 32 35 transfer is being made in reliance upon Rule 144A under the Securities Act as certified by such transferee in a letter in the form of Exhibit B hereto; (ii) after the appropriate holding period, such transfer is pursuant to an exemption from registration under the Securities Act provided by Rule 144 under the Securities Act; (iii) such transfer is to a transferee who is an "Accredited Investor" (as defined in Rule 501 of the Securities Act) in a transaction exempt from the registration requirements of the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States or (iv) such transfer is otherwise exempt from the registration requirements of the Securities Act. If any resale or other transfer of (a) the Class R Notes is proposed to be made to an Accredited Investor pursuant to clause (iii) above or (b) the Class E Notes is proposed, the Trustee will require, in order to assure compliance with such laws, that the Class E Noteholder's or Class R Noteholder's prospective transferee referred to in the preceding clauses (iii) or (iv) deliver an investment letter certifying to the Issuer and the Trustee as to the facts surrounding such transfer in the form of Exhibit B hereto. Except in the case of a transfer of Class E Notes or Class R Notes to a transferee referred to in the preceding clause (i) or, in general, a transfer that is to be made after three years from the Issuance Date, the Trustee shall require an opinion of counsel satisfactory to it to the effect that such transfer may be made pursuant to an exemption from the Securities Act without such registration (which opinion of counsel shall not be an expense of the Trustee or the Servicer or the Issuer). None of the Issuer, the Servicer or the Trustee is obligated to register or qualify the Class E Notes or the Class R Notes under the Securities Act or any other securities law or to take any action not otherwise required under this Indenture to permit the transfer of any Class E Note or Class R Note without registration. The Trustee shall not register the transfer of any Note (other than the transfer of a Note to the nominee of the Clearing Agency) unless the transferee has executed and delivered to the Trustee a certification to the effect that either (i) the transferee is not (A) an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code")) that is subject to Section 4975 of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the assets of a Benefit Plan, or (ii) the transferee's acquisition and continued holding of the Note will be covered by a U.S. Department of Labor Prohibited Transaction Class Exemption. Each transferee of a book-entry Note shall be deemed to make one of the foregoing representations. (b) Each transferee of Class R Notes represented by an interest in a Rule 144A Global Note will be deemed to have represented and agreed as follows (terms used in this paragraph that are defined in Rule 144A under the Securities Act are used herein as defined therein): (1) The transferee (A) is a "qualified institutional buyer", (B) is aware that the sale of the Class R Notes to it is being made in reliance on the exemption from registration provided by Rule 144A under the Securities Act and (C) is acquiring the Class R Notes for its own account or for one or more accounts, each of which is a QIB, and as to each of which the transferee exercises 33 36 sole investment discretion, and in a principal amount of not less than $1,000,000, for the transferee and for each such account. The transferee has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Class R Notes, and the transferee and any accounts for which it is acting are each able to bear the economic risk of the transferee's or its investment. (2) The transferee understands that the Class R Notes are being offered only in a transaction not involving any public offering in the United States within the meaning of the Securities Act, the Class R Notes have not been and will not be registered under the Securities Act, and, if in the future the transferee decides to offer, resell, pledge or otherwise transfer the Class R Notes, such Class R Notes may be offered, resold, pledged or otherwise transferred only in accordance with the legend on such Class R Notes described above. The transferee acknowledges that no representation is made by the Issuer as to the availability of any exemption under the Securities Act or any state securities laws for resale of the Class R Notes. (3) The transferee has carefully read and understands the Class R Private Placement Memorandum, including, without limitation, the "Risk Factor" section therein, and has based its decision to purchase the Class R Notes upon the information contained therein and not upon any information, if any, provided to it by any of the Issuer, the Placement Agent or any other Person. The transferee is not purchasing the Class R Notes with a view to the resale, distribution or other disposition thereof in violation of the Securities Act. The transferee understands that an investment in the Class R Notes involves certain risks, including the risk of loss of a substantial part of its investment under certain circumstances. The transferee has had access to such financial and other information concerning the Issuer and the Class R Notes as it deemed necessary or appropriate in order to make an informed investment decision with respect to its purchase of the Class R Notes, including an opportunity to ask questions of and request information from the Placement Agent. (4) In connection with the transfer of the Class R Notes: (i) none of the Issuer, the Placement Agent or the Servicer is acting as a fiduciary or financial or investment adviser for the transferee; (ii) the transferee is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the Issuer, the Placement Agent or the Servicer other than any in a current private placement memorandum for such Class R Notes and any representations expressly set forth in a written agreement with such party; (iii) none of the Issuer, the Placement Agent or the Servicer has given to the transferee (directly or indirectly through any other person) any assurance, guarantee, or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence, or benefit (including legal, regulatory, tax, financial, accounting, or otherwise) of the Indenture or documentation for the Class R Notes; (iv) the transferee has consulted with its own legal, regulatory, tax, business, investment, 34 37 financial, and accounting advisers to the extent it has deemed necessary, and it has made its own investment decisions (including decisions regarding the suitability of any transaction pursuant to the Indenture) based upon its own judgment and upon any advice from such advisers as it has deemed necessary and not upon any view expressed by the Issuer; (v) the transferee has determined that the rates, prices or amounts and other terms of the purchase and sale of the Class R Notes reflect those in the relevant market for similar transactions; (vi) the transferee is acquiring the Class R Notes with a full understanding of all of the terms, conditions and risks thereof (economic and otherwise), and it is capable of assuming and willing to assume (financially and otherwise) those risks; and (vii) the transferee is a sophisticated investor. (5) The transferee understands that the Class R Notes offered in reliance on Rule 144A will bear the legend set forth in the form of Class R Notes attached hereto as Exhibit A, and will be represented by one or more Rule 144A Global Notes. The Class R Notes may not at any time be held by or on behalf of U.S. persons that are not QIBs or institutional accredited investors. Before any interest in a Rule 144A Global Note may be offered, resold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in a Definitive Note, the transferor will be required to provide the Trustee with a written certification (in the form provided as Exhibit B hereto) as to compliance with the transfer restrictions. (6) The transferee will not, at any time, offer to buy or offer to sell the Class R Notes by any form of general solicitation or advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio or seminar or meeting whose attendees have been invited by general solicitations or advertisings. (7) The transferee by its purchase of the Class R Notes, represents that either (i) it is not a Benefit Plan and is not acting on behalf of or investing the assets of a Benefit Plan or (ii) the transferee's acquisition and continued holding of such Class R Notes will be covered by a U.S. Department of Labor Prohibited Transaction Class Exemption. (8) The transferee acknowledges that the Issuer, the Placement Agent and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that, if any of the acknowledgments, representations or warranties deemed to have been made by it by or in connection with its purchase of Class R Notes is no longer accurate, it shall promptly notify the Issuer and the Placement Agent. If the transferee is acquiring any Class R Notes as a fiduciary or agent for one or more investor accounts, it shall be deemed to have represented that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account. 35 38 (c) Subject to Section 2.03(a), upon surrender for registration of transfer of any Note at the office of the Issuer designated pursuant to Section 8.02 for such purpose, the Issuer shall execute and the Trustee upon request shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate original principal amount. The Trustee shall make a notation on any such new Note of the amount of principal, if any, that has been paid on such Note. (d) All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. (e) Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Issuer or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Trustee duly executed, by the holder thereof or his attorney duly authorized in writing. (f) No service charge shall be made for any registration of transfer or exchange of Notes, but the Issuer or the Trustee may require payment by the transferor of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 9.05 not involving any transfer. SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes. (a) If any mutilated Note is surrendered to the Trustee, the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefore a replacement Note of like tenor and principal amount and bearing a number not contemporaneously outstanding. (b) If there shall be delivered to the Issuer and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of actual notice to the Issuer or the Trustee that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a replacement Note of like tenor and principal amount and bearing a number not contemporaneously outstanding. (c) In case the final installment of principal on any such mutilated, destroyed, lost or stolen Note has become or will at the next Payment Date become due and payable, the Issuer in its discretion may, instead of issuing a replacement Note, pay such Note. (d) Upon the issuance of any replacement Note under this Section, the Issuer or the Trustee may require the payment by the Noteholder of a sum sufficient to 36 39 cover any tax or other governmental charge that may be imposed as a result of the issuance of such replacement Note. (e) Every replacement Note issued pursuant to this Section 2.04 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. (f) The provisions of this Section 2.04 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.05. Book-Entry Registration of Class A Notes, Class B Notes, Class C Notes, Class D Notes and Class R Notes. Each of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class R-1 Notes, and the Class R-2 Notes, upon original issuance, shall be issued in the form attached as Exhibit A and delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Issuer. Each of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, the Class R-1 Notes and the Class R-2 Notes shall initially be registered on the Note Register in the name of Cede & Co., the nominee of The Depository Trust Company, as the initial Clearing Agency, and no Class A-1 Note Owner, Class A-2 Note Owner, Class A-3 Note Owner, Class A-4 Note Owner, Class B Note Owner, Class C Note Owner, Class D Note Owner, Class R-1 Note Owner, or Class R-2 Note Owner will receive a definitive note representing such Note Owner's interest, except as provided in Section 2.07. Unless and until Definitive Class A-1 Notes, Definitive Class A-2 Notes, Definitive Class A-3 Notes, Definitive Class A-4 Notes, Definitive Class B Notes, Definitive Class C Notes, Definitive Class D Notes, Definitive Class R-1 Notes and/or Definitive Class R-2 Notes ("Definitive Notes") have been issued to the applicable Note Owners pursuant to Section 2.07: (a) the provisions of this Section 2.05 shall be in full force and effect with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes or the Class B Notes, Class C Notes, Class D Notes or Class R Notes, as the case may be; (b) the Issuer, the Servicer and the Trustee may deal with the Clearing Agency and the Clearing Agency Participants for all purposes with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes or Class R Notes, as the case may be (including the making of distributions on the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes and Class R Notes, as the case may be), as the authorized representatives of the respective Note Owners; 37 40 (c) to the extent that the provisions of this Section 2.05 conflict with any other provisions of this Indenture, the provisions of this Section 2.05 shall control; and (d) the rights of the respective Note Owners shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by law and agreements between such respective Note Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Notes, are issued pursuant to Section 2.07, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the related Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes and Class R-2 Notes, as the case may be, to such Clearing Agency Participants. For purposes of any provision of this Indenture requiring or permitting actions with the consent of, or at the direction of, holders of Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes or Class R-2 Notes, as the case may be, evidencing a specified percentage of the Outstanding Principal Amount of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes or Class R-2 Notes, respectively, such direction or consent may be given by Note Owners (acting through the Clearing Agency and the Clearing Agency Participants) owning Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes or Class R-2 Notes evidencing the requisite percentage of the Outstanding Principal Amount of such Notes, respectively. SECTION 2.06. Notice to Clearing Agency. Whenever notice or other communication to the Class A-1 Noteholders, Class A-2 Noteholders, Class A-3 Noteholders, Class A-4 Noteholders, Class B Noteholders, Class C Noteholders, Class D Noteholders, Class R-1 Noteholders or Class R-2 Noteholders is required under this Agreement, unless and until Definitive Notes shall have been issued to the related Note Owners pursuant to Section 2.07, the Trustee shall give all such notices and communications specified herein to be given to such Noteholders to the applicable Clearing Agency which shall give such notices and communications to the related Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class A-4 Note Owners, Class B Note Owners, Class C Note Owners, Class D Noteholders, Class R-1 Noteholders or Class R-2 Noteholders in accordance with its applicable rules, regulations and procedures. SECTION 2.07. Definitive Class A Notes, Class B Notes, Class C Notes, Class D Notes and Class R Notes. (a) If (a) (i) the Issuer advises the Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities under the 38 41 Depository Agreement with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes, Class C Notes, Class D Notes, the Class R-1 Notes and/or the Class R-2 Notes and (ii) the Trustee or the Issuer is unable to locate a qualified successor, (b) the Issuer, at its option, advises the Trustee in writing that it elects to terminate the book-entry system with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes, Class C Notes, Class D Notes, the Class R-1 Notes and/or the Class R-2 Notes through the Clearing Agency or (c) after the occurrence of a Servicer Event of Default, Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class A-4 Note Owners, Class B Note Owners, Class C Note Owners, Class D Note Owners, Class R-1 Note Owners and Class R-2 Note Owners with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes and Class R-2 Notes evidencing not less than 50% of the aggregate unpaid Outstanding Principal Amount of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes and Class R-2 Notes, respectively, advise the Trustee and the Clearing Agency through the Clearing Agency Participants in writing that the continuation of a book-entry system with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes or Class R-2 Notes, respectively, through the Clearing Agency is no longer in the best interests of the Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class A-4 Note Owners, Class B Note Owners, Class C Note Owners, Class D Note Owners, Class R-1 Note Owners or Class R-2 Note Owners, as the case may be, the Trustee shall notify all Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class A-4 Note Owners, Class B Note Owners, Class C Note Owners, Class D Note Owners, Class R-1 Note Owners and Class R-2 Note Owners with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes and Class R-2 Notes, respectively, through the Clearing Agency, of the occurrence of any such event and of the availability of Definitive Notes, to Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class A-4 Note Owners, Class B Note Owners, Class C Note Owners, Class D Note Owners, Class R-1 Note Owners or Class R-2 Note Owners, respectively, requesting the same. Upon surrender to the Trustee of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, Class R-1 Notes or Class R-2 Notes, as the case may be, by the Clearing Agency, accompanied by registration instructions from the Clearing Agency for registration, the Issuer shall execute and the Trustee shall authenticate and deliver the relevant Definitive Notes. Neither the Issuer nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes, as the case may be, all references herein to obligations imposed upon or to be performed by the Clearing Agency shall be deemed to be imposed upon and performed by the Trustee, to the extent applicable with respect to such Definitive Notes, and the Trustee shall recognize the holders of the relevant Definitive Notes as Noteholders hereunder. (b) The Class R Notes sold to QIBs will be represented by a permanent global note in fully registered form without coupons (the "Rule 144A Global Note") deposited with a custodian for, and registered in the name of, a nominee of DTC. 39 42 In the case of Class R Notes that are Definitive Notes initially issued to an Accredited Investor or in exchange for the Rule 144A Global Notes, such Definitive Notes will bear, and be subject to the legend set forth in the form of Class R Notes attached hereto as Exhibit A. The holder of such Definitive Note may transfer such Definitive Note by surrendering it at the office or agency maintained by the Trustee. Upon the transfer, exchange or replacement of Definitive Notes bearing such legend, or upon specific written request for removal of the legend on a Definitive Note, the Trustee will deliver only Definitive Notes that bear such legend, or will refuse to remove such legend, as the case may be, unless there is delivered to the Trustee such satisfactory evidence, which may include an opinion of counsel, as may reasonably be required by the Trustee that neither such legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act. Definitive Notes will not be eligible for clearing or settlement through DTC, Euroclear or Cedel. SECTION 2.08. Payment of Interest and Principal; Rights Preserved. (a) Any installment of interest or principal, payable on any Note that is punctually paid or duly provided for by the Issuer on the applicable Payment Date shall be paid to the Person in whose name such Note was registered at the close of business on the Record Date for such Payment Date by wire transfer of federal funds to the account and number specified in the Note Register on such Record Date for such Person or, if no such account or number is so specified, then by check mailed to such Person's address as it appears in the Note Register on such Record Date. (b) All reductions in the principal amount of a Note effected by payments of installments of principal made on any Payment Date shall be binding upon all holders of such Note and of any Note issued upon the registration of transfer thereof or in exchange therefore or in lieu thereof, whether or not such payment is noted on such Note. All payments on the Notes shall be paid without any requirement of presentment but each holder of any Note shall be deemed to agree, by its acceptance of the same, to surrender such Note at the Corporate Trust Office against payment of the final installment of principal of such Note. SECTION 2.09. Persons Deemed Owners. Prior to due presentment of a Note for registration of transfer, the Issuer, the Trustee, and any agent of the Issuer or the Trustee may treat the registered Noteholder as the owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee shall be affected by notice to the contrary. SECTION 2.10. Cancellation. All Notes surrendered for registration of transfer or exchange or following final payment shall, if surrendered to any Person other than the Trustee, be delivered to 40 43 the Trustee and shall be promptly cancelled by it. The Issuer may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee may be disposed of in the normal course of its business or as directed by a Trust Order. SECTION 2.11. Noteholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders and shall otherwise comply with Section 312(a) of the Trust Indenture Act. In the event the Trustee no longer serves as the Note Registrar, the Issuer (or any other obligor upon the Notes) shall furnish to the Trustee at least five Business Days before each interest payment date (and in all events in intervals of not more than 6 months) and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders, and the Issuer shall otherwise comply with Section 312(a) of the Trust Indenture Act. SECTION 2.12. Treasury Securities. In determining whether the Noteholders of the required Outstanding Principal Amount of the Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, any other obligor upon the Notes or an Affiliate of the Issuer shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Responsible Officer knows are so owned shall be so disregarded. ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION AND APPLICATION OF MONEYS; REPORTS SECTION 3.01. Trust Accounts; Investments by Trustee. (a) On or before the Issuance Date, the Trustee shall establish in the name of the Trustee for the benefit of the Noteholders and the Trust to the extent of their interests therein as provided in this Indenture and in the Assignment and Servicing Agreement, the following accounts, which accounts shall be Eligible Accounts maintained at the Corporate Trust Office: (i) Collection Account; (ii) Reserve Account; (iii) Residual Account; and 41 44 (iv) Liquidity Reserve Account Subject to the further provisions of this Section 3.01(a), the Trustee shall, upon receipt or upon transfer from another account, as the case may be, deposit into such accounts all amounts received by it which are required to be deposited therein in accordance with the provisions of this Indenture. All such amounts and all investments made with such amounts, including all income and other gain from such investments, shall be held by the Trustee in such accounts as part of the Trust Estate as herein provided, subject to withdrawal by the Trustee in accordance with, and for the purposes specified in the provisions of, this Indenture. (b) The Trustee shall hold in trust but shall not be required to deposit in any account specified in Section 3.01(a) any payment received by it until such time as the Trustee shall have identified to its reasonable satisfaction the nature of such payment and, on the basis thereof, the proper account or accounts into which such payment is to be deposited. In determining into which of the accounts, if any, referred to above any amount received by the Trustee is to be deposited, the Trustee may conclusively rely (in the absence of bad faith on the part of the Trustee) on the advice of the Servicer. Unless the Trustee is advised differently in writing by the Lessee making the payment or by the Servicer in writing (with the Servicer's instruction controlling), the Trustee shall assume that any amount remitted to it by such Lessee is to be deposited into the Collection Account pursuant to Section 3.03. The Trustee may establish from time to time such deadline or deadlines as it shall determine are reasonable or necessary in the administration of the Trust Estate after which all amounts received or collected by the Trustee on any day shall not be deemed to have been received or collected until the next succeeding Business Day. (c) Neither the Servicer, Trustee nor the institution then acting as Trustee shall have any right of set-off with respect to the Collection Account, the Reserve Account, the Residual Account or the Liquidity Reserve Account, or any investment therein. (d) So long as no Event of Default shall have occurred and be continuing, all or a portion of the amounts in the Trust Accounts, shall be invested and reinvested by the Trustee pursuant to a Trust Order or Servicer Order in one or more Eligible Investments. Subject to the restrictions on the maturity of investments set forth in Section 3.01(f), each such Trust Order or Servicer Order may authorize the Trustee to make the specific Eligible Investments set forth therein, to make Eligible Investments from time to time consistent with the general instructions set forth therein, or to make specific Eligible Investments pursuant to instructions received in writing or by telegraph or facsimile transmission from the employees or agents of the Issuer or the Servicer, as the case may be, identified therein, in each case in such amounts as such Trust Order or Servicer Order shall specify. The Issuer agrees to report as income for financial reporting and tax purposes (to the extent reportable) all investment earnings on amounts in the Collection Account, the Reserve Account, the Residual Account, or the Liquidity Reserve Account. Each of the Issuer and the Servicer agrees to give appropriate and timely investment directions to the Trustee so that there will not be more than two Business 42 45 Days in any one calendar year at the end of which funds in the Trust Accounts are not invested, directly or indirectly, pursuant to a Trust Order or a Servicer Order in Eligible Investments that mature on or after the opening of business on the next Business Day. (e) In the event that either (i) the Issuer or the Servicer, as the case may be, shall have failed to give investment directions to the Trustee by 9:30 A.M., New York City time on any Business Day on which there may be uninvested cash or (ii) an Event of Default shall be continuing, the Trustee shall promptly invest and reinvest the funds then in the Collection Account, the Reserve Account, the Residual Account or the Liquidity Reserve Account, as the case may be, to the fullest extent practicable in one or more Eligible Investments. All investments made by the Trustee shall mature no later than the maturity date therefore permitted by Section 3.01(f) unless the Trustee shall have received written confirmation from each Rating Agency, that the liquidation of such Eligible Investments prior to their respective maturity dates, will not result in the reduction or withdrawal of such Rating Agency's then-current rating of the Notes. (f) Unless payable on demand, no investment of any amount held in the Trust Accounts shall mature later than the Business Day immediately preceding the Payment Date which is scheduled to occur immediately following the date of investment. All income or other gains (net of losses) from the investment of moneys deposited in the Trust Accounts shall be deposited by the Trustee in such account immediately upon receipt. (g) Any investment of any funds in the Trust Accounts and any sale of any investment held in such accounts, shall be made under the following terms and conditions: (i) each such investment shall be made in the name of the Trustee or in the name of a nominee of the Trustee, in each case in such manner as shall be necessary to maintain the identity of such investments as assets of the Trust Estate; (ii) any certificate or other instrument evidencing such investment shall be delivered directly to the Trustee or its agent and the Trustee shall have sole possession of such instrument, and all income on such investment; and (iii) the proceeds of any sale of an investment shall be remitted by the purchaser thereof directly to the Trustee for deposit in the account in which such investment was held. (h) If any amounts are needed for disbursement from the Trust Accounts and sufficient uninvested funds are not collected and available therein to make such disbursement, in the absence of a Trust Order or Servicer Order for the liquidation of investments held therein in an amount sufficient to provide the required funds, the Trustee shall select and cause to be sold or otherwise converted to cash a sufficient amount of the investments in such accounts. 43 46 (i) The Trustee shall not in any way be held liable by reason of any insufficiency in the Trust Accounts resulting from losses on investments made in accordance with the provisions of this Section 3.01 (but the institution serving as Trustee shall at all times remain liable for its own debt obligations, if any, constituting part of such investments). The Trustee shall not be liable for any investment made by it in accordance with this Section 3.01 on the grounds that it could have made a more favorable investment or a more favorable selection for sale of an investment. SECTION 3.02. Collection of Moneys. (a) On or before the Issuance Date, the Servicer shall designate an address for the receipt directly from Lessees of all Lease Payments, Casualty Payments and Termination Payments on or in respect of each Lease (which payments may be aggregated by the Lessee paying the same with Similar Transaction Payments and Other Lease Payments and which designated address may be the same designated address to which such Similar Transaction Payments and Other Lease Payments may be sent). The Servicer shall, within two Business Days of receipt of any payment at such designated address, deposit such payment (excluding Residual Realizations) in the Collection Account and Residual Realizations in the Residual Account. All Lease Payments, Casualty Payments, Termination Payments and other payments relating to a Lease received at such designated address and so deposited shall constitute part of the Trust Estate. Any Similar Transaction Payments and Other Lease Payments from time to time received at such designated address or otherwise received by the Servicer or deposited in the Collection Account shall not constitute part of the Trust Estate. (b) The Trustee shall from time to time, in accordance with instructions of the Servicer and the provisions of the Similar Transaction Agreements, withdraw from the Collection Account any amounts in the Collection Account which the Servicer advises the Trustee are (i) Similar Transaction Payments and apply such payments in accordance with the Similar Transaction Agreements and (ii) Other Lease Payments. Prior to such payment, the Trustee shall have rights to and an interest in such amounts to the extent (but only to the extent) it is determined that such amounts actually constitute Transaction Payment Amounts. (c) If at any time the Issuer shall receive any payment on or in respect of any Lease, it shall hold such Payment in trust for the benefit of the Trustee and the holders of the Notes, shall segregate such payment from the other property of the Issuer, and shall, promptly (but in no event later than the next following Business Day) upon receipt, deliver such payment in the form received to the Trustee. SECTION 3.03. Collection Account; Payments. (a) The Servicer shall within two Business Days of receipt (a "Required Deposit Date") deposit the following funds, as received, into the Collection Account: 44 47 (i) Lease Payments (net of any Excess Copy Charges and Fee Per Scan Charges); (ii) recoveries from Non-Performing Leases to the extent Copelco has not substituted Substitute Leases for such Non-Performing Leases (except to the extent required to reimburse unreimbursed Servicer Advances); (iii) late charges on delinquent Lease payments not advanced by the Servicer; (iv) proceeds (other than Residual Warranty Payments) from repurchases by Copelco of Leases as a result of breaches of representations and warranties by Copelco to the extent Copelco has not substituted Substitute Leases for such Leases; (v) proceeds from investment of funds in the Collection Account and the Reserve Account; (vi) Casualty Payments (other than Residual Casualty Payments); (vii) Servicer Advances; (viii) Termination Payments (other than Residual Prepayments) to the extent the Issuer does not reinvest such Termination Payments in Additional Leases; and (ix) payments from the Transferor to effect a redemption of the Receivable Notes pursuant to Section 2.01(b). (b) Unless the Notes have been declared due and payable pursuant to Section 6.02 and moneys collected by the Trustee are being applied in accordance with Section 6.06, Available Funds on deposit in the Collection Account and the amounts, if any, deposited into the Collection Account from the Reserve Account in accordance with the provisions of Section 3.05 shall be withdrawn by the Servicer on or before each Payment Date from the Collection Account, in the amounts required, for application in the following order of priority, to make the following required payments: (i) to pay the Servicing Fee; (ii) to reimburse unreimbursed Servicer Advances in respect of a prior Payment Date; (iii) concurrently and pro rata: (a) to make Interest Payments on the Class A-1 Notes; (b) to make Interest Payments on the Class A-2 Notes; (c) to make Interest payments on the Class A-3 Notes; (d) to make Interest payments on the Class A-4 Notes; (iv) to make Interest Payments on the Class B Notes; (v) to make Interest Payments on the Class C Notes; (vi) to make Interest Payments on the Class D Notes; 45 48 (vii) to make Interest Payments on the Class E Notes; (viii) to make the Class A Principal Payment (i) to the Class A-1 Noteholders only, until the Outstanding Principal Amount on the Class A-1 Notes is reduced to zero, then (ii) to the Class A-2 Noteholders only, until the Outstanding Principal Amount on the Class A-2 Notes is reduced to zero, then (iii) to the Class A-3 Noteholders only, until the Outstanding Principal Amount on the Class A-3 Notes is reduced to zero and finally, (iv) to the Class A-4 Noteholders until the Outstanding Principal Amount on the Class A-4 Notes is reduced to zero; (ix) to pay the Class B Principal Payment to the Class B Noteholders; (x) to pay the Class C Principal Payment to the Class C Noteholders; (xi) to pay the Class D Principal Payment to the Class D Noteholders; (xii) to pay the Class E Principal Payment to the Class E Noteholders; (xiii) to pay the Additional Principal, if any, as an additional reduction of principal, to the Class A Noteholders then receiving the Class A Principal Payment until the Outstanding Principal Amount as provided in clause (viii) above on all of the Class A Notes has been reduced to zero, thereafter to the Class B Noteholders as an additional reduction of principal until the Outstanding Class B Principal Amount has been reduced to zero, thereafter to the Class C Noteholders until the Outstanding Class C Principal Amount has been reduced to zero; thereafter to the Class D Noteholders until the Outstanding Class D Principal Amount has been reduced to zero; and thereafter to the Class E Noteholders until the Outstanding Class E Principal Amount has been reduced to zero; (xiv) to make a deposit to the Reserve Account in an amount equal to the excess of the Required Reserve Amount over the Available Reserve Amount; and (xv) to the Issuer, the balance, if any. (c) Notwithstanding the foregoing, the Trustee shall retain in the Collection Account an amount equal to all Lease Payments received that were due since the prior Due Period, and all Casualty Payments and Termination Payments (excluding Residual Realizations) received by the Trustee after the Determination Date for such Payment Date and shall not distribute any such amounts on such Payment Date. If at any time any amount or portion thereof previously distributed pursuant to this Section 3.03(c) shall have been recovered, or shall be subject to recovery, in any proceeding with respect to the Issuer or otherwise, then for purposes of determining future distributions pursuant to this Section 3.03(c) such amount or portion thereof shall be deemed to have not been previously so distributed. 46 49 SECTION 3.04. The Residual Account; Payments. (a) The Servicer shall within two Business Days of receipt deposit the following funds, as received into the Residual Account: (i) Residual Realizations; (ii) proceeds from investment of funds in the Residual Account and the Liquidity Reserve Account; (iii) Residual Servicer Advances; and (iv) payments from the Transferor to effect a redemption of the Class R Notes pursuant to Section 2.01(b). (b) Unless the Notes have been declared due and payable pursuant to Section 6.02 and moneys collected by the Trustee are being applied in accordance with Section 6.06, amounts on deposit in the Residual Account and the amounts, if any, deposited into the Residual Account from the Liquidity Reserve Account in accordance with the provisions of Section 3.06 shall be withdrawn by the Servicer on or before each Payment Date from the Residual Account, in the amounts required, for application in the following order of priority, to make the following required payments: (i) to pay the Residual Servicing Fee; (ii) to reimburse unreimbursed Residual Servicer Advances in respect of a prior Payment Date; (iii) to make Interest Payments on the Class R-1 Notes; (iv) to make Interest Payments on the Class R-2 Notes; (v) to make a deposit to the Liquidity Reserve Account in an amount equal to the excess of the Required Liquidity Reserve over the amount then on deposit therein; (vi) to pay principal on the Class R-1 Notes until such time as the Outstanding Class R-1 Principal Amount is reduced to zero; (vii) to pay principal on the Class R-2 Notes until such time as the Outstanding Class R-2 Principal Amount is reduced to zero; and (viii) to the Issuer, the balance, if any. SECTION 3.05. The Reserve Account. (a) On the Issuance Date, the Issuer has made an initial deposit of $____________ into the Reserve Account. On each Payment Date, the Trustee shall transfer to the Reserve Account from the Collection Account such amounts as shall be required by Section 3.05(b). 47 50 (b) If by 12:00 noon, New York City time, one Business Day preceding any Payment Date, the amount of collected funds on deposit in the Collection Account available for distribution under Section 3.03(b) is insufficient to permit on such Payment Date all distributions required by Section 3.03(b)(i) through 3.03(b)(xii) (such payments, the "Required Payments" and such shortfall, an "Available Funds Shortfall"), then, to the extent of the Available Reserve Amount on deposit in the Reserve Account, the Trustee shall transfer, not later than the end of such Business Day, from the Reserve Account to the Collection Account such amount to the extent available as shall be necessary to make on such Payment Date all Required Payments. (c) In the event that after giving effect to all the disbursements required to be made on any Payment Date, the Available Reserve Amount exceeds the Required Reserve Amount, the Trustee shall transfer, not later than the end of business on such Payment Date, an amount equal to such excess to the Issuer. (d) Upon termination of this Indenture, any balance remaining in the Reserve Account, after all obligations to the Noteholders hereunder have been fully satisfied, shall be paid to reimburse the Trustee for any amounts owing to it arising from the performance of its obligations under this Indenture and, then, to the Issuer. SECTION 3.06. The Liquidity Reserve Account. (a) On the Issuance Date, the Issuer has made an initial deposit of $____________ into the Liquidity Reserve Account for the sole benefit of the Class R Notes. On each Payment Date, the Trustee shall transfer to the Liquidity Reserve Account from the Residual Account such amounts as shall be required by Section 3.06(b). (b) If by 12:00 noon, New York City time, one Business Day preceding any Payment Date, the amount of collected funds on deposit in the Residual Account available for distribution under Section 3.04(b) is insufficient to permit on such Payment Date all distributions required by Section 3.04(b)(i) through 3.04(b)(iv) then, to the extent of the amount on deposit in the Liquidity Reserve Account, the Trustee shall transfer, not later than the end of such Business Day, from the Liquidity Reserve Account to the Residual Account such amount as shall be necessary to make such distribution on such Payment Date. (c) If on any Payment Date, the aggregate of the balance in the Residual Account and the balance in the Liquidity Reserve Account is greater than the outstanding balance of the Class R Notes and interest payable thereon and the Residual Servicing Fee payable on such Payment Date, the Trustee shall withdraw all amounts from the Liquidity Reserve Account and deposit them in the Residual Account for distribution to the Class R-1 Noteholders and Class R-2 Noteholders on such date. (d) If on any Payment Date, the balance in the Liquidity Reserve Account after giving effect to all distributions required by Section 3.04(b)(i) through 3.04(b)(iv) is greater than the Required Liquidity Reserve the Trustee shall withdraw 48 51 such excess from the Liquidity Reserve Account and deposit them in the Residual Account for distribution to the Class R Noteholder on such Payment Date. (e) Upon termination of this Indenture, any balance remaining in the Liquidity Reserve Account, after all obligations to the Class R Noteholders hereunder have been fully satisfied, shall be paid to reimburse the Trustee for any amounts owing to it arising from the performance of its obligations under this Indenture and, then, to the Issuer. SECTION 3.07. Reports by Trustee; Notices of Certain Payments. (a) The Trustee shall within two Business Days after the request of the Issuer, the Servicer or any Receivable Noteholder, deliver to the requesting person a written report setting forth the amounts on deposit in the Collection Account and the Reserve Account and identifying the investments included therein. (b) Within five Business Days following each Payment Date or as promptly as possible thereafter but in no event later than two Business Days following the receipt of the Monthly Report from the Servicer pursuant to Section 5.01 of the Assignment and Servicing Agreement, the Trustee shall mail to the Issuer, Copelco, each Rating Agency and the Servicer and make available to each Receivable Noteholder the following information: (i) the principal amount of all Outstanding Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes, and Class E Notes respectively. (ii) the amount of Interest Payments and payments in reduction of principal paid on such Payment Date with respect to all Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes respectively, and with respect to the Receivable Notes held by each Receivable Noteholder; (iii) the amount of the Servicing Fee and unreimbursed Servicer Advances paid on such Payment Date pursuant to Section 3.03(b)(i) and Section 3.03(b)(ii); and (iv) the amount on deposit in the Collection Account and the Reserve Account, in each case after giving effect to all of the withdrawals and applications or transfers required on or before such Payment Date pursuant to Sections 3.02, 3.03 and 3.05. (c) The Trustee shall within two Business Days after the request of the Issuer, the Servicer, or any Class R Noteholder, deliver to the requesting person a written report setting forth the amounts on deposit in the Residual Account and the Liquidity Reserve Account, and identifying the investments included therein. (d) Within five Business Days following each Payment Date or as promptly as possible thereafter but in no event later than two Business Days following 49 52 the receipt of the Monthly Report from the Servicer pursuant to Section 5.01 of the Assignment and Servicing Agreement, the Trustee shall mail to the Issuer, Copelco, each Rating Agency and the Servicer and make available to each Class R Noteholder the following information: (i) the principal amount of all Outstanding Class R-1 Notes and Class R-2 Notes, respectively; (ii) the amount of Interest Payments and payments in reduction of principal paid on such Payment Date with respect to all Class R-1 Notes and Class R-2 Notes, respectively, and with respect to the Class R Notes held by each Class R Noteholder; (iii) the amount of the Residual Servicing Fee and unreimbursed Residual Servicer Advances paid on such Payment Date pursuant to Section 3.04(b)(i) and Section 3.04(b)(ii); and (iv) the amount on deposit in the Residual Account and the Liquidity Reserve Account, in each case after giving effect to all the withdrawals and applications or transfers required on or before such Payment Date pursuant to Sections 3.04 and 3.06. (e) With each report of the Trustee furnished pursuant to this Section 3.07 following any Payment Date, the Trustee shall enclose a copy of the relevant Servicing Report and the report required to be furnished to the Trustee by the Servicer following such Payment Date pursuant to Section 6.01 of the Assignment and Servicing Agreement or, if such reports have not been received, a statement to such effect. (f) Upon request of a Noteholder, the Trustee will provide information as to the Outstanding Principal Amount of each Class of Notes. SECTION 3.08. Trustee May Rely on Certain Information from Copelco and Servicer. Pursuant to Sections 4.01, 4.05, 5.01 and 6.02 of the Assignment and Servicing Agreement and Section 3.02 through 3.07 hereof, the Servicer is required to furnish to the Trustee from time to time certain information and make various calculations which are relevant to the performance of the Trustee's duties in this Article Three and in Article Four of this Indenture. The Trustee shall be entitled to rely in good faith on such information or calculations in the performance of its duties hereunder (i) unless and until a Responsible Officer of the Trustee has actual knowledge, or is advised by any Noteholder (either in writing or orally with prompt written or telecopied confirmation), that such information or calculations is or are incorrect, or (ii) unless there is a manifest error in any such information. 50 53 ARTICLE IV RELEASE OF LEASES AND EQUIPMENT SECTION 4.01. Release of Equipment. Subject to the satisfaction of the provisions of Section 4.02, the Trustee shall release Equipment from the Lien of the Indenture upon the occurrence of any of the following events: (a) the sale of such Equipment pursuant to Section 4.03(b) of the Assignment and Servicing Agreement (unless retained by the Issuer for re-leasing), (b) the expiration of the related Lease upon the payment of the final Lease Payment due and payable under such Lease and the deposit of any Residual Realization in respect thereof, (c) the repurchase of the related Lease in accordance with the provisions of Section 5 of the Assignment and Servicing Agreement, (d) the addition of an Additional Lease to the extent new Equipment is provided in replacement of such Equipment in accordance with the provisions of Section 11 of the Assignment and Servicing Agreement and (e) upon the substitution of a Substitute Lease related to such Equipment in accordance with the provisions of Section 11 of the Assignment and Servicing Agreement. The proceeds (excluding Residual Realizations) of any such sale, repurchase or releasing shall be deposited in the Collection Account for disposition under this Indenture. The Residual Realizations shall be deposited in the Residual Account for disposition under this Indenture. SECTION 4.02. Release of Leases Upon Final Lease Payment. In the event that the Trustee shall have received notice (either in writing or orally with prompt written or telecopied confirmation) from the Servicer that the Trustee has received from amounts paid by the Lessee, the Lease Repurchase Amount, or from the proceeds of the Equipment subject to any Lease (i) the final Lease Payment due and payable under such Lease and the deposit of any Residual Realization in respect thereof, (ii) a Termination Payment in respect of such Lease, and the deposit of any Residual Realization in respect thereof, (iii) a Lease Repurchase Amount in respect of such Lease, and the deposit of any Residual Realization in respect thereof, (iv) a Casualty Payment under such Lease (and, following such final Lease Payment, Casualty Payment, Lease Repurchase Amount or Termination Payment, no further payments on or in respect of such Lease are or will be due and payable), or (iv) the full amount of any recoveries with respect to such Non-Performing Lease, such Lease shall be released from the lien of this Indenture. SECTION 4.03. Execution of Documents. The Trustee shall promptly execute and deliver such documents, including without limitation partial releases and termination statements (which shall be furnished to the Trustee by the Issuer), and take such other actions as the Issuer, by Trust Request, may reasonably request (including the return of any Lease which has been released) to fully effectuate the release from this Indenture of any Lease and interests in the related Equipment required to be so released pursuant to Sections 4.01 or 4.02. 51 54 ARTICLE V SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER SECTION 5.01. Servicer Events of Default. If a Servicer Event of Default shall have occurred and be continuing, the Trustee shall, upon the written request of the holders of 66-2/3% of the then Outstanding Principal Amount of the Notes, give notice in writing to the Servicer of the termination of all of the rights and obligations of the Servicer under the Assignment and Servicing Agreement (but none of Copelco's obligations pursuant to Section 4 of the Assignment and Servicing Agreement, which shall survive such termination). On and after the giving of such written notice, all rights and obligations of the Servicer under the Assignment and Servicing Agreement, including, without limitation, the Servicer's right thereunder to receive the Servicing Fee, but none of the Servicer obligations pursuant to Section 4 thereof, shall pass to, be vested in, and be assumed by the Trustee, and the Trustee shall be authorized to, and shall, execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such termination and of such passing, vesting, and assumption; provided that in performing the duties of the Servicer under the Assignment and Servicing Agreement the Trustee shall at all times be deemed to be acting as the Trustee hereunder and shall be entitled to the full benefit of all the protections, benefits, immunities and indemnities provided in this Indenture for or with respect to the Trustee, including without limitation those set forth in Article Seven hereof. SECTION 5.02. Substitute Servicer. Notwithstanding the provisions of Section 5.01, the Trustee may, if it shall be unwilling to continue to act as the successor to the Servicer in accordance with Section 5.01, or shall, if it is unable to continue to so act or is so instructed in writing by the holders of 66-2/3% of the then Outstanding Principal Amount of the Notes, appoint a successor to the Servicer in accordance with the provisions of Section 8.03 of the Assignment and Servicing Agreement. ARTICLE VI EVENTS OF DEFAULT; REMEDIES SECTION 6.01. Events of Default. "Event of Default," wherever used herein, means any one of the following (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 52 55 (a) default in making of Principal Payments at the Stated Maturity of the relevant Receivable Notes or Interest Payments on the Receivable Notes when such become due and payable; (b) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or (ii) a decree or order adjudging the Issuer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of or in respect of the Issuer under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator, or other similar official of the Issuer or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (c) the commencement by the Issuer of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator, or similar official of the Issuer or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the Issuer's failure to pay its debts generally as they become due, or the taking of corporate action by the Issuer in furtherance of any such action. SECTION 6.02. Acceleration of Maturity; Rescission and Annulment. (a) If an Event of Default occurs, the unpaid principal amount of the Notes shall automatically become due and payable at par together with all accrued and unpaid interest thereon, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Issuer. (b) At any time after such an Event of Default has occurred and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the holders of Notes evidencing 66-2/3% of the then Outstanding Principal Amount of the Notes by written notice to the Issuer and the Trustee, may rescind and annul such declaration and its consequences if the Issuer has paid or deposited with the Trustee a sum sufficient to pay: (A) all Principal Payments on any Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class 53 56 R Notes which have become due otherwise than by such declaration of acceleration and interest thereon from the date when the same first became due until the date of payment or deposit at the appropriate Note Interest Rate, (B) all Interest Payments due with respect to any Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class R Notes and, to the extent that payment of such interest is lawful, interest upon overdue interest from the date when the same first became due until the date of payment or deposit at a rate per annum equal to the appropriate Note Interest Rates, and (C) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents and counsel; No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon. SECTION 6.03. Remedies. (a) If an Event of Default occurs and is continuing of which a Responsible Officer has actual knowledge, the Trustee shall immediately give notice to each Noteholder as set forth in Section 7.02. (b) Following any acceleration of the Notes, the Trustee shall have all of the rights, powers and remedies with respect to the Trust Estate as are available to secured parties under the Uniform Commercial Code or other applicable law. Such rights, powers and remedies may be exercised by the Trustee in its own name as trustee of an express trust. (c) If an Event of Default specified in Section 6.01(a) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal and interest remaining unpaid. (d) In exercising its rights and obligations under this Section 6.03, the Trustee may sell the Trust Estate (other than the Liquidity Reserve Account); provided that if the Event of Default involves other than non-payment of principal or interest on the Notes, then such sale must be for an amount greater than or equal to amounts due under clauses first through fourth in Section 6.06 unless directed otherwise by the holders of 66 - 2/3% of the then Outstanding Principal Amount of the Notes. Neither the Trustee nor any Noteholder shall have any rights against the Issuer other than to enforce the Lien against the Leases and the Equipment and to sell the Trust Estate. 54 57 SECTION 6.04. Trustee Shall File Proofs of Claim. (a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial proceeding relative to the Issuer, Copelco, the Servicer or any other obligor upon the Notes or the other obligations secured hereby or relating to the property of the Issuer, Copelco, the Servicer or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuer, Copelco or the Servicer for the payment of overdue principal or interest or any such other obligation) shall by intervention in such proceeding or otherwise, (i) file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Notes and any other obligation secured hereby and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Noteholders allowed in such judicial proceeding, and (ii) collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or other similar official in any such judicial proceeding is hereby authorized by each Noteholder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Noteholders to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. (b) Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Noteholder in any such proceeding. SECTION 6.05. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and 55 58 counsel, be for the ratable benefit of the holders of the Notes in respect of which such judgment has been recovered. SECTION 6.06. Application of Money Collected. Any money collected by the Trustee pursuant to this Article following an Event of Default, and any moneys that may then be held (excluding amounts on deposit in the Liquidity Reserve Account which will be used, on the Payment Date immediately following an Event of Default for the payment of interest and principal to Class R Noteholders in accordance with Clause fourth below) or thereafter received by the Trustee (other than the Liquidity Reserve Account) shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of the entire amount due on account of principal or interest, upon presentation of the Notes and surrender thereof: first to the payment of all costs and expenses of collection incurred by the Trustee and the Noteholders (including the reasonable fees and expenses of any counsel to the Trustee and the Noteholders); second if the person then acting as Servicer under the Assignment and Servicing Agreement is not Copelco Capital or an Affiliate of Copelco Capital, to the payment of all Servicer's Fees then due to such person; third first, pro-rata to the payment of all accrued and unpaid interest on the Outstanding Class A-1 Principal Amount, Outstanding Class A-2 Principal Amount, Outstanding Class A-3 Principal Amount and Outstanding Class A-4 Principal Amount, respectively, to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class A-1 Note Interest Rate, Class A-2 Note Interest Rate and Class A-3 Note Interest Rate and Class A-4 Note Interest Rate, respectively, second, to the payment of all accrued and unpaid interest on the Outstanding Class B Principal Amount to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class B Note Interest Rate, third, to the payment of all accrued and unpaid interest on the Outstanding Class C Principal Amount to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class C Note Interest Rate, fourth, to the payment of all accrued and unpaid interest on the Outstanding Class D Principal Amount to the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class D Note Interest Rate, fifth, to the payment of all accrued and unpaid interest on the Outstanding Class E Principal Amount to 56 59 the date of payment thereof, including (to the extent permitted by applicable law) interest on any overdue installment of interest and principal from the maturity of such installment to the date of payment thereof at the rate per annum equal to the Class E Note Interest Rate, sixth, to the payment of the Outstanding Class A-1 Principal Amount, seventh, to the payment of the Outstanding Class A-2 Principal Amount, Outstanding Class A-3 Principal Amount and Outstanding Class A-4 Principal Amount pro-rata, eighth, to the payment of the Outstanding Class B Principal Amount, ninth, to the payment of the Outstanding Class C Principal Amount, tenth, to the payment of the Outstanding Class D Principal Amount and eleventh, to the payment of the Outstanding Class E Principal Amount; provided, that the Noteholders may allocate such payments for interest, principal and premium at their own discretion, except that no such allocation shall affect the allocation of such amounts or future payments received by any other Noteholder; fourth first to the payment of all accrued and unpaid interest in the Outstanding Class R-1 Principal Amount, second to the payment of all accrued and unpaid interest on the Outstanding Class R-2 Principal Amount, third to the payment of the Outstanding Class R-1 Principal Amount and fourth to the payment of the Outstanding Class R-2 Principal Amount; fifth to the payment of amounts then due the Trustee hereunder; sixth if the person then acting as Servicer is Copelco Capital or an Affiliate of Copelco Capital, to the payment of all Servicer's Fees then due to such Person; and seventh to the payment of the remainder, if any, to the Issuer or any other Person legally entitled thereto. On the Payment Date following an Event of Default, amounts in the Liquidity Reserve Account shall be used to make any amounts not paid under item fourth above and thereafter in the priority first through seventh above. SECTION 6.07. Limitation on Suits. None of the Noteholders shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) such Noteholder has previously given written notice to the Trustee of a continuing Event of Default; (ii) the holders of not less than 66-2/3% of the then Outstanding Principal Amount of the Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; 57 60 (iii) such Noteholder or Noteholders have offered to the Trustee adequate indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee for 30 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (v) so long as any of the Notes remain Outstanding, no direction inconsistent with such written request has been given to the Trustee during such 30-day period by the holders of 66-2/3% of the then Outstanding Principal Amount of the Notes; it being understood and intended that no one or more Noteholders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb, or prejudice the rights of any other Noteholders, or to obtain or to seek to obtain priority or preference over any other Noteholders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Noteholders. It is further understood and intended that so long as any portion of the Notes remains Outstanding, Copelco shall not have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture (other than for the enforcement of Sections 3.03(b), 3.04(b), 3.05, 3.06, 4.01 and 4.02 hereof) or for the appointment of a receiver or trustee (including, without limitation, a proceeding under the Bankruptcy Code), or for any other remedy hereunder. Nothing in this Section 6.07 shall be construed as limiting the rights of otherwise qualified Noteholders to petition a court for the removal of a Trustee pursuant to Section 7.09(h) hereof. SECTION 6.08. Unconditional Right of Noteholders to Receive Principal and Interest. Notwithstanding any other provision in this Indenture, other than the provisions hereof limiting the right to recover amounts due on the Notes to recoveries from the property of the Trust Estate, the holder of any Note shall have the absolute and unconditional right to receive payment of the principal of and interest on such Note on the Maturities for such payments, including the Stated Maturity, and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Noteholder. SECTION 6.09. Restoration of Rights and Remedies. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Noteholder, then and in every such case, subject to any determination in such proceeding, the Issuer, the Trustee and the Noteholders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Noteholders continue as though no such proceeding had been instituted. 58 61 SECTION 6.10. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost, or stolen Notes in Section 2.04 (f), no right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 6.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be. SECTION 6.12. Control by Noteholders. Except as may otherwise be provided in this Indenture, until such time as the conditions specified in Sections 10.01(i) and (ii) have been satisfied in full, the holders of 66-2/3% of the then Outstanding Principal Amount of the Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. Notwithstanding the foregoing, (i) no such direction shall be in conflict with any rule of law or with this Indenture; (ii) the Trustee shall not be required to follow any such direction which the Trustee reasonably believes might result in any personal liability on the part of the Trustee for which the Trustee is not adequately indemnified; and (iii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with any such direction; provided that the Trustee shall give notice of any such action to each Noteholder. SECTION 6.13. Residual Notes Events of Default. (a) Upon a default in making of Principal Payments at the Stated Maturity of the relevant Class R Notes or Interest Payments on the Class R Notes when such become due and payable (a "Residual Event of Default"), the unpaid principal amount of the Class R Notes shall automatically become due and payable at par together with all accrued and unpaid interest thereon, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Issuer. 59 62 (b) At any time after such a Residual Event of Default has occurred and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the holders of Class R Notes evidencing 66-2/3% of the then Outstanding Principal Amount of the Class R Notes by written notice to the Issuer and the Trustee, may rescind and annul such declaration and its consequences if the Issuer has paid or deposited with the Trustee a sum sufficient to pay all Principal Payments on the Class R Notes which have become due otherwise than by such declaration of acceleration and interest thereon from the date when the same first became due until the date of payment or deposit at the appropriate Note Interest Rate all Interest Payments due with respect to any Class R Notes and, to the extent that payment of such interest is lawful, interest upon overdue interest from the date when the same first became due until the date of payment or deposit at a rate per annum equal to the appropriate Note Interest Rates, and all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents and counsel. No such rescission shall affect any subsequent Residual Event of Default or impair any right consequent thereon. (c) If a Residual Event of Default occurs and is continuing of which a Responsible Officer has actual knowledge, the Trustee shall immediately give notice to each Noteholder as set forth in Section 7.02. Following any acceleration of the Class R Notes, the Trustee shall have all of the rights, powers and remedies with respect to the Residual Realizations as are available to secured parties under the Uniform Commercial Code or other applicable law. Such rights, powers and remedies may be exercised by the Trustee in its own name as trustee of an express trust. If a Residual Event of Default occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal and interest remaining unpaid. In exercising its rights and obligations under this Section 6.13, the Trustee may sell the rights to receive Residual Realizations to a third party. Neither the Trustee nor any Class R Noteholder shall have any rights against the Issuer other than to sell the Residual Realizations. (d) Any money collected by the Trustee pursuant to this Article following a sale of rights to Residual Realizations following a Residual Event of Default, and any moneys that may then be held or thereafter received by the Trustee for the benefit of the Class R Notes or otherwise available in the Residual Account or the Liquidity Reserve Account shall be applied in the following order, at the date or dates fixed by the Trustee, upon presentation of the Class R Notes and surrender thereof: first to the payment of all costs and expenses of collection incurred by the Trustee and the Class R Noteholders (including the reasonable fees and expenses of any counsel to the Trustee and the Noteholders); second if the person then acting as Servicer under the Assignment and Servicing Agreement is not Copelco Capital or an Affiliate of Copelco Capital, to the payment of all Residual Servicer's Fees then due to such person; 60 63 third first to the payment of all accrued and unpaid interest on the Outstanding Class R-1 Principal Amount, second to the payment of all accrued and unpaid interest on the Outstanding Class R-2 Principal Amount, third to the payment of the Outstanding Class R-1 Principal Amount and fourth to the payment of the Outstanding Class R-2 Principal Amount; fourth to the payment of amounts then due the Trustee hereunder; fifth if the person then acting as Servicer is Copelco Capital or an Affiliate of Copelco Capital, to the payment of all Residual Servicer's Fees then due to such Person; and sixth to the payment of the remainder, if any, to the Issuer or any other Person legally entitled thereto. SECTION 6.14. Undertaking for Costs. All parties to this Indenture agree (and each holder of any Note by its acceptance thereof shall be deemed to have agreed) that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholder, or group of Noteholders, holding in the aggregate more than 10% of the then Outstanding Principal Amount of the Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the Maturities for such payments, including the Stated Maturity as applicable. SECTION 6.15. Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 6.16. Sale of Trust Estate. (a) The power to effect any sale of any portion of the Trust Estate described pursuant to Section 6.03 shall not be exhausted by any one or more sales as to any portion of the Trust Estate remaining unsold, but shall continue unimpaired until the entire Trust Estate shall have been sold or all amounts payable on the Notes shall have 61 64 been paid. The Trustee may from time to time, upon directions in accordance with Section 6.12, postpone any public sale by public announcement made at the time and place of such sale. For any public sale of the Trust Estate, the Trustee shall have provided each Noteholder with notice of such sale at least two weeks in advance of such sale which notice shall specify the date, time and location of such sale. (b) To the extent permitted by applicable law, the Trustee shall not in any private sale sell to a third party the Trust Estate, or any portion thereof unless, (i) until such time as the conditions specified in Sections 10.01(a)(i) and (ii) have been satisfied in full, the holders of 66-2/3% of the then Outstanding Principal Amount of each Class of the Notes voting separately consent to or direct the Trustee in writing to make such sale; or (ii) the proceeds of such sale would be not less than the sum of all amounts due to the Trustee hereunder and the entire unpaid principal amount of the Notes and interest due or to become due thereon in accordance with Section 6.06 on the Payment Date next succeeding the date of such sale. The foregoing provisions shall not preclude or limit the ability of the Trustee to purchase all or any portion of the Trust Estate at a private sale. (c) In connection with a sale of all or any portion of the Trust Estate: (i) any one or more Noteholders may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain, and possess and dispose of such property, without further accountability, and any Noteholder may, in paying the purchase money therefore, deliver in lieu of cash any Outstanding Notes or claims for interest thereon for credit in the amount that shall, upon distribution of the net proceeds of such sale, be payable thereon, and the Notes, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Noteholders after being appropriately stamped to show such partial payment; (ii) the Trustee shall execute and deliver an appropriate instrument of conveyance transferring its interest in any portion of the Trust Estate in connection with a sale thereof; (iii) the Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to transfer and convey its interest in any portion of the Trust Estate in connection with a sale thereof, and to take all action necessary to effect such sale; and (iv) no purchaser or transferee at such a sale shall be bound to ascertain the Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. (d) The method, manner, time, place and terms of any sale of all or any portion of the Trust Estate shall be commercially reasonable. 62 65 (e) The provisions of this Section 6.16 shall not be construed to restrict the ability of the Trustee to exercise any rights and powers against the Issuer or the Trust Estate that are vested in the Trustee by this Indenture, including, without limitation, the power of the Trustee to proceed against the collateral subject to the lien of this Indenture and to institute judicial proceedings for the collection of any deficiency remaining thereafter. ARTICLE VII THE TRUSTEE SECTION 7.01. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default known to the Trustee, (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing to the actual knowledge of a Responsible Officer of the Trustee, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this subsection shall not be construed to limit the effect of subsection (a) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved, subject to Section 7.03(f) hereof, that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Noteholders in accordance with Section 6.12 relating to the time, method, and place of conducting any 63 66 proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 7.02. Notice of Defaults or Events of Default. Within two Business Days after a Responsible Officer obtaining knowledge of the occurrence of any Default or Event of Default hereunder, the Trustee shall transmit, by certified mail return receipt requested, hand delivery or overnight courier, to all Noteholders, as their names and addresses appear in the Note Register, and the Rating Agencies notice of such Default or Event of Default hereunder known to the Trustee, unless such Default or Event of Default shall have been cured or waived. SECTION 7.03. Certain Rights of Trustee. Subject to the provisions of Section 7.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note, debenture, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by a Trust Request or Trust Order and any action of the Issuer may be sufficiently evidenced by a Trust Order; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel as to legal matters and the written advice of any such counsel selected by the Trustee with due care shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the 64 67 Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note, debenture, other evidence of indebtedness, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 7.04. Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Issuer of the proceeds of the Notes. SECTION 7.05. May Hold Notes. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer with the same rights it would have if it were not Trustee. SECTION 7.06. Money Held in Trust. Money and investments held by the Trustee shall be held in trust in one or more trust accounts hereunder, but need not be segregated from other funds except to the extent required by law. SECTION 7.07. Compensation, Reimbursement, etc. The Issuer agrees: (a) to pay to the Trustee from time to time, solely from and only to the extent that amounts are available, such compensation for all services rendered by it hereunder as the Issuer and the Trustee may agree in writing (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and 65 68 (b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request, solely from and only to the extent that amounts are available to the Issuer under Section 3.03(b) or Section 3.04(b) or payable to the Trustee under clause first of Section 6.06 or clause first of Section 6.13), for all reasonable expenses, disbursements, and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement, or advance as may be attributable to its negligence or bad faith. SECTION 7.08. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall (a) be a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers; (b) have a combined capital and surplus of at least $100,000,000; (c) be subject to supervision or examination by federal or state authority; and (d) at the time of appointment, shall have long-term debt obligations (or, if the Trustee does not have outstanding long-term debt obligations and is a subsidiary of a holding company, which holding company shall have long-term obligations) having a credit rating of at least "A-" from S&P and Baa3 from Moody's. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. This Indenture shall always have a Trustee who satisfies the requirements of Section 310(a)(1) of the Trust Indenture Act. The Trustee is subject to the provisions of Section 310(b) of the Trust Indenture Act regarding disqualification of a trustee upon acquiring any conflicting interest. SECTION 7.09. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.10. (b) The Trustee may resign at any time by giving written notice thereof to the Issuer and by mailing notice of resignation by first-class mail, postage prepaid, to Noteholders at their addresses appearing on the Note Register. (c) The Trustee may be removed at any time by Act of the holders of not less than a majority of the then Outstanding Principal Amount of the Notes, delivered to the Trustee and the Issuer. 66 69 (d) If the Trustee shall resign, be removed, or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Issuer, with the consent of the holders of 66-2/3% of the Outstanding Principal Amount of the Notes, by an act of the Issuer, shall promptly appoint a successor Trustee. (e) If no successor Trustee shall have been so appointed by the Issuer or the Noteholders as hereinbefore provided and accepted appointment in the manner hereinafter provided within 30 days after any such resignation or removal, existence of incapability, or occurrence of such vacancy, the Trustee or any Noteholder may petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Issuer shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to all Noteholders, as their names and addresses appear in the Note Register and each Rating Agency. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. (g) The Issuer may remove the Trustee if the Trustee fails to comply with Section 7.08 of this Indenture. (h) If the Trustee after written request by any Noteholder who has been a Noteholder for at least six months fails to comply with Section 310(b) of the Trust Indenture Act, such Noteholder may petition any court of competent jurisdiction, for the removal of the Trustee and the appointment of a successor Trustee. SECTION 7.10. Acceptance of Appointment by Successor. (a) Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Issuer and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Issuer or the successor Trustee, such retiring Trustee shall, upon payment of its charges and expenses, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. (b) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. 67 70 SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion, or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. The Trustee shall provide prompt written notice to each Rating Agency of any event referenced in this Section 7.11. SECTION 7.12. Co-trustees and Separate Trustees. (a) At any time or times, if the Issuer, the Trustee or any Noteholder determines that it is necessary for the purpose of meeting the legal requirements of any jurisdiction in which any of the Trust Estate may at the time be located, the Issuer and the Trustee shall have power to appoint, and, upon the written request of the Trustee or the holders of a majority of the then Outstanding Principal Amount of the Notes, the Issuer shall for such purpose join with the Trustee in the execution, delivery, and performance of all instruments and agreements necessary or proper to appoint one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of such Trust Estate, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Issuer does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee, or the holders of a majority of the then Outstanding Principal Amount of the Notes, alone shall have power to make such appointment. (b) Should any written instrument from the Issuer be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Issuer. (i) Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms: (ii) The Notes shall be authenticated and delivered and all rights, powers, duties, and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised, solely by the Trustee. 68 71 (iii) The rights, powers, duties, and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that, under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee. (iv) The Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Issuer evidenced by a Trust Order, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case an Event of Default has occurred and is continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Issuer. Upon the written request of the Trustee, the Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section. (v) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee or any other such trustee hereunder and the Trustee shall not be personally liable by reason of any act or omission of any co-trustee or other such separate trustee hereunder selected by the Trustee with due care or appointed in accordance with directions to the Trustee pursuant to Section 6.12. (vi) Any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. SECTION 7.13. Acceptance by Trustee. The Trustee hereby acknowledges the conveyance of the Granted Assets and the receipt of the Leases and the other Granted Assets granted by the Issuer hereunder and declares that the Trustee, through a custodian, will hold such Leases and other Granted Assets conveyed by the Issuer in trust, for the use and benefit of all Noteholders subject to the terms and provisions hereof. SECTION 7.14. Preferential Collection of Claims Against the Issuer. The Trustee is subject to Trust Indenture Act Section 311(a), excluding any creditor relationship listed in Trust Indenture Act Section 311(b). A Trustee who has resigned or been removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated therein. 69 72 SECTION 7.15. Reports by Trustee to Noteholders. To the extent required by the Trust Indenture Act, within 60 days after each May 15, following the date of this Indenture, the Trustee shall mail to Noteholders a brief report dated as of such reporting date that complies with Trust Indenture Act Section 313(a), if such a report is required pursuant to Trust Indenture Act Section 313(a). The Trustee also shall comply with Trust Indenture Act Section 313(b). The Trustee shall also transmit by mail all reports as required by Trust Indenture Act Section 313(c). A copy of each such report required under Trust Indenture Act Section 313 shall, at the time of such transmission to Noteholders be filed with the Commission and with each stock exchange or other market system on which the Notes are listed. The Issuer or any other obligor upon the Notes shall notify the Trustee if the Notes become listed on any stock exchange or market trading system. SECTION 7.16. No Proceedings. The Trustee hereby agrees that it will not, with respect to its fees and expenses, directly or indirectly institute, or cause to be instituted, against the Issuer any proceeding of the type referred to in Section 6.01(b) or (c) so long as there shall not have elapsed one year plus one day since the latest maturing Notes have been paid in full in cash. ARTICLE VIII COVENANTS SECTION 8.01. Payment of Principal and Interest. The Issuer will duly and punctually pay the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. SECTION 8.02. Maintenance of Office or Agency; Chief Executive Office. (a) The Issuer will maintain at the Corporate Trust Office an office or agency where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. (b) The chief executive office of the Issuer, and the office at which the Issuer maintains its records with respect to the Leases, the interests in the Equipment, and the transactions contemplated hereby, is currently located in Wilmington, Delaware; and records with respect to certain of the Leases are maintained in Mt. Laurel, New Jersey. The Issuer will not change the location of such offices without giving the Trustee at least 30 days prior written notice thereof. 70 73 SECTION 8.03. Money for Payments to Noteholders to be Held in Trust. (a) All payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Collection Account pursuant to Section 3.03(b) or Section 6.06 or from amounts withdrawn from the Residual Account pursuant to Section 3.04(b) shall be made on behalf of the Issuer by the Trustee, and no amounts so withdrawn from the Collection Account or the Residual Account for payments of Notes shall be paid over to the Issuer under any circumstances except as provided in this Section 8.03 or in Section 3.03(b), Section 3.04(b) or Section 6.06. (b) In making payments hereunder, the Trustee will: (i) allocate all sums received for payment to the Noteholders on each Payment Date among such Noteholders pursuant to Section 3.03(b), Section 3.04(b), or Section 6.06, as applicable, in accordance with the information known to the Trustee; (ii) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided; and (iii) comply with all requirements of the Internal Revenue Code of 1986, as amended (or any successor statutes), and all regulations thereunder, with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. Whenever the Issuer shall have one or more Paying Agents, it will, prior to each due date of the principal of or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Noteholders entitled to such principal or interest, and (unless such Paying Agent is the Trustee) the Issuer will promptly notify the Trustee of its action or failure so to act. The Issuer will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of or interest on Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and (2) give the Trustee notice of any default by the Issuer (or any other obligor upon the Securities) in the making of any payment of principal or interest. 71 74 (c) Except as required by applicable law, any money held by the Trustee in trust for the payment of any amount due with respect to any Note and remaining unclaimed for three years after such amount has become due and payable to the Noteholder shall be discharged from such trust and, subject to applicable escheat laws, paid to the Issuer upon request; and such Noteholder shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Trustee with respect to such trust money shall thereupon cease. SECTION 8.04. Corporate Existence; Merger; Consolidation, etc. (a) The Issuer will keep in full effect its existence and rights as a business trust under the laws of the State of Delaware. (b) The Issuer shall at all times observe and comply in all material respects with (i) all laws applicable to it, (ii) all requisite and appropriate organizational and other formalities in the management of its business and affairs and the conduct of the transactions contemplated hereby and by the Underwriting Agreement and the Assignment and Servicing Agreement. (c) The Issuer shall not (i) consolidate or merge with or into any other Person or convey or transfer its properties and assets substantially as an entirety to any other Person or (ii) commingle its assets with those of any other Person. SECTION 8.05. Protection of Trust Estate; Further Assurances. The Issuer will from time to time execute and deliver all such supplements and amendments hereto and all such Financing Statements, continuation statements, instruments of further assurance, and other instruments, and will take such other action as may be necessary or advisable to: (i) Grant more effectively all or any portion of the Trust Estate; (ii) maintain or preserve the Lien of this Indenture or carry out more effectively the purposes hereof; (iii) publish notice of, or protect the validity of, any Grant made or to be made by this Indenture and perfect the security interest contemplated hereby in favor of the Trustee in each of the Leases, in the Equipment and all other property included in the Trust Estate; provided, that the Issuer shall not be required to file Financing Statements with respect to the interests in the Equipment in addition to those contemplated by Section 11.03 of the Assignment and Servicing Agreement; (iv) enforce or cause the Servicer to enforce any of the Leases; or (v) preserve and defend title to the Leases (including the right to receive all payments due or to become due thereunder), the interests in the Equipment, or other property included in the Trust Estate and preserve and defend the rights of the Trustee 72 75 and the Noteholders in such Leases (including the right to receive all payments due or to become due thereunder), interests in the Equipment and other property against the claims of all Persons and parties. The Issuer, upon the Issuer's failure to do so, hereby designates the Trustee its agent and attorney-in-fact to execute any Financing Statement or continuation statement required pursuant to this Section 8.05; provided, however, that such designation shall not be deemed to create a duty in the Trustee to monitor the compliance of the Issuer with the foregoing covenants; and provided, further, that the duty of the Trustee to execute any instrument required pursuant to this Section 8.05 shall arise only if a Responsible Officer of the Trustee has actual knowledge of any failure of the Issuer to comply with the provisions of this Section 8.05. SECTION 8.06. [Reserved]. SECTION 8.07. Performance of Obligations; Assignment and Servicing Agreement. (a) The Issuer will punctually perform and observe all of its obligations and agreements contained in this Indenture, the Notes, the Underwriting Agreement and the Placement Agent Agreement. (b) The Issuer will not take any action or permit any action to be taken by others which would release any Person from any of such Person's covenants or obligations under any Lease or any other instrument included in the Trust Estate, or which would result in the amendment, hypothecation, subordination, termination, or discharge of, or impair the validity or effectiveness of, any Lease or such other instrument, except as expressly provided in this Indenture or the Assignment and Servicing Agreement. (c) If any Authorized Officer shall have knowledge of the occurrence of a default under the Assignment and Servicing Agreement, the Issuer shall promptly notify the Trustee and the Noteholders thereof, and shall specify in such notice the action, if any, the Issuer is taking in respect of such default. Unless consented to by the holders of 66 2/3% of the then Outstanding Principal Amount of the Notes, the Issuer may not waive any default under or amend the Assignment and Servicing Agreement. SECTION 8.08. Negative Covenants. The Issuer will not: (a) sell, transfer, exchange or otherwise dispose of any portion of the Trust Estate except as expressly permitted by this Indenture; (b) claim any credit on, or make any deduction from, the principal of, or interest on, any of the Notes by reason of the payment of any taxes levied or assessed upon any portion of the Trust Estate; 73 76 (c) engage in any business or activity other than in connection with, or relating to the ownership of, the Leases and the interests in the Equipment, the issuance of the Notes, and the specific transactions contemplated hereby; (d) become liable for, issue, incur, assume, or allow to remain outstanding any indebtedness, or guaranty any indebtedness of any Person, other than the Notes, except as contemplated by this Indenture, the registration statement filed with respect to the Class A Notes, Class B Notes, Class C Notes and Class D Notes, and the Assignment and Servicing Agreement; (e) seek dissolution or liquidation in whole or in part or reorganization of its business or affairs; (f) (i) permit the validity or effectiveness of this Indenture or any Grant hereby to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations under this Indenture, except as may be expressly permitted hereby, (ii) permit any lien, charge, security interest, mortgage or other encumbrance to be created on or to extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof other than the lien of this Indenture, or (iii) subject to Section 3.01(c) of the Assignment and Servicing Agreement, permit the lien of this Indenture not to constitute a valid first priority security interest in the Trust Estate; or (g) make any loan or advance to any Affiliate of the Issuer or to any other Person; provided that the Issuer may from time to time make Inter-Company Loans on the terms and conditions set forth in Section 13 of the Assignment and Servicing Agreement. SECTION 8.09. Information as to Issuer. The Issuer shall deliver to the Trustee and, the Trustee shall deliver to each Rating Agency and to each holder of outstanding Notes (and, upon the request of any Noteholder, to any prospective transferee of any Notes): (a) Notice of Event of Default - immediately upon becoming aware of the existence of any condition or event which constitutes a Default or an Event of Default, a written notice describing its nature and period of existence and what action the Issuer is taking or proposes to take with respect thereto; and (b) Report on Proceedings - promptly upon the Issuer's becoming aware of (i) any proposed or pending investigation of it by any governmental authority or agency, or (ii) any pending or proposed court or administrative proceeding which involves or may involve the possibility of materially and adversely affecting the properties, business, prospects, profits or condition (financial or otherwise) of the Issuer, a written notice specifying the nature of such investigation or proceeding and what action the Issuer is taking or proposes to take with respect thereto and evaluating its merits. 74 77 SECTION 8.10. Taxes. The Issuer shall pay all taxes when due and payable or levied against its assets, properties or income, including any property that is part of the Trust Estate. SECTION 8.11. Indemnification. The Issuer agrees to indemnify and hold harmless the Trustee and each Noteholder (each an "Indemnified Party") against any and all liabilities, losses, damages, penalties, costs and expenses (including costs of defense and legal fees and expenses) which may be incurred or suffered by such Indemnified Party without negligence or willful misconduct on its part as a result of claims, actions, suits or judgments asserted or imposed against it and arising out of the transactions contemplated hereby or by the Assignment and Servicing Agreement, including without limitation, any claims resulting from any use, operation, maintenance, repair, storage or transportation of any item of Equipment, whether or not in the Issuer's possession or under its control, and any tort claims and any fines or penalties arising from any violation of the laws or regulations of the United States or any state or local government or governmental authority; provided that, all amounts payable pursuant to this Section 8.11 shall be fully subordinated to amounts payable under the Notes, shall be without recourse to the Issuer except to the extent that all amounts otherwise due and payable under the terms of this Indenture have been fully paid and shall not, to the extent that such amounts are unpaid, constitute a claim against the Issuer except to the extent that all amounts otherwise due and payable under the terms of this Indenture have been fully paid. SECTION 8.12. Commission Reports; Reports to Trustee; Reports to Noteholders. To the extent it has not satisfied the following requirements by reporting under Section 8.09 hereof, the Issuer shall: (a) file with the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports which the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act (or copies of such portions thereof as may be prescribed by rules and regulations of the Commission); or, if the Issuer is not required to file with the Commission information, documents or reports pursuant to either Section 13 or Section 15(d) of the Exchange Act, then the Issuer will file with the Trustee and with the Commission, in accordance with rules and regulations prescribed by the Commission, such of the supplementary and periodic information, documents and reports required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the Commission, in accordance with the rules and regulations prescribed by the Commission, such additional information, documents and reports with respect to compliance by the Issuer with the conditions and 75 78 covenants provided for in this Indenture as may be required by such rules and regulations; and (c) furnish to the Trustee for distribution to the Noteholders, as the names and addresses of such Noteholders appear in the Note Register, in the manner and to the extent provided in Section 7.15 hereof, such summaries of any information, documents and reports required to be filed with the Trustee pursuant to the provisions of Subsections (a) and (b) of this Section 8.12 as may be required to be provided to such Noteholders by the rules and regulations of the Commission under the provisions of the Trust Indenture Act. ARTICLE IX SUPPLEMENTAL INDENTURES SECTION 9.01. Supplemental Indentures Without Consent of Noteholders. (a) Without the consent of any Noteholders, the Issuer, by a Trust Order, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (i) to add to the covenants of the Issuer for the benefit of the Noteholders, or to surrender any right or power herein conferred upon the Issuer; (ii) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein; or (iii) to correct or amplify the description of any property at any time subject to the lien of this Indenture, or to better assure, convey and confirm unto the Trustee any property subject or required to be subjected to the lien of this Indenture; provided such action pursuant to this Section 9.01(a) shall not adversely affect the interests of the Noteholders in any respect. (b) The Trustee shall promptly deliver to each Noteholder and each Rating Agency a copy of any supplemental indenture entered into pursuant to Section 9.01(a). SECTION 9.02. Supplemental Indentures with Consent of Noteholders. (a) With the consent of the holders of not less than 66-2/3% of the then Outstanding Principal Amount of the Notes and by Act of said Noteholders delivered to the Issuer and the Trustee, the Issuer, by a Trust Order, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Noteholders under this 76 79 Indenture; provided, that no supplemental indenture shall, without the consent of the holder of each Outstanding Note affected thereby: (i) change the Stated Maturity of any Note or the Principal Payments or Interest Payments due or to become due on any Payment Date with respect to any Note, or change the priority of payment thereof as set forth herein, or reduce the principal amount thereof or the Note Interest Rate thereon, or change the place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Maturity thereof; (ii) reduce the percentage of the Outstanding Principal Amount of the Notes the consent of whose Noteholders is required for any such supplemental indenture, for any waiver of compliance with provisions of this Indenture or Events of Default and their consequences, or for any Act of Noteholders; (iii) modify any of the provisions of this Section except to increase any percentage or fraction set forth therein or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the holder of each Outstanding Note affected thereby; (iv) modify or alter the provisions of the proviso to the definition of the term "Outstanding"; or (v) permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Trust Estate or, except as provided in Sections 4.01 or 4.02, terminate the lien of this Indenture on any property at any time subject hereto or deprive any Noteholder of the security afforded by the lien of this Indenture. (b) The Trustee shall promptly deliver to each Noteholder and each Rating Agency a copy of any supplemental indenture entered into pursuant to Section 9.02(a). SECTION 9.03. Execution of Supplemental Indentures. In executing any supplemental indenture (a) pursuant to Article 9.01 of this Indenture or (b) pursuant to Section 9.02 of this Indenture without the consent of each holder of the Notes to the execution of the same, the Trustee shall be entitled to receive, and (subject to Section 7.01) shall be, fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any supplemental indenture which affects the Trustee's own rights, duties, projections, or immunities under this Indenture or otherwise. 77 80 SECTION 9.04. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes, and every Noteholder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 9.05. Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Issuer shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Trustee in exchange for Outstanding Notes. SECTION 9.06. Compliance with Trust Indenture Act. Every amendment, supplement or waiver to this Indenture or the Notes shall comply with the Trust Indenture Act as then in effect. ARTICLE X SATISFACTION AND DISCHARGE SECTION 10.01. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Notes herein expressly provided for), and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (i) 100 days shall have elapsed since either (A) all Notes theretofore authenticated and delivered (other than (1) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.04 and (2) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 8.03(c)) have been delivered to the Trustee for cancellation; or (B) the final installments of principal on all such Notes not theretofore delivered to the Trustee for cancellation (1) have become due and payable, or 78 81 (2) will become due and payable at their Stated Maturity, as applicable, within one year, and the Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity thereof; (ii) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer for the benefit of the Noteholders; and (iii) the Issuer has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. At such time, the Trustee shall deliver to the Issuer or, upon Trust Order, its assignee, all cash, securities and other property held by it as part of the Trust Estate other than funds deposited with the Trustee pursuant to Section 10.01(i)(B), for the payment and discharge of the Notes. (b) Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Issuer to the Trustee under Sections 7.07 and 8.11, and, if money shall have been deposited with the Trustee pursuant to Section 10.01(i)(B), the obligations of the Trustee under Section 10.02 and Section 8.03(c) shall survive. (c) The Trustee shall provide prompt written notice to each Rating Agency of any satisfaction and discharge of this Indenture pursuant to this Article 10. SECTION 10.02. Application of Trust Money. Subject to the provisions of Section 8.03(c), all money deposited with the Trustee pursuant to Sections 10.01 and 8.03 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. 79 82 ARTICLE XI MISCELLANEOUS SECTION 11.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of Trust Indenture Act Section 318(a), the duties imposed by Section 318(a) shall control. SECTION 11.02. Communication by Noteholders with Other Noteholders. Noteholders may communicate, pursuant to Trust Indenture Act Section 312(b), with other Noteholders with respect to their rights under this Indenture or the Notes. The Issuer, the Trustee, the Note Registrar and all other parties shall have the protection of Trust Indenture Act Section 312(c). SECTION 11.03. Officers' Certificate and Opinion of Counsel as to Conditions Precedent. Upon any request or application by the Issuer (or any other obligor upon the Notes) to the Trustee to take any action under this Indenture, the Issuer (or such other Obligor) shall furnish to the Trustee: (a) an Officers' Certificate (which shall include the statements set forth in Section 11.04) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel (which shall include the statements set forth in Section 11.04) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with. SECTION 11.04. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 80 83 (c) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. SECTION 11.05. Nonpetition. The Trustee shall not petition or otherwise invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Trust or any substantial part of its respective property, or ordering the winding up or liquidation of the affairs of the Trust. 81 84 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and witnessed, all as of the day and year first above written. COPELCO CAPITAL FUNDING LLC 99-1, as Issuer By: Name: Title: MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By Name: Title: COPELCO CAPITAL INC., as Servicer By Name: Title: [Signature Page to the Indenture] 82 85 EXHIBIT A CLASS A-1 NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS A-1 LEASE-BACKED NOTE, SERIES 1999-A CUSIP NO. _______________ No. R-1 $____________ Copelco Capital Funding LLC 99-1, a limited liability company duly organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _______________________________________________ ($_____________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from the date of issuance until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of a year of 360 days and the actual number of days in the period since the last Payment Date or with respect to the March 1999 Payment Date, since March __, 1999. Principal and interest on this Class A-1 Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class A-1 Note as of the relevant Record Date or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the 86 Notes shall be payable to the Holder of this Note only upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. The Stated Maturity of the Class A-1 Notes is __________, on which date the Outstanding Principal Amount of the Class A-1 Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class A-1 Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class A-1 Note is one of a duly authorized issue of Class A Notes of the Issuer designated as its "___% Class A-1 Lease-Backed Notes, Series 1999-A" (herein called the "Class A-1 Notes") limited in aggregate principal amount of $____________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital, Inc., as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class A-1 Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. This Class A-1 Note will be secured by the pledge to the Trustee of the Trust Estate. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class A-1 Notes (but not less than all the Class A-1 Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class A-1 Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A-1 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class A-1 Note and of any A-1-2 87 Class A-1 Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class A-1 Note or any Class A-1 Note. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-1 Note is registrable in the Note Register, upon surrender of this Class A-1 Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class A-1 Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class A-1 Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class A-1 Notes are exchangeable for a like aggregate principal amount of Class A-1 Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class A-1 Note is registered as the owner hereof for all purposes, whether or not this Class A-1 Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class A-1 Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. A-1-3 88 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: _______________, as Manager By: __________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class A-1 Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: _______________________________________________ Authorized Officer A-1-4 89 ASSIGNMENT FORM If you the holder want to assign this Class A-1 Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class A-1 Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class A-1 Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class A-1 Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class A-1 Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class A-1 Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class A-1 Note. A-1-5 90 CLASS A-2 NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS A-2 LEASE-BACKED NOTE, SERIES 1999-A CUSIP NO. _______________ No. R-1 $____________ Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________________________________________________ ($___________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of _________% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class A-2 Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class A-2 Note as of the relevant Record Date or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Notes shall be payable to the Holder of this Note only upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. 91 The Stated Maturity of the Class A-2 Notes is __________, on which date the Outstanding Principal Amount of the Class A-2 Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class A-2 Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class A-2 Note is one of a duly authorized issue of Class A Notes of the Trust designated as its "___% Class A-2 Lease-Backed Notes, Series 1999-A" (herein called the "Class A-2 Notes") limited in aggregate principal amount of $____________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-1, as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class A-2 Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. This Class A-2 Note will be secured by the pledge to the Trustee of the Trust Estate. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class A-2 Notes (but not less than all the Class A-2 Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class A-2 Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A-2 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class A-2 Note and of any Class A-2 Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class A-2 Note or any Class A-2 Note. A-2-2 92 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-2 Note is registrable in the Note Register, upon surrender of this Class A-2 Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class A-2 Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class A-2 Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class A-2 Notes are exchangeable for a like aggregate principal amount of Class A-2 Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class A-2 Note is registered as the owner hereof for all purposes, whether or not this Class A-2 Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class A-2 Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. A-2-3 93 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: _______________, as Manager By: __________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class A-2 Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: _______________________________________________ Authorized Officer A-2-4 94 ASSIGNMENT FORM If you the holder want to assign this Class A-2 Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class A-2 Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class A-2 Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class A-2 Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class A-2 Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class A-2 Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class A-2 Note. A-2-5 95 CLASS A-3 NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS A-3 LEASE-BACKED NOTE, SERIES 1999-A CUSIP NO. _______________ No. R-1 $____________ Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________________________________________________ ($___________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of _________% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class A-3 Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class A-3 Note as of the relevant Record Date or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Notes shall be payable to the Holder of this Note only upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. 96 The Stated Maturity of the Class A-3 Notes is __________, on which date the Outstanding Principal Amount of the Class A-3 Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class A-3 Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class A-3 Note is one of a duly authorized issue of Class A Notes of the Trust designated as its "___% Class A-3 Lease-Backed Notes, Series 1999-A" (herein called the "Class A-3 Notes") limited in aggregate principal amount of $____________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-1, as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class A-3 Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. This Class A-3 Note will be secured by the pledge to the Trustee of the Trust Estate. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class A-3 Notes (but not less than all the Class A-3 Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class A-3 Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A-3 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class A-3 Note and of any Class A-3 Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class A-3 Note or any Class A-3 Note. A-3-2 97 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-3 Note is registrable in the Note Register, upon surrender of this Class A-3 Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class A-3 Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class A-3 Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class A-3 Notes are exchangeable for a like aggregate principal amount of Class A-3 Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class A-3 Note is registered as the owner hereof for all purposes, whether or not this Class A-3 Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class A-3 Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. A-3-3 98 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: _______________, as Manager By: __________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class A-3 Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: _______________________________________________ Authorized Officer A-3-4 99 ASSIGNMENT FORM If you the holder want to assign this Class A-3 Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class A-3 Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class A-3 Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class A-3 Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class A-3 Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class A-3 Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class A-3 Note. A-3-5 100 CLASS A-4 NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS A-4 LEASE-BACKED NOTE, SERIES 1999-A CUSIP NO. _______________ No. R-1 $____________ Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________________________________________________ ($___________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of _________% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class A-4 Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class A-4 Note as of the relevant Record Date or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Notes shall be payable to the Holder of this Note only upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. 101 The Stated Maturity of the Class A-4 Notes is __________, on which date the Outstanding Principal Amount of the Class A-4 Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class A-4 Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class A-4 Note is one of a duly authorized issue of Class A Notes of the Trust designated as its "___% Class A-4 Lease-Backed Notes, Series 1999-A" (herein called the "Class A-4 Notes") limited in aggregate principal amount of $____________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-1, as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class A-4 Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. This Class A-4 Note will be secured by the pledge to the Trustee of the Trust Estate. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class A-4 Notes (but not less than all the Class A-4 Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class A-4 Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A-4 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class A-4 Note and of any Class A-4 Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class A-4 Note or any Class A-4 Note. A-4-2 102 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-4 Note is registrable in the Note Register, upon surrender of this Class A-4 Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class A-4 Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class A-4 Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class A-4 Notes are exchangeable for a like aggregate principal amount of Class A-4 Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class A-4 Note is registered as the owner hereof for all purposes, whether or not this Class A-4 Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class A-4 Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. A-4-3 103 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: _______________, as Manager By: __________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class A-4 Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: _______________________________________________ Authorized Officer A-4-4 104 ASSIGNMENT FORM If you the holder want to assign this Class A-4 Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class A-4 Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class A-4 Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class A-4 Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class A-4 Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class A-4 Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class A-4 Note. A-4-5 105 CLASS B NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS B LEASE-BACKED NOTE, SERIES 1999-A CUSIP NO. _______________ No. R-1 $____________ Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________________________________________________ ($___________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of _________% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class B Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class B Note as of the relevant Record Date or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Notes shall be payable to the Holder of this Note only upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. 106 The Stated Maturity of the Class B Notes is __________, on which date the Outstanding Principal Amount of the Class B Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class B Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class B Note is one of a duly authorized issue of Class A Notes of the Trust designated as its "___% Class B Lease-Backed Notes, Series 1999-A" (herein called the "Class B Notes") limited in aggregate principal amount of $____________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-1, as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class B Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. This Class B Note will be secured by the pledge to the Trustee of the Trust Estate. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class B Notes (but not less than all the Class B Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class B Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class B Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class B Note and of any Class B Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class B Note or any Class B Note. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class B Note is registrable in the Note Register, upon surrender B-2 107 of this Class B Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class B Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class B Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class B Notes are exchangeable for a like aggregate principal amount of Class B Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class B Note is registered as the owner hereof for all purposes, whether or not this Class B Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class B Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. B-3 108 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: _______________, as Manager By: __________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class B Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: ______________________________________________ Authorized Officer B-4 109 ASSIGNMENT FORM If you the holder want to assign this Class B Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class B Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class B Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class B Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class B Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class B Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class B Note. B-5 110 CLASS C NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS C LEASE-BACKED NOTE, SERIES 1999-A CUSIP NO. _______________ No. R-1 $____________ Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________________________________________________ ($___________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of _________% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class A-2 Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class C Note as of the relevant Record Date or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Notes shall be payable to the Holder of this Note only upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. 111 The Stated Maturity of the Class C Notes is __________, on which date the Outstanding Principal Amount of the Class C Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class C Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class C Note is one of a duly authorized issue of Class A Notes of the Trust designated as its "___% Class C Lease-Backed Notes, Series 1999-A" (herein called the "Class C Notes") limited in aggregate principal amount of $____________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-1, as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class C Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. This Class C Note will be secured by the pledge to the Trustee of the Trust Estate. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class C Notes (but not less than all the Class C Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class C Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class C Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class C Note and of any Class C Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class C Note or any Class C Note. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class C Note is registrable in the Note Register, upon surrender C-2 112 of this Class C Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class C Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class C Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class C Notes are exchangeable for a like aggregate principal amount of Class C Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class C Note is registered as the owner hereof for all purposes, whether or not this Class C Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class C Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. C-3 113 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: _______________, as Manager By: __________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class C Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: ______________________________________________ Authorized Officer C-4 114 ASSIGNMENT FORM If you the holder want to assign this Class C Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class C Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class C Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class C Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class C Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class C Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class C Note. C-5 115 CLASS D NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS D LEASE-BACKED NOTE, SERIES 1999-A CUSIP NO. _______________ No. R-1 $____________ Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________________________________________________ ($___________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of _________% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class D Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class D Note as of the relevant Record Date or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Notes shall be payable to the Holder of this Note only upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. 116 The Stated Maturity of the Class D Notes is __________, on which date the Outstanding Principal Amount of the Class D Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class D Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class D Note is one of a duly authorized issue of Class A Notes of the Trust designated as its "___% Class D Lease-Backed Notes, Series 1999-A" (herein called the "Class D Notes") limited in aggregate principal amount of $____________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital Funding LLC 99-1, as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class D Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. This Class D Note will be secured by the pledge to the Trustee of the Trust Estate. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class D Notes (but not less than all the Class D Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class D Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class D Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class D Note and of any Class D Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class D Note or any Class D Note. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class D Note is registrable in the Note Register, upon surrender D-2 117 of this Class D Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class D Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class D Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class D Notes are exchangeable for a like aggregate principal amount of Class D Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class D Note is registered as the owner hereof for all purposes, whether or not this Class D Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class D Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. D-3 118 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: _______________, as Manager By: __________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class D Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: ______________________________________________ Authorized Officer D-4 119 ASSIGNMENT FORM If you the holder want to assign this Class D Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class D Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class D Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class D Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class D Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class D Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class D Note. D-5 120 CLASS E NOTE NO TRANSFER OF ANY CLASS E NOTE MAY BE MADE UNLESS THAT TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND AN EFFECTIVE REGISTRATION OR A QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS, OR IS MADE IN A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION BECAUSE THE TRANSFER SATISFIES ONE OF THE FOLLOWING: (I) SUCH TRANSFER IS IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT SUCH TRANSFER IS BEING MADE IN RELIANCE UPON RULE 144A UNDER THE SECURITIES ACT AS CERTIFIED BY SUCH TRANSFEREE IN A LETTER IN THE FORM OF EXHIBIT B TO THE INDENTURE; (II) AFTER THE APPROPRIATE HOLDING PERIOD, SUCH TRANSFER IS PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT; (III) SUCH TRANSFER IS TO A TRANSFEREE WHO IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR (IV) SUCH TRANSFER IS OTHERWISE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE TRUSTEE WILL REQUIRE, IN ORDER TO ASSURE COMPLIANCE WITH SUCH LAWS, THAT THE CLASS E NOTEHOLDER'S PROSPECTIVE TRANSFEREE REFERRED TO IN THE PRECEDING CLAUSES (III) OR (IV) DELIVER AN INVESTMENT LETTER CERTIFYING TO THE ISSUER AND THE TRUSTEE AS TO THE FACTS SURROUNDING SUCH TRANSFER IN THE FORM OF EXHIBIT B TO THE INDENTURE. EXCEPT IN THE CASE OF A TRANSFER OF CLASS E NOTES TO A TRANSFEREE REFERRED TO IN THE PRECEDING CLAUSE (I) OR, IN GENERAL, A TRANSFER THAT IS TO BE MADE AFTER THREE YEARS FROM THE ISSUANCE DATE, THE TRUSTEE SHALL REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO IT TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT WITHOUT SUCH REGISTRATION (WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE OR THE SERVICER OR THE ISSUER). NONE OF THE ISSUER, THE SERVICER OR THE TRUSTEE IS OBLIGATED TO REGISTER OR QUALIFY THE CLASS E NOTES UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES LAW OR TO TAKE ANY ACTION NOT OTHERWISE REQUIRED UNDER THIS INDENTURE TO PERMIT THE TRANSFER OF ANY CLASS E NOTE WITHOUT REGISTRATION. COPELCO CAPITAL FUNDING LLC 99-1 ____% CLASS E LEASE-BACKED NOTE CUSIP No. ____________ No. R-1 $_______________ Copelco Capital Funding LLC 99-1, a limited liability company duly organized and existing under the laws of Delaware (herein called the "Issuer", which term 121 includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay __________, or registered assigns, the principal sum ___________ ($____________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of ____% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class E Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class E Note or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Class E Notes shall be payable to the Holder of this Class E Note only upon presentation and surrender of this Class E Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. The Stated Maturity of the Class E Notes is __________, on which date the Outstanding Principal Amount of the Class E Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class E Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class E Note is one of a duly authorized issue of Class E Notes of the Issuer designated as its "____% Class E Lease-Backed Notes, Series 1999-A" (herein called the "Class E Notes"), limited in aggregate principal amount of $________, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital, Inc., as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the Holders and of the terms upon which the Class E Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class E Notes (but not less than all the Class E Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class E Note shall terminate. E-2 122 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class E Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class E Note and of any Class E Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class E Note or any Class E Note. No sale or transfer of this Class E Note may be made unless such sale or transfer complies with or is exempt from registration requirements of the Securities Act and applicable state securities laws. Prospective transferees of this Class E Note will be required to deliver a certificate pursuant to the terms of the Indenture relating to compliance with the Securities Act and applicable state securities law. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class E Note is registrable in the Note Register, upon surrender of this Class E Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class E Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class E Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class E Notes are exchangeable for a like aggregate principal amount of Class E Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class E Note is registered as the owner hereof for all purposes, whether or not this Class E Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. E-3 123 The Indenture and this Class E Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. E-4 124 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: ________________, as manager By: ____________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class E Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: ______________________________________________ Authorized Officer E-5 125 ASSIGNMENT FORM If you the holder want to assign this Class E Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class E Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class E Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class E Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class E Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class E Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class E Note. E-6 126 CLASS R-1 NOTE THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT, TO REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVE IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $1,000,000, FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO, IN EACH CASE, COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) AND (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) COMPLETED AND DELIVERED BY THE PROSPECTIVE TRANSFEROR HEREOF TO THE ISSUER AND THE TRUSTEE AND (2) THAT SUCH HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PROSPECTIVE PURCHASER OF THIS SECURITY FROM IT OR THE RESALE RESTRICTIONS REFERRED TO IN (1) ABOVE. 127 COPELCO CAPITAL FUNDING LLC 99-1 ___% CLASS R-1 LEASE-BACKED NOTE CUSIP No. ____________ No. R-1 $______________ Copelco Capital Funding LLC 99-1, a limited liability company duly organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _____________________________________, ($____________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of ____% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class R-1 Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class R-1 Note or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Class R-1 Notes shall be payable to the Holder of this Class R-1 Note only upon presentation and surrender of this Class R-1 Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. The Stated Maturity of the Class R-1 Notes is ___________, on which date the Outstanding Principal Amount of the Class R-1 Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class R-1 Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class R-1 Note is one of a duly authorized issue of Class R-1 Notes of the Trust designated as its "____% Class R-1 Lease-Backed Notes, Series 1999-A" (herein called the "Class R-1 Notes"), limited in aggregate principal amount of $_______, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital, Inc., as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the R-1-2 128 Holders and of the terms upon which the Class R-1 Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class R-1 Notes (but not less than all the Class R-1 Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class R-1 Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class R-1 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class R-1 Note and of any Class R-1 Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class R-1 Note or any Class R-1 Note. No sale or transfer of this Class R-1 Note may be made unless such sale or transfer complies with or is exempt from registration requirements of the Securities Act and applicable state securities laws. Prospective transferees of this Class R-1 Note will be required to deliver a certificate pursuant to the terms of the Indenture relating to compliance with the Securities Act and applicable state securities law. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class R-1 Note is registrable in the Note Register, upon surrender of this Class R-1 Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class R-1 Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class R-1 Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class R-1 Notes are exchangeable for a like aggregate R-1-3 129 principal amount of Class R-1 Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class R-1 Note is registered as the owner hereof for all purposes, whether or not this Class R-1 Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class R-1 Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. R-1-4 130 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: COPELCO __________, as manager By: ______________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class R-1 Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: ______________________________________________ Authorized Officer R-1-5 131 ASSIGNMENT FORM If you the holder want to assign this Class R-1 Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class R-1 Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class R-1 Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class R-1 Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class R-1 Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class R-1 Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class R-1 Note. R-1-6 132 CLASS R-2 NOTE THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT, TO REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVE IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $1,000,000, FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO, IN EACH CASE, COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) AND (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) COMPLETED AND DELIVERED BY THE PROSPECTIVE TRANSFEROR HEREOF TO THE ISSUER AND THE TRUSTEE AND (2) THAT SUCH HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PROSPECTIVE PURCHASER OF THIS SECURITY FROM IT OR THE RESALE RESTRICTIONS REFERRED TO IN (1) ABOVE. 133 COPELCO CAPITAL FUNDING LLC 99-1 ___% CLASS R-2 LEASE-BACKED NOTE CUSIP No. ____________ No. R-1 $______________ Copelco Capital Funding LLC 99-1, a limited liability company duly organized and existing under the laws of Delaware (herein called the "Issuer", which term includes any successor Person under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _____________________________________, ($____________), payable in monthly installments beginning on March 15, 1999, in accordance with the Indenture. Interest will accrue on the unpaid principal hereof from February 15, 1999, at the rate of ____% per annum, until the full amount of principal hereof is otherwise paid or made available for payment and shall be computed on the basis of twelve 30-day months and a year of 360 days. Principal and interest on this Class R-2 Note shall be paid on the 15th day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing March 15, 1999, either by check to the registered address of the Holder of this Class R-2 Note or by wire transfer to an account at a bank in the United States as the Holder shall specify, as provided more fully in the Indenture; provided, that the final payment of principal and interest in respect of the Class R-2 Notes shall be payable to the Holder of this Class R-2 Note only upon presentation and surrender of this Class R-2 Note at the Corporate Trust Office of the Trustee or at the principal office of any Paying Agent appointed pursuant to the Indenture. The Stated Maturity of the Class R-2 Notes is ___________, on which date the Outstanding Principal Amount of the Class R-2 Notes shall be due and payable. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Class R-2 Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Class R-2 Note is one of a duly authorized issue of Class R-2 Notes of the Trust designated as its "____% Class R-2 Lease-Backed Notes, Series 1999-A" (herein called the "Class R-2 Notes"), limited in aggregate principal amount of $_______, issued under the Indenture, dated as of March 1, 1999 (herein called the "Indenture"), among the Issuer, Copelco Capital, Inc., as Servicer, and Manufacturers and Traders Trust Company as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Trustee and the R-2-2 134 Holders and of the terms upon which the Class R-2 Notes are authenticated and delivered. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Indenture. If an Event of Default under the Indenture has been declared by the Trustee, the principal of all the Class R-2 Notes (but not less than all the Class R-2 Notes) may be declared due and payable in the manner and with the effect provided in the Indenture. Notice of such declaration will be given by mail to Holders, as their names and addresses appear in the Note Register, as provided in the Indenture. Upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class R-2 Note shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time outstanding, on behalf of all the Holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class R-2 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Class R-2 Note and of any Class R-2 Note issued upon the registration of transfer hereof or in exchange here for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class R-2 Note or any Class R-2 Note. No sale or transfer of this Class R-2 Note may be made unless such sale or transfer complies with or is exempt from registration requirements of the Securities Act and applicable state securities laws. Prospective transferees of this Class R-2 Note will be required to deliver a certificate pursuant to the terms of the Indenture relating to compliance with the Securities Act and applicable state securities law. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class R-2 Note is registrable in the Note Register, upon surrender of this Class R-2 Note for registration of transfer at the office or agency of the Trustee in the City of Buffalo, NY, and at any other office or agency maintained by the Issuer for that purpose, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Class R-2 Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Class R-2 Notes are issuable only in registered form without coupons in minimum denominations of $1,000,000. As provided in the Indenture and subject to certain limitations therein set forth, Class R-2 Notes are exchangeable for a like aggregate R-2-3 135 principal amount of Class R-2 Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class R-2 Note is registered as the owner hereof for all purposes, whether or not this Class R-2 Note may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and this Class R-2 Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. R-2-4 136 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: March __, 1999 COPELCO CAPITAL FUNDING LLC 99-1 By: COPELCO __________, as manager By: ______________________________ Authorized Officer Trustee's Certificate of Authentication This is one of the Class R-2 Notes referred to in the within mentioned Indenture. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: ______________________________________________ Authorized Officer R-2-5 137 ASSIGNMENT FORM If you the holder want to assign this Class R-2 Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Class R-2 Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint ____________, agent to transfer this Class R-2 Note on the books of the Issuer. The agent may substitute another to act for him. Dated: ________________ Signed: _________________________________ _________________________________ (sign exactly as the name appears on the other side of this Class R-2 Note) Signature Guarantee ____________________________________________________________ Important Notice: When you sign your name to this Assignment Form without filling in the name of your "Assignee" or "Attorney", this Note becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed Class R-2 Note, it is recommended that you fill in the name of the new owner in the "Assignee" blank. Alternatively, instead of using this Assignment Form, you may sign a separate "power of attorney" form and then mail the unsigned Class R-2 Note and the signed "power of attorney" in separate envelopes. For added protection, use certified or registered mail for a Class R-2 Note. R-2-6 138 EXHIBIT B [FORM OF INVESTOR'S LETTER] (Date) Copelco Capital Funding LLC 99-1 700 East Gate Drive Mount Laurel, New Jersey 08110 Prudential Securities Incorporated One New York Plaza New York, NY 10292-2014 Ladies and Gentlemen: We propose to purchase $___________ in original aggregate principal amount of Copelco Capital Funding LLC 99-1 _____% Class [E] [R-1] [R-2] Lease-Backed Notes, Series 1999-A, (the "Notes"). The Notes were issued pursuant to an Indenture (the "Indenture"), dated as of March 1, 1999, among Copelco Capital Funding LLC 99-1, as Issuer, Manufacturers and Traders Trust Company, as Trustee, and Copelco Capital, Inc., as Servicer. Capitalized terms used herein but not otherwise defined shall have the same meaning as in the Indenture. In connection with our proposed purchase of the Notes, we agree to the following terms and conditions and make the representations and warranties stated herein with the express understanding that they will be relied upon by Copelco Capital Funding LLC 99-1 and the parties to the Placement Agent Agreement. 1. We understand that the Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or registered or qualified under any state securities or "Blue Sky" laws and are being sold to us in a transaction that is exempt from the registration requirements of the Securities Act and the registration or qualification requirements of such state laws. 2. We are (Check one): (a) a "Qualified Institutional Buyer" (as defined in Rule 144A under the Securities Act), in the case of a transfer of Certificates to be made in reliance on Rule 144A. (b) an institutional investor that has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Notes and is able to bear the 139 economic risk of investment in the Notes. (c) an "accredited investor" as defined in Rule 501 promulgated under the Securities Act that has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investment in the Notes and is able to bear the economic risk of investment in the Notes. 3. We agree that, to the extent that Section 2(a) of this letter is applicable, that the Notes will not be transferred unless such transfer is made in reliance on Rule 144A or unless some other exemption from the registration requirements of the Securities Act, or any applicable state securities law, is available. 4. To the extent that Section 2(b) or (c) of this letter is applicable, that we are acquiring the Notes (i) solely for investment purposes for our own account or for accounts as to which we exercise sole investment discretion and not with a view to any resale or distribution of the Notes in whole or in part, or (ii) otherwise for purposes which will not constitute a distribution of securities under the Securities Act, or under any state securities or "Blue Sky" laws subject, nevertheless, to the understanding that disposition of our property shall at all times be and remain within our control, and under no circumstances will we attempt to sell, pledge, hypothecate or otherwise transfer all or any portion of our interest in the Notes except in accordance with the terms of the Notes and the Indenture. 5. We agree not to sell the Notes in whole or in part, unless the subsequent purchaser agrees to be subject to the same representations and warranties as were applicable to us in acquiring the Notes. 6. We understand that each of the Notes shall bear a legend substantially as set forth in the form of Note included in the Indenture. 7. We understand that there is no public market for the Notes and it is unlikely that such market will develop. 8. We are authorized to invest in the Notes and we are sophisticated institutional investors and have knowledge and experience in financial and business matters and we are capable of evaluating the merits and risks of its investment in the Notes and we are able to bear the economic risk of such investment for an indefinite period of time. We have been given such information concerning the Notes as we have requested. 9. The Purchaser represents that either (a) it is not (i) an employee benefit plan (as defined in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), which is subject to the provisions of Title I of ERISA, or (ii) a plan (as defined in section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "code")) that is subject to Section 4975 of the Code (each of the foregoing, B-2 140 a "Benefit Plan"), and is not acting on behalf of or investing the assets of a Benefit Plan, or (b) its acquisition and continued holding of the Notes is covered by a U.S. Department of Labor Prohibited Transaction Class Exemption. 10. We certify that, in acquiring the Notes, we have complied with any applicable guidelines or regulations for or limitations on investments established by each regulatory agency or body, if any, which has jurisdiction over investments made by us and that our acquisition and retention of the Notes will not violate the limitations on possession contained in any such guidelines, regulations or limitations. 11. We will comply with all applicable federal and state securities laws in connection with any subsequent resale of the Notes. Very truly yours, [TRANSFEREE] B-3 141 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........................................2 SECTION 1.01. General Definitions..................................................................2 SECTION 1.02. Compliance Certificates and Opinions................................................23 SECTION 1.03. Form of Documents Delivered to Trustee..............................................24 SECTION 1.04. Acts of Noteholders, etc............................................................25 SECTION 1.05. Notices, etc., to Trustee, Servicer, Issuer and Rating Agencies.....................26 SECTION 1.06. Notice to Noteholders; Waiver.......................................................27 SECTION 1.07. Effect of Headings and Table of Contents............................................27 SECTION 1.08. Successors and Assigns..............................................................27 SECTION 1.09. GOVERNING LAW.......................................................................27 SECTION 1.10. Legal Holidays......................................................................27 SECTION 1.11. Execution in Counterparts...........................................................28 SECTION 1.12. Inspection..........................................................................28 SECTION 1.13. Survival of Representations and Warranties..........................................28 ARTICLE II THE NOTES....................................................................................29 SECTION 2.01. General Provisions..................................................................29 SECTION 2.02. Execution, Authentication, Delivery, and Dating.....................................32 SECTION 2.03. Transfer and Exchange...............................................................32 SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes.........................................36 SECTION 2.05. Book-Entry Registration of Class A Notes, Class B Notes, Class C Notes, Class D Notes and Class R Notes....................................................37 SECTION 2.06. Notice to Clearing Agency...........................................................38 SECTION 2.07. Definitive Class A Notes, Class B Notes, Class C Notes, Class D Notes and Class R Notes......................................................................38 SECTION 2.08. Payment of Interest and Principal; Rights Preserved.................................40 SECTION 2.09. Persons Deemed Owners...............................................................40 SECTION 2.10. Cancellation........................................................................40 SECTION 2.11. Noteholder Lists....................................................................41 SECTION 2.12. Treasury Securities.................................................................41 ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION AND APPLICATION OF MONEYS; REPORTS...............41 SECTION 3.01. Trust Accounts; Investments by Trustee..............................................41 SECTION 3.02. Collection of Moneys................................................................44 SECTION 3.03. Collection Account; Payments........................................................44 SECTION 3.04. The Residual Account; Payments......................................................47 SECTION 3.05. The Reserve Account.................................................................47
142 SECTION 3.06. The Liquidity Reserve Account.......................................................48 SECTION 3.07. Reports by Trustee; Notices of Certain Payments.....................................49 SECTION 3.08. Trustee May Rely on Certain Information from Copelco and Servicer...................50 ARTICLE IV RELEASE OF LEASES AND EQUIPMENT..............................................................51 SECTION 4.01. Release of Equipment................................................................51 SECTION 4.02. Release of Leases Upon Final Lease Payment..........................................51 SECTION 4.03. Execution of Documents..............................................................51 ARTICLE V SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER...............................................52 SECTION 5.01. Servicer Events of Default..........................................................52 SECTION 5.02. Substitute Servicer.................................................................52 ARTICLE VI EVENTS OF DEFAULT; REMEDIES..................................................................52 SECTION 6.01. Events of Default...................................................................52 SECTION 6.02. Acceleration of Maturity; Rescission and Annulment..................................53 SECTION 6.03. Remedies............................................................................54 SECTION 6.04. Trustee Shall File Proofs of Claim..................................................55 SECTION 6.05. Trustee May Enforce Claims Without Possession of Notes..............................55 SECTION 6.06. Application of Money Collected......................................................56 SECTION 6.07. Limitation on Suits.................................................................57 SECTION 6.08. Unconditional Right of Noteholders to Receive Principal and Interest................58 SECTION 6.09. Restoration of Rights and Remedies..................................................58 SECTION 6.10. Rights and Remedies Cumulative......................................................59 SECTION 6.11. Delay or Omission Not Waiver........................................................59 SECTION 6.12. Control by Noteholders..............................................................59 SECTION 6.13. Residual Notes Events of Default....................................................59 SECTION 6.14. Undertaking for Costs...............................................................61 SECTION 6.15. Waiver of Stay or Extension Laws....................................................61 SECTION 6.16. Sale of Trust Estate................................................................61 ARTICLE VII THE TRUSTEE.................................................................................63 SECTION 7.01. Certain Duties and Responsibilities.................................................63 SECTION 7.02. Notice of Defaults or Events of Default.............................................64 SECTION 7.03. Certain Rights of Trustee...........................................................64 SECTION 7.04. Not Responsible for Recitals or Issuance of Notes...................................65 SECTION 7.05. May Hold Notes......................................................................65 SECTION 7.06. Money Held in Trust.................................................................65 SECTION 7.07. Compensation, Reimbursement, etc....................................................65 SECTION 7.08. Corporate Trustee Required; Eligibility.............................................66 SECTION 7.09. Resignation and Removal; Appointment of Successor...................................66 SECTION 7.10. Acceptance of Appointment by Successor..............................................67 SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business.........................68 SECTION 7.12. Co-trustees and Separate Trustees...................................................68
ii 143 SECTION 7.13. Acceptance by Trustee...............................................................69 SECTION 7.14. Preferential Collection of Claims Against the Issuer................................69 SECTION 7.15. Reports by Trustee to Noteholders...................................................70 SECTION 7.16. No Proceedings......................................................................70 ARTICLE VIII COVENANTS..................................................................................70 SECTION 8.01. Payment of Principal and Interest...................................................70 SECTION 8.02. Maintenance of Office or Agency; Chief Executive Office.............................70 SECTION 8.03. Money for Payments to Noteholders to be Held in Trust...............................71 SECTION 8.04. Corporate Existence; Merger; Consolidation, etc.....................................72 SECTION 8.05. Protection of Trust Estate; Further Assurances......................................72 SECTION 8.06. [Reserved]..........................................................................73 SECTION 8.07. Performance of Obligations; Assignment and Servicing Agreement......................73 SECTION 8.08. Negative Covenants..................................................................73 SECTION 8.09. Information as to Issuer............................................................74 SECTION 8.10. Taxes...............................................................................75 SECTION 8.11. Indemnification.....................................................................75 SECTION 8.12. Commission Reports; Reports to Trustee; Reports to Noteholders......................75 ARTICLE IX SUPPLEMENTAL INDENTURES......................................................................76 SECTION 9.01. Supplemental Indentures Without Consent of Noteholders..............................76 SECTION 9.02. Supplemental Indentures with Consent of Noteholders.................................76 SECTION 9.03. Execution of Supplemental Indentures................................................77 SECTION 9.04. Effect of Supplemental Indentures...................................................78 SECTION 9.05. Reference in Notes to Supplemental Indentures.......................................78 SECTION 9.06. Compliance with Trust Indenture Act.................................................78 ARTICLE X SATISFACTION AND DISCHARGE....................................................................78 SECTION 10.01. Satisfaction and Discharge of Indenture............................................78 SECTION 10.02. Application of Trust Money.........................................................79 ARTICLE XI MISCELLANEOUS................................................................................80 SECTION 11.01. Trust Indenture Act Controls.......................................................80 SECTION 11.02. Communication by Noteholders with Other Noteholders................................80 SECTION 11.03. Officers' Certificate and Opinion of Counsel as to Conditions Precedent............80 SECTION 11.04. Statements Required in Certificate or Opinion......................................80 SECTION 11.05. Nonpetition........................................................................81 SCHEDULES SCHEDULE 1 Leases EXHIBITS
iii 144 EXHIBIT A Forms of Notes and Form of Trustee's Certificate of Authentication EXHIBIT B Form of Investor Letter iv EX-5.1 6 OPINION DEWEY 1 DEWEY BALLANTINE LLP 1301 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 TELEPHONE (212) 259-8000 FACSIMILE (212) 259-6333 February 26, 1999 Copelco Capital Funding LLC 99-1 700 East Gate Drive Mount Laurel, New Jersey 08054-5400 Re: Copelco Capital Funding LLC 99-1 Registration Statement on Form S-1 (File No. 333-69983) Ladies and Gentlemen: We have acted as special counsel for Copelco Capital Funding LLC 99-1, a Delaware limited liability company (the "Issuer") in connection with the preparation and filing of the above-referenced registration statement on Form S-1 ( the "Registration Statement"), filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, in respect of the Copelco Capital Funding 99-1 Class A-1 Lease-Backed Notes, Series 1999-A, Class A-2 Lease-Backed Notes, Series 1999-A, Class A-3 Lease-Backed Notes, Series 1999-A, Class A-4 Lease-Backed Notes, Series 1999-A, Class A-5 Lease-Backed Notes, Series 1999-A, Class B Lease-Backed Notes, Series 1999-A, Class C Lease-Backed Notes, Series 1999-A, and Class D Lease-Backed Notes Series 1999-A (collectively, the "Notes"). Our advice formed the basis for the description of federal income tax consequences appearing under the heading "Material Federal Income Tax Considerations" in the prospectus contained in the Registration Statement. Such description does not purport to discuss all possible federal income tax consequences of an investment in the Notes but with respect to those tax consequences which are discussed, it is our opinion that the description is accurate. In addition, assuming (i) the Indenture dated as of March 1, 1999 among Copelco Capital Funding LLC 99-1, Copelco Capital, Inc. and Manufacturers and Traders Trust Company is fully executed, delivered and enforceable against the parties thereto in accordance with its terms, and (ii) the transaction described in the prospectus is completed on substantially the terms and conditions set forth therein, it is our opinion that the Notes will be characterized as indebtedness for federal income tax purposes. 2 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this opinion, we do not concede that we are experts within the meaning of the Act or the rules and regulations therewith, or that this consent is required by Section 7 of the Act. Very truly yours, DEWEY BALLANTINE LLP EX-8.1 7 OPINION DEWEY 1 DEWEY BALLANTINE LLP 1301 AVENUE OF THE AMERICAS NEW YORK 10019-6092 TELEPHONE 212 259-8000 FACSIMILE 212 259-6333 February 26, 1999 Copelco Capital Funding LLC 99-1 700 East Gate Drive Mount Laurel, New Jersey 08054-5400 Re: Copelco Capital Funding LLC 99-1 Registration Statement on Form S-1 (File No. 333-69983) Ladies and Gentlemen: We have acted as special counsel for Copelco Capital Funding LLC 99-1, a Delaware limited liability company (the "Issuer"), in connection with the preparation of the above-referenced Registration Statement on Form S-1 (the "Registration Statement"), filed with the Securities and Exchange Commission contemporaneously herewith under the Securities Act of 1933, as amended (the "Act"), which Registration Statement includes a Prospectus (the "Prospectus") for the registration under the Act of Class A-1 Lease-Backed Notes, Series 1999-A, Class A-2 Lease-Backed Notes, Series 1999-A, Class A-3 Lease-Backed Notes, Series 1999-A, Class A-4 Lease-Backed Notes, Series 1999-A, Class A-5 Lease-Backed Notes, Series 1999-A, Class B Lease-Backed Notes, Series 1999-A, Class C Lease-Backed Notes, Series 1999-A and Class D Lease-Backed Notes, Series 1999-A (the "Offered Notes") to be issued pursuant to the Indenture dated on or about March 1, 1999 ("Indenture") among the Issuer, Copelco Capital, Inc., as servicer, and Manufacturers and Traders Trust Company, as Trustee (substantially in the form filed as an exhibit to the Registration Statement). In that regard, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purposes of this opinion. The opinions expressed below are subject to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights generally and to general equity principles. We are admitted to the Bar of the State of New York and we express no 2 opinion as to the laws of any other jurisdiction except as to matters that are governed by Federal law or the laws of the State of New York. All opinions expressed herein are based on laws, regulations and policy guidelines currently in force and may be affected by future regulations. Based upon the foregoing, we are of the opinion that when the Indenture has been duly authorized by the Trustee and duly executed and delivered by the Trustee and when the Offered Notes have been duly executed and authenticated in accordance with the provisions of the Indenture, and issued and sold as contemplated in the Registration Statement and the Prospectus, as amended or supplemented, delivered pursuant to Section 5 of the Act in connection therewith, such Offered Notes will be legally and validly issued and the holders of such Offered Notes will be entitled to the benefits of such Indenture. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this opinion, we do not concede that we are experts within the meaning of the Act or the rules and regulations therewith, or that this consent is required by Section 7 of the Act. Very truly yours, DEWEY BALLANTINE LLP EX-10.1 8 FORM OF ASSIGNMENT AND SERVICING AGREEMENT 1 COPELCO CAPITAL, INC., TRANSFEROR AND SERVICER AND COPELCO CAPITAL FUNDING LLC 99-1 ISSUER ------------------------- ASSIGNMENT AND SERVICING AGREEMENT Dated as of March 1, 1999 ------------------------- ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF COPELCO CAPITAL FUNDING LLC 99-1 HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF MANUFACTURERS AND TRADERS TRUST COMPANY, AS TRUSTEE, UNDER THE INDENTURE DATED AS OF MARCH 1, 1999, FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN. 2 TABLE OF CONTENTS Page R E C I T A L S .........................................................1 A G R E E M E N T S .........................................................2 SECTION 1. CAPITAL CONTRIBUTION.............................................2 1.01 Contribution of Leases...........................................2 1.02 Capital Contribution.............................................2 1.03 Transfer of Leases; Grant of Security Interest...................2 1.04 Servicer to Act as Custodian.....................................3 SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.....................4 2.01 Corporate Organization and Authority.............................4 2.02 Business and Property............................................4 2.03 Financial Statements.............................................4 2.04 Equipment and Leases.............................................5 2.05 Payments.........................................................8 2.06 Full Disclosure..................................................8 2.07 Pending Litigation...............................................8 2.08 Title to Properties..............................................9 2.09 Transactions Legal and Authorized................................9 2.10 Governmental Consent.............................................9 2.11 Taxes............................................................9 2.12 Compliance with Law.............................................10 2.13 ERISA...........................................................10 2.14 Ability to Perform..............................................10 2.15 Ordinary Course; No Insolvency..................................11 2.16 Assets and Liabilities..........................................11 2.17 Fair Consideration..............................................11 2.18 Ability to Pay Debts............................................11 2.19 Bulk Transfer Provisions........................................11 2.20 Transfer Taxes..................................................12 2.21 Principal Executive Office......................................12 2.22 Servicing Provisions Customary..................................12 2.23 Nonconsolidation................................................12 2.24 Contribution Treatment..........................................13 SECTION 3. ADMINISTRATION OF LEASES........................................13 3.01 Servicer to Act.................................................13 3.02 Lease Amendments and Modifications..............................15 3.03 Non-Performing Leases...........................................16 i 3 3.04 Costs of Servicing; Servicing Fee; Administrative Expenses......17 3.05 Other Transactions..............................................17 SECTION 4. SERVICER ADVANCES AND SELLER'S SUPPORT..........................18 4.01 Late Lease Payments.............................................18 4.02 Early Termination Leases........................................18 4.03 Indemnification.................................................19 4.04 Purchases; Other Payments.......................................19 4.05 Payment Advice..................................................20 SECTION 5. INFORMATION TO BE PROVIDED......................................20 5.01 Monthly Status Reports; Servicing Reports.......................20 5.02 Annual Independent Public Accountant's Report...................22 SECTION 6. THE SERVICER....................................................22 6.01 Merger or Consolidation of the Servicer.........................22 6.02 Limitation on Liability of the Servicer and Others..............22 6.03 Servicer Not to Resign or Be Removed............................23 6.04 Financial and Business Information..............................23 6.05 Officers' Certificates..........................................25 6.06 Inspection......................................................25 6.07 Servicer Records................................................25 SECTION 7. THE SELLER......................................................25 7.01 Merger or Consolidation of the Transferor.......................25 7.02 Control of Issuer...............................................26 7.03 Financial and Business Information..............................26 7.04 Officers' Certificates..........................................27 7.05 Inspection......................................................27 7.06 Books and Records...............................................28 7.07 Communications..................................................28 SECTION 8. DEFAULT ........................................................28 8.01 Servicer Events of Default......................................28 8.02 Termination.....................................................30 8.03 Trustee to Act; Appointment of Successor........................30 8.04 Servicer to Cooperate...........................................31 8.05 Notification to Noteholders.....................................31 8.06 Remedies Not Exclusive..........................................31 SECTION 9. SUBSTITUTION AND ADDITION OF LEASES.............................32 9.01 Substitution and Addition.......................................32 9.02 Procedure.......................................................33 9.03 Objection and Purchase..........................................34 9.04 Transferor's and Servicer's Subsequent Obligations..............34 ii 4 SECTION 10. ASSIGNMENT.....................................................35 10.01 Assignment to Trustee..........................................35 10.02 Assignment by Transferor or Servicer...........................35 SECTION 11. NATURE OF OBLIGATIONS AND SECURITY THEREFOR....................35 11.01 Obligations Absolute...........................................35 11.02 Security for Obligations.......................................36 11.03 Further Assurances; Financing Statements.......................36 SECTION 12. DEFINITIONS....................................................36 SECTION 13. INTER-COMPANY LOANS............................................42 13.01 Inter-Company Loans............................................42 SECTION 14. MISCELLANEOUS..................................................42 14.01 Continuing Obligations.........................................42 14.02 GOVERNING LAW..................................................43 14.03 Successors and Assigns.........................................43 14.04 Modification...................................................43 14.05 No Proceedings.................................................43 14.06 Notices........................................................43 14.07 Counterparts...................................................43 14.08 Nonpetition Covenant...........................................44 Schedule 1 - Subsidiaries of the Transferor Exhibit A - Schedule of Leases and Equipment Exhibit B - Form of Inter-Company Loan Note Exhibit C - Form of Receivables Servicing Report iii 5 ASSIGNMENT AND SERVICING AGREEMENT This ASSIGNMENT AND SERVICING AGREEMENT is made and dated as of March 1, 1999, by and between COPELCO CAPITAL FUNDING LLC 99-1, a Delaware limited liability company, as purchaser hereunder (the "Issuer") and COPELCO CAPITAL, INC., a Delaware corporation, as originator and seller of the Leases (in such capacity, the "Transferor") and servicer (in such capacity, the "Servicer"). R E C I T A L S A. The Transferor wishes to contribute and assign to the Issuer, and the Issuer wishes to acquire from the Transferor, all right, title and interest of the Transferor in, to and under the Leases and the Equipment subject to the Leases (such terms and all other capitalized terms used herein having the meanings ascribed thereto in Section 12 hereof unless otherwise indicated). B. Pursuant to the Indenture, the Issuer is issuing one class of ______% Class A-1 Lease-Backed Notes, Series 1999-A in the aggregate principal amount of $________ (the "Class A-1 Notes"), one class of ____% Class A-2 Lease-Backed Notes, Series 1999-A in the aggregate principal amount of $_________ (the "Class A-2 Notes"), one class of ___% Class A-3 Lease-Backed Notes, Series 1999-A in the aggregate principal amount of $______ (the "Class A-3 Notes"), one class of ____% Class A-4 Lease-Backed Notes, Series 1999-A in the aggregate principal amount of $_________ (the "Class A-4 Notes"; together with the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the "Class A Notes"), one class of ____% Class B Leased-Backed Notes, Series 1999-A (the "Class B Notes"), in the aggregate principal amount of $_________, one class of ____% Class C Lease-Backed Notes, Series 1999-A, in the aggregate principal amount of $__________ (the "Class C Notes"), one class of _____% Class D Leased Backed Notes, Series 1999-A in the aggregate principal amount of $_________ (the "Class D Notes"), one class of ______% Class E Lease-Backed Notes, Series 1999-A, in the aggregate principal amount of $_________ (the "Class E Notes"; together with the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes, the "Receivable Notes"), one class of ____% Class R-1 Residual Notes, Series 1999-A in the aggregate principal amount of $________ (the "Class R-1 Notes") and one class of ____% Class 2 Residual Notes, Series 1999-A in the aggregate principal amount of $_________ (the Class R-2 Notes; together with the Class R-1 Notes, the "Class R Notes"; the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class R Notes are referred to collectively as the "Notes"), the proceeds of which are being used by the Issuer to make payment to the Transferor for the Leases. C. Pursuant to the Indenture, the Issuer is granting, inter- alia, to the Trustee, for the benefit of the holders from time to time of the Notes, a security interest in all right, title and interest of the Issuer in, to and under the Leases, the interests in the Equipment and this Assignment and Servicing Agreement. 6 A G R E E M E N T S SECTION 1. CAPITAL CONTRIBUTION 1.01 Contribution of Leases. By their execution and delivery of this Assignment and Servicing Agreement, the Transferor hereby contributes and assigns to the Issuer, and the Issuer hereby acquires from the Transferor without recourse (except to the extent of the Transferor's purchase obligations as set forth herein), all of the Transferor's right, title and interest in and to each of the Leases (including the right to receive all payments due or to become due thereunder since the Cut-Off Date). 1.02 Capital Contribution. The Transferor and the Issuer each acknowledge and confirm that contemporaneously with the contribution of the Leases as hereinabove provided, the Transferor, as a holder of beneficial interests in the Issuer, is contributing and transferring to the Issuer, and in connection with each transfer and assignment of Additional Leases and Substitute Leases the Transferor will contribute and transfer to the Issuer, without recourse, all right, title and interest of the Transferor in and to each item of Equipment subject to each Lease, Additional Lease and Substitute Lease. After such contribution and transfer by the Transferor to the Issuer, all right, title and interest of the Transferor in and to each item of Equipment subject to each Lease shall be vested in the Issuer. 1.03 Transfer of Leases; Grant of Security Interest. It is the intention of the parties hereto that each transfer of Leases, Additional Leases, Substitute Leases, Lease Payments and all other amounts due or becoming due with respect thereto and Equipment (or interests therein) being made hereunder shall constitute a capital contribution and not a loan. The Transferor shall not take any action inconsistent with the treatment of such transfers as capital contributions or with the Issuer's ownership of the Leases, the Lease Receivables and all other amounts due or becoming due with respect thereto and the interests in the Equipment. The Transferor shall indicate in its records that ownership of each of the Leases, the Lease Receivables and the interests in the Equipment is held by the Issuer, and each shall respond to any inquiries from third parties by indicating that its ownership in the Leases, Additional Leases, Substitute Leases, the Lease Receivables and all other amounts due or becoming due with respect thereto and the interests in the Equipment is held by the Issuer and pledged to the Trustee. In the event, however, that a court of competent jurisdiction were to hold that any transaction evidenced hereby constitutes a loan and not a capital contribution, it is the intention of the parties hereto that this Agreement shall constitute a security agreement under applicable law and that the Issuer and the Trustee shall be deemed to have been granted a first priority security interest in (a) the Leases and all Lease Payments, Casualty Payments, Termination Payments, Residual Realizations and other amounts 2 7 now due or becoming due with respect thereto since the Cut-Off Date (other than any prepayments of rent required pursuant to the terms of any Lease at or before the commencement of the Lease and any payments due before the Cut-Off Date) and all Additional Leases and Substitute Leases and all Lease Payments, Casualty Payments, Termination Payments, Residual Realizations and other amounts due or becoming due with respect thereto since the effective date of their respective addition or substitution (other than any prepayments of rent required by the terms of any Lease at or before the commencement of the Lease and any payments due before the effective date of such addition or substitution), (b) all rights of the Issuer to or under any guarantees of or collateral (including all rights of the Issuer in any security deposits) for the Lessee's obligations under any Lease, (c) all interests of the Issuer in the Equipment at any time subject to any Lease including any security interest of the Transferor in the Equipment and (d) all proceeds of the conversion, whether voluntary or involuntary, of any of the foregoing into cash or other property. 1.04 Servicer to Act as Custodian. (a) The Servicer shall hold and acknowledges that it is holding the Leases and all other Granted Assets that it may from time to time receive hereunder as custodian for the Trustee. (b) The Servicer shall perform its duties under this Section 1.05 in accordance with the standard set forth in Section 3.01 as such standard applies to servicers acting as custodial agents. The Servicer shall promptly report to the Trustee any failure by it to hold the complete Leases as herein provided and shall promptly take appropriate action to remedy any such failure but only to the extent (i) any such failure is caused by the acts or omissions of the Servicer and (ii) such remedial action is otherwise within its capabilities or control. As custodian, the Servicer shall have and perform the following powers and duties: (A) hold the Leases on behalf of the Trustee for the benefit of the Noteholders, maintain accurate records pertaining to each Lease to enable it to comply with the terms and conditions of this Assignment and Servicing Agreement, and maintain a current inventory thereof; (B) implement policies and procedures in accordance with the Servicer's normal business practices with respect to the handling and custody of the Leases so that the integrity and physical possession of the Leases will be maintained; and (C) attend to all details in connection with maintaining custody of the Leases on behalf of the Trustee on behalf of the Noteholders. (c) In acting as custodian of the Leases, the Servicer agrees further that it does not and will not have or assert any beneficial ownership interest in such Leases. The Servicer on behalf of the Noteholders shall mark conspicuously each original contractual document with a Lessee, and its master data processing records evidencing each Lease with a legend, acceptable to the Trustee, evidencing that all right, title and interest in the Leases has been granted to the Trustee as provided in the Indenture. (d) The Servicer agrees to maintain the Leases at its office in Mt. Laurel, New Jersey or Mahwah, New Jersey or Moberly, Missouri or at such other offices of the Servicer as shall from time to time be identified by prior written notice to the Trustee. Subject to the foregoing, the Servicer may temporarily move individual Leases or any portion thereof without notice as necessary to conduct collection and other servicing activities. 3 8 SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER The Transferor hereby represents and warrants as follows: 2.01 Corporate Organization and Authority. The Transferor: (a) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, (b) has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as now conducted (except where the failure to have such licenses and permits would not have a material adverse effect on the business or condition (financial or otherwise) of the Transferor or impair the enforceability of any Lease) and to enter into and perform its obligations under this Assignment and Servicing Agreement, and the transactions contemplated hereby, including performance of the duties of the Servicer and the Transferor's support obligations hereunder, and (c) has duly qualified and is authorized to do business and is in good standing as a foreign corporation in each jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary (except where the failure to be so qualified or in good standing would not have a material adverse effect on the Trust Estate or the business or condition (financial or otherwise) of the Transferor or impair the enforceability of any Lease). 2.02 Business and Property. The Prospectus and the Private Placement Memoranda, accurately describe in all material respects the general nature of the business of the Transferor. 2.03 Financial Statements. (a) The consolidated balance sheet of the Transferor and its consolidated subsidiaries for the fiscal periods ended December 31, 1997 and December 31, 1996 and the related consolidated statements of income, retained earnings and cash flow for the respective period and fiscal years ended on such dates, all accompanied by reports thereon containing opinions without qualification, except as therein noted, by KPMG Peat Marwick, independent certified public accountants, and the unaudited interim consolidated balance sheet of the Transferor and its consolidated subsidiaries as of September 30, 1998 and the related consolidated statements of income, retained earnings and cash flow for the nine months ended on such date have been prepared in accordance with generally accepted accounting principles consistently applied, and present fairly the financial position of the Transferor and its subsidiaries as of such dates and the results of their operations for such periods. 4 9 (b) Except as disclosed in the Prospectus, the Private Placement Memoranda and the financial statements referred to in the preceding Section 2.03(a), since September 30, 1998 there has been no change in the business, condition or prospects (financial or otherwise) of the Transferor except changes in the ordinary course of business, none of which individually or in the aggregate has been materially adverse. Neither the Transferor nor any of its subsidiaries has any material liabilities or obligations not incurred in the ordinary course of business other than those disclosed in the financial statements referred to in Section 2.03(a) or for which adequate reserves are reflected in such financial statements and certain contingent obligations of the Transferor relating to other asset securitization transactions involving the Transferor. 2.04 Equipment and Leases. (a) Prior to the date of each transfer of any Leases and Equipment in accordance with Sections 1.01 and 1.02, respectively, the Transferor purchased each item of Equipment from either (i) the manufacturer or other supplier following receipt of an invoice from such manufacturer or supplier or (ii) a Lessee following confirmation that such item of Equipment was on such Lessee's premises. The Transferor has paid in full, to the manufacturer or supplier or Lessee, as the case may be, the purchase price and any related charges in connection with the acquisition of the Equipment. The transfer to the Issuer of the Leases and all of the Transferor's right, title and interest in each item of Equipment does not violate the terms or provisions of any Lease or any other agreement to which the Transferor is a party or by which it is bound. (b) Upon completion of the transfer described in Article I hereof, the Issuer will (i) be the legal owner of the Leases (including the right to receive all payments due or to become due thereunder), (ii) have good title to each item of the Equipment subject to any Lease other than a Nominal Buy-Out Lease (or other finance lease), (iii) have a valid security interest in each item of Equipment subject to any Lease other than a Nominal Buy-Out Lease (or other finance lease) and (iv) have a perfected security interest in each item of Equipment with a purchase price in excess of $25,000 subject to a Nominal Buy-Out Lease (or other finance lease). At such time, the Leases (including the right to receive all payments due or to become due thereunder) and the Transferor's interest in the Equipment will be free and clear of all Liens other than the rights of each Lessee under the Lease to which such Lessee is a party and the Lien created by the Indenture; and there will be no delinquent taxes or other outstanding charges affecting the Equipment which are or may be Liens prior to, or equal or coordinate with, the Lien of the Trustee under the Indenture. (c) At the time of each transfer of a Lease hereunder, each such Lease (i) is or will be a triple-net lease, (ii) is or will be a legal, valid and binding full recourse obligation of the Lessee thereunder, enforceable by the Issuer (and by the Trustee as assignee of the Issuer) against such Lessee in accordance with the terms thereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights and by general equity principles and (iii) is noncancellable by the Lessee and is in full force and effect, and any and all requirements of any federal, state or local law, including, without limitation, usury, truth-in-lending and equal credit opportunity laws applicable to each Lease have been complied with; and the Transferor has no knowledge (after 5 10 due inquiry) of any challenge, dispute or claim by or against the Lessee under or affecting any Lease or of the bankruptcy or insolvency of any such Lessee. As of the initial Determination Date, or the effective date of the transfer of any Additional Lease or Substitute Lease, each Lessee has paid at least one installment of rent under its respective Lease. (d) At the time that any item of Equipment (including the Transferor's security interest in any item not owned by it) is contributed hereunder, the Transferor will have no knowledge that any item of the Equipment has suffered any loss or damage which has not been repaired. (e) Each Lease requires the Lessee thereunder to maintain insurance on the Equipment subject thereto in an amount at least equal to the fair market value thereof. (f) In addition to the insurance maintained by the Lessees with respect to the Equipment, the Transferor (or an Affiliate of the Transferor) maintains (i) one or more casualty insurance policies which, in the aggregate, are in an amount not less than the aggregate Outstanding Principal Amount of the Notes, (ii) a general liability insurance policy in the aggregate amount of $1,000,000 and (iii) an excess liability insurance policy in umbrella form in the aggregate amount of $10,000,000. Each of such policies is in full force and effect and covers all equipment owned by the Transferor and the Issuer. All premiums in respect of such policies have been paid. Each of the Trustee and the Issuer are named as loss payees and additional insureds, as their interests may appear, on such casualty and liability policies maintained by the Transferor. (g) At the time of each transfer of a Lease hereunder, no Lease had outstanding rent which was 63 or more days past due as of the Cut-Off Date. (h) Each Lease was entered into or acquired by the Transferor in accordance with the Transferor's regular credit approval process described in the Prospectus, and no selection procedures adverse to the credit quality of the Leases were employed in selecting the Leases for contribution under this Assignment and Servicing Agreement. (i) The obligation of each Lessee to pay rent under each of the Leases throughout the term thereof is and will be unconditional, without any right of setoff by such Lessee and without regard to any event affecting the Equipment, the obsolescence of any Equipment, any claim of such Lessee against the Issuer, the Transferor or the Servicer or any change in circumstance of such Lessee or any other circumstance whatsoever except to the extent that in the event of a casualty of any item of Equipment, the Lessee is obligated to pay, in lieu of the future Lease Payments with respect to such item, an amount which equals or exceeds the Discounted Present Value of the Lease as of the Payment Date next succeeding the making of such payment (plus any unpaid rents). (j) In the case of each Lease which consists of a master lease and one or more exhibits or schedules thereto, the Transferor has neither assigned such master lease in its entirety, nor delivered physical possession of such master lease, to any Person other than the Issuer or the Trustee (including the trustee under another indenture in a transaction substantially similar to the transaction contemplated hereby, which other indenture provides that the lien thereof on such 6 11 master lease extends only to such master lease insofar as it relates to lease schedules which are not part of the Trust Estate). (k) As of the time of each transfer of Leases and Equipment hereunder, there are no facts or circumstances which give rise, or would give rise at any time in the future, to any right of rescission, setoff, counterclaim or defense, including the defense of usury, to obligations of any Lessee, including the obligation of such Lessee to pay all amounts due with respect to any Lease to which such Lessee is a party, and neither the operation of any of the terms of any Lease or the exercise of any right thereunder will render such Lease unenforceable in whole or in part or subject to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and no such right of rescission, setoff, counterclaim or defense has been asserted with respect thereto. (l) As of the time of each transfer of Leases and Equipment hereunder, no Lease has been amended, altered or modified in any respect, except in writing and copies of all such writings are attached to the Lease delivered to the Trustee. (m) As of the time of each transfer of Leases and Equipment hereunder, no Lessee will have been released, in whole or in part, from any of its obligations in respect of any Lease; no Lease will have been satisfied, cancelled or subordinated, in whole, or in part, or rescinded, and no Equipment covered by any Lease will have been released from such Lease, in whole or in part, nor has any instrument been executed that would effect any such satisfaction, release, cancellation, subordination or rescission. (n) As of the time of each transfer of Leases and Equipment hereunder, each Lease was either (i) originated by the Transferor in the ordinary course of its business or (ii) purchased by the Transferor for value and taken into possession prior to the Cut-Off Date in the ordinary course of its business. (o) No Lease was originated in or is subject to the laws of any jurisdiction whose laws would make any of the transfers and sales thereof under this Assignment and Servicing Agreement unlawful. (p) All parties to each Lease had all requisite authority and capacity to execute such Lease. (q) None of the Leases is a consumer lease and each Lessee has accepted the Equipment leased to it. (r) The Booked Residual Value of the Equipment as of the Cut-Off Date equals $____________. (s) As of the Cut-Off Date, the Final Lease Payment on each Lease was due and payable on or prior to _________. (t) Each Lease agreement is "chattel paper" within the meaning of The Uniform Commercial Code in the states of New York and New Jersey. 7 12 2.05 Payments. (a) The aggregate amounts of Lease Payments payable by the Lessees under the Leases during each lease payment period, including amounts on deposit in the Reserve Account, are sufficient to cover the Servicing Fee and pay the principal and interest on the Receivable Notes, as such payments become due and payable. (b) The aggregate amount of Residual Realizations using the average historical realization rate, including amounts on deposit in the Liquidity Reserve Account, is sufficient to cover the Residual Servicing Fee and pay the principal and interest on the Class R Notes as such payments become due and payable. (c) The portfolio detail delivered or to be delivered to the Trustee on or prior to the Issuance Date (i) accurately sets forth, as of the Cut-Off Date, the amount of each Lease Payment due under each of the Leases and the month in which such Lease Payment is to be paid in accordance with the terms of the Lease under which the same is to be paid, (ii) accurately sets forth, as of the Cut-Off Date, the information with respect to certain other characteristics of the Leases and the Equipment described in such portfolio detail and (iii) is otherwise true and correct in all respects. 2.06 Full Disclosure. The Prospectus and the Private Placement Memoranda (including, without limitation, the statistical and descriptive information with respect to the initial Leases, Lessees and Equipment), as of their respective dates, do not contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. There is no fact peculiar to the Transferor or any Affiliate of the Transferor or, to the knowledge of the Transferor, any Lease, Lessee or item of Equipment, which the Transferor has not or will not disclose in the Prospectus or the Private Placement Memoranda which materially affects adversely nor, so far as the Transferor can now reasonably foresee, will materially affect adversely the ability of the Transferor to perform the transactions contemplated by this Assignment and Servicing Agreement. 2.07 Pending Litigation. There are no proceedings or investigations pending, or to the knowledge (after due inquiry) of the Transferor threatened, against or affecting the Transferor or any subsidiary in or before any court, governmental authority or agency or arbitration board or tribunal, including, but not limited to, any such proceeding or investigation with respect to any environmental or other liability resulting from the ownership or use of any of the Equipment, which, individually or in the aggregate, involve the possibility of materially and adversely affecting the properties, business, prospects, profits or condition (financial or otherwise) of the Transferor and its subsidiaries, or the ability of the Transferor or the Servicer to perform its obligations under this Assignment and Servicing Agreement. The Transferor is not in default with respect to any order of any court, governmental authority or agency or arbitration board or tribunal. 8 13 2.08 Title to Properties. Immediately following the transfer by the Transferor to the Issuer of the Leases and the Transferor's interest in the Equipment, the Leases (including the right to receive all payments due or to become due thereunder) and the interest in the Equipment will be free and clear of all Liens, except the Lien on the Trust Estate in favor of the Trustee granted pursuant to the Indenture (or the Lien in favor of the Issuer which is assigned to the Trustee pursuant to the Indenture). 2.09 Transactions Legal and Authorized. The transfer by the Transferor of all of its right, title and interest in and to each item of Equipment and each Lease (including the right to receive all payments due or to become due thereunder) and compliance by the Transferor with all of the provisions of this Assignment and Servicing Agreement: (a) have been duly authorized by all necessary corporate action on the part of the Transferor, and do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of the Transferor except such as have been duly obtained; (b) are within the corporate powers of the Transferor; and (c) are legal and will not conflict with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any Lien upon any property of the Transferor under the provisions of, any agreement, charter instrument, by-law or other instrument to which the Transferor is a party or by which it or its property may be bound or result in the violation of any law, regulation, rule, order or judgment applicable to the Transferor or its properties, or any order to which the Transferor or its properties is subject, of or by any government or governmental agency or authority. 2.10 Governmental Consent. No consent, approval or authorization of, or filing, registration or qualification with, any governmental authority is necessary or required on the part of the Transferor in connection with the execution and delivery of this Assignment and Servicing Agreement or the contribution of the Leases and Equipment or the performance of its obligations as Servicer. 2.11 Taxes. (a) All tax returns required to be filed by the Transferor or any subsidiary in any jurisdiction have in fact been filed, and all taxes, assessments, fees and other governmental charges upon the Transferor or any subsidiary, or upon any of their respective properties, income or franchises, shown to be due and payable on such returns have been paid. To the best of the Transferor's knowledge all such tax returns were true and correct and neither the Transferor nor any subsidiary knows of any proposed additional tax assessment against it in any material amount nor of any basis therefor. 9 14 (b) The provisions for taxes on the books of the Transferor and each of its subsidiaries are in accordance with generally accepted accounting principles. 2.12 Compliance with Law. The Transferor: (a) is not in violation of any laws, ordinances, governmental rules or regulations to which it is subject; (b) has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its business; and (c) is not in violation in any material respect of any term of any agreement, charter instrument, by-law or other instrument to which it is a party or by which it may be bound, which violation or failure to obtain might materially adversely affect the business or condition (financial or otherwise) of the Transferor and its subsidiaries. 2.13 ERISA. (a) The present value of all benefits vested under all "employee pension benefit plans", as such term is defined in Section 3(2) of ERISA, maintained by or contributed to by the Transferor and its Related Persons (other than "multiemployer plans", as such term is defined in Section 3(37) of ERISA), as from time to time in effect (herein called the "Pension Plans"), does not exceed the value of the assets of the Pension Plans allocable to such vested benefits; (b) No Prohibited Transactions, Accumulated Funding Deficiencies or Reportable Events have occurred with respect to any Pension Plans that, in the aggregate, could subject the Transferor to any material tax, penalty or other liability; and (c) No notice of intent to terminate a Pension Plan under a distress termination has been filed, nor has the PBGC instituted proceedings to terminate, or appoint a trustee to administer, a Pension Plan and no event has occurred or condition exists which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan. 2.14 Ability to Perform. At the date hereof, the Transferor does not believe, nor does it have any reasonable cause to believe, that it cannot perform each and every covenant contained in this Assignment and Servicing Agreement or its ability to perform as Servicer. 10 15 2.15 Ordinary Course; No Insolvency. The transactions contemplated by the Notes, the Indenture and this Assignment and Servicing Agreement are being consummated by the Transferor in furtherance of the Transferor's ordinary business purposes and constitute a practical and reasonable course of action by the Transferor designed to improve the financial position of the Transferor, with no contemplation of insolvency and with no intent to hinder, delay or defraud any of its present or future creditors. The Transferor will not, either as a result of the transaction contemplated by this Assignment and Servicing Agreement, or immediately before or after such transaction, be insolvent or have an unreasonably small capital for the conduct of its business and the payment of anticipated obligations. 2.16 Assets and Liabilities. (a) Both immediately before and after any transfer of Leases (including the right to receive all payments due or to become due thereunder) and the transfer of the interests in the Equipment contemplated by this Assignment and Servicing Agreement, the present fair salable value of the Transferor's assets was or will be in excess of the amount that will be required to pay the Transferor's probable liabilities as they then exist and as they become absolute and matured; and (b) Both immediately before and after any transfer of Leases (including the right to receive all payments due or to become due thereunder) and the transfer of the interests in the Equipment contemplated by this Assignment and Servicing Agreement, the sum of the Transferor's assets was or will be greater than the sum of the Transferor's debts, valuing the Transferor's assets at a fair salable value. 2.17 Fair Consideration. The consideration received by the Transferor, in exchange for the Leases (including the right to receive all payments due or to become due thereunder) and the transfer of its interests in the Equipment, is fair consideration having value equivalent to or in excess of the value of the assets being transferred by the Transferor. 2.18 Ability to Pay Debts. Neither as a result of the transaction contemplated by this Assignment and Servicing Agreement nor otherwise does the Transferor believe that it will incur debts beyond its ability to pay or which would be prohibited by its charter documents or by-laws. The Transferor's assets and cash flow enable it to meet its present obligations in the ordinary course of business as they become due. 2.19 Bulk Transfer Provisions. The transfer, assignment and conveyance of the Leases and its interests in the Equipment by the Transferor pursuant to this Assignment and Servicing Agreement is not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction. 11 16 2.20 Transfer Taxes. The transfer, assignment and conveyance of the Leases (including all payments due or to become due thereunder) and its interests in the Equipment by the Transferor pursuant to this Assignment and Servicing Agreement is not subject to and will not result in any tax, fee or governmental charge payable by the Transferor to any federal, state or local government ("Transfer Taxes"). In the event that the Issuer receives actual notice of any Transfer Taxes arising out of the transfer, assignment and conveyance of the Leases and/or its interests in the Equipment, on written demand by the Issuer, or upon the Transferor otherwise being given notice thereof, the Transferor shall pay, and otherwise indemnify and hold the Issuer, the Trustee and the holders of the Notes harmless, on an after-tax basis, from and against any and all such Transfer Taxes (it being understood that the holders of the Notes and the Trustee shall have no obligation to pay such Transfer Taxes). 2.21 Principal Executive Office. The principal executive office of each of the Transferor and the Servicer is located at One International Boulevard, Mahwah, New Jersey 07430-0631. 2.22 Servicing Provisions Customary. The servicing arrangements hereunder, including without limitation the terms and conditions pursuant to which the Transferor will act as Servicer and the Servicing Fee to be paid to the Transferor, are consistent with the arrangements and customary practices of the Transferor when providing comparable services to non-affiliated entities and of other servicers in the equipment leasing industry. 2.23 Nonconsolidation. The Transferor is and at all times since its incorporation has been operated in such a manner that it would not be substantively consolidated with the Issuer, such that the separate existence of the Transferor and the Issuer would be disregarded in the event of a bankruptcy or insolvency of the Transferor or the Issuer, and in such regard: (a) the Transferor is not involved in the day-to-day management of the Issuer; (b) the Transferor maintains separate corporate records and books of account from the Issuer and otherwise observes corporate formalities and has a separate business office from the Issuer; (c) the financial statements and books and records of the Transferor prepared after the Issuance Date will reflect the separate existence of the Issuer; (d) the Transferor maintains its assets separately from the assets of the Issuer (including through the maintenance of a separate bank account), the Transferor's funds and assets, and records relating thereto, have not been and are not commingled with those of the Issuer and the separate creditors of the Transferor and the Issuer will be entitled to be satisfied 12 17 out of the Transferor's and the Issuer's assets prior to any value in the Transferor or the Issuer becoming available to the Issuer's equityholders or the Transferor's creditors; (e) all business correspondence of the Transferor and other communications are conducted in the Transferor's own name and on its own stationery; and (f) the Issuer does not act as an agent of the Transferor in any capacity and the Transferor does not act as agent for the Issuer, but instead presents itself to the public as a corporation separate from the Issuer. 2.24 Contribution Treatment. The Transferor will treat the transfer to the Issuer of the Leases and the Lease Receivables as a capital contribution and absolute assignment for tax reporting and accounting purposes. SECTION 3. ADMINISTRATION OF LEASES 3.01 Servicer to Act. (a) Notwithstanding the transfers and assignments of the Leases (including the right to receive all payments due or to become due thereunder) and the related interests in the Equipment contemplated hereby, the Servicer, for the benefit of the Issuer, will service and administer each Lease in accordance with the terms thereof and of this Assignment and Servicing Agreement. The Servicer shall take, or cause to be taken, all such actions as may be necessary or advisable to service, administer and collect each Lease from time to time, all in accordance with (i) customary and prudent servicing procedures for leases of a similar type, (ii) all applicable laws, rules and regulations, and (iii) without limitation as to its obligations under the preceding clauses (i) and (ii), no less a standard of care than that which it applies to Leases it services for its own account. The Servicer shall provide the Lessees with appropriate invoices and such other notices as may be required to ensure that all Lease Payments, Casualty Payments and Termination Payments on or in respect of each Lease are remitted by the Lessees to the address specified by the Servicer. The Servicer shall deposit such payments to the Collection Account or the Residual Account, as applicable, within two Business Days of the receipt thereof. Any other amount received by the Servicer from time to time from the Issuer or any Lessee which is or is intended to be subject to the Lien of the Indenture shall be held in trust by the Servicer, as agent for the Trustee and promptly turned over to the Trustee or deposited into the Collection Account or Residual Account, as applicable, for application in accordance with the provisions of the Indenture. (b) The Servicer shall do, and shall have full power and authority to do, subject only to the specific requirements and prohibitions of this Assignment and Servicing Agreement, any and all things in connection with the servicing and administration of the Leases and the interests in the Equipment which are consistent with the manner in which it services leases and equipment constituting part of its own portfolio and consistent with the customary practices of servicers in the equipment leasing industry, but in performing its duties hereunder, the Servicer will act on behalf and for the benefit of the Issuer, the Trustee and the holders of the Notes, subject at all times to the provisions of the Indenture, without regard to any relationship 13 18 which the Servicer or any Affiliate of the Servicer may otherwise have with a Lessee. The Servicer shall at all times act in accordance with the provisions of each Lease, and shall observe and comply with all requirements of law applicable to it. Except as permitted by the terms of any Lease following a default thereunder, the Servicer shall not take any action which would result in the interference with the Lessee's right to quiet enjoyment of the Equipment subject to the Lease during the term thereof. The Servicer shall exercise with respect to each item of Equipment all rights and remedies it, the Issuer or the Trustee shall have against any vendor of the Equipment, subject to the provisions of any Lease, and shall promptly pay all amounts realized from such actions to the Trustee for deposit in the Collection Account or Residual Account, in accordance with the terms of the Indenture. (c) Without limiting the generality of the foregoing, the Servicer agrees to (i) invoice each Lessee monthly (except quarterly, semi-annually or annually in the case of Leases which provide for quarterly, semi-annual or annual Lease Payments, respectively) for all Lease Payments required to be paid by such Lessee in such manner and to the same extent as the Servicer does with respect to leases held for its own account, (ii) maintain with respect to each Lease and each item of Equipment, and with respect to each payment by each Lessee and compliance by each Lessee with the provisions of each Lease, complete and accurate records in the same form and to the same extent as the Servicer does with respect to leases and equipment held for its own account (which records shall be at least as complete and accurate as those maintained by the Servicer as of the date of this Assignment and Servicing Agreement), and (iii) from time to time execute, deliver and file (or cause the same to be done), and the Servicer is hereby authorized and empowered to execute, deliver, and file on behalf of the Issuer and the Trustee, any and all tax returns with respect to sales, use, personal property and other taxes (other than corporate income tax returns) and any and all reports or licensing applications required to be filed in any jurisdiction with respect to any Lease or any item of Equipment and any and all required Financing Statements and assignments of Financing Statements and such additional Financing Statements and continuation statements with respect thereto as may from time to time be necessary because of Lease substitutions, equipment replacements in accordance with the provisions of any Lease or otherwise so that the security interest contemplated by the Indenture in favor of the Trustee in each of the Leases, at all times will be perfected by such filings with the appropriate Uniform Commercial Code filing offices. The Transferor and the Servicer agree to file Financing Statements on Form UCC-1 to perfect the security interest of the Trustee in the Leases and the Lease Payments, and to the extent provided herein, the Equipment. (d) The Servicer will maintain, or cause to be maintained, with respect to the Leases and the Equipment casualty and liability insurance in amounts at least as great as those described in Section 2.04(f). Each such casualty and liability policy (i) if maintained by the Servicer, shall name the Issuer and Trustee as loss payees or additional insureds and (ii) if maintained by the Lessee, shall name the Servicer or the Trustee as loss payee and additional insured; provided that the Servicer shall cause all such policies to name the Trustee and the Issuer as loss payees and additional insureds if (A) the Transferor is no longer the Servicer, (B) an Event of Default shall have occurred and be continuing or (C) a Servicer Event of Default shall have occurred and be continuing. (e) On or prior to the Issuance Date, the Servicer will file the Financing Statements and assignments of Financing Statements in accordance with the Filing Requirements 14 19 and thereafter will file such additional Financing Statements and continuation statements and assignments with respect to the Leases as may be necessary because of equipment replacements in accordance with the provisions of any Lease, purchases of Additional Leases in accordance with Section 9 and Lease substitutions pursuant to Section 9 hereof or otherwise so that (i) the ownership interest contemplated by this Agreement in favor of the Issuer and the security interest contemplated by the Indenture in favor of the Trustee in each of the Leases and the Equipment will be perfected by such filings with the appropriate Uniform Commercial Code filing offices (to the extent this may be achieved by central filing), and (ii) the security interest contemplated by the Assignment and Servicing Agreement in favor of the Transferor and the Issuer in each of the Leases and Equipment will be perfected by such filings with the appropriate Uniform Commercial Code filing offices (to the extent this may be achieved by central filing). (f) The Servicer shall pay the Excess Copy Charges, Maintenance Charges and Fee Per Scan Charges, if any, owing the related vendor in a timely fashion. 3.02 Lease Amendments and Modifications. In performing its obligations hereunder, the Servicer may, acting in the name of the Issuer and without the necessity of obtaining the prior consent of the Issuer or the Trustee, enter into and grant modifications, waivers and amendments to the terms of any Lease except for modifications, waivers or amendments that (a) are inconsistent with the servicing standards set forth in Section 3.01 above, (b) would reduce the amount or extend the time for payment of any Lease Payment, Casualty Payment, Termination Payment or Residual Realizations to be made under a Lease (other than to permit termination of a Lease which does not otherwise provide for termination by requiring the payment, in lieu of all future Lease Payments with respect to the Lease or Equipment subject thereto, an amount which equals or exceeds the Lease Purchase Amount for such Lease as of such date) or the Lessee's absolute and unconditional obligation to make payment of the same, (c) would reduce or adversely affect the Lessee's obligation to maintain, service, insure and care for the Equipment or would permit the alteration of any item of Equipment in any way which could adversely affect its present or future value or (d) otherwise could adversely affect the interests of any of the Issuer, the Trustee or the holders of the Notes. In addition, following the transfer of any Lease to the Issuer in accordance herewith, the Servicer may make adjustments to such Lease which modify one or more terms of such Lease, such as payment amount or payment date. Such administrative adjustments may result in a re-booking of such Lease and the assignment of a new Lease number, but will not be considered to be a substitution or prepayment of such Lease. Except to the extent the Transferor substitutes a Substitute Lease therefor in accordance with Section 9 hereof, the Servicer may permit such adjustments so long as the following conditions precedent have been satisfied: (i) after giving effect to such adjustments and any additions and substitutions pursuant to Section 9, the aggregate Booked Residual Value of such Leases will not be less than 100% of the aggregate Booked Residual Value of the Leases adjusted, replaced or substituted since the Issuance Date. 15 20 (ii) after giving effect to such adjustment and any additions and substitutions pursuant to Section 9, the final payment on such Lease must be on or prior to __________. (iii) after giving effect to such adjustments and any additions and substitutions pursuant to Section 9 the aggregate amount of Lease Payments through the term of the Leases (including the Substitute Leases and the Additional Leases) will not be materially less than the aggregate scheduled Lease Payments of the Leases prior to such adjustment, substitution or addition. (iv) after giving effect to such adjustments, additions and substitutions pursuant to Section 9, the Discounted Present Value of the Performing Leases must not be less than the Discounted Present Value of the Performing Leases prior to such adjustment, addition and substitution. (v) after giving effect to such adjustments, additions, and substitutions pursuant to Section 9, the weighted average remaining term of the Performing Leases must not be greater than the weighted average remaining term of the Performing Leases prior to such adjustment, addition, and substitution. 3.03 Non-Performing Leases. (a) Upon receipt of notice from the Issuer, the Trustee or any other Person, or if the Servicer otherwise learns that any Lease is a Non-Performing Lease, the Servicer will take such action as is appropriate, consistent with the Servicer's administration of leases in its own portfolio and consistent with the customary practices of servicers in the equipment leasing industry, including such action as may be necessary to cause, or attempt to cause, the Lessee thereunder to cure such non-performance (if the same may be cured) or to terminate or attempt to terminate such Lease and to recover, or attempt to recover, all damages resulting from such default. The Servicer shall demand, on behalf of the Issuer, that the Transferor immediately repay any Inter-Company Loan representing the advance pursuant to Section 13.01 hereof of any security deposit with respect to any Lease which becomes a Non-Performing Lease, and the Servicer shall apply such security deposit in accordance with Section 3.03(d) hereof. (b) The Servicer will use its best efforts to sell or lease any Equipment upon the expiration or early termination of a Lease or that is subject to a Non-Performing Lease in a timely manner and upon the most favorable terms and conditions available at the time. In the event of an early lease termination, any Substitute Lease must have a Discounted Present Value equal to or greater than that of the Terminated Lease, monthly payments at least equal to those of the Terminated Lease through the remaining term of such Terminated Lease, a remaining term less than or equal to that of the Terminated Lease and a Booked Residual Value at least equal to that of such Terminated Lease. (c) In the event that the Servicer is required to sell or lease any item of Equipment pursuant to the provisions of this Section 3.03 at a time when the Servicer has other similar items of equipment available to it, the Servicer will not favor any such other item in its remarketing efforts. 16 21 (d) All amounts realized by the Servicer in the performance of its duties hereunder with respect to any Lease or Equipment remaining subject to the Lien of the Indenture (net of the Servicer's actual out-of-pocket expenses reasonably incurred in such realization) shall be held in trust by the Servicer, as agent for the Trustee and deposited into the Collection Account for application in accordance with the provisions of the Indenture; provided that, to the extent that (i) the Servicer has made any advances pursuant to Section 4.01 hereof with respect to any Lease which thereafter became a Non-Performing Lease, and (ii) the Servicer has not otherwise been fully reimbursed for such advances or payments, the Servicer shall reimburse itself for such advances or payments from any amounts recovered with respect to such Non-Performing Lease before depositing any such amounts pursuant to this Section 3.03(d). 3.04 Costs of Servicing; Servicing Fee; Administrative Expenses. (a) All costs of servicing each Lease in the manner required by this Section 3 shall be borne by the Servicer, but the Servicer shall be entitled to retain, out of any amounts actually recovered by the Servicer in the performance of its obligations under Section 3.03 hereof with respect to any Lease or the interests in the Equipment subject thereto, the Servicer's actual out-of-pocket expenses reasonably incurred in the course of such performance with respect to such Lease or the interests in the Equipment. (For all purposes of this Section 3 the Servicer's "out-of-pocket expenses" means only those expenses incurred to third parties (e.g., reasonable fees of outside counsel in a collection suit) and not salaries, operating costs, overtime wages and other such "overhead" costs or expenses of the Servicer.) In addition, the Servicer shall be entitled to receive from the Issuer on each Payment Date following the Issuance Date a servicing fee with respect to the Receivables Notes (the "Servicing Fee") and a servicing fee with respect to the Class R Notes (the "Residual Servicing Fee") in the amounts described in paragraph (b) below. (b) The amount of the Servicing Fee which the Servicer shall be entitled to receive on each Payment Date following the original issuance of the Receivables Notes shall be determined by multiplying (i) the Discounted Present Value of Performing Leases as of the prior Payment Date times (ii) one-twelfth of 0.75%. The amount of the Residual Servicing Fee which the Servicer shall be entitled to receive on each Payment Date following the issuance of the Class R Notes shall be determined by multiplying (i) the Booked Residual Values as of the prior Payment Date for all Performing Leases times (ii) one-twelfth of 0.75%. (c) The Servicer agrees to pay, out of the Servicing Fee, all Trustee's Fees and expenses in connection with the Notes (including the expenses relating to the preparation and delivery of reports to Noteholders) and all fees of accountants in connection with the Notes. 3.05 Other Transactions. Nothing in this Assignment and Servicing Agreement shall preclude the Transferor or the Servicer from entering into other leases or other financial transactions with any Lessee or selling or discounting any such lease with any Person. 17 22 SECTION 4. SERVICER ADVANCES AND SELLER'S SUPPORT 4.01 Late Lease Payments. (a) On each Determination Date, the Servicer may, but will not be required to, advance and remit to the Trustee for deposit in the Collection Account, in such manner as will ensure that the Trustee will have immediately available funds on account thereof by 11:00 A.M. New York City time on the second Business Day prior to the next succeeding Payment Date, an amount (a "Servicer Advance") equal to any Lease Payment due during the prior Lease Payment Period but unpaid prior to such Determination Date with respect to any Lease. In consideration of each Servicer Advance the Servicer will be entitled to retain any late payment fees recovered from the Lessee with respect to any Lease Payment covered by a Servicer Advance. In addition, the Servicer will be reimbursed for Servicer Advances from funds in the Collection Account in accordance with the Indenture on the second following Payment Date. (b) On each Determination Date, the Servicer will be required to advance and remit to the Trustee for deposit in the Residual Account, in such manner as will ensure that the Trustee will have immediately available funds on account thereof by 11:00 A.M. New York City time on the second Business Day prior to the next succeeding Payment Date, an amount (a "Residual Servicer Advance") equal to the difference between distributions due to be made pursuant to Section 3.02(b)(i)- (iv) of the Indenture and the amounts then on deposit in the Residual Account and the Liquidity Reserve Account. The Servicer will be reimbursed for Residual Servicer Advances from funds in the Residual Account in accordance with the Indenture on the second following Payment Date. 4.02 Early Termination Leases. Following the Determination Date as of which any Lease first becomes an Early Termination Lease the Transferor may, but shall have no obligation to, either (a) substitute one or more Eligible Leases and the Equipment subject thereto for such Lease and the Equipment subject thereto pursuant to Section 9 hereof (if the Transferor is then entitled to substitute Leases and Equipment in accordance with the provisions of Section 9.01 hereof) on or before the second Business Day prior to the next succeeding Payment Date, (b) purchase from the Issuer such Lease and the related Equipment by remitting to the Trustee an amount equal to the Lease Purchase Amount in such manner as will ensure that the Trustee will have immediately available funds therefor by 11:00 A.M. New York City time on the second Business Day prior to the next succeeding Payment Date or (c) transfer to the Issuer one or more Additional Leases in consideration of the proceeds thereof in accordance with Section 9 hereof. Unless the Transferor takes one of the actions set forth in the prior sentence, the Servicer will not permit a voluntary termination of a Lease prior to its stated maturity unless it receives a payment in connection with such termination equal to at least the Lease Purchase Amount. Any Early Termination Lease and the Equipment subject thereto which is acquired, or for which Additional Leases have been acquired or Substitute Leases transferred, pursuant to this Section 4.02 shall nevertheless remain subject to the Lien of the Indenture until such time as an Additional Lease or Additional Leases have been acquired or Substitute Lease or Substitute Leases have been transferred in accordance with the provisions of Section 9 hereof or the Lease Purchase Amount has been paid. A Lease will be considered to be an "Eligible Lease" if on the date such Lease is substituted for or added 18 23 in replacement of an Early Termination Lease, such Lease satisfies the representations and warranties set forth in Section 2.04(a) through (u) and the requirements of Section 9 hereof. 4.03 Indemnification. The Transferor in its capacity as Servicer, agrees to indemnify and hold harmless the Issuer, the Servicer, the Trustee and each holder of the Notes (each an "Indemnified Party") against any and all liabilities, losses, damages, penalties, costs and expenses (including costs of defense and legal fees and expenses) which may be incurred or suffered by such Indemnified Party (except to the extent arising out of the gross negligence or willful misconduct on the part of the Indemnified Party) as a result of claims, actions, suits or judgments asserted or imposed against it and arising out of the transactions contemplated hereby or by the Indenture, including, without limitation, any claims resulting from any use, operation, maintenance, repair, storage or transportation of any item of Equipment, whether or not in the Servicer's possession or under its control pursuant to this Assignment and Servicing Agreement, and any tort claims and any fines or penalties arising from any violation of the laws or regulations of the United States or any state or local government or governmental authority; provided that the foregoing indemnity shall in no way be deemed to impose on the Transferor any obligation, other than to the extent specifically set forth in this Section 4, to make any payment with respect to principal or interest on the Notes or to reimburse the Issuer for any payments on account of the Notes. This Section 4.03 shall bind any successor Servicer hereunder. 4.04 Purchases; Other Payments. (a) In the event that (i) any of the representations or warranties made by the Transferor in Sections 2.04 and 2.05 hereof with respect to any of the Leases or the Equipment subject thereto proves at any time to have been inaccurate in any material respect as of the Issuance Date or related transfer date, as the case may be or (ii) any Lease shall be terminated in whole or in part by a Lessee, or any amounts due with respect to any Lease shall be reduced or impaired, as a result of any action or inaction by the Transferor (other than any such action or inaction of the Transferor, when acting as Servicer, in connection with the enforcement of any Lease in a manner consistent with the provisions of this Assignment and Servicing Agreement) or any claim by any Lessee against the Transferor and, in any such case, the event or condition causing such inaccuracy, termination, reduction, impairment or claim shall not have been cured or corrected within 30 days after the earlier of the date on which the Transferor is given notice thereof by the Issuer or the Trustee or the date on which the Transferor otherwise first has notice thereof, the Transferor will purchase such Lease and the Equipment subject thereto by paying to the Trustee, not later than the third Business Day after the Determination Date next following the expiration of such 30-day period with respect to the events referenced in Section 4.04(a)(i) and (ii), an amount equal to the Lease Purchase Amount, and simultaneously with such purchase, the Transferor shall reimburse the Servicer for all amounts, if any, theretofore advanced by the Servicer pursuant to Section 4.01 with respect to such Lease. Without limiting the generality of the foregoing, it is agreed and understood that for purposes of this Section 4.04, any inaccuracy in any representation or warranty with respect to (i) the priority of the Lien of the Indenture with respect to any Lease or (ii) the amount (if less than represented) of the Lease Payments, Casualty Payments, Termination Payment or Booked Residual Value under any Lease shall be deemed to be material. 19 24 (b) By the Issuance Date, the Transferor agrees to obtain and provide to the Trustee UCC searches against it from the central filing offices in New Jersey confirming the absence of any UCC filings (other than those in the process of being released pursuant to releases delivered on the Issuance Date) against the Transferor with respect to the Leases (including the right to receive all payments due or to become due thereunder) and the Equipment, other than those naming the Transferor or the Issuer as the owner of the Leases or the Trustee as secured party. In the event the Transferor fails to provide any such searches required by the preceding sentence of this Section 4.04(b) within the required time period or any search reveals the existence of any conflicting Liens (which are not removed within 30 days of receipt of such search), the Transferor shall be required to purchase not later than the third Business Day after the Determination Date following the expiration of the time period during which such search was to be obtained or such Lien released, as the case may be, any Lease of Equipment in any such state for which such searches are not provided or with respect to which conflicting Liens are found to exist at the Lease Purchase Amount for such Lease. (c) The Transferor's obligations under this Section 4.04 are the full recourse obligations of the Transferor and shall in no way be limited or discharged by the application of any funds constituting part of the Trust Estate. 4.05 Payment Advice. Each payment to the Trustee pursuant to any of the provisions of this Assignment and Servicing Agreement shall be accompanied by written advice containing sufficient information to identify the Lease and/or Equipment to which such payment relates, the Section of this Assignment and Servicing Agreement pursuant to which such payment is made, and the proper application pursuant to the provisions of the Indenture of the amounts being paid. SECTION 5. INFORMATION TO BE PROVIDED 5.01 Monthly Status Reports; Servicing Reports. (a) Within five Business Days following each Payment Date, the Servicer will send to the Trustee (copies of which the Trustee shall send to each Rating Agency and to each holder of the Notes as provided in the Indenture) a written report, signed by one of the Servicer's financial officers, (i) identifying each Lease with respect to which any Lease Payment was 30 or more days overdue as of the end of the immediately preceding Lease Payment Period, the Discounted Present Value of such Lease as of such Payment Date, the amount advanced by the Servicer with respect to such Lease pursuant to Section 4.01 hereof since the Servicer's previous monthly report (or, in the case of the first such report, since the Cut-Off Date), (ii) identifying each Lease with respect to which any Lease Payment was 60 or more days overdue as of the end of the immediately preceding Lease Payment Period, the Discounted Present Value of such Lease as of such Payment Date, the amount advanced by the Servicer with respect to such Lease pursuant to Section 4.01 hereof since the Servicer's previous monthly report (or, in the case of the first such report, since the Issuance Date), (iii) identifying each Lease with respect to which any Lease Payment was 93 or more days overdue as of the end of the immediately preceding Lease Payment Period, the Discounted Present Value of such Lease as of such Payment Date, the amount advanced by the Servicer with respect to such Lease pursuant to Section 4.01 hereof 20 25 since the Servicer's previous monthly report (or, in the case of the first such report, since the Issuance Date), (iv) identifying each Lease which became a Non-Performing Lease as of the preceding Determination Date and specifying the Discounted Present Value of such Lease as of such Determination Date (or, in the case of the first such report, subsequent to the Cut-Off Date) and the aggregate Discounted Present Value of all such Non-Performing Leases, (v) indicating the aggregate amount recovered by the Servicer subsequent to the preceding Payment Date (or, in the case of the first Payment Date, subsequent to the Cut-Off Date) and on or prior to such Payment Date with respect to Lease Delinquency Payments and Non-Performing Lease Payments previously made by the Transferor and the Servicer (and the specific amounts so recovered with respect to any Non-Performing Lease) and (vi) indicating the Residual Realizations, as of the related Determination Date. Each such report shall also describe generally what action or actions the Servicer is then taking or proposes to take to recover from the appropriate Lessees any amounts previously paid by the Servicer to the Trustee pursuant to Section 4.01 hereof. (b) On the second Business Day preceding the Payment Date, the Servicer shall deliver to the Trustee and to each Rating Agency two certificates signed by an officer of the Servicer (a "Receivable Servicing Report" and a "Residual Servicing Report," collectively, the "Servicing Report") stating the date and in the form of Exhibit C hereto. (c) The Servicing Report shall include, among other items, the total amount of all Lease Payments, Casualty Payments, Termination Payments, Lease Purchase Amount, recoveries related to Non-Performing Leases, Residual Realizations, Similar Transaction Payments and Other Lease Payments received by the Servicer and deposited in the Collection Account and Residual Account prior to such Determination Date and on or subsequent to the Determination Date preceding such Determination Date (or, in the case of the first Determination Date, on or subsequent to the Cut-Off Date). Such report shall indicate the amount of all Lease Payments received by the Servicer and deposited in the Collection Account or Residual Account, as applicable, which are for any Lease Payment Period other than the Lease Payment Period for such Determination Date and shall identify each Lease with respect to which a Casualty Payment, Termination Payment or Lease Purchase Amount was made during such time period. Such report shall also indicate (i) the aggregate amount paid by the Servicer on or subsequent to the most recent Determination Date with respect to Non-Performing Leases pursuant to Section 4.01 hereof, and (ii) the aggregate amount reimbursed to the Servicer prior to the most recent Determination Date and on or subsequent to the Determination Date preceding such Determination Date (or, in the case of the first Determination Date, on or subsequent to the Cut-Off Date) for actual cash payments made by the Servicer with respect to Non-Performing Leases pursuant to Section 4.01 hereof. The Servicer hereby represents and warrants that such calculations will be correct and accurate, and the Servicer shall be fully responsible for, and shall reimburse and indemnify each Indemnified Party for, any loss resulting from such Indemnified Party's reliance on any such calculations which are not correct. (d) If the Servicer intends to withdraw any funds from the Collection Account or Residual Account other than on a Payment Date, the Servicer shall submit with such report a certificate (i) setting forth the amounts to be withdrawn (on an item-by-item basis), (ii) stating that none of such amounts are all or part of any Lease Payment, Lease Delinquency Payment, recoveries related to Non-Performing Leases, Lease Purchase Amount, Casualty Payment, 21 26 Termination Payment or Residual Realizations, and (iii) identifying the lease or leases to which such amounts relate. 5.02 Annual Independent Public Accountant's Report. The Servicer shall cause a firm of independent public accountants (who may also render other services to the Servicer or to the Transferor) to deliver to the Trustee, with a copy to each Rating Agency, within 135 days following the end of each fiscal year of the Servicer, beginning with the Servicer's fiscal year ending December 31, 1999, a written statement to the effect that such firm has (a) obtained from the Servicer a copy of the monthly status report pursuant to Section 5.01 for a single month during the previous calendar year; (b) compared the information contained in such monthly status report and in the monthly summaries prepared by the Servicer in support of such monthly status report to the computer printouts and accounts prepared by the Servicer and supporting such reports; and (c) selected, at random, at least 100 Leases included in the Trust Estate and compared the activity in the files maintained by the Servicer for such Leases to the activity as reported for those Leases to the monthly summaries prepared by the Servicer and supporting the monthly status report, and that, on the basis of such examination and comparison, such firm is of the opinion that the Servicer has prepared such monthly status report and summaries in agreement with the computer printouts, accounts and individual Lease files, except in each case for (x) such exceptions as such firm shall believe to be immaterial and (y) such other exceptions as shall be set forth in such statement. SECTION 6. THE SERVICER 6.01 Merger or Consolidation of the Servicer. The Servicer will keep in full force and effect its existence, rights and franchise as a corporation under the laws of its jurisdiction of incorporation and will preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is necessary to protect the validity and enforceability of any of the Leases or to permit performance of the Servicer's duties under this Assignment and Servicing Agreement. The Servicer shall not merge or consolidate with any other Person unless (i) the entity surviving such merger or consolidation is a corporation organized under the laws of the United States or any jurisdiction thereof and (ii) the surviving entity, if not the Servicer, shall execute and deliver to the Issuer, the Servicer and the Trustee, in form and substance satisfactory to each of them, (a) an instrument expressly assuming all of the obligations of the Servicer hereunder and (b) an opinion of counsel to the effect that such Person is a corporation of the type described in the preceding clause (i) and has effectively assumed the obligations of the Servicer hereunder. Upon the occurrence of any such merger or consolidation, the Servicer shall give notice promptly to the Rating Agencies. 6.02 Limitation on Liability of the Servicer and Others. Neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall incur any liability to the Issuer, the Trustee or the holders of the Notes for any action taken or not taken in good faith pursuant to the terms of this Assignment and Servicing Agreement with respect to any Lease (including any Non-Performing Lease) or the Equipment 22 27 subject thereto; provided, however, that this provision shall not protect the Servicer or any such person against any breach of warranties, representations or covenants made by it herein or in any certificate delivered in conjunction with the purchase of the Notes or for any liability which would otherwise be imposed for any action or inaction resulting from willful misconduct or bad faith or for negligence in the performance or nonperformance of its duties hereunder. 6.03 Servicer Not to Resign or Be Removed. The Servicer shall not resign from the servicing obligations and duties hereby imposed on it except upon determination that such duties hereunder are no longer permissible under applicable law. Any such determination permitting the resignation of the Servicer shall be evidenced by an opinion of independent counsel to the Servicer, in form and substance satisfactory to the holders of the Notes, to such effect delivered to the Trustee. Except as provided in Section 8.02 hereof, the Servicer shall not be removed or be replaced as Servicer with respect to any Lease or any of the Equipment. No resignation or removal of the Servicer shall in any event (i) become effective until the Trustee or a successor servicer shall have assumed the Servicer's servicing responsibilities and obligations in accordance with Section 8.02 hereof, or (ii) affect the Transferor's obligations pursuant to Section 3 hereof. 6.04 Financial and Business Information. The Servicer will deliver to the Issuer and the Trustee upon receipt thereof shall deliver to each Rating Agency and upon request, to any holder of outstanding Notes evidencing not less than 25% of the Outstanding Principal Amount of the Receivable Notes or the Class R Notes (and, upon the request of any holder of outstanding Notes, to any prospective transferee of any Notes) and, in the case of subsection (c) below: (a) Quarterly Statements - within 45 days after the end of each of the first three quarterly fiscal periods in each fiscal year of the Servicer, a copy of: (1) a consolidated balance sheet of the Servicer (or its parent) and its consolidated subsidiaries at the end of such quarter, and (2) consolidated statements of income, retained earnings and cash flow of the Servicer (or its parent) and its consolidated subsidiaries for that quarter and for the portion of the fiscal year ending with such quarter, accompanied by a certificate signed by a principal financial officer of the Servicer stating that such financial statements present fairly the financial condition of the Servicer and its consolidated subsidiaries and have been prepared in accordance with generally accepted accounting principles consistently applied; (b) Annual Statements - within 135 days after the end of each fiscal year of the Servicer, a copy of: 23 28 (1) a consolidated balance sheet of the Servicer (or its parent) and its consolidated subsidiaries, at the end of that year, and (2) consolidated statements of income, retained earnings and cash flow of the Servicer (or its parent) and its consolidated subsidiaries for that year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and accompanied by an opinion of a firm of independent certified public accountants of recognized national standing stating that such financial statements present fairly the financial condition of the Servicer and its consolidated subsidiaries and have been prepared in accordance with generally accepted accounting principles consistently applied (except for changes in application in which such accountants concur and footnote), and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; (c) Notice of Servicer Event of Default - immediately upon becoming aware of the existence of any condition or event which constitutes a Servicer Event of Default, a written notice, by certified mail return receipt requested, hand delivery or overnight courier, describing its nature and period of existence and what action the Servicer is taking or proposes to take with respect thereto; (d) SEC and Other Reports - promptly upon their becoming available, one copy of each report (including the Servicer's annual report to shareholders and reports on Form 8-K, 10-K, and 10-Q), proxy statement, registration statement, prospectus and notice filed with or delivered to any securities exchange, the Securities and Exchange Commission or any successor agencies; and (e) Report on Proceedings - promptly upon the Servicer's becoming aware of (1) any proposed or pending investigation of it by any governmental authority or agency, or (2) any court or administrative proceeding which involves or may involve the possibility of materially and adversely affecting the properties, business, prospects, profits or conditions (financial or otherwise) of the Servicer, a written notice specifying the nature of such investigation or proceeding and what action the Servicer is taking or proposes to take with respect thereto and evaluating its merits; and (f) Requested Information - with respect to the Class E Notes and the Class R Notes, with reasonable promptness, any other data and information which may be reasonably requested from time to time, including, without limitation, any information required to be made available at any time to any prospective transferee of any Notes in order to satisfy the requirements of Rule 144A under the Securities Act of 1933, as amended. 24 29 6.05 Officers' Certificates. With each set of financial statements delivered pursuant to Section 6.04, the Servicer will deliver an Officers' Certificate stating (i) that the officers signing such Officers' Certificate have reviewed the relevant terms of this Assignment and Servicing Agreement and have made, or caused to be made under such officers' supervision, a review of the activities of the Servicer during the period covered by the statements then being furnished, (ii) that the review has not disclosed the existence of any Servicer Event of Default or, if a Servicer Event of Default exists, describing its nature and what action the Servicer has taken and is taking with respect thereto, and (iii) that on the basis of such review the officers signing such certificate are of the opinion that during such period the Servicer has serviced the Leases in compliance with the procedures hereof except as described in such certificate. 6.06 Inspection. The Servicer will permit, on reasonable prior notice, the representatives of the Issuer and the Trustee and the holder of any Notes evidencing not less than 25% of the Outstanding Principal Amount of any class of Notes to examine all of the books of account, records, reports and other papers of the Servicer, to make copies and extracts therefrom, and to discuss the Servicer's affairs, finances and accounts with its officers, employees and independent public accountants (and by this provision the Servicer authorizes said accountants to discuss the finances and affairs of the Servicer) all at such reasonable times and as often as may be reasonably requested for the purpose of reviewing or evaluating the financial condition or affairs of the Servicer or the Servicer's performance of its duties and obligations hereunder. Any expense incident to the exercise by the Issuer, the Trustee, or any holder of the Notes during the continuance of any Servicer Event of Default, or any event or condition which with the giving of notice or the lapse of time or both would become a Servicer Event of Default, of any right under this Section 6.06 shall be borne by the Servicer. 6.07 Servicer Records. The Servicer will indicate in its records that it is servicing and administering each Lease in its capacity as Servicer hereunder, and to the extent it is in possession of any original Lease agreement, will hold such Lease, subject to the provisions of the Indenture as Custodian for the Trustee. SECTION 7. THE SELLER 7.01 Merger or Consolidation of the Transferor. The Transferor will keep in full force and effect its existence, rights and franchise as a corporation under the laws of its jurisdiction of incorporation and will preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is necessary to protect the validity and enforceability of any of the Leases or to permit performance of the Transferor's duties under this Assignment and Servicing Agreement. The Transferor shall not merge or consolidate with any other Person unless (i) the entity surviving such merger or consolidation is a corporation organized under the laws of the 25 30 United States or any jurisdiction thereof and (ii) the surviving entity, if not the Transferor, shall execute and deliver to the Issuer or the Servicer and the Trustee, in form and substance satisfactory to each of them, (a) an instrument expressly assuming all of the obligations of the Transferor hereunder and (b) an opinion of counsel to the effect that such Person is a corporation of the type described in the preceding clause (i) and has effectively assumed the obligations of the Transferor hereunder. 7.02 Control of Issuer. So long as any of the Notes or the other obligations secured by the Indenture remain outstanding, the Transferor will not (i) sell, pledge or otherwise transfer any of its membership interest in the Issuer held by the Transferor or (ii) vote such beneficial interests in favor of any amendment to or alteration of the certificate of formation of the Issuer. 7.03 Financial and Business Information. The Transferor will deliver to the Issuer and the Trustee and upon receipt thereof the Trustee shall deliver to each Rating Agency and upon request, to any holder of outstanding Notes evidencing not less than 25% of the Outstanding Principal Amount of Receivable Notes or to any holder of Outstanding Notes evidencing not less than 25% of the Outstanding Principal Amount of the Class R Notes (and, upon the request of any holder of outstanding Notes, to any prospective transferee of any Notes): (a) Notice of Servicer Event of Default - immediately upon becoming aware of the existence of any condition or event which constitutes a Servicer Event of Default, a written notice (with a copy to each Rating Agency) describing its nature and period of existence and what action the Transferor is taking or proposes to take with respect thereto; (b) SEC and Other Reports - promptly upon their becoming available, one copy of each report (including the Transferor's annual report to shareholders and reports on Form 8-K, 10-K, and 10-Q), proxy statement, registration statement, prospectus and notice filed with or delivered to any securities exchange, the Securities and Exchange Commission or any successor agencies; (c) Report on Proceedings - promptly upon the Transferor's becoming aware of (1) any proposed or pending investigation of it by any governmental authority or agency, or (2) any court or administrative proceeding, which involves or may involve the possibility of materially and adversely affecting the properties, business, prospects, profits or condition (financial or otherwise) of the Transferor, a written notice specifying the nature of such investigation or proceeding and what action the Transferor is taking or proposes to take with respect thereto and evaluating its merits; 26 31 (d) ERISA - (i) promptly and in any event within ten days after the Transferor knows or has reason to know of the occurrence of a Reportable Event with respect to a Pension Plan with regard to which notice must be provided to the PBGC, a copy of such materials required to be filed with the PBGC with respect to such Reportable Event and in each such case a statement of the chief financial officer of the Transferor setting forth details as to such Reportable Event and the action which the Transferor proposes to take with respect thereto; (ii) at least ten days prior to the filing by any plan administrator of a Pension Plan of a notice of intent to terminate such Pension Plan, a copy of such notice; (iii) upon request of the Issuer and the Trustee, and in no event more than ten days after such request, copies of each annual report which is filed on Form 5500, together with certified financial statements for the Pension Plan (if any) as of the end of such year and actuarial statements on Schedule B to such Form 5500; (iv) promptly and in any event within ten days after it knows or has reason to know of any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, a statement of the chief financial officer of the Transferor describing such event or condition; (v) promptly and in no event more than ten days after receipt thereof by the Transferor or any Related Person, each notice received by the Transferor or any Related Person concerning the imposition of any withdrawal liability under Section 4202 of ERISA; and (vi) promptly after receipt thereof a copy of any notice the Transferor or any Related Person may receive from the PBGC or the Internal Revenue Service with respect to any Pension Plan; provided, however, that this subsection (vi) shall not apply to notices of general application promulgated by the PBGC or the Internal Revenue Service or notices which would not require any material payment by the Transferor or any Related Person; and (e) Requested Information - with reasonable promptness, any other data and information which may be reasonably requested from time to time. 7.04 Officers' Certificates. With each set of financial statements delivered pursuant to Section 7.03, the Transferor will deliver an Officers' Certificate stating that the officers signing such Certificate have reviewed the relevant terms of this Assignment and Servicing Agreement and have made, or caused to be made under such officers' supervision, a review of the activities of the Transferor during the period covered by the income statements then being furnished and, so long as the Transferor is Servicer hereunder, that the review has not disclosed the existence of any Servicer Event of Default or, if a Servicer Event of Default exists, describing its nature and what action the Transferor has taken and is taking with respect thereto. 7.05 Inspection. The Transferor will permit, on reasonable prior notice, the representatives of the Issuer, the Servicer, the Trustee, or any holder of the Notes evidencing not less than 25% of the Outstanding Principal Amount of any class of Notes to examine all of the books of account, records, reports and other papers of the Transferor, to make copies and extracts therefrom, and to discuss the Transferor's affairs, finances and accounts with its officers, employees and independent public accountants (and by this provision the Transferor authorizes said accountants to discuss the finances and affairs of the Transferor) all at such reasonable times and as often as 27 32 may be reasonably requested for the purpose of reviewing or evaluating the financial condition or affairs of the Transferor or the Transferor's performance of its duties and obligations hereunder. Any expense incident to the exercise by the Issuer, the Trustee or any holder of the Notes during the continuance of any default by the Transferor in any of its obligations hereunder of any right under this Section 7.05 shall be borne by the Transferor. 7.06 Books and Records. The Transferor will clearly mark its books and records to reflect each assignment of a Lease and contribution of the Equipment pursuant to this Agreement. 7.07 Communications. The Transferor will reply to all inquiries by third parties with respect to the transactions contemplated by this Agreement by indicating that it has sold and assigned the Leases and contributed its right, title and interest in the related Equipment and that the Issuer now holds title to the Leases and such interest in the related Equipment. SECTION 8. DEFAULT 8.01 Servicer Events of Default. The following events and conditions shall constitute Servicer Events of Default hereunder: (i) failure on the part of the Servicer to deposit to the Collection Account, Residual Account or other applicable account in accordance with the terms of the Indenture within three Business Days following the receipt thereof any monies received by the Servicer (including, without limitation, any Lease Payments and any Non-Performing Lease Payments) and required to be deposited hereunder; (ii) so long as the Transferor is the Servicer hereunder, failure on the part of the Transferor to pay to the Trustee on the date when due in accordance with the terms hereof, any payment required to be made by the Transferor pursuant to Section 4 hereof; (iii) failure on the part of either the Servicer or (so long as the Transferor is the Servicer) the Transferor to observe or perform in any material respect any other of their respective covenants or agreements in this Assignment and Servicing Agreement which failure continues unremedied for a period of 30 days after the earlier of (A) the date it first becomes known to any officer of the Transferor or the Servicer, as the case may be, and (B) the date on which written notice thereof requiring the same to be remedied shall have been given to the Transferor or the Servicer, as the case may be, by the Trustee, or to the Transferor or the Servicer, as the case may be, and the Trustee by any holder of the Notes; 28 33 (iv) if any representation or warranty made by the Transferor in this Assignment and Servicing Agreement or in any certificate or other writing delivered pursuant hereto or made by any successor Servicer in connection with such successor Servicer's assumption of the duties of the Servicer shall prove to be incorrect in any material respect as of the time when the same shall have been made; provided, however, that the breach of any representation or warranty made by the Transferor or Servicer in this Assignment and Servicing Agreement will be deemed to be "material" only if it affects the Noteholders, the enforceability of the Indenture or of the Notes; and provided, further, that a material breach of any representation or warranty made by the Transferor in this Assignment and Servicing Agreement with respect to any of the Leases or the Equipment subject thereto will not constitute a Servicer Event of Default if the Transferor repurchases such Lease and Equipment in accordance with this Assignment and Servicing Agreement; (v) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Servicer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or (B) a decree or order adjudging the Servicer bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of or in respect of the Servicer under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator, or other similar official of the Servicer or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; (vi) the commencement by the Servicer of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Servicer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator, or similar official of the Servicer or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the failure by the Servicer to pay its debts generally as they become due, or the taking of corporate action by the Servicer in furtherance of any such action; (vii) the failure of the Servicer to make one or more payments due with respect to aggregate recourse debt or other obligations exceeding $5,000,000, or the occurrence of any event or the existence of any condition, the effect of which 29 34 event or condition is to cause (or permit one or more persons to cause) more than $5,000,000 of aggregate recourse debt or other obligations of the Servicer to become due before its (or their) stated maturity or before its (or their) regularly scheduled dates of payment so long as such failure, event or condition shall be continuing and shall not have been waived by the Person or Persons entitled to performance; or (viii) a final judgment or judgments (or decrees or orders) for the payment of money aggregating in excess of $5,000,000 and any one of such judgments (or decrees or orders) has remained unsatisfied and in effect for any period of 60 consecutive days without a stay of execution. 8.02 Termination. So long as a Servicer Event of Default shall be continuing, the Trustee shall, upon the instructions of the holders of 66-2/3% in Outstanding Principal Amount of the Notes, by notice in writing to the Servicer terminate all of the rights and obligations of the Servicer (but not the Transferor's obligations which shall survive any such termination) under this Assignment and Servicing Agreement. On the receipt by the Servicer of such written notice, all authority and power of the Servicer under this Assignment and Servicing Agreement to take any action with respect to any Lease or Equipment shall cease and the same shall pass to and be vested in the Trustee pursuant to and under this Section and the Indenture; and, without limitation, the Trustee is hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and assignment of any Lease and the related Equipment, or otherwise. 8.03 Trustee to Act; Appointment of Successor. (a) On and after the time the Servicer receives a notice of termination pursuant to Section 8.02 hereof, the Trustee, subject to the terms of Section 4.02 of the Indenture, shall be the successor in all respects to the Servicer in its capacity as servicer of the Leases under this Assignment and Servicing Agreement and, to such extent, shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof (but not the obligations of the Transferor contained in Section 4 hereof which shall survive any such termination as above provided) and shall be entitled to receive from the Issuer the Servicing Fee provided for in Section 3.04 hereof; provided that the Trustee shall in no way be responsible or liable for any action or actions of the Servicer before the time the Servicer receives such a notice of termination. (b) Notwithstanding the above, the Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so act, give notice of such fact to each holder of the Notes and (i) appoint an established institution satisfactory to the holders of 66-2/3% in Outstanding Principal Amount of the Notes as the successor to the Servicer hereunder to assume all of the rights and obligations of the Servicer hereunder, including, without limitation, the Servicer's right hereunder to receive the Servicing Fee (but not the obligations of the Transferor contained in Section 4 hereof) or, (ii) if no such institution satisfactory to the holders of 66-2/3% in 30 35 Outstanding Principal Amount of the Notes is so appointed within 60 days following the giving of such notice, appoint a bank or other established institution, which has experience in servicing lease contracts and equipment similar to the Leases and Equipment and as to which each of S&P, Fitch and DCR has indicated in writing that the appointment of such Person, as the successor to the Servicer hereunder will not result in the reduction or withdrawal of such Rating Agency's then-current rating of the Notes or, (iii) if no such institution is so appointed, petition a court of competent jurisdiction to appoint an institution meeting such criteria as the Servicer hereunder. Pending appointment of a successor to the Servicer hereunder, the Trustee shall act in such capacity as hereinabove provided. In connection with such appointment and assumption, the Trustee shall cause such successor to the Servicer to enter into a servicing agreement substantially in the form of this Assignment and Servicing Agreement except that such agreement shall not include any of the Transferor's representations, warranties or obligations and the Trustee may make arrangements for the compensation of such successor out of payments on Leases as it and such successor shall agree; provided, however, that no such compensation shall be in excess of that provided for a successor to the Servicer in Section 4.04 hereof. The Trustee shall provide the Rating Agencies with prior written notice of the appointment of any successor to the Servicer. 8.04 Servicer to Cooperate. The Servicer hereby agrees to cooperate with the Trustee or any successor to the Servicer appointed in accordance with Section 8.03 hereof, as applicable, in effecting the termination and transfer of the responsibilities and rights of the Servicer hereunder to the Trustee or any successor to the Servicer, including, without limitation, the execution and delivery of assignments of Financing Statements, and the transfer to the Trustee or the successor to the Servicer for administration by it of all cash amounts which shall at the time be held by the Servicer or thereafter received with respect to the Leases. The Servicer hereby agrees to transfer to any successor to the Servicer its electronic records and all other records, correspondence and documents relating to the Leases and Equipment in the manner and at such times as the successor to the Servicer shall reasonably request. The Servicer hereby designates the Trustee and any successor to the Servicer its agent and attorney-in-fact to execute transfers of Financing Statements (including any and all Financing Statements naming an individual Lessee as debtor and the Servicer as secured party) and any other filings or instruments which may be necessary or advisable to effect such transfer of the Servicer's responsibilities and rights hereunder. 8.05 Notification to Noteholders. Upon any such termination or appointment of a successor to the Servicer, the Issuer shall cause the Trustee to give prompt written notice thereof to each Rating Agency and to each holder of the Notes in the manner provided in the Indenture. 8.06 Remedies Not Exclusive. Nothing in the preceding provisions of this Section 8 shall be interpreted as limiting or restricting any rights or remedies which the Issuer, the Trustee or any other Person would otherwise have at law or in equity on account of the breach or violation of any provision of this Assignment and Servicing Agreement by the Servicer, including, without limitation, the 31 36 right to recover full and complete damages on account thereof to the extent not inconsistent with Section 6.02 hereof. SECTION 9. SUBSTITUTION AND ADDITION OF LEASES 9.01 Substitution and Addition. (a) Subject to the satisfaction of the requirements set forth in Section 9.01(b) hereof, the Transferor will have the right (but not the obligation) at any time to substitute one or more Eligible Leases and the Equipment subject thereto (each, a "Substitute Lease") for a Lease (for purposes of this Section 9 referred to as a "Predecessor Lease") and the Equipment subject thereto if: (i) the Predecessor Lease became (A) a Non-Performing Lease, (B) a Warranty Lease or (C) an Adjusted Lease during the immediately preceding Due Period; (ii) the aggregate Discounted Present Value of the Non-Performing Leases that are Predecessor Leases shall not in the aggregate exceed 10% of the Discounted Present Value of the Leases on the Cut-Off Date; and (iii) the aggregate Discounted Present Value of the Adjusted Leases and Warranty Leases that are Predecessor Leases shall not exceed 10% of the Discounted Present Value of the Leases on the Cut-off Date. Subject to the satisfaction of the requirements set forth in Section 4 and Section 9.01(b) hereof, in the event of an Early Lease Termination which has been prepaid in full, the Issuer will have the option to reinvest the proceeds of such Early Termination Lease in one or more Additional Leases. The purchase price of such Additional Lease or Leases will be an amount equal to the proceeds of such Early Termination Lease. (b) Each transfer of Substitute Leases and addition of Additional Leases will be subject to the satisfaction of the following conditions precedent: (i) after giving effect to such additions and substitutions and any adjustments pursuant to Section 4.02 thereof, the aggregate Booked Residual Value of such Leases must be not less than 100% of the Booked Residual Value of the Leases added, substituted or adjusted since the Issuance Date. (ii) the final payment on such Substitute Lease or Additional Lease must be on or prior to __________. (iii) after giving effect to such additions and substitutions and any adjustments pursuant to Section 4.02 hereof the aggregate amount of Lease Payments through the term of the Leases (including the Substitute Leases and the Additional Leases) and the Discounted Present Value of the Performing Leases will not be materially less than the aggregate scheduled Lease Payments of the 32 37 Leases and the Discounted Present Value of the Leases, respectively prior to such substitution or addition or adjustment; and (iv) after giving effect to such adjustments, additions and substitutions, the Discounted Present Value of the Performing Leases must not be less than the Discounted Present Value of the Performing Leases prior to such adjustment, substitution or addition. (v) after giving effect to such adjustments, additions, and substitutions pursuant to Section 9, the weighted average remaining term of the Performing Leases must not be greater than the weighted average remaining term of the Performing Leases prior to such adjustment, addition, and substitution. (vi) such Additional Lease or Substitute Lease was originated in the Healthcare Division, the Commercial and Industrial Division and the Business Technology Division or its predecessors or successors. (c) Each addition and substitution pursuant to this Section 9.01 shall include the right to receive all amounts due or to become due under each Substitute Lease being substituted or Additional Leases being purchased and any security deposits paid by the related Lessee to the Transferor in connection therewith (other than any prepayments of rent required pursuant to the terms thereof at or before the commencement of such Lease and any payments due before the Lease Payment Period during which such substitution or addition is made). At the time of each such substitution and addition, the Transferor shall transfer to the Trustee all Lease Payments actually received by the Transferor which became due during the current Lease Payment Period. 9.02 Procedure. (a) By 11:00 A.M. on the third Business Day following each Determination Date, the Transferor shall give written notice to the Servicer of any substitution pursuant to Section 9.01 of Substitute Leases for Predecessor Leases or addition of Additional Leases for Early Termination Leases which have been prepaid in full during the preceding Lease Payment Period. By 11:00 A.M. on the fourth Business Day following each Payment Date, the Transferor shall deliver to the Servicer and the Trustee and, to the extent not included in the Monthly Servicer Report, the Trustee shall promptly deliver to each Rating Agency (i) a supplement to Exhibit A hereto setting forth the information shown thereon for each such Substitute Lease and Additional Lease, (ii) an Officer's Certificate (A) certifying that each such Substitute Lease and Additional Lease is an "Eligible Lease", (B) specifying each Predecessor Lease for which a substitution has been made and each Early Termination Lease which is being replaced by an Additional Lease and the amount of each periodic Lease Payment and the Booked Residual Value under each such Predecessor Lease and the amount of each periodic Lease Payment and the Booked Residual Value under each Additional Lease and Substitute Lease being transferred thereby and (C) that all conditions precedent to such addition or substitution have been satisfied and (iii) such additional information concerning such Additional Leases, Substitute Leases, Early Termination Leases or Predecessor Leases as may be needed for the Servicer to prepare its 33 38 monthly reports pursuant to Section 5.01 hereof and to otherwise carry out its duties as servicer hereunder. (b) Subject to the provisions of Section 9.03, the delivery of any Officer's Certificate and supplement to Exhibit A pursuant to Section 9.02(a) shall be conclusive evidence, without further act or deed, that during the immediately preceding Lease Payment Period (i) the Transferor contributed to the Issuer pursuant to Section 9.01 hereof all of the Transferor's right, title and interest in and to the Substitute Leases and Additional Leases identified in such supplement and the related rights described in Section 9.01 hereof, (ii) the Transferor transferred to the Issuer, as a contribution to capital, all of the Transferor's right, title and interest in and to the Equipment subject to such Substitute Leases (to the extent of the Transferor's interest in such Equipment, including the Transferor's security interest in any Equipment which is not owned by the Transferor), and (iii) the Issuer assigned and transferred to the Transferor, without representation or warranty, all of the Issuer's right, title and interest in and to the Predecessor Leases and Early Termination Leases identified in such Officer's Certificate and the Equipment subject thereto (to the extent of the Issuer's interest in such Equipment, including the Issuer's security interest in any Equipment which is not owned by the Issuer). The Transferor shall promptly deliver to the Trustee (or a custodian on its behalf) the original executed counterpart of each Substitute Lease and Early Termination Lease assigned to the Issuer pursuant to Section 9.01 hereof and the Issuer shall promptly request the Trustee to deliver to the Transferor the original executed counterpart of each Predecessor Lease for which substitution has been made pursuant to Section 11.01 hereof. 9.03 Objection and Purchase. If any holder of the Notes objects to any substitution of Leases within ten days of receipt of the Servicer's monthly report providing notice thereof pursuant to Section 5.01 above, on the grounds either that any Substitute Lease or Additional Lease is not an Eligible Lease within the meaning of the definition thereof or that such substitution or addition is otherwise not permitted under the provisions of Section 9.01 hereof, the Transferor shall be entitled to present such additional information as it deems appropriate in an effort to demonstrate that such Lease is an Eligible Lease and that such substitution is permitted under the provisions of Section 11.01 hereof. Following such presentation, the substitution shall remain effective if each person originally objecting to the substitution withdraws his objection. If the conditions specified in the preceding sentence are not satisfied, or if at any time it is established that any lease was not, at the time of substitution, an Eligible Lease, then the Transferor shall be required to purchase such Lease in accordance with the provisions of Section 4.04 hereof. 9.04 Transferor's and Servicer's Subsequent Obligations. Upon any substitution of Leases in accordance with the provisions of this Section 9, the Transferor's and the Servicer's obligations hereunder with respect to the Predecessor Lease shall cease but the Transferor and the Servicer shall each thereafter have the same obligations with respect to the Substitute Lease substituted as it has with respect to all other Leases subject to the terms hereof. 34 39 SECTION 10. ASSIGNMENT 10.01 Assignment to Trustee. It is understood that this Assignment and Servicing Agreement and all rights of the Issuer hereunder will be assigned by the Issuer to the Trustee pursuant to the Indenture, for the benefit of the Trustee, the holders from time to time of the Notes as provided in the Indenture, and may be subsequently assigned by the Trustee to any successor Trustee or as otherwise provided in the Indenture. Each of the Transferor and the Servicer hereby expressly agrees to each such assignment and agrees that all of its duties, obligations, representations and warranties hereunder shall be for the benefit of, and may be enforced by, the Trustee, the holders from time to time of the Notes, and any successor to or assignee of any thereof. 10.02 Assignment by Transferor or Servicer. None of the respective rights or obligations of the Transferor and the Servicer hereunder may be assigned without the prior written consent of the Issuer and the Trustee (acting upon the instructions of the holders of 66-2/3% of the then aggregate unpaid Outstanding Principal Amount of the Notes); provided, that nothing herein shall preclude the Servicer from performing its duties hereunder through the use of agents to the extent that such use is consistent with the Servicer's business practices in dealing with leases and equipment for its own account. SECTION 11. NATURE OF OBLIGATIONS AND SECURITY THEREFOR 11.01 Obligations Absolute. The obligations of the Transferor hereunder, and the rights of the Trustee, as assignee of the Issuer, in and to all amounts payable by the Transferor hereunder, shall be absolute and unconditional and shall not be subject to any abatement, reduction, setoff, defense, counterclaim or recoupment whatsoever, including, without limitation, abatements, reductions, setoffs, defenses, counterclaims or recoupments due or alleged to be due to, or by reason of, any past, present or future claims which the Transferor may have against the Servicer, the Issuer, the Trustee, and any holder of the Notes or any other Person for any reason whatsoever; nor, except as otherwise expressly provided herein, shall this Assignment and Servicing Agreement terminate, or the respective obligations of the Issuer, the Transferor or the Servicer be otherwise affected, by reason of any defect in any Lease or in any unit of Equipment or in the respective rights and interests of the Issuer, the Transferor and the Trustee therein, or by reason of any Liens, encumbrances, security interests or rights of others with respect to any Lease or any unit of Equipment, or any failure by the Issuer or the Servicer to perform any of its obligations herein contained, or by reason of any other indebtedness or liability, howsoever and whenever arising, of the Issuer, the Servicer, the Trustee, or any holder of the Notes to the Transferor or any other Person or by reason of any insolvency, bankruptcy, or similar proceedings by or against the Transferor, the Servicer, the Issuer, the Trustee or any other Person or for any other cause whether similar or dissimilar to the foregoing, any present or future law to the contrary notwithstanding, it being the intention of the parties hereto that all obligations of the Transferor hereunder and all amounts payable by the Transferor hereunder shall continue to be due and payable in all events and in the manner and at the times herein provided unless and until the 35 40 obligation to perform or pay the same shall be terminated or limited pursuant to the express provisions of this Assignment and Servicing Agreement. 11.02 Security for Obligations. As security for the full and timely performance by the Transferor and the Servicer of each of its obligations hereunder, and by the Issuer of each of its obligations hereunder and under the Notes and the Indenture, the Transferor hereby pledges and grants to the Trustee (as a precaution in the event that, contrary to the intent of the parties to the transactions contemplated hereby, it is contended that either has any continuing interest in any Lease or item of Equipment subject to the Indenture) a first priority Lien on and security interest in all right, title and interest of the Transferor now or hereafter acquired in and to each Lease (including the right to receive all payments due or to become due thereunder) and each item of Equipment at any time subject to the Indenture. The foregoing security interest is granted upon and is subject to the same terms and provisions as are set forth in the Indenture and shall continue in full force and effect until the same is discharged in accordance with the terms therein, notwithstanding any waiver or modification of any of the terms hereof or thereof or of any of the Notes, whether with or without the consent of the Transferor. 11.03 Further Assurances; Financing Statements. Each of the Transferor and the Servicer severally agrees that at any time and from time to time, at its expense, it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable or that the Issuer or the Trustee may request to perfect and protect the assignments and security interests granted or purported to be granted herein with respect to the Leases and the Lease Payments or to enable the Issuer or the Trustee to exercise and enforce its rights and remedies under this Agreement with respect to any Leases and the Lease Payments. Without limiting the generality of the foregoing, each of the Transferor shall execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices as may be necessary or desirable or that the Issuer or the Trustee may request to protect and preserve the assignments and security interests granted by this Agreement with respect to the Leases. SECTION 12. DEFINITIONS As used in this Assignment and Servicing Agreement, the following terms have the respective meanings set forth below or set forth in the Section hereof or in any other agreement indicated: Accumulated Funding Deficiency - a funding deficiency described in Section 302 of ERISA. Additional Lease - each separate lease agreement and each lease schedule or supplement (and each master lease agreement insofar as the same relates to any such schedule or supplement) acquired by the Issuer from the Transferor with all or a portion of the proceeds of an Early Termination Lease that has been prepaid in full pursuant to Section 9 hereof. 36 41 Adjusted Lease - a Lease which has had one or more non-credit related terms adjusted or modified by the Servicer. Affiliate - Section 1.01 of the Indenture. Booked Residual Value - the estimated residual value of the Equipment recorded on the books of the Transferor as of the Cut-Off Date in the case of the initial Leases, and as of the date of substitution in the case of a Substitute Lease. Business Day - any day that is not a Saturday, Sunday or other day on which commercial banking institutions in the city in which the Corporate Trust Office or the Servicer is located are authorized or obligated by law or executive order to remain closed. Casualty Payment - any payment pursuant to a Lease on account of the loss, theft, condemnation, governmental taking, destruction, or damage beyond repair of any item of Equipment subject thereto which results, in accordance with the terms of the Lease, in a reduction in the number or amount of any future Lease Payments due thereunder or in the termination of the Lessee's obligation to make future Lease Payments thereunder. Class A Notes - the Issuer's Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes. Class A-1 Notes - the Issuer's ______% Class A-1 Lease-Backed Notes, Series 1999-A. Class A-2 Notes - the Issuer's _____% Class A-2 Lease-Backed Notes, Series 1999-A. Class A-3 Notes - the Issuer's ______% Class A-3 Lease-Backed Notes, Series 1999-A. Class A-4 Notes - the Issuer's ______% Class A-4 Lease-Backed Notes, Series 1999-A. Class B Notes - the Issuer's ______% Class B Lease-Backed Notes, Series 1999-A. Class C Notes - the Issuer's ______% Class C Lease-Backed Notes, Series 1999-A. Class D Notes - the Issuer's ______% Class D Lease-Backed Notes, Series 1999-A. Class E Notes - the Issuer's ______% Class E Lease-Backed Notes, Series 1999-A. Class R Notes - the Issuer's Class R-1 Notes and Class R-2 Notes. 37 42 Class R-1 Notes - the Issuer's _____% Class R-1 Lease-Backed Notes, Series 1999-A. Class R-2 Notes - the Issuer's _____% Class R-2 Lease-Backed Notes, Series 1999-A. Code - the Internal Revenue Code of 1986, as amended. Collection Account - Section 1.01 of the Indenture. Corporate Trust Office - Section 1.01 of the Indenture. Cut-Off Date - close of business on January 31, 1999. Delinquent Lease - Section 1.01 of the Indenture. Determination Date - Section 1.01 of the Indenture. Discounted Present Value of the Leases - Section 1.01 of the Indenture. Early Termination Lease - a lease which has been prepaid prior to its original stated maturity. Eligible Lease - Section 4.02 hereof. Equipment - all units or items of equipment from time to time subject to any Lease and all such units or items of equipment (to the extent of the Issuer's interest therein) remaining subject to the Lien of the Indenture following the expiration or termination of the Lease to which the same was previously subject. ERISA - the Employee Retirement Income Security Act of 1974, as amended. Event of Default - Section 1.01 of the Indenture. Excess Copy Charges - Section 1.01 of the Indenture. Fee Per Scan Charges - Section 1.01 of the Indenture. Filing Requirements - Financing Statements necessary to perfect the ownership interest of the Issuer and the perfected security interest of the Trustee in the Leases and the Equipment. Financing Statement - a statement filed pursuant to the UCC which evidences a perfected security interest in an asset. Governmental Authority: Any court or federal or state regulatory body, administrative agency or other tribunal or other governmental instrumentality. Granted Assets - The assets of the Granting Clause of the Indenture. 38 43 Indemnified Party - Section 4.03 hereof. Indenture - the Indenture dated as of March 1, 1999, among the Issuer, the Trustee and the Servicer, as the same may be supplemented, modified or amended from time to time in accordance with the terms thereof. Inter-Company Loans - Section 13.01 hereof. Issuance Date - _________, 1999. Issuer - Copelco Capital Funding LLC 99-1, a Delaware limited liability company. Lease - each separate lease agreement and each lease schedule or supplement (and each master lease agreement insofar as the same relates to any such schedule or supplement) described on Exhibit A hereto, as the same may be amended or modified from time to time in accordance with the provisions hereof and thereof. Lease Delinquency Payment - Section 1.01 of the Indenture. Lease Payment - Section 1.01 of the Indenture. Lease Payment Period - with respect to any Payment Date and the Determination Date with respect thereto, the calendar month prior to the month in which such Payment Date and Determination Date occur. Lease Receivables - with respect to any Lease, all amounts owing by the Lessee thereunder. Lease Purchase Amount - at any date with respect to any Lease, an amount equal to the sum of (i) the Discounted Present Value of the Lease as of the prior Payment Date plus the next scheduled monthly payment on such Lease and any amounts previously due and unpaid, and (ii) the product of (x) the Initial ADRB and (y) the ratio, as of the Cut-Off Date, that the Booked Residual Value of the Lease bears to the aggregate Booked Residual Value of all Leases. Lessee - each lessee under a Lease. Lien - means a security interest, lien, charge, pledge, equity, or encumbrance of any kind other than tax liens, mechanics liens, and any liens that attach to a Lease by operation of law. Liquidity Reserve Account - Section 1.01 of the Indenture. Maintenance Charges - Section 1.01 of the Indenture. Nominal Buy-Out Lease - each Lease identified on Exhibit A hereto as having an estimated residual value of $10 or less in the column under the-heading "RESIDUAL". Non-Performing Lease - Section 1.01 of the Indenture. 39 44 Nonrecoverable Advance - any advance made or to be made by the Servicer pursuant to Section 4.01 hereof which, in the good faith judgment of the Servicer, will ultimately not be recoverable by the Servicer under the terms of this Assignment and Servicing Agreement and the Indenture. Noteholder - at any time, any Person in whose name a note is registered in the Note Register (as defined in the Indenture). Notes - the Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class R Notes issued pursuant to the Indenture and all notes issued in exchange therefor pursuant to the Indenture. Officers' Certificate - with respect to the Transferor or Servicer, a certificate delivered to the Trustee and signed by the Chairman, the President, or a Vice President, and by another Vice President, the Treasurer, an Assistant Treasurer, the Secretary, or an Assistant Secretary of the Transferor or Servicer, as the case may be, who is not the same person as the other officer signing such certificate. Original Principal Amount of the Notes - the principal amount of the Notes originally issued on the Issuance Date. Other Lease Payments - Section 1.01 of the Indenture. Outstanding Principal Amount - Section 1.01 of the Indenture. PBGC - the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. Payment Date - the 20th day of each calendar month (or the next Business Day thereafter if such day is not a Business Day). Predecessor Lease - Section 11.01 hereof. Pension Plan - Section 2.13 hereof. Person - an individual, partnership, corporation, joint venture, association, limited liability company, trust (including any beneficiary thereof) or unincorporated organization, or a government or agency or political subdivision thereof. Prime Rate - the Manufacturers and Traders Trust Company prime lending rate. Private Placement Memoranda - each final Private Placement Memoranda used in connection with the private offering of the Class E Notes and the Class R Notes. Prohibited Transaction - any transaction described in Section 406 of ERISA which is not exempt by reason of Section 408 of ERISA or the transitional rules set forth in Section 414(c) of ERISA and any transaction described in Section 4975(c) of the Code which is 40 45 not exempt by reason of Section 4975(c)(2) or Section 4975(d) of the Code, or the transitional rules of Section 2003(c) of ERISA. Prospectus - the form of final prospectus to be used in connection with the public offering of the Class A Notes, the Class B Notes, the Class C Notes and Class D Notes as filed with the Securities and Exchange Commission pursuant to Rule 424(b). Rating Agency - Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies, Fitch IBCA, Inc., Moody's Investors' Service, Inc. or Duff & Phelps Credit Rating Co. Receivable Notes - Section 1.01 of the Indenture. Registration Statement - the registration statement (File No. 333-69983) filed with the Securities and Exchange Commission for the registration of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes. Related Person - any Person (whether or not incorporated) which is under common control with the Transferor within the meaning of Section 414(c) of the Internal Revenue Code of 1986, as amended, or of Section 4001(b) of ERISA. Reportable Event - any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, a withdrawal from a Pension Plan described in Section 4063 of ERISA, or a cessation of operations described in Section 4062(e) of ERISA. Reserve Account - Section 1.01 of the Indenture. Residual Account - Section 1.01 of the Indenture. Residual Realization - Section 1.01 of the Indenture. Residual Servicing Fee - Section 3.04(a) hereof. Servicer - the corporation so identified in the first paragraph of this Assignment and Servicing Agreement and any successor thereto in accordance with the provisions hereof. Servicer Event of Default - Section 10.01 hereof. Servicing Fee - Section 3.04(a) hereof. Servicing Report - Section 5.01(b) hereof. Similar Transaction Amount - Section 1.01 of the Indenture. Similar Transaction Payments - Section 1.01 of the Indenture. Substitute Lease - Section 9.01(a) hereof. Stated Maturity - Section 1.01 of the Indenture. 41 46 Termination Payment - Section 1.01 of the Indenture. Transaction Payment Amount - Section 1.01 of the Indenture. Transferor - the corporation so identified in the first paragraph of this Assignment and Servicing Agreement and any successor thereto in accordance with the provisions hereof. Trust Estate - Section 1.01 of the Indenture. Trustee - Manufacturers and Traders Trust Company, and any successor thereto, as trustee under the Indenture. Underwriting Agreement - the Underwriting Agreement dated ________, 1999 among the Issuer, Transferor and Prudential Securities Incorporated for the purchase and sale of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes. Uniform Commercial Code or UCC - with respect to a particular jurisdiction, the Uniform Commercial Code, as in effect from time to time in such jurisdiction, or any successor statute thereto. Utilized Residual Amount - Section 1.01 of the Indenture. Warranty Lease - Section 1.01 of the Indenture. SECTION 13. INTER-COMPANY LOANS 13.01 Inter-Company Loans. With the contribution of the Leases, the Issuer has acquired the right to hold and apply in accordance with the provisions of certain of the Leases, security deposits. The Issuer may from time to time, to the extent permitted by law, lend such security deposits and any amounts disbursed to the Issuer pursuant to Sections 3.04(b), 3.05(b) or 6.06 of the Indenture to the Transferor (each such advance, an "Inter-Company Loan"). Each Inter-Company Loan shall be on a demand basis, shall bear interest at an annual rate equal to the Prime Rate plus one percent, shall be in the form attached hereto as Exhibit B and shall otherwise be on such arm's-length terms and conditions as the Issuer and the Transferor may agree. SECTION 14. MISCELLANEOUS 14.01 Continuing Obligations. This Assignment and Servicing Agreement shall continue in full force and effect until each of the Notes and any other amounts due to any holder of the Notes have been paid in full and all other obligations, if any, secured by the Lien of the Indenture have been fully satisfied. 42 47 14.02 GOVERNING LAW. THIS ASSIGNMENT AND SERVICING AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK. IF ANY PROVISION OF THIS ASSIGNMENT AND SERVICING AGREEMENT IS DEEMED INVALID, IT SHALL NOT AFFECT THE BALANCE OF THIS ASSIGNMENT AND SERVICING AGREEMENT. 14.03 Successors and Assigns. This Assignment and Servicing Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Issuer, the Transferor, the Servicer and the Trustee and shall inure to the benefit of the successors and assigns of the holders, from time to time, of the Notes. 14.04 Modification. The terms of this Assignment and Servicing Agreement shall not be waived, modified or amended without the written consent of the party against whom such waiver, modification or amendment is claimed and, in any case, the Trustee (acting upon the instructions of the holders of 66-2/3% of the then aggregate unpaid Outstanding Principal Amount of the Notes). 14.05 No Proceedings. The Transferor and the Servicer, each hereby agree that it will not, directly or indirectly, institute, or cause to be instituted, against the Issuer any proceeding of the type referred to in Section 6.01(b) or (c) of the Indenture so long as there shall not have elapsed one year plus one day since the latest maturing Notes have been paid in full in cash. 14.06 Notices. All notices and other communications given in connection with this Assignment and Servicing Agreement shall be sufficient for every Person hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid or certified mail return receipt requested, or sent by private courier or confirmed telecopy, in case of the Transferor, to East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey 08054-5400, Attention: Stephen Shippie with a copy to the General Counsel (telecopy: 609-273-9288) and in the case of the Issuer, the Servicer and the Trustee and the holders of the Notes, to such addresses as are provided pursuant to Sections 1.05 and 1.06 of the Indenture or to such other address as either party may specify to the other from time to time in accordance with this Section 14.06. 14.07 Counterparts. This Assignment and Servicing Agreement may be executed in any number of counterparts, each counterpart constituting an original, but all together constituting only one Agreement. 43 48 14.08 Nonpetition Covenant. The Transferor shall not petition or otherwise invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its respective property, or ordering the winding up or liquidation of the affairs of the Issuer. Neither the Transferor shall petition or otherwise invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its respective property, or ordering the winding up or liquidation of the affairs of the Issuer. 44 49 IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Servicing Agreement as of the date and year first written above. COPELCO CAPITAL, INC., as Transferor and Servicer By: __________________________________ Name: Title: COPELCO CAPITAL FUNDING LLC 99-1 By: [COPELCO CAPITAL FUNDING CORP. XI,] as manager By: ______________________________ Name: STEPHEN W. SHIPPIE Title: VICE PRESIDENT The undersigned hereby acknowledges receipt of a copy of the foregoing Assignment and Servicing Agreement and agrees to, and to be bound by, each of the provisions thereof applicable to the undersigned. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By: ______________________________ Name: Title: [Signature Page to the Assignment and Servicing Agreement] 50 EXHIBIT A SCHEDULE OF LEASES AND EQUIPMENT A-1 51 INTER-COMPANY LOAN NOTE ALL RIGHT, TITLE AND INTEREST IN AND TO THIS PROMISSORY NOTE ON THE PART OF COPELCO CAPITAL FUNDING LLC 99-1 HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF MANUFACTURERS AND TRADERS TRUST COMPANY, AS TRUSTEE, UNDER AN INDENTURE DATED AS OF _________, 1999, FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN. $______________ ____________, 1999 COPELCO CAPITAL, INC., a Delaware corporation (the "Maker"), with its principal office at One International Boulevard, Mahwah, NJ 07430-0631, FOR VALUE RECEIVED, hereby promises to pay to the order of Copelco Capital Funding LLC 99-1, a Delaware limited liability company or its assignee (the "Payee"), for its account, the principal sum ______________________________ ($___________) (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Payee to the Maker under the Assignment Agreement (as defined below)), together with interest per annum on the unpaid principal amount hereof at the Prime Rate plus one per cent, in lawful money of the United States of America and in immediately available funds immediately on the demand of the Payee. The date, amount and interest rate, of each Loan made by the Payee to the Maker, and each payment made on account of the principal thereof, shall be recorded by the Payee on its books and, prior to any transfer of this Note, endorsed by the Payee on the schedule attached hereto or any continuation thereof. This Note evidences certain Inter-Company Loans from Payee to Maker pursuant to Section 13.01 of that certain Assignment and Servicing Agreement dated as of March 1, 1999, between the Maker and the Payee (the "Assignment Agreement"). Capitalized terms used in this Note have the respective meanings assigned to them in the Assignment Agreement. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. COPELCO CAPITAL, INC. By _________________________________ 52 SCHEDULE OF LOANS This Note evidences demand Loans made under the within-described Assignment Agreement to the Maker, on the date, at the interest rate, and in the principal amounts set forth below, subject to the payments and prepayments of principal set forth below: Principal Amount Unpaid Amount of Interest Paid or Principal Notation Date Loan Rate Prepaid Amount Made By - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ 53 EXHIBIT C FORM OF RECEIVABLES SERVICING REPORT Line 1 Transaction Cash Flow - see computer detail 1/1 Beginning Net Present Value 1/2 Less: - current month 1/3 Add: Actual Interest Payment (Weighted Avg. A, B & C notes) 1/4 Add: 0.75% Servicing Component 1/5 Less: Current month Nonperforming 1/5a Less: Warranty Leases 1/6 Less: Amounts on Early Terminations 1/7 Add: Amounts due to Substitutions 1/8 Add: Amounts due to Additional leases (Prepaid leases) 1/9 Ending Net Present Value 2 Overdue Lease Payments - see computer detail 2/1 Beginning Balance 2/2 (Memo) Overdue Payments Received 2/3 Less: Reimbursed Per This Report 2/4 Less: Past Dues on Disqualified Leases - Early Terminations 2/5 Less: Past Dues on Disqualified Leases - Nonperforming and Warranty 2/6 Add: Last Month's Current Payments that became Past due 2/7 Add: Received on Replacements Leases 2/8 (MEMO) Net New Advances 2/9 Ending Balance 3 Residual 3/1 Beginning Availability 3/2 Less: Amount Used 3/3 Ending Maximum Availability 3/4 (Memo) Amount Realized 3/5 LTD Residuals of Nonperforming, Warranty, and Prepaid leases substituted 3/6 LTD Residuals of Substitutions 4 Collection account-Advance Lease Payments 4/1 Beginning Balance 4/2 Less: Applied to Current from Prepaid 4/3 Less: Advance on Disqualified Leases 4/4 Add: Received This Month 4/5 Add: Received on Replacement Leases 4/6 Ending Balance C-1 54 5 Residual Event Calculation 5/1 Delinquency condition exist (payments over 62 days performing leases only) 5/2 Overdue payments and PV on leases over 62 but less than 122 days 5/3 PV of performing leases 5/4 Delinquency Rate Current Month 5/5 Second Preceding Month 5/6 Third Preceding Month 5/7 Average 5/8 Residual Realization > 100% (Yes/No) 5/9 Copelco Capital as Servicer (Yes/No) 6 Cash Reserve Account 6/1 Beginning Balance 6/2 Less: New Obligations: Total Shortfall (B9) 6/3 Plus: Interest earned on Cash Reserve Acct. 6/4 Ending Balance 6/5 ___% of Outstanding Note Value 6/6 Lesser of __% of $__________ and Outstanding Note Value 6/7 Target Cash Reserve (Greater of 6/5 & 6/6) 6/8 Cash Reserve Release (6/4-6/7) 6/9 Ending Balance Cash Reserve Account 7 Residual Account 7/1 Beginning Balance 7/2 Plus Current Month Addition 7/3 Less Disbursements 7/4 Ending Balance 8 Nonperforming Leases 8/1 Beginning Balance of Nonperforming Leases 8/2 Plus Current Month Additions 8/3 Plus Past Due Payments on Nonperforming Leases 8/4 Less Current Month Recoveries 8/5 Ending Balance Cash Receipts Line A/1 Regular monthly payments A/2 Overdue payments A/3 Overdue Payments due on Early Termination and Termed Out Leases (From Transferor) A/4 Advance Payments of monthly rentals A/5 Residual Values A/6 Recoveries on Defaulted Leases A/7 Proceeds from investment of Collection Accounts funds A/8 Draws upon Residual Account A/9 Casualty and Termination Payments A/10 Servicer Advances A/11 Total Receipts C-2 55 Disbursement Requirements Line B/1 Past Due Payments Collected, Due Servicer (COLLECTION ACCT) B/2 Overdue Payments Advanced, on Disqualified Leases (COLLECTION ACCT) B/3 Servicing Fee (COLLECTION ACCT) B/4 Advanced Payments on Disqualified Leases (COLLECTION ACCT) B/5 Total to Servicer B/6 Collection Account - Advanced Rents (Monthly-Increase/(Decrease)) B/7 Net cash receipts B/8 Shortfall B/9 Draw on Cash Reserve B/10 Draw on Residual Account B/11 Total Available Funds C Noteholders C/1 Class A-1 Interest Paid ____% C/2 Class A-2 Interest Paid ____% C/3 Class A-3 Interest Paid ____% C/4 Class A-4 Interest Paid ____% C/5 Class B Interest Paid ____% C/6 Class C Interest Paid ____% C/7 Class D Interest Paid ____% C/8 Class E Interest Paid ____% C/9 Beginning Class A-1 Note Balance C/10 Class A-1 Note Value Target (___% of 1/9) C/11 Class A-1 Principal Paid C/12 Beginning Class A-2 Note Balance C/13 Class A-2 Note Value C/14 Ending Class A-2 Note Balance C/15 Class A-2 Principal Paid C/16 Beginning Class A-3 Note Balance C/17 Class A-3 Note Value C/18 Ending Class A-3 Note Balance C/19 Class A-3 Principal Paid C/20 Beginning Class A-4 Note Balance C/21 Class A-4 Note Value C/22 Class A-4 Principal Paid C/23 Ending Class A-4 Note Balance C/24 Beginning Class B Note Balance C/25a Class B Note Value Target (__% of 1/9) C/25b Class B Note Value Floor (__% of $__________ + Cum. Losses- C/12-6/4) C/26 Class B Principal Paid C/27 Ending Class B Note Balance C/28 Beginning Class C Note Balance C/29a Class C Note Value Target (__% of 1/9) C/29b Class C Note Value Floor (__% of $__________ + Cum. Losses- 6/4) C-3 56 C/30 Class C Principal Paid C/31 Ending Class C Note Balance C/32 Beginning Class D Note Balance C/33 Class D Note Value Target (__% of 1/9) C/34 Class D Note Value Floor (__% of $__________ + Cum. Losses-6/4) C/35 Class D Principal Paid C/36 Ending Class D Note Balance C/37 Beginning Class E Note Balance C/38 Class E Note Value Target (__% of 1/9) C/39 Class E Note Value Floor (__% of $__________ + Cum. Losses-6/4) C/40 Class E Principal Paid C/41 Ending Class E Note Balance C/42 Balance Available for Distribution to Copelco D Miscellaneous Tracking Items D/1 % of Total Nonperforming and Warranty substituted as per Initial Outs, Note Value D/2 (MEMO) Cumulative amounts on Early Lease Terminations due to modification of leases D/3 (MEMO) Cumulative amounts of additional leases purchased D/4 (MEMO) Avg. residual realization greater than booked residual by Document Imaging and Major Accounts division for last three months (Yes/No) D/5 % of Total Variance of Residuals substituted for Nonperforming & Prepaid leases and residuals of Substituted leases to Initial pool booked residuals C-4 EX-10.2 9 PLACEMENT AGENT AGREEMENT 1 COPELCO CAPITAL FUNDING TRUST 1999-A _____% CLASS E LEASE-BACKED NOTES ____% CLASS R-1 LEASE RESIDUAL BACKED NOTES ____% CLASS R-2 LEASE RESIDUAL BACKED NOTES SERIES 1999-A PLACEMENT AGENT AGREEMENT February __, 1999 PRUDENTIAL SECURITIES INCORPORATED One New York Plaza, 14th Floor New York, New York 10292-2014 Ladies and Gentlemen: Copelco Capital Funding LLC 99-1, a limited liability company organized and existing under the laws of Delaware (the "Issuer") and Copelco Capital, Inc., a corporation organized and existing under the laws of Delaware ("Copelco"), hereby agree with you as follows: Section 1. Issuance and Sale of Notes. The Issuer has authorized the issuance of $___________ of ____% Class E Lease-Backed Notes, $___________ of ____% Class R-1 Lease Residual Backed Notes and $___________ of ____% Class R-2 Lease Residual Backed Notes (collectively, the "Class R Notes") Series 1998-A (the "Notes"). The Notes will be issued on __________, 1999 or such other date as we shall mutually agree upon (the "Closing Date") pursuant to an Indenture, dated as of March 1, 1999 (the "Indenture"), between the Issuer, Manufacturers and Traders Trust Company (the "Trustee") and Copelco, as servicer. The Notes are more fully described in the Private Placement Memorandum (as defined below), a copy of which the Issuer is furnishing to you. The Notes will evidence secured debt obligations of the Issuer. The assets of the Issuer will include a pool of business, manufacturing and healthcare equipment lease contracts, including all payments due thereunder (the "Leases") and certain interests in the underlying equipment (the "Equipment"). The Issuer has also authorized the issuance of $___________ aggregate principal amount of the Issuer's _____% Class A-1 Lease-Backed Notes, Series 1999-A (the "Class A-1 Notes"), $__________ aggregate principal amount of the Issuer's ____% Class A-2 Lease-Backed Notes, Series 1999-A (the "Class A-2 Notes"), $___________ aggregate principal amount of the Issuer's ____% Class A-3 Lease-Backed Notes, Series 1999-A (the "Class A-3 Notes"), $___________ aggregate principal amount of the Issuer's ____% Class A-4 Lease-Backed Notes, Series 1999-A (the "Class A-4 Notes"; together with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the "Class A Notes") $___________ of the ____% Class B 2 Lease-Backed Notes, Series 1999-A (the "Class B Notes") $___________ of the ____% Class C Lease-Backed Notes, Series 1999-A (the "Class C Notes") and $___________ of the ____% Class D Leased-Backed Notes Series 1999-A (the "Class D Notes"). The Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are being sold in a public offering and are not included in this private placement. A copy of the Prospectus dated ___________ (the "Prospectus") relating to such public offering is included in the Private Placement Memorandum (as defined below). Capitalized terms used and not defined herein shall have the meanings specified in the Indenture. Section 2. Appointment of Placement Agent; Placement of Notes. (a) The Issuer hereby appoints you as exclusive Placement Agent in connection with the placement of all of the Notes (the "Placement Agent") for the period (the "Offering Period") from the date hereof until such date as may be agreed between us (the "Offering Termination Date"). Subject to the performance in all material respects by the Issuer of its obligations to be performed hereunder, and to the completeness and accuracy in all material respects of all of the representations and warranties of the Issuer and Copelco contained herein, you hereby accept such agency and agree on the terms and conditions herein set forth to purchase, or to find qualified purchasers ("Purchasers") for, all of the Notes on the Closing Date. Your agency hereunder is not terminable, except as provided herein, by the Issuer or Copelco without your permission and shall continue until the close of business on the Offering Termination Date. (b) In the event the offering is commenced but no Notes shall have been subscribed for prior to the Offering Termination Date, your agency and this Private Placement Agreement (the "Agreement") shall terminate without obligation on your part or on the part of the Issuer except as provided in Section 7 hereof and except that the indemnification and contribution referred to in Section 8 hereof shall continue after such termination of this Agreement. Section 3. Delivery. Delivery of the Notes to the purchasers thereof (the "Purchasers") shall be made at the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New York at 10:00 A.M., New York time, on the Closing Date. The denominations of the Notes to be delivered and the name in which each such Note is to be registered will be set forth in a notice to be delivered by you on behalf of the Purchasers to the Trustee. The Issuer agrees to have the Notes available for inspection, checking and packaging by the Placement Agent in New York, New York, not later than 1:00 P.M., New York City time, on the Business Day prior to the Closing Date. Section 4. Representations and Warranties. (a) The Issuer hereby represents and warrants to, and agrees with you, as follows: (i) The Issuer, with your assistance, will prepare and furnish to you by the Closing Date a copy of a Private Placement Memorandum dated _______, 1999 relating to the Class E Notes and a copy of a Private Placement Memorandum dated _______, 1999 related to the Class R Notes (collectively, as supplemented and amended, the "Private Placement Memorandum") relating to the Notes. The Private Placement Memorandum 2 3 does not, as of its date, and as of the date hereof will not, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Issuer makes no representations or warranties as to the Underwriting Information (as defined in Section 8(b) hereof). (ii) This Agreement has been duly authorized, executed and delivered by the Issuer and constitutes a legal, valid and binding agreement of the Issuer enforceable in accordance with its terms, except that the provisions hereof relating to indemnification of the Placement Agent may be subject to limitations of public policy. (iii) Each of the Indenture and the Assignment and Servicing Agreement have been duly authorized by the Issuer, and, when executed and delivered by the Issuer, will constitute the legal, valid and binding obligation of the Issuer, enforceable in accordance with its terms. (iv) The issuance of the Notes has been duly authorized by the Issuer and, when duly and validly executed, authenticated and delivered in accordance with the Indenture, will be the legal, valid and binding obligations of the Issuer, enforceable in accordance with their terms, and entitled to the benefits of the Indenture. (v) The issuance and sale of the Notes and the performance of this Agreement, the Indenture and the Assignment and Servicing Agreement by the Issuer will not (A) not conflict with or result in a breach of, and will not constitute a default under any of the provisions of, its certificate of incorporation or any law, governmental rule or regulation, or any judgment, decree or order binding on the Issuer or its properties, or any of the provisions of any indenture, mortgage, deed of trust, contract or other agreement or instrument to which the Issuer is a party or by which it is bound or (B) result in the creation or imposition of any Adverse Claim and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Notes or the consummation by the Issuer of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase of the Notes by the Purchasers. As used herein, "Adverse Claim" means a lien, pledge, security interest or other charge or encumbrance. (vi) The Issuer is not, and will not, as of the Closing Date, be an "investment company" under the Investment Company Act of 1940, as amended (the "1940 Act"). (b) Copelco hereby represents and warrants to and agrees with the Placement Agent as follows: (i) This Agreement has been duly authorized, executed and delivered, the Assignment and Servicing Agreement has been duly authorized, executed and delivered, and this Agreement constitutes, and when executed and delivered, the Assignment and 3 4 Servicing Agreement will constitute, legal, valid and binding obligations of Copelco, enforceable in accordance with their respective terms, except that the provisions hereof relating to indemnification of the Placement Agent may be subject to limitations of public policy. (ii) The performance of this Agreement by Copelco, and the consummation by Copelco of the transactions herein contemplated, will not (A) conflict with or result in a breach of, and will not constitute a default under any of the provisions of its certificate of incorporation or by-laws or any law, governmental rule or regulation, or any judgment, decree or order binding on Copelco or its properties, or any of the provisions of any indenture, mortgage, deed of trust, contract or other agreement or instrument to which Copelco is a party or by which it is bound or (B) result in the creation or imposition of any Adverse Claim and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the consummation by Copelco of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase of the Notes by the Purchasers. (iii) Copelco hereby makes and repeats the representations and warranties set forth in Section 2 of the Assignment and Servicing Agreement. Such representations and warranties are incorporated by reference in this Section 4(b), and the Placement Agent and the Purchasers may rely thereon as if such representations and warranties were fully set forth herein. (iv) Copelco represents and warrants it has delivered to the Placement Agent complete and correct copies of its balance sheet and statements of income and retained earnings reported by Copelco Capital Inc. and Copelco Financial Services Group, Inc. (the "Copelco Entities") for the year ended December 31, 1997 and the period ended September 30, 1998. Except as set forth in or contemplated in the Private Placement Memorandum, there has been no material adverse change in the condition (financial or otherwise) of the Copelco Entities since September 30, 1998. (v) Any taxes, fees and other governmental charges arising from the execution and delivery of this Agreement, the Assignment and Servicing Agreement and the Indenture and in connection with the execution, delivery and issuance of the Notes and with the transfer of the Leases and the Equipment, have been paid or will be paid by Copelco. (c) Each of the Issuer and Copelco represents and warrants to you that there is no pending or threatened action, suit or proceeding against or affecting it in any court or tribunal or before any arbitrator of any kind or before or by any governmental authority (i) asserting the invalidity of this Agreement, the Assignment and Servicing Agreement, the Indenture or the Notes, (ii) seeking to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by this Agreement, the Assignment and Servicing Agreement or the Indenture or (iii) seeking any determination or ruling that might materially and adversely affect (A) its performance of its obligations under this Agreement, the Assignment and Servicing Agreement or the Indenture 4 5 (as applicable) or (B) the validity or enforceability of this Agreement, the Assignment and Servicing Agreement, the Indenture or the Notes. (d) The Placement Agent represents and warrants to, and agrees with Copelco and the Issuer that: (i) It understands that the Notes have not been registered under the Securities Act of 1933 (the "1933 Act"), in reliance upon the exemption provided in Section 4(2) of the 1933 Act, and it hereby covenants and agrees that it will not offer or sell the Notes in a manner that would cause such exemption to be inapplicable. Such Placement Agent has not utilized and will not utilize any form of general solicitation or general advertising in connection with the placement of the Notes, including any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio, or conduct any seminar or meeting with respect to the Notes whose attendees have been invited by general solicitation or advertising. (ii) The Notes will only be offered and sold by the Placement Agent to Purchasers to whom the Placement Agent have delivered a Private Placement Memorandum. (iii) It is understood that Copelco and the Issuer have only authorized the Placement Agent to distribute the Private Placement Memorandum, the information specifically referred to therein and any other documents authorized by Copelco or the Issuer and the Placement Agent agrees and covenants to Copelco and the Issuer that it shall offer and sell the Notes only pursuant to delivery of such materials. (iv) The Placement Agent shall advise Copelco and the Issuer of the jurisdictions in which it desires to sell the Notes. Section 5. Covenants of the Issuer and Copelco. The Issuer and Copelco, jointly and severally, hereby covenant and agree with you as follows: (a) Each of the Issuer and Copelco will promptly advise the Placement Agent of the receipt by any of them of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Issuer will not prepare any amendment or supplement to the Private Placement Memorandum to which the Placement Agent reasonably objects. (b) If, at any time when a Private Placement Memorandum relating to the Notes is to be delivered to a potential Purchaser, any event occurs as a result of which the Private Placement Memorandum as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary, in the opinion of the Placement Agent, to supplement such Private Placement Memorandum, the Issuer promptly will prepare and deliver to the Placement Agent or any such potential Purchaser, subject to paragraph (a) of this Section 5, a supplement which will correct such statement or omission. 5 6 (c) Each of the Issuer and Copelco understands that pursuant to this Agreement each potential Purchaser may request documents or information in addition to those referred to in Section 5(b) relating to Copelco, the Issuer, and the Leases. Each of the Issuer and Copelco will provide to you and such Purchaser all such documents and opportunities to meet with officials of Copelco or the Issuer as such potential Purchasers shall reasonably request or have requested; it being understood that all such documents and disclosures may be subject to appropriate confidentiality agreements. Upon request, Copelco and the Issuer will make available to Noteholders and to you such information as will satisfy the provisions of Rule 144A under the 1933 Act in order to effect resales of the Notes pursuant thereto. (d) Copelco and the Issuer will furnish to you, so long as delivery of a placement memorandum is desired by you, as many copies of the Private Placement Memorandum relating to the Notes and any supplement thereto as you may reasonably request. (e) Copelco and the Issuer will take all reasonable actions requested by you to arrange for the qualification of the Notes for sale under the laws of the jurisdictions within the United States as you may designate and will maintain such qualifications in effect as long as required for the completion of the placement of the Notes; provided, that the Issuer shall not be required to register the Notes under the 1933 Act in connection therewith if the Issuer shall be required to qualify as a foreign corporation doing business in any such jurisdiction. (f) For so long as the Notes are outstanding, the Issuer and Copelco shall deliver to you by first-class mail as soon as practicable a copy of all reports and notices delivered to the Trustee or the Noteholders under the Indenture. (g) For so long as the Notes are outstanding, the Issuer and Copelco will furnish to you as soon as practicable after filing any other information concerning the Issuer or Copelco filed with any government or regulatory authority which is otherwise publicly available. (h) To the extent, if any, that any rating provided with respect to the Notes set forth in Section 6(e) hereof is conditional upon the furnishing of documents reasonably available to the Issuer or Copelco, the Issuer and Copelco shall furnish such documents. Section 6. Conditions of Placement Agent' Obligation. The obligations of the Placement Agent to act as Placement Agent for the Notes on the Closing Date shall be subject to the accuracy in all material respects of the representations and warranties of the Issuer and Copelco herein, in the Assignment and Servicing Agreement and in the Indenture, to the performance by the Issuer and Copelco in all material respects of their obligations hereunder and to the following additional conditions: (a) The Issuer and Copelco shall each have delivered a certificate (an "Officer's Certificate"), dated the Closing Date, signed by its Vice President and its Chief Financial Officer to the effect that: (i) the representations and warranties made by the Issuer or Copelco (as the case may be) in this Agreement, the Indenture and the Assignment and Servicing Agreement are true and correct in all material respects at and as of the date of such Officer's 6 7 Certificate as if made on and as of such date (except to the extent they expressly relate to an earlier date); (ii) the Issuer or Copelco (as the case may be) has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under this Agreement, the Indenture and the Assignment and Servicing Agreement at or prior to the date of such Officer's Certificate; (iii) nothing has come to such officer's attention that would lead him to believe that the Private Placement Memorandum contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (iv) such officer is not aware of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the envision or threatening of any proceeding for that purpose. (b) You shall have received from Spencer N. Lempert, Esq., a favorable opinion (subject to customary and usual qualifications) with respect to Copelco and the Issuer, dated the Closing Date and reasonably satisfactory in form and substance to the Placement Agent and their counsel with respect to, or to the effect that: (i) the due formation and qualification of each of the Issuer and Copelco and that the Issuer and Copelco, as applicable, have the corporate power and authority to perform this Agreement, the Assignment and Servicing Agreement and the Indenture and the transactions contemplated herein and therein; (ii) the due authorization, execution, delivery and enforceability of this Agreement, the Assignment and Servicing Agreement and the Indenture, as applicable, by the Issuer and Copelco; (iii) each of this Agreement, the Assignment and Servicing Agreement and the Indenture are the legal, valid and binding obligation of the Issuer and Copelco, as applicable, enforceable against each of them in accordance with its terms (subject to customary exceptions relating to bankruptcy and laws affecting creditors' rights); (iv) the Notes have been duly authorized, executed and delivered by the Issuer and constitute the legal, valid and binding obligations of the Issuer, enforceable in accordance with their terms (subject to customary exceptions as to bankruptcy and laws affecting creditors' rights) and are entitled to the benefits of the Indenture; (v) the issuance and sale of the Notes by the Issuer, the performance of this Agreement by the Issuer and Copelco and the compliance by the Issuer and Copelco with the terms of the Indenture and the Assignment and Servicing Agreement, as applicable, and the consummation of the transactions contemplated herein and therein will not conflict with the organizational documents of the Issuer or Copelco, or to the best of such counsel's knowledge, any other contracts to which the Issuer or Copelco is party or by which either of them is bound; (vi) to the best of such counsel's knowledge, there is no legal or governmental proceeding threatened or pending against the Issuer or Copelco which would have a material adverse effect on the issuance of the Notes; (vii) (other than with respect to financial data, as to which such counsel need not express an opinion) nothing has come to such counsel's attention that leads such counsel to believe that the Private Placement Memorandum (as of its date or the Closing Date) contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (viii) in the event a court disregarded the intent of the parties and characterized the transfers of the Leases and the Equipment (or interests therein) by 7 8 Copelco to the Issuer as a pledge of collateral rather than as a sale or absolute assignment, the Assignment and Servicing Agreement and accompanying documentation creates a valid security interest in the Leases and the Equipment (or interests therein) under applicable law; and (ix) assuming no prior financing statements covering the Leases are in effect, that financing statements covering the Leases and naming (A) the Issuer as secured party and Copelco as debtor and (B) the Issuer as debtor and the Trustee as secured party are being filed in the appropriate filing offices of the State of New Jersey, and that the Trustee has taken possession of the Leases and the Trustee has a first priority perfected security interest in all right, title and interest of Copelco and the Issuer in the Leases. In rendering such opinion, counsel may rely, to the extent deemed proper and as stated therein, as to matters of fact on certificates of responsible officers of the Issuer or Copelco and public officials and as to matters of state law of jurisdictions other than the jurisdictions in which such counsel is admitted to practice, on opinions of local counsel satisfactory to the Placement Agent. (c) The Placement Agent shall have received from Dewey Ballantine, special counsel for the Placement Agent, such opinion or opinions, dated the Closing Date, with respect to the validity of the Notes, the Private Placement Memorandum, true sale, nonconsolidation and other related matters as the Placement Agent may require. (d) On the date hereof and at the Closing Date, KMPG Peat Marwick shall have furnished to the Placement Agent a letter or letters, dated the date of this Agreement and the Closing Date, respectively, in form and substance satisfactory to the Placement Agent. (e) The Class E Notes shall have been rated at least BB by Duff & Phelps Credit Rating Co. ("DCR") and Fitch IBCA, Inc. ("Fitch"), respectively, which rating shall not have been reduced or withdrawn as evidenced by the Officer's Certificate referred to in Section 6(b). The Class R-1 Notes shall have been rated at least AAA by Moody's Investors Service, Inc. ("Moody's"), DCR, and Fitch, respectively, which rating shall not have been reduced or withdrawn as evidenced by the Officer's Certificate referred to in Section 6(b). The Class R-2 Notes shall have been rated at least BBB by DCR and Fitch, respectively, which ratings shall not have been reduced or withdrawn as evidenced by the Officer's Certificate referred to in Section 6(b). (f) Counsel to the Trustee shall have delivered a favorable opinion (subject to customary and usual exceptions), dated the Closing Date, as the case may be, and satisfactory in form and substance to the Placement Agent and counsel for the Placement Agent and to the Issuer and Copelco and their counsel with respect to, or to the effect that: (i) the due incorporation and valid existence of the Trustee, (ii) the due authorization, execution and delivery by the Trustee of the Indenture, (iii) the Indenture is the legal, valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms (subject to customary and usual exceptions) and (iv) the execution, delivery and performance of the Indenture will not conflict with the Trustee's organizational documents. (g) All proceedings in connection with the transactions contemplated by this Agreement and all documents incident hereto shall be reasonably satisfactory in form and substance to you, and you and your special counsel shall have received such other information, certificates and documents as you or they may reasonably request. 8 9 (h) The issuance and sale of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes shall have occurred. Section 7. Fees and Expenses. In consideration of the Placement Agent services in acting as exclusive Placement Agent for the placement of the Notes on a firm commitment basis, the Company hereby agrees to pay to the Placement Agent a fee in an amount equal to ____% of the initial principal amount of the Class E Notes, ____% of the initial principal amount of the Class R-1 Notes, and ____% of the initial principal amount of the Class R-2 Notes. In the event that (x) no closing of the sale of the Notes occurs by the Closing Date through no fault of the Issuer or Copelco or (y) the Placement Agent terminate the engagement pursuant to Section 10 or because any conditions precedent in Section 6 (other than Section 6(d)) have not been fulfilled, then the Issuer and Copelco's liability to the Placement Agent shall be limited to the reimbursement of the Placement Agent' expenses incurred through the date of termination for its reasonable out-of-pocket and incidental expenses. In addition, whether or not the Notes are issued or sold: (a) Copelco shall pay the reasonable fees and expenses associated with the transactions contemplated hereby not paid by the Placement Agent in accordance with the provisions of Section 7(b), including, without limitation, the following fees and expenses: (i) Rating Agency fees payable to DCR, Fitch and Moody's with respect to each of their ratings of the Notes; (ii) Fees charged by the firm of independent public accountants referred to in Section 6(d); (iii) Filing fees in connection with the transactions contemplated hereby; (iv) Fees and expenses of counsel to the Placement Agent; (v) Trustee's fees and fees of counsel to the Trustee; (vi) the costs and expenses of printing any Private Placement Memorandum; (vii) the costs of printing or reproducing this Agreement, the Blue Sky Survey and any other documents in connection with the offer, sale and delivery of the Notes; (viii) all expenses in connection with the qualification of the Notes under state securities laws as provided in Section 4(a)(v), including the fees and disbursements of counsel in connection with the Blue Sky Survey; (ix) the filing fees incident to securing any required review with the National Association of Securities Dealers, Inc.; (x) the cost of preparing the Notes; 9 10 (xi) the cost or expenses of any transfer agent or registrar; and (xii) all other costs and expenses incident to the performance of their obligations hereunder which are not otherwise specifically provided for in this Section 7; provided, however, that Copelco does not hereby waive any rights to reimbursement from the Placement Agent in the event of the Placement Agent' failure to perform in accordance with this Agreement. (b) It is understood and agreed that, except as provided in Sections 8 and 9, the Placement Agent will pay securities transfer taxes on the resale of any of the Notes by them, and any expenses connected with any placements they may make. Section 8. Indemnification and Contribution. (a) The Issuer and Copelco, jointly and severally, will indemnify and hold harmless the Placement Agent, each of the Placement Agent's officers and directors, and each person, if any, who controls the Placement Agent within the meaning of Section 15 of the 1933 Act from and against any and all losses, claims, damages or liabilities, joint or several, to which the Placement Agent or any such controlling person may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or is based upon (i) an untrue statement or alleged untrue statement of a material fact contained in any Private Placement Memorandum, or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made, not misleading, and will promptly reimburse the Placement Agent and each such controlling person for any legal or other expenses reasonably incurred by such Placement Agent or such controlling person in connection with investigating, preparing to defend or defending, or appearing as a third party witness in connection with, any such loss, action, damage, liability or claim as such expenses are incurred; provided, however, that the Issuer and Copelco shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Private Placement Memorandum or any such amendment or supplement in reliance upon and in conformity with the Underwriting Information. The foregoing indemnity agreement is in addition to any liability which each of the Issuer and Copelco may otherwise have to you or any person who controls you. (b) The Placement Agent agrees to indemnify and hold harmless the Issuer and Copelco against any losses, claims, damages or liabilities to which the Issuer or Copelco may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement of a material fact contained in the Private Placement Memorandum, or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Private Placement Memorandum or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Issuer or Copelco by or 10 11 on behalf of such Placement Agent expressly for use therein and provided that such written information was not based upon Company-Provided Information (as defined herein); and will reimburse the Issuer or Copelco for any legal or other expenses reasonably incurred by the Issuer or Copelco in connection with the investigating, preparing to defend or defending, or appearing as a third party witness in connection with, any such loss, claim, damage, liability or action as such expenses are incurred. The Issuer and Copelco acknowledge that the statements set forth in the last paragraph of the cover page and under the heading "Underwriting" in the Prospectus, which is included with the Private Placement Memorandum, constitute the only information furnished in writing by or on behalf of the Placement Agent for inclusion in the Private Placement Memorandum (the "Underwriting Information"), and each of you confirm that such statements are correct. The foregoing indemnity agreement is in addition to any liability which you may otherwise have to each of the Issuer and Copelco. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the claim of commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have been advised by counsel that representation of such indemnified party and the indemnifying party may be inappropriate under applicable standards of professional conduct due to actual or potential differing interests between them, the indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. It is understood that the indemnifying party shall, in connection with any such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys together with appropriate local counsel at any time from all indemnified parties not having actual or potential differing interests with any other indemnified party. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to appoint counsel to defend such action and approval by the indemnified party of such counsel, the indemnifying party will not be liable for any settlement entered into without its consent and will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). Notwithstanding the immediately preceding sentence and the first sentence of this paragraph, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, the indemnifying party agrees 11 12 that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. (d) You agree to deliver to the Issuer or Copelco no later than the date on which the Prospectus Supplement is required to be filed pursuant to Rule 424 with a copy of its Derived Information (defined below). (e) You agree, assuming all Company-Provided Information (defined below) is accurate and complete in all material respects, to indemnify and hold harmless the Issuer and Copelco against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in the Derived Information provided by you, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by him, her or it in connection with investigating or defending or preparing to defend any such loss, claim, damage, liability or action as such expenses are incurred. Your obligations under this Section 8(e) shall be in addition to any liability which you may otherwise have. (f) Each of the Issuer and Copelco agrees to indemnify and hold harmless the Placement Agent, each of the Placement Agent's officers and directors and each person who controls the Placement Agent within the meaning of Section 15 of the 1933 Act against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in the Company-Provided Information provided by the Issuer or Copelco, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by him, her or it in connection with investigating or defending or preparing to defend any such loss, claim, damage, liability or action as such expenses are incurred. Your obligation under this Section 8(f) shall be in addition to any liability which you may otherwise have. The procedures set forth in Section 8(c) shall be equally applicable to Sections 8(e) and 8(f). (g) For purposes of this Section 8, the term Derived Information means such portion, if any, of the information delivered to the Issuer or Copelco by the Placement Agent pursuant to Section 8(d) as: (i) is not contained in the Private Placement Memorandum without taking into account information incorporated therein by reference; 12 13 (ii) does not constitute Company-Provided Information; and (iii) is of the type of information defined as Collateral Term Sheets, Structural Term Sheets or Computational Materials (as such terms are interpreted in the No-Action Letters). "Company-Provided Information" means any computer tape furnished to the Placement Agent by the Company concerning the Leases or any other information furnished by the Company to the Placement Agent that is relied on or is reasonably anticipated by the parties hereto to be relied on by the Placement Agent in the course of the Placement Agent's preparation of its Derived Information or the written information to be included in the Private Placement Memorandum by the Placement Agent as set forth in Section 8(b) herein. The terms "Collateral Term Sheet" and "Structural Term Sheet" shall have the respective meanings assigned to them in the February 13, 1995 letter (the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public Securities Association (which letter, and the SEC staff's response thereto, were publicly available February 17, 1995). The term "Collateral Term Sheet" as used herein includes any subsequent Collateral Term Sheet that reflects a substantive change in the information presented. The term "Computational Materials" has the meaning assigned to it in the May 17, 1994 letter (the "Kidder letter" and together with the PSA Letter, the "No-Action Letters") of Brown & Wood on behalf of Kidder, Peabody & Co., Inc. (which letter, and the SEC staff's response thereto, were publicly available May 20, 1994). (h) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Issuer and Copelco on the one hand and the Placement Agent on the other from the offering of the Notes. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Issuer or Copelco on the one hand and the Placement Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Issuer or Copelco on the one hand and the Placement Agent on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Issuer and Copelco bear to the total commissions received by the Placement Agent. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer or Copelco or the Placement Agent on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuer, Copelco and the Placement Agent agree that it would not be just and equitable if contributions pursuant to this 13 14 subsection (h) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (h). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this subsection (h) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending, or appearing as a third party witness in connection with, any such action or claim. Notwithstanding the provisions of this subsection (h), the Placement Agent shall not be required to contribute any amount in excess of the fee paid to the Placement Agent pursuant to Section 7 hereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (i) The obligations of the Issuer and Copelco under this Section 8 shall be in addition to any liability which the Issuer or Copelco may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Placement Agent within the meaning of the 1933 Act; and the obligations of the Placement Agent under this Section 8 shall be in addition to any liability which the Placement Agent may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Issuer and Copelco and to each person, if any, who controls the Issuer or Copelco within the meaning of the 1933 Act. Section 9. Survival. The respective representations, warranties and agreements of the Issuer, Copelco and the Placement Agent set forth or made pursuant to this Agreement will remain in full force and effect, notwithstanding any investigation heretofore or hereafter made by or on behalf of the Issuer, Copelco or the Placement Agent, and such representations, warranties and agreements made by the Issuer and Copelco shall survive the delivery and payment for the Notes. The provisions of Section 7 and 8 shall survive the termination or cancellation of this Agreement. (a) No other person will have any right or obligation hereunder, except that the provisions of this Agreement, including, without limitation, the representations and warranties and the covenants and agreements of the Issuer and Copelco contained herein are intended to be for the benefit of all Purchasers and shall be enforceable against Copelco by any such Purchaser, whether or not an express assignment to such Purchaser of rights under this Agreement has been made by you, any intervening Purchaser or any of your or their successors and assigns. Section 10. Termination. (a) This Agreement may be terminated by you in your absolute discretion at any time upon the giving of notice at any time prior to the Closing Date: (i) if there has been any material adverse change in the condition, financial or otherwise, of Copelco or the Issuer, or in the earnings, business affairs or business prospects of Copelco or the Issuer, whether or not arising in the ordinary course of business, or (ii) if there has occurred any outbreak or escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it, in your reasonable judgment, impracticable to market the Notes or enforce contracts for the sale of the Notes, or (iii) if trading generally on either the American Stock Exchange or the New York Stock Exchange has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said 14 15 exchanges or by order of the Commission or any other governmental authority, or (iv) if a banking moratorium has been declared by either federal or New York authorities. In the event of any such termination, no party will have any liability to any other party hereto, except as otherwise provided in Section 7 or 8 hereof. (b) This Agreement may not be terminated by the Issuer or Copelco without the written consent of the Placement Agent, except in accordance with law. (c) Notwithstanding anything herein to the contrary, in the event the Issuer or Copelco does not perform any obligation under this Agreement or any representation and warranty hereunder is incomplete or inaccurate in any material respect, this Agreement and all of the Placement Agent' obligations hereunder may be immediately cancelled by the Placement Agent by notice thereof to the Issuer or Copelco. Any such cancellation shall be without liability of any party to any other party except that the provisions of Sections 8 and 9 hereof shall survive any such cancellation. Section 11. Notices. All communications provided for or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered to or mailed by certified or registered mail, postage prepaid, or transmitted by telex or telegraph and confirmed by a similar mailed writing, if to you, addressed to you, at the address first stated in this Agreement, or to such other address as you may designate in writing to the Issuer and Copelco, if to Copelco or the Issuer addressed to Copelco or the Issuer at East Gate Center, 700 East Gate Drive, Mount Laurel, New Jersey 08054-5400 or to such other address as Copelco or the Issuer may have designated in writing to you. Section 12. Successors. This Agreement will inure to the benefit of and be binding upon the Issuer and Copelco and their successors and assigns and the Placement Agent and its successors and assigns. Section 13. Entire Agreement. This Agreement and the documents referred to herein and to be delivered pursuant hereto constitute the entire agreement between the parties pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. Section 14. Governing Law. (a) THIS AGREEMENT IS TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK. (b) THE ISSUER AND COPELCO HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 11 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, 15 16 POSTAGE PREPAID. THE ISSUER AND COPELCO HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE ISSUER OR COPELCO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION. (c) THE ISSUER AND COPELCO HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. Section 15. Counterparts. This Agreement may be executed in two or more counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. Section 16. Miscellaneous. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. If you are in agreement with the foregoing, please sign a counterpart hereof and return the same to the Issuer or Copelco, whereupon this Agreement shall become a binding agreement between you, and the Issuer and Copelco. Very truly yours, COPELCO CAPITAL, INC. By:_____________________________________ Name: NICHOLAS ANTONACCIO Title: VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER COPELCO CAPITAL FUNDING LLC 99-1 By:_____________________________________, as Manager By:_____________________________________ Name: Title: 16 17 The foregoing Agreement is hereby accepted and entered into as of the date hereof. PRUDENTIAL SECURITIES INCORPORATED, By:______________________________ Name: Title: [SIGNATURE PAGE TO THE PLACEMENT AGENT AGREEMENT] 17 EX-23.2 10 AUDITORS' CONSENT 1 EXHIBIT INDEPENDENT AUDITORS' CONSENT The Board of Directors Copelco Capital Funding LLC 99-1: We consent to the use of our report included herein and to the reference to our firm under the heading "Experts" in the Registration Statement. KPMG LLP New York, New York March 1, 1999 2 EX-25.1 11 FORM T-1 1 EXHIBIT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an application to determine eligibility of a Trustee pursuant to Section 305(b)(2)____ MANUFACTURERS AND TRADERS TRUST COMPANY (Exact name of trustee as specified in its charter) NEW YORK 16-0538020 (Jurisdiction of incorporation (I.R.S. employer or organization if not a national bank) identification No.) One M&T Plaza Buffalo, New York 14240-2399 (Address of principal executive offices) (Zip Code) COPELCO CAPITAL FUNDING LLC 99-1 (Exact name of obligor as specified in its charter) DELAWARE (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 (Address of principal executive offices) (Zip Code) CLASS A-1 LEASE-BACKED NOTES, SERIES 1999-A CLASS A-2 LEASE-BACKED NOTES, SERIES 1999-A CLASS A-3 LEASE-BACKED NOTES, SERIES 1999-A CLASS A-4 LEASE-BACKED NOTES, SERIES 1999-A CLASS A-5 LEASE-BACKED NOTES, SERIES 1999-A CLASS B LEASE-BACKED NOTES, SERIES 1999-A CLASS C LEASE-BACKED NOTES, SERIES 1999-A CLASS D LEASE-BACKED NOTES, SERIES 1999-A (Title of indenture securities) 2 ITEM 1. GENERAL INFORMATION Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Superintendent of Banks of the State of New York, 2 World Trade Center, New York, NY 10047 and Albany, NY 12203. Federal Reserve Bank of New York, 33 Liberty Street, New York, NY 10045. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH OBLIGOR If the obligor is an affiliate of the trustee, describe each such affiliation. None. [Items 3 through 15 omitted pursuant to General Instruction B to Form T-1] 1 3 ITEM 16. LIST OF EXHIBITS Exhibit A. Organization Certificate of the Trustee as now in effect (incorporated herein by reference to Exhibit 1, Form T-1, Registration Statement No. 33-7309). Exhibit B. Certificate of Authority of the Trustee to commence business (incorporated herein by reference to Exhibit 2, Form T-1, Registration Statement No. 33-7309). Exhibit C. Authorization of the Trustee to exercise corporate trust powers (incorporated herein by reference to Exhibit 3, Form T-1, Registration Statement No. 33-7309). Exhibit D. Existing By-Laws of the Trustee (incorporated herein by reference to Exhibit 4, Form T-1, Registration Statement No. 33-7309). Exhibit E. Not Applicable. Exhibit F. Consent of the Trustee (incorporated herein by reference to Exhibit 6, Form T-1, Registration Statement No. 33-7309). Exhibit G. Report of Condition of the Trustee.* Exhibit H. Not Applicable. Exhibit I. Not Applicable - ---------- * Filed Herewith SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, Manufacturers and Traders Trust Company, a banking corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Buffalo, and State of New York, on the 1st day of March, 1999. MANUFACTURERS AND TRADERS TRUST COMPANY By: _______________________________ Russell T. Whitley Assistant Vice President 2 4 EXHIBIT G REPORT OF CONDITION OF THE TRUSTEE MANUFACTURERS AND TRADERS TRUST COMPANY CONDENSED CONSOLIDATED BALANCE SHEET
March 31 Dollars in thousands 1998 - -------------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 436,526 Money-market assets 356,703 Investment securities Available for sale (cost: $1,267,451) 1,271,387 Held to maturity (market value: $78,915) 78,152 Other (market value: $56,964) 56,964 ----------- Total investment securities 1,406,503 ----------- Loan and leases, net of unearned discount 11,493,787 Allowance for possible credit losses (273,991) ----------- Loan and leases, net 11,219,796 Other assets 590,654 ----------- Total assets $14,010,182 LIABILITIES Deposits Noninterest-bearing $ 1,425,705 Interest-bearing 9,335,726 ----------- Total deposits 10,761,431 Short-term borrowings 1,724,359 Accrued interest and other liabilities 277,257 Long-term borrowings 177,397 ----------- Total liabilities 12,940,444 STOCKHOLDER'S EQUITY 1,069,738 ----------- Total liabilities and stockholder's equity $14,010,182 -----------
G-1 EX-99.1 12 PRELIMINARY BACKGROUND INFORMATION 1 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A $[139,000,000] [TBD]% Class A-1 Lease-Backed Notes, Series 1999-A $[ 95,000,000] [TBD]% Class A-2 Lease-Backed Notes, Series 1999-A $[110,000,000] [TBD]% Class A-3 Lease-Backed Notes, Series 1999-A $[ 90,000,000] [TBD]% Class A-4 Lease-Backed Notes, Series 1999-A $[ 75,613,000] [TBD]% Class A-5 Lease-Backed Notes, Series 1999-A $[ 13,029,000] [TBD]% Class B Lease-Backed Notes, Series 1999-A $[ 10,134,000] [TBD]% Class C Lease-Backed Notes, Series 1999-A $[ 15,925,000] [TBD]% Class D Lease-Backed Notes, Series 1999-A The analysis in this report is accurate to the best of PSI's knowledge and is based on information provided by the Issuer. PSI makes no representations as to the accuracy of such information provided to it by the Issuer. All assumptions and information in this report reflect PSI's judgment as of this date and are subject to change. All analyses are based on certain assumptions noted herein and different assumptions could yield substantially different results. You are cautioned that there is no universally accepted method for analyzing financial instruments. You should review the assumptions; there may be differences between these assumptions and your actual business practices. Further, PSI does not guarantee any results and there is no guarantee as to the liquidity of the instruments involved in this analysis. The decision to adopt any strategy remains your responsibility. PSI (or any of its affiliates) or their officers, directors, analysts or employees may have positions in securities, commodities or derivative instruments thereon referred to herein, and may, as principal or agent, buy or sell such securities, commodities or derivative instruments. In addition, PSI may make a market in the securities referred to herein. Neither the information nor the assumptions reflected herein shall be construed to be, or constitute, an offer to sell or buy or a solicitation of an offer to sell or buy any securities, commodities or derivative instruments mentioned herein. No sale of any securities, commodities or derivative instruments should be consummated without the purchaser first having received a Prospectus. Finally, PSI has not addressed the legal, accounting and tax implications of the analysis with respect to you, and PSI strongly urges you to seek advice from your counsel, accountant and tax advisor. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 2 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A PRICING INFORMATION
Class A-1 Class A-2 Class A-3 Class A-4 Approximate Face Amount: [$139,000,000] [$95,000,000] [$110,000,000] [$90,000,000] Exp. Ratings (Moody's/Fitch/Duff): [P-1/F1+,AAA/D-1+] [Aaa/AAA/AAA] [Aaa/AAA/AAA] [Aaa/AAA/AAA] Coupon: [TBD] [TBD] [TBD] [TBD] Approximate Price: [TBD] [TBD] [TBD] [TBD] Yield: [TBD] [TBD] [TBD] [TBD] Spread: [TBD] bps [TBD] bps [TBD] bps [TBD] bps Exp. Avg Life to 5% Call: [0.440] yrs [1.257] yrs [2.071] yrs [3.010] yrs Exp. Avg Life to Maturity: [0.440] yrs [1.257] yrs [2.071] yrs [3.010] yrs 1st Prin Payment: [0.100] yrs [0.850] yrs [1.600] yrs [2.517] yrs Exp. Maturity to 5% Call: [0.850] yrs [1.600] yrs [2.517] yrs [3.600] yrs Exp. Maturity: [01/15/00] [10/15/00] [09/15/01] [10/15/02] Stated Maturity: [03/15/00] [10/15/01] [09/15/02] [10/15/03] Pricing Speed: [0% CPR] [0% CPR] [0% CPR] [0% CPR] Pricing Date: [TBD] [TBD] [TBD] [TBD] Expected Settle Date: [03/09/99] [03/09/99] [03/09/99] [03/09/99] 1st Pmt Date: [04/15/99] [04/15/99] [04/15/99] [04/15/99] Cut-Off Date (Opening of Business): [02/01/99] [02/01/99] [02/01/99] [02/01/99] Dated Date: [TBD] [TBD] [TBD] [TBD] Pmt Delay: [0] days [0] days [0] days [0] days Int Pmt: [Actual/360] 30/360 30/360 30/360 Pmt Terms: Monthly Monthly Monthly Monthly Distribution: Public Public Public Public Offering Offering Offering Offering ERISA Eligibility: Yes Yes Yes Yes Settlement: Book Entry Book Entry Book Entry Book Entry (DTC) (DTC) (DTC) (DTC)
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 3 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A PRICING INFORMATION
Class A-5 Class B Class C Class D Approximate Face Amount: [$75,613,000] [$13,029,000] [$10,134,000] [$15,925,000] Exp. Ratings (Moody's/Fitch/Duff): [Aaa/AAA/AAA] [Aa2/AA/AA] [A2/A/A] [Baa2/BBB/BBB] Coupon: [TBD] [TBD] [TBD] [TBD] Approximate Price: [TBD] [TBD] [TBD] [TBD] Yield: [TBD] [TBD] [TBD] [TBD] Spread: [TBD] bps [TBD] bps [TBD] bps [TBD] bps Exp. Avg Life to 5% Call: [4.072] yrs [2.514] yrs [2.514] yrs [2.519] yrs Exp. Avg Life to Maturity: [4.118] yrs [2.571] yrs [2.583] yrs [2.627] yrs 1st Prin Payment: [3.600] yrs [0.850] yrs [0.850] yrs [0.850] yrs Exp. Maturity to 5% Call: [4.350] yrs [4.350] yrs [4.350] yrs [4.350] yrs Exp. Maturity: [12/15/03] [01/15/04] [02/15/04] [06/15/04] Stated Maturity: [01/15/07] [01/15/07] [01/15/07] [01/15/07] Pricing Speed: [0% CPR] [0% CPR] [0% CPR] [0% CPR] Pricing Date: [TBD] [TBD] [TBD] [TBD] Expected Settle Date: [03/09/99] [03/09/99] [03/09/99] [03/09/99] 1st Pmt Date: [04/15/99] [04/15/99] [04/15/99] [04/15/99] Cut-Off Date (Opening of Business): [02/01/99] [02/01/99] [02/01/99] [02/01/99] Dated Date: [TBD] [TBD] [TBD] [TBD] Pmt Delay: [0] days [0] days [0] days [0] days Int Pmt: 30/360 30/360 30/360 30/360 Pmt Terms: Monthly Monthly Monthly Monthly Distribution: Public Public Public Public Offering Offering Offering Offering ERISA Eligibility: Yes Yes Yes Yes Settlement: Book Entry Book Entry Book Entry Book Entry (DTC) (DTC) (DTC) (DTC)
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 4 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A COMPANY OVERVIEW COPELCO FINANCIAL SERVICES GROUP is a diversified finance company with operations in equipment leasing as well as consumer finance. Since its founding, Copelco Financial has followed a basic growth plan of building a financial services company which meets the needs of particular markets and sub-markets. Copelco Financial's founder and current Chief Executive Officer, Mr. Ian Berg, has been in the leasing business for over 28 years and has turned Copelco Financial into one of the most successful private specialty finance companies in America. COPELCO CAPITAL, INC. is Copelco Financial's flagship subsidiary. Copelco Capital is a leading issuer of equipment lease-backed securities and one of the largest independent small-ticket equipment lessors in the United States. Copelco Capital has three strategic business units. The largest is the BUSINESS TECHNOLOGY GROUP. This Group leases small-ticket equipment, primarily photocopiers and computers, to businesses and business owners throughout the U.S. and Canada through multiple manufacturer, vendor and dealer programs. The Business Technology Group (and its predecessor strategic business units) have originated leases that have been included in 17 prior asset securitizations representing approximately $1.4 billion in total issuance. As of September 30, 1998, the Business Technology Group's portfolio totaled $1.355 billion which is approximately 58% of Copelco Capital's total portfolio. The HEALTHCARE GROUP provides a diversified range of leasing services for financing healthcare equipment. This Group also operates through multiple manufacturer, vendor and dealer programs with particular emphasis upon the acquisition, leasing and remarketing of high technology medical equipment to hospitals, other healthcare facilities, healthcare providers and physicians. As of September 30, 1998, the Healthcare Group's portfolio totaled $747 million which is approximately 32% of Copelco Capital's total portfolio. The Healthcare Group has originated leases subject to 18 prior securitizations representing approximately $1.2 billion in issuance. Finally, the COMMERCIAL AND INDUSTRIAL GROUP primarily leases equipment to the electronics manufacturing service industry such as printed circuit board assembly and test equipment. As of September 30, 1998, the Commercial and Industrial Group's portfolio totaled $220 million which is approximately 10.00% of Copelco Capital's total portfolio. The last two domestic equipment lease securitizations have been comprised of collateral from all three groups. These two securitizations totaled $1.25 billion which was made up of approximately 60% of collateral from the Business Technology Group, 30% from the Healthcare Group and 10% from the Commercial and Industrial Group. HIGHLIGHTS - - COPELCO CAPITAL, AND ITS PREDECESSORS, HAVE BEEN IN THE LEASING BUSINESS FOR OVER 26 YEARS. - - SENIOR MANAGEMENT (TOP SIX OFFICERS) AT COPELCO CAPITAL HAVE AN AVERAGE OF 26 YEARS OF EXPERIENCE IN THE LEASING BUSINESS. - - 38 SECURITIZATIONS COMPLETED TO DATE FOR OVER $3.8 BILLION IN LEASES WITH APPROXIMATELY $2 BILLION REPAID TO BONDHOLDERS TO DATE. - - LEADER IN SPECIALTY FINANCE TECHNOLOGY WITH INTERNET BASED LEASING SYSTEM AND NEW STATE OF THE ART SERVICING FACILITY. - - STABLE DELINQUENCY HISTORY OF 2% TO 4% OVER 30 DAYS PAST DUE OVER A PERIOD OF SIX YEARS. - - ANNUAL NET LOSSES AS A PERCENTAGE OF AVERAGE RECEIVABLES OUTSTANDING ARE CONSISTENTLY BELOW 1.75% OVER THE LAST SIX YEARS. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 5 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A FINANCIAL HIGHLIGHTS. Selected financial information (all in millions) of Copelco Capital is set forth below.
Nine Months Ended September 30, December 31, 1998 1997 ----------------- ------------ (MM) (MM) Total Assets 2,525.4 2,083.3 Cash and Cash Equivalents 112.6 71.3 Restricted Cash 47.5 45.2 Net Investment in Direct Financing Leases 2,157.1 1,784.3 Other 208.2 182.4 Total Liabilities 2,342.9 1,927.6 Total Shareholders Equity 182.6 155.7 Total Revenues 217.7 253.8 Net Income (Before Taxes) 44.9 54.8 - -some totals may not add up due to rounding
HISTORICAL DELINQUENCY INFORMATION. Delinquency information for Copelco Capital is set forth below.
September 30, December 31, December 31, December 31, December 31, December 31, 1998 1997 1996 1995 1994 1993 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (000s) % $ (000s) % $ (000s) % $ (000s) % $ (000s) % $ (000s) % - ----------------------------------------------------------------------------------------------------------------------------------- Total Receivables Balance(1) 2,000,113 1,732,010 1,503.56 1,238,424 1,000,488 736,374 - ----------------------------------------------------------------------------------------------------------------------------------- No. of Delinquent Days 30-59 Days 43,824 2.19% 38,610 2.23% 34,682 2.29% 26,255 2.12% 14,847 1.48% 9,184 1.25% 60-89 Days 16,739 0.84% 11,999 0.69% 8,137 0.54% 4,977 0.40% 3,971 0.40% 1,887 0.26% 90 Days + 5,720 0.29% 10,438 0.60% 7,588 0.50% 5,703 0.54% 6,749 0.67% 5,099 0.69% - ----------------------------------------------------------------------------------------------------------------------------------- Total Delinquency 66,283 3.31% 61,047 3.52% 50,206 3.34% 37,935 3.06% 25,567 2.56% 16,170 2.20%
HISTORICAL CHARGE-OFF EXPERIENCE. Charge-off information for leases that are owned and serviced by Copelco Capital for the period January 1, 1993 to September 30, 1998 is set forth below.
Year Ended December 31 Nine Months Ended ---------------------------------------------------------------- September 30, 1998 1997 1996 1995 1994 1993 ------------------ ---------- ---------- ---------- ---------- -------- Average Receivables Outstanding(1) (000s) $1,866,061 $1,617,532 $1,370,740 $1,119,456 $868,431 $649,278 Net Losses (000s) $21,476 $22,147 $15,713 $11,457 $10,328 $8,842 Net Loss as a Percentage of Average Receivables 1.53%(2) 1.37% 1.15% 1.02% 1.19% 1.36%
(1) Equals the arithmetic average of the beginning of the period Receivable Balance and the end of the period Receivable Balance. The Receivable or Balance is equal to the aggregate future rent owing on the leases. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 6 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A Title of Securities: Copelco Capital Funding LLC 99-1, Lease-Backed Notes, Series 1999-A, Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class A-5 Notes(collectively, the "Class A Notes"), Class B Notes, Class C Notes, Class D Notes and Class E Notes (the Class A Notes, Class B Notes, Class C Notes and Class D Notes collectively, the "Offered Notes, together with the Class E Notes the "Notes" or the "Receivable Notes"). Securities Offered: [$509,613,000] Class A Notes equal to [88.00]% of the aggregate discounted contract balance of the contract payments sold to the Issuer at closing (the "ADCB"). [$13,029,000] [TBD]% Class B Notes, equal to [2.25]% of the ADCB [$10,134,000] [TBD]% Class C Notes, equal to [1.75]% of the ADCB [$15,925,000] [TBD]% Class D Notes, equal to [2.75]% of the ADCB The Class E Notes are not being offered hereby. Distribution and Form: Public Offering. The Offered Notes will be available in Book-Entry Form through DTC, CEDEL or Euroclear. Discount Rate: The contract payments are discounted at [TBD]%. The Discount Rate is equal to the sum of (a) the weighted average Coupon Rate of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes each weighted by (i) the initial principal balance of each Class of Notes, as applicable, and (ii) the weighted average life of each Class of Notes under a zero prepayment and no loss scenario, as applicable, and (b) the Servicing Fee of [75] bps. Collateral: The Transaction is collateralized by a pool of healthcare, manufacturing and business equipment lease contracts, including payments due thereunder and an interest in the related leased equipment transferred to the Issuer (the "Leases"). Related Transaction: The leases and equipment will be sold to the Issuer that will issue two Series of Notes. One Series, the Notes described herein, will be repaid by scheduled lease payments and payments received from recoveries on any defaulted leases. The Noteholders of this series will not be entitled to residual realizations on leases that do not default. The second Series, the "Residual Notes", will be privately placed and repaid by amounts collected on the leases and equipment after all scheduled payments have been made. Issuer: Copelco Capital Funding LLC 99-1, a Delaware limited liability company, bankruptcy-remote, special purpose corporation wholly-owned by Copelco Capital, Inc., the Servicer for the transaction. Servicer/Copelco Capital, Inc. Copelco Capital, Inc. Servicing Fee: [75] bps Trustee: [Manufacturers and Traders Trust Company] Lead Manager: Prudential Securities Incorporated Co-Manager: First Union Capital Markets Corp. Structure: Senior/subordinated with tranched Classes and Reserve Account. After Class A-1 has been reduced to zero, Classes A,B,C,D and E receive pro-rata principal payments subject to certain targets and floors further described herein. Within Class A, the tranches A-2, A-3, A-4 and A-5 are paid sequentially. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 7 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A Cut-Off Date: Opening of Business on [February 1, 1999] Pricing Date: [TBD] Settlement Date: [March 9, 1999] Prepayment Speed: [0]% CPR Payment Date: The 15th day of each month (or if any such date is not a business day, on the first business day thereafter), commencing on [April 15, 1999]. Determination Date: The 5th day prior to each Payment Date Interest Accrual Period: With respect to any Payment Date, interest on the Notes will accrue during the period from the Payment Date in the immediately preceding month (or in the case of the first Payment Date, from the Settlement Date) to the day immediately preceding the related Payment Date. Interest on the Class A-1 Notes will be calculated based on the actual number of days that have elapsed during the related accrual period on a 360-day year basis and interest on all the other Notes will be calculated based on a 360-day year consisting of twelve 30-day months. Exp. Ratings:
Moody's Fitch IBCA Duff & Phelps ------- ---------- ------------- Class A-1 Notes -- P-1 F1+/AAA D-1+ Class A-2 Notes -- Aaa AAA AAA Class A-3 Notes -- Aaa AAA AAA Class A-4 Notes -- Aaa AAA AAA Class A-5 Notes -- Aaa AAA AAA Class B Notes -- Aa2 AA AA Class C Notes -- A2 A A Class D Notes -- Baa2 BBB BBB
Substitution: The Seller shall have the right to reinvest proceeds generated through lessee prepayments or equipment upgrades in new leases. The Seller shall also have the right to provide substitute leases for leases that have become Non-Performing leases (more than 123 days delinquent or determined by the Servicer to be uncollectible). Such substitution may not exceed 10% of the Discounted Present Value of the Leases as of the Cut-Off Date. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 8 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A Flow of Funds: On each Payment Date distributions will be made by the Trustee according to the following priority: (i) Servicing Fee; (ii) To reimburse the Servicer for any unreimbursed Servicer Advances; (iii) Class A interest (current and overdue) paid to Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 on a pro rata basis; (iv) Class B interest (current and overdue); (v) Class C interest (current and overdue); (vi) Class D interest (current and overdue); (vii) Class E interest (current and overdue); (viii) Class A Principal (current and overdue) paid to (a) Class A-1 only, until outstanding principal balance on the Class A-1 Notes is reduced to zero, (b) to Class A-2 only, until outstanding principal balance on the Class A-2 Notes is reduced to zero, (c) to Class A-3 only, until outstanding principal balance on the Class A-3 Notes is reduced to zero; (d) to Class A-4 only, until outstanding principal balance on the Class A-4 Notes is reduced to zero; (e) to Class A-5 only, until outstanding principal balance on the Class A-5 Notes is reduced to zero; (ix) Class B Principal (overdue and current); (x) Class C Principal (overdue and current); (xi) Class D Principal (overdue and current); (xii) Class E Principal (overdue and current); (xiii) Any remaining principal, if any, to Classes A,B,C,D and E until the outstanding principal balance on each Class is reduced to zero in the order of priority as described above; (xiv) To the Reserve Account, the Reserve Account Deposit Amount; (xv) To the Issuer, the remaining amount to the extent of Available Funds. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 9 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A Principal Distribution: All Classes will receive principal based on the respective class' "Target Investor Principal Amount" which is defined as the product of (i) such Class' Target Percentage and (ii) the Discounted Present Value of the Performing Leases as of the related Determination Date subject to certain floors further described herein. Class Percentages: The Class Target Percentages for the Class' A, B, C, D and E Notes are 84.21%, 2.96%, 2.30%, 3.62% and 3.95% respectively. None of the Notes (other than the Class A-1 Notes) will receive any principal payments while the Class A-1 Notes are outstanding. Class A Principal: The "Class A Principal" shall equal (a) while the Class A-1 Notes are outstanding, (i) on all Payment Dates prior to the March 2000 Payment Date, the lesser of (1) the amount necessary to reduce the Outstanding Principal Amount on the Class A-1 Notes to zero and (2) the difference between (A) the Discounted Present Value of the Performing Leases as of the previous Determination Date, and (B) the Discounted Present Value of the Performing Leases as of the related Determination Date, and (ii) on and after the March 2000 Payment Date, the entire Outstanding Principal Amount on the Class A-1 Notes and (b) after the Class A-1 Notes have been paid in full, the amount necessary to reduce the aggregate Outstanding Principal Amount on the Class A Notes to the Class A Target Investor Principal Amount. Class B Principal: On each Payment Date, after the Class A-1 Notes have been reduced to zero, the Class B Notes will receive the amounts necessary to reduce the Outstanding Principal Amount on the Class B Notes to the greater of the Target Investor Principal Amount and the Class B Floor. Class C Principal: On each Payment Date, after the Class A-1 Notes have been reduced to zero, the Class C Notes will receive the amounts necessary to reduce the Outstanding Principal Amount on the Class C Notes to the greater of the Target Investor Principal Amount and the Class C Floor. Class D Principal: On each Payment Date, after the Class A-1 Notes have been reduced to zero, the Class D Notes will receive the amounts necessary to reduce the Outstanding Principal Amount on the Class D Notes to the greater of the Target Investor Principal Amount and the Class D Floor. Class E Principal: On each Payment Date, after the Class A-1 Notes have been reduced to zero, the Class E Notes will receive the amounts necessary to reduce the Outstanding Principal Amount on the Class E Notes to the greater of the Target Investor Principal Amount and the Class E Floor. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 10 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A Class Floors: With respect to Classes B, C, D, E and any Payment Date, the Class Floor is equal to (a) such Class' Floor Percentage of the ADCB as of the Cut-Off Date plus (b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum of the outstanding balance of all Notes subordinate to that Class and the Overcollateralization Balance as of the immediately preceding Payment Date after giving effect to all principal payments made on that day, minus (d) the amount on deposit in the Reserve Account after giving effect to withdrawals to be made on such Payment Date. Floor Percentages: The Floor percentages for the Class B, C, D and E Notes are 2.7%, 2.2%, 1.8% and 1.2%, respectively. Available Funds: Funds received prior to the related Determination Date will be available for distribution by the Trustee on each Payment Date and will include: (i) Lease Payments, (ii) Recoveries from Non-Performing Leases to the extent not substituted, (iii) Late charges received on delinquent Lease payments not advanced by the Servicer, (iv) Warranty Payments, (v) Casualty Payments, (vi) Early Termination Payments, (vii) Servicer Advances, and (viii) Investment earnings on funds deposited in the Collection Account and Reserve Account. Note: Warranty payments, casualty payments and early termination payments available to the Noteholders will not exceed the ADCB of the warranty, casualty or early termination lease. Events of Default: The Receivable Notes and Residual Notes are subject to the following Events of Default: (i) Default in making Interest Payments when such become due and payable; or (ii) Default in making Principal Payments at Stated Maturity; or (iii) Insolvency or bankruptcy events relating to the Issuer. Upon the occurrence of an Event of Default with respect to the Receivable Notes, the collateral (excluding the Liquidity Reserve Account) may be sold and the Class R Notes will only receive proceeds of such sale after repayment of interest and principal in full on the Receivable Notes. In the Event of a Default with respect to the Residual Notes, the Residual Realizations may be sold and paid to the Residual Notes. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 11 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A Credit Enhancement Subordination: Class A: The Class B Notes, Class C Notes, Class D Notes, Class E Notes and the Issuer's first loss piece are subordinate to the Class A Notes. In addition, a Reserve Account will be available, as described below. Class B: The Class C Notes, Class D Notes, Class E Notes and the Issuer's first loss piece are subordinate to the Class B Notes. In addition, a Reserve Account will be available, as described below. Class C: The Class D Notes, Class E Notes and the Issuer's first loss piece are subordinate to the Class C Notes. In addition, a Reserve Account will be available, as described below. Class D: The Class E Notes and the Issuer's first loss piece are subordinate to the Class D Notes. In addition, a Reserve Account will be available, as described below. Reserve Account: If there exists a shortfall between the Available Funds and interest or principal due on the Notes for any Payment Date, amounts on deposit in the Reserve Account will be available to make up for any shortfall in Available Funds to the Notes in the order of priority specified in "Flow of Funds". The Reserve Account will be funded at Closing in an amount equal to 1% of the ADCB of the Leases as of the Cut-Off Date (the "Initial Required Reserve Amount"). Thereafter, additional deposits from Available Funds will be made to the Reserve Account to the extent that the Reserve Account is less than the Required Reserve Amount. The Required Reserve Amount equals the lesser of (a) 1.0% of the ADCB of the leases as of the Cut-Off Date and (b) the outstanding balance of the Notes. Amounts on deposit in the Reserve account in excess of the Required Reserve Amount will be disbursed to the Issuer. Optional Redemption By Issuer: The Issuer will have the option, subject to certain conditions, to redeem all, but not less than all, of the Notes and thereby cause early repayment of the Notes as of any Payment Date on which the Discounted Present Value of the Performing Leases is less than or equal to 5% of the Discounted Present Value of the Leases as of the Cut-Off Date. THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 12 PRELIMINARY BACKGROUND INFORMATION FOR COPELCO CAPITAL FUNDING LLC 99-1 (ISSUER) LEASE-BACKED NOTES, SERIES 1999-A Tax Status: The Class A Notes, the Class B Notes and the Class C Notes will be characterized as debt for federal income tax purposes. The Class D Notes will be characterized as debt or as interests in a partnership. Please see the Prospectus for a full description of the tax characterization of the Notes. ERISA Eligible: The acquisition of Notes by an employee benefit plan is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or the provisions of Section 4975 of the Code (a "Plan"), and is permissible if the proposed acquisition qualifies for a statutory or administrative exemption. If the proposed acquisition does not qualify for an exemption, such acquisition could result in a prohibited transaction under ERISA or Section 4975 of the Code. If, by virtue of such acquisition, assets held by the Issuer and pledged to the Trustee were deemed to be assets of the Plan, the Issuer or other parties may be considered to be a fiduciary with respect to any Plan. Therefore, the acquisition and transfer of the Notes are subject to certain restrictions. The Indenture provides that each prospective initial Noteholder acquiring Notes, each prospective transferee acquiring the Notes, and each prospective owner (or transferee thereof) of a beneficial interest in the Notes (each a "Prospective Owner") will be deemed to have represented and warranted to the Seller, the Servicer, the Issuer, the Trustee and any successor Servicer that either (1) the Prospective Owner is not a Plan and the Prospective Owner is not directly or indirectly acquiring the Notes on behalf of, as investment manager of, as named fiduciary of, as trustee of, or with assets of a Plan, or (2) the proposed acquisition or transfer will qualify for a statutory or administrative prohibited transaction exemption under ERISA and the Code and will not give rise to a transaction described in Section 406 of ERISA or Section 4975(e)(l) of the Code for which a statutory or administrative exemption is unavailable. See "ERISA Considerations" in the Prospectus. Prospectus: The Offered Notes are being offered pursuant to a Prospectus. Complete information with respect to the Offered Notes and the Collateral is contained in the Prospectus. The foregoing is qualified in its entirety by the information appearing in the Prospectus. To the extent that the foregoing is inconsistent with the Prospectus, the Prospectus shall govern in all respects. Sales of the Offered Notes may not be consummated unless the purchaser has received the Prospectus. Further Information: Banking: Robert Schwartz (212-778-4638), Shelby Carvalho (212-778-4127), Naveen Bhalla (212-778-7448) Trading: Greg Richter or Rob Karr (212-778-2741) FSG: John Mawe (212-778-1166), Frank Lee (212-778-2612) THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 13 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $139,000,000.00 COUPON: TBD ORIGINAL BALANCE: $139,000,000.00 Copelco99 BOND A-1 BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 5.838 5.885 5.933 5.982 6.031 99-24+ 5.801 5.845 5.890 5.936 5.982 99-25 5.764 5.805 5.847 5.890 5.933 99-25+ 5.727 5.765 5.804 5.844 5.883 99-26 5.689 5.725 5.761 5.798 5.834 99-26+ 5.652 5.685 5.718 5.752 5.785 99-27 5.615 5.645 5.675 5.705 5.736 99-27+ 5.578 5.605 5.632 5.659 5.687 99-28 5.541 5.564 5.589 5.613 5.638 99-28+ 5.504 5.524 5.546 5.567 5.588 99-29 5.467 5.484 5.503 5.521 5.539 99-29+ 5.430 5.444 5.460 5.475 5.490 99-30 5.393 5.404 5.417 5.429 5.441 99-30+ 5.356 5.365 5.374 5.384 5.392 99-31 5.319 5.325 5.331 5.338 5.343 99-31+ 5.282 5.285 5.288 5.292 5.294 100-00 5.245 5.245 5.246 5.246 5.245 100-00+ 5.208 5.205 5.203 5.200 5.196 100-01 5.171 5.165 5.160 5.154 5.147 100-01+ 5.134 5.125 5.117 5.108 5.099 100-02 5.097 5.085 5.074 5.063 5.050 100-02+ 5.060 5.045 5.032 5.017 5.001 100-03 5.024 5.006 4.989 4.971 4.952 100-03+ 4.987 4.966 4.946 4.925 4.903 100-04 4.950 4.926 4.903 4.880 4.854 100-04+ 4.913 4.886 4.861 4.834 4.806 100-05 4.876 4.847 4.818 4.788 4.757 100-05+ 4.839 4.807 4.776 4.743 4.708 100-06 4.803 4.767 4.733 4.697 4.659 100-06+ 4.766 4.727 4.690 4.651 4.611 100-07 4.729 4.688 4.648 4.606 4.562 100-07+ 4.692 4.648 4.605 4.560 4.513 First Payment 0.100 0.100 0.100 0.100 0.100 Average Life 0.440 0.407 0.378 0.353 0.330 Last Payment 0.850 0.850 0.767 0.683 0.683
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 14 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $95,000,000.00 COUPON: TBD ORIGINAL BALANCE: $95,000,000.00 DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 YIELD TABLE DATE: 03/09/99 Copelco99 BOND A-2 BE-YIELD TABLE PREPAYMENT SPEED
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 5.857 5.872 5.888 5.904 5.922 99-24+ 5.844 5.858 5.873 5.888 5.904 99-25 5.830 5.843 5.857 5.872 5.887 99-25+ 5.817 5.829 5.842 5.856 5.870 99-26 5.804 5.815 5.827 5.839 5.852 99-26+ 5.791 5.801 5.812 5.823 5.835 99-27 5.777 5.787 5.797 5.807 5.818 99-27+ 5.764 5.772 5.781 5.791 5.800 99-28 5.751 5.758 5.766 5.775 5.783 99-28+ 5.738 5.744 5.751 5.758 5.766 99-29 5.724 5.730 5.736 5.742 5.749 99-29+ 5.711 5.716 5.721 5.726 5.731 99-30 5.698 5.702 5.706 5.710 5.714 99-30+ 5.685 5.687 5.690 5.694 5.697 99-31 5.671 5.673 5.675 5.677 5.679 99-31+ 5.658 5.659 5.660 5.661 5.662 100-00 5.645 5.645 5.645 5.645 5.645 100-00+ 5.632 5.631 5.630 5.629 5.628 100-01 5.619 5.617 5.615 5.613 5.610 100-01+ 5.605 5.603 5.600 5.597 5.593 100-02 5.592 5.588 5.584 5.580 5.576 100-02+ 5.579 5.574 5.569 5.564 5.559 100-03 5.566 5.560 5.554 5.548 5.542 100-03+ 5.553 5.546 5.539 5.532 5.524 100-04 5.539 5.532 5.524 5.516 5.507 100-04+ 5.526 5.518 5.509 5.500 5.490 100-05 5.513 5.504 5.494 5.483 5.473 100-05+ 5.500 5.490 5.479 5.467 5.456 100-06 5.487 5.476 5.464 5.451 5.438 100-06+ 5.474 5.461 5.449 5.435 5.421 100-07 5.460 5.447 5.433 5.419 5.404 100-07+ 5.447 5.433 5.418 5.403 5.387 First Payment 0.850 0.850 0.767 0.683 0.683 Average Life 1.257 1.172 1.092 1.020 0.955 Last Payment 1.600 1.517 1.433 1.350 1.267
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 15 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $110,000,000.00 COUPON: TBD ORIGINAL BALANCE: $110,000,000.00 Copelco99 BOND A-3 BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 5.971 5.978 5.985 5.993 6.001 99-24+ 5.963 5.969 5.976 5.983 5.991 99-25 5.955 5.961 5.967 5.974 5.981 99-25+ 5.947 5.952 5.958 5.964 5.971 99-26 5.938 5.943 5.949 5.954 5.960 99-26+ 5.930 5.935 5.940 5.945 5.950 99-27 5.922 5.926 5.931 5.935 5.940 99-27+ 5.914 5.917 5.921 5.926 5.930 99-28 5.906 5.909 5.912 5.916 5.920 99-28+ 5.897 5.900 5.903 5.907 5.910 99-29 5.889 5.892 5.894 5.897 5.900 99-29+ 5.881 5.883 5.885 5.887 5.890 99-30 5.873 5.874 5.876 5.878 5.880 99-30+ 5.864 5.866 5.867 5.868 5.870 99-31 5.856 5.857 5.858 5.859 5.860 99-31+ 5.848 5.848 5.849 5.849 5.850 100-00 5.840 5.840 5.840 5.840 5.840 100-00+ 5.831 5.831 5.831 5.830 5.830 100-01 5.823 5.822 5.821 5.821 5.820 100-01+ 5.815 5.814 5.812 5.811 5.809 100-02 5.807 5.805 5.803 5.801 5.799 100-02+ 5.799 5.796 5.794 5.792 5.789 100-03 5.790 5.788 5.785 5.782 5.779 100-03+ 5.782 5.779 5.776 5.773 5.769 100-04 5.774 5.771 5.767 5.763 5.759 100-04+ 5.766 5.762 5.758 5.754 5.749 100-05 5.757 5.753 5.749 5.744 5.739 100-05+ 5.749 5.745 5.740 5.735 5.729 100-06 5.741 5.736 5.731 5.725 5.719 100-06+ 5.733 5.728 5.722 5.716 5.709 100-07 5.725 5.719 5.713 5.706 5.699 100-07+ 5.716 5.710 5.704 5.697 5.689 First Payment 1.600 1.517 1.433 1.350 1.267 Average Life 2.071 1.966 1.865 1.768 1.675 Last Payment 2.517 2.433 2.350 2.183 2.100
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 16 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $90,000,000.00 COUPON: TBD ORIGINAL BALANCE: $90,000,000.00 Copelco99 BOND A-4 BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 6.051 6.054 6.058 6.062 6.066 99-24+ 6.045 6.048 6.052 6.056 6.059 99-25 6.039 6.042 6.045 6.049 6.053 99-25+ 6.033 6.036 6.039 6.042 6.046 99-26 6.027 6.030 6.033 6.036 6.039 99-26+ 6.022 6.024 6.027 6.029 6.032 99-27 6.016 6.018 6.020 6.023 6.025 99-27+ 6.010 6.012 6.014 6.016 6.019 99-28 6.004 6.006 6.008 6.010 6.012 99-28+ 5.998 6.000 6.001 6.003 6.005 99-29 5.992 5.994 5.995 5.997 5.998 99-29+ 5.987 5.988 5.989 5.990 5.991 99-30 5.981 5.982 5.983 5.984 5.985 99-30+ 5.975 5.976 5.976 5.977 5.978 99-31 5.969 5.970 5.970 5.971 5.971 99-31+ 5.963 5.964 5.964 5.964 5.964 100-00 5.958 5.958 5.958 5.958 5.958 100-00+ 5.952 5.951 5.951 5.951 5.951 100-01 5.946 5.945 5.945 5.944 5.944 100-01+ 5.940 5.939 5.939 5.938 5.937 100-02 5.934 5.933 5.932 5.931 5.930 100-02+ 5.928 5.927 5.926 5.925 5.924 100-03 5.923 5.921 5.920 5.918 5.917 100-03+ 5.917 5.915 5.914 5.912 5.910 100-04 5.911 5.909 5.907 5.905 5.903 100-04+ 5.905 5.903 5.901 5.899 5.897 100-05 5.899 5.897 5.895 5.892 5.890 100-05+ 5.894 5.891 5.889 5.886 5.883 100-06 5.888 5.885 5.882 5.879 5.876 100-06+ 5.882 5.879 5.876 5.873 5.869 100-07 5.876 5.873 5.870 5.866 5.863 100-07+ 5.870 5.867 5.864 5.860 5.856 First Payment 2.517 2.433 2.350 2.183 2.100 Average Life 3.010 2.890 2.774 2.660 2.550 Last Payment 3.600 3.433 3.350 3.267 3.100
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 17 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $75,613,000.00 COUPON: TBD ORIGINAL BALANCE: $75,613,000.00 Copelco99 BOND A-5 BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 ** TO CALL **
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 6.126 6.128 6.129 6.130 6.132 99-24+ 6.122 6.123 6.124 6.126 6.127 99-25 6.117 6.118 6.119 6.121 6.123 99-25+ 6.113 6.114 6.115 6.116 6.118 99-26 6.108 6.109 6.110 6.111 6.113 99-26+ 6.104 6.105 6.106 6.107 6.108 99-27 6.099 6.100 6.101 6.102 6.103 99-27+ 6.095 6.096 6.096 6.097 6.098 99-28 6.090 6.091 6.092 6.093 6.094 99-28+ 6.086 6.087 6.087 6.088 6.089 99-29 6.082 6.082 6.083 6.083 6.084 99-29+ 6.077 6.078 6.078 6.078 6.079 99-30 6.073 6.073 6.073 6.074 6.074 99-30+ 6.068 6.069 6.069 6.069 6.069 99-31 6.064 6.064 6.064 6.064 6.065 99-31+ 6.059 6.059 6.060 6.060 6.060 100-00 6.055 6.055 6.055 6.055 6.055 100-00+ 6.050 6.050 6.050 6.050 6.050 100-01 6.046 6.046 6.046 6.045 6.045 100-01+ 6.042 6.041 6.041 6.041 6.040 100-02 6.037 6.037 6.036 6.036 6.036 100-02+ 6.033 6.032 6.032 6.031 6.031 100-03 6.028 6.028 6.027 6.027 6.026 100-03+ 6.024 6.023 6.023 6.022 6.021 100-04 6.019 6.019 6.018 6.017 6.016 100-04+ 6.015 6.014 6.014 6.013 6.012 100-05 6.011 6.010 6.009 6.008 6.007 100-05+ 6.006 6.005 6.004 6.003 6.002 100-06 6.002 6.001 6.000 5.998 5.997 100-06+ 5.997 5.996 5.995 5.994 5.992 100-07 5.993 5.992 5.991 5.989 5.987 100-07+ 5.988 5.987 5.986 5.984 5.983 First Payment 3.600 3.433 3.350 3.267 3.100 Average Life 4.072 3.984 3.912 3.816 3.715 Last Payment 4.350 4.267 4.267 4.183 4.100
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 18 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $75,613,000.00 COUPON: TBD ORIGINAL BALANCE: $75,613,000.00 Copelco99 BOND A-5 BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 YIELD TABLE DATE: 03/09/99 **TO MATURITY**
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 6.125 6.127 6.128 6.130 6.131 99-24+ 6.121 6.122 6.123 6.125 6.126 99-25 6.117 6.118 6.119 6.120 6.122 99-25+ 6.112 6.113 6.114 6.116 6.117 99-26 6.108 6.109 6.110 6.111 6.112 99-26+ 6.103 6.104 6.105 6.106 6.107 99-27 6.099 6.100 6.101 6.102 6.103 99-27+ 6.095 6.095 6.096 6.097 6.098 99-28 6.090 6.091 6.091 6.092 6.093 99-28+ 6.086 6.086 6.087 6.088 6.088 99-29 6.081 6.082 6.082 6.083 6.084 99-29+ 6.077 6.077 6.078 6.078 6.079 99-30 6.073 6.073 6.073 6.074 6.074 99-30+ 6.068 6.068 6.069 6.069 6.069 99-31 6.064 6.064 6.064 6.064 6.064 99-31+ 6.059 6.059 6.059 6.060 6.060 100-00 6.055 6.055 6.055 6.055 6.055 100-00+ 6.051 6.050 6.050 6.050 6.050 100-01 6.046 6.046 6.046 6.046 6.045 100-01+ 6.042 6.041 6.041 6.041 6.041 100-02 6.037 6.037 6.037 6.036 6.036 100-02+ 6.033 6.033 6.032 6.032 6.031 100-03 6.029 6.028 6.028 6.027 6.026 100-03+ 6.024 6.024 6.023 6.022 6.022 100-04 6.020 6.019 6.018 6.018 6.017 100-04+ 6.015 6.015 6.014 6.013 6.012 100-05 6.011 6.010 6.009 6.008 6.007 100-05+ 6.007 6.006 6.005 6.004 6.003 100-06 6.002 6.001 6.000 5.999 5.998 100-06+ 5.998 5.997 5.996 5.994 5.993 100-07 5.993 5.992 5.991 5.990 5.988 100-07+ 5.989 5.988 5.987 5.985 5.984 First Payment 3.600 3.433 3.350 3.267 3.100 Average Life 4.118 4.039 3.953 3.864 3.768 Last Payment 4.767 4.683 4.683 4.600 4.600
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 19 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $13,029,000.00 COUPON: TBD ORIGINAL BALANCE: $13,029,000.00 Copelco99 BOND B BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 ** TO CALL **
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 6.238 6.243 6.247 6.252 6.257 99-24+ 6.231 6.236 6.239 6.244 6.248 99-25 6.224 6.228 6.232 6.236 6.240 99-25+ 6.217 6.221 6.224 6.228 6.232 99-26 6.210 6.214 6.217 6.220 6.224 99-26+ 6.203 6.206 6.209 6.212 6.216 99-27 6.196 6.199 6.202 6.205 6.208 99-27+ 6.189 6.192 6.194 6.197 6.200 99-28 6.182 6.185 6.187 6.189 6.192 99-28+ 6.175 6.177 6.179 6.181 6.183 99-29 6.169 6.170 6.172 6.173 6.175 99-29+ 6.162 6.163 6.164 6.166 6.167 99-30 6.155 6.156 6.157 6.158 6.159 99-30+ 6.148 6.148 6.149 6.150 6.151 99-31 6.141 6.141 6.142 6.142 6.143 99-31+ 6.134 6.134 6.134 6.134 6.135 100-00 6.127 6.127 6.127 6.127 6.127 100-00+ 6.120 6.119 6.119 6.119 6.119 100-01 6.113 6.112 6.112 6.111 6.110 100-01+ 6.106 6.105 6.104 6.103 6.102 100-02 6.099 6.098 6.097 6.095 6.094 100-02+ 6.092 6.090 6.089 6.088 6.086 100-03 6.085 6.083 6.082 6.080 6.078 100-03+ 6.078 6.076 6.074 6.072 6.070 100-04 6.071 6.069 6.067 6.064 6.062 100-04+ 6.064 6.061 6.059 6.057 6.054 100-05 6.057 6.054 6.052 6.049 6.046 100-05+ 6.050 6.047 6.044 6.041 6.038 100-06 6.043 6.040 6.037 6.033 6.029 100-06+ 6.036 6.033 6.029 6.025 6.021 100-07 6.029 6.025 6.022 6.018 6.013 100-07+ 6.022 6.018 6.014 6.010 6.005 First Payment 0.850 0.850 0.767 0.683 0.683 Average Life 2.514 2.414 2.331 2.235 2.142 Last Payment 4.350 4.267 4.267 4.183 4.100
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 20 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $13,029,000.00 COUPON: TBD ORIGINAL BALANCE: $13,029,000.00 Copelco99 BOND B BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 YIELD TABLE DATE: 03/09/99 **TO MATURITY**
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 6.236 6.240 6.244 6.249 6.253 99-24+ 6.229 6.233 6.237 6.241 6.245 99-25 6.223 6.226 6.230 6.233 6.238 99-25+ 6.216 6.219 6.222 6.226 6.230 99-26 6.209 6.212 6.215 6.218 6.222 99-26+ 6.202 6.205 6.207 6.211 6.214 99-27 6.195 6.198 6.200 6.203 6.206 99-27+ 6.188 6.191 6.193 6.195 6.198 99-28 6.181 6.183 6.185 6.188 6.190 99-28+ 6.175 6.176 6.178 6.180 6.182 99-29 6.168 6.169 6.171 6.172 6.174 99-29+ 6.161 6.162 6.163 6.165 6.166 99-30 6.154 6.155 6.156 6.157 6.158 99-30+ 6.147 6.148 6.149 6.149 6.150 99-31 6.140 6.141 6.141 6.142 6.142 99-31+ 6.133 6.134 6.134 6.134 6.135 100-00 6.127 6.127 6.127 6.127 6.127 100-00+ 6.120 6.120 6.119 6.119 6.119 100-01 6.113 6.112 6.112 6.111 6.111 100-01+ 6.106 6.105 6.105 6.104 6.103 100-02 6.099 6.098 6.097 6.096 6.095 100-02+ 6.092 6.091 6.090 6.089 6.087 100-03 6.086 6.084 6.083 6.081 6.079 100-03+ 6.079 6.077 6.075 6.073 6.071 100-04 6.072 6.070 6.068 6.066 6.063 100-04+ 6.065 6.063 6.061 6.058 6.056 100-05 6.058 6.056 6.053 6.051 6.048 100-05+ 6.051 6.049 6.046 6.043 6.040 100-06 6.045 6.042 6.039 6.035 6.032 100-06+ 6.038 6.035 6.031 6.028 6.024 100-07 6.031 6.027 6.024 6.020 6.016 100-07+ 6.024 6.020 6.017 6.013 6.008 First Payment 0.850 0.850 0.767 0.683 0.683 Average Life 2.571 2.476 2.389 2.296 2.209 Last Payment 4.850 4.767 4.683 4.683 4.600
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 21 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $10,134,000.00 COUPON: TBD ORIGINAL BALANCE: $10,134,000.00 Copelco99 BOND C BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 ** TO CALL **
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 6.439 6.443 6.447 6.452 6.457 99-24+ 6.432 6.436 6.440 6.444 6.449 99-25 6.425 6.428 6.432 6.436 6.441 99-25+ 6.418 6.421 6.425 6.428 6.432 99-26 6.411 6.414 6.417 6.421 6.424 99-26+ 6.404 6.407 6.409 6.413 6.416 99-27 6.397 6.399 6.402 6.405 6.408 99-27+ 6.390 6.392 6.394 6.397 6.400 99-28 6.383 6.385 6.387 6.389 6.392 99-28+ 6.376 6.378 6.379 6.381 6.384 99-29 6.369 6.370 6.372 6.374 6.375 99-29+ 6.362 6.363 6.364 6.366 6.367 99-30 6.355 6.356 6.357 6.358 6.359 99-30+ 6.348 6.348 6.349 6.350 6.351 99-31 6.341 6.341 6.342 6.342 6.343 99-31+ 6.334 6.334 6.334 6.334 6.335 100-00 6.327 6.327 6.327 6.327 6.327 100-00+ 6.320 6.319 6.319 6.319 6.319 100-01 6.313 6.312 6.312 6.311 6.310 100-01+ 6.306 6.305 6.304 6.303 6.302 100-02 6.299 6.298 6.297 6.295 6.294 100-02+ 6.292 6.290 6.289 6.288 6.286 100-03 6.285 6.283 6.282 6.280 6.278 100-03+ 6.278 6.276 6.274 6.272 6.270 100-04 6.271 6.269 6.267 6.264 6.262 100-04+ 6.264 6.261 6.259 6.256 6.254 100-05 6.257 6.254 6.252 6.249 6.245 100-05+ 6.250 6.247 6.244 6.241 6.237 100-06 6.243 6.240 6.237 6.233 6.229 100-06+ 6.236 6.232 6.229 6.225 6.221 100-07 6.229 6.225 6.222 6.217 6.213 100-07+ 6.222 6.218 6.214 6.210 6.205 First Payment 0.850 0.850 0.767 0.683 0.683 Average Life 2.514 2.418 2.331 2.235 2.146 Last Payment 4.350 4.267 4.267 4.183 4.100
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 22 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $10,134,000.00 COUPON: TBD ORIGINAL BALANCE: $10,134,000.00 Copelco99 BOND C BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 YIELD TABLE DATE: 03/09/99 **TO MATURITY**
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 6.436 6.440 6.444 6.449 6.453 99-24+ 6.430 6.433 6.437 6.441 6.445 99-25 6.423 6.426 6.430 6.434 6.437 99-25+ 6.416 6.419 6.422 6.426 6.430 99-26 6.409 6.412 6.415 6.418 6.422 99-26+ 6.402 6.405 6.407 6.411 6.414 99-27 6.395 6.398 6.400 6.403 6.406 99-27+ 6.388 6.390 6.393 6.395 6.398 99-28 6.381 6.383 6.385 6.388 6.390 99-28+ 6.375 6.376 6.378 6.380 6.382 99-29 6.368 6.369 6.371 6.372 6.374 99-29+ 6.361 6.362 6.363 6.365 6.366 99-30 6.354 6.355 6.356 6.357 6.358 99-30+ 6.347 6.348 6.349 6.350 6.350 99-31 6.340 6.341 6.341 6.342 6.342 99-31+ 6.334 6.334 6.334 6.334 6.335 100-00 6.327 6.327 6.327 6.327 6.327 100-00+ 6.320 6.320 6.319 6.319 6.319 100-01 6.313 6.313 6.312 6.311 6.311 100-01+ 6.306 6.305 6.305 6.304 6.303 100-02 6.299 6.298 6.297 6.296 6.295 100-02+ 6.292 6.291 6.290 6.289 6.287 100-03 6.286 6.284 6.283 6.281 6.279 100-03+ 6.279 6.277 6.275 6.273 6.271 100-04 6.272 6.270 6.268 6.266 6.264 100-04+ 6.265 6.263 6.261 6.258 6.256 100-05 6.258 6.256 6.253 6.250 6.248 100-05+ 6.251 6.249 6.246 6.243 6.240 100-06 6.245 6.242 6.239 6.235 6.232 100-06+ 6.238 6.235 6.231 6.228 6.224 100-07 6.231 6.228 6.224 6.220 6.216 100-07+ 6.224 6.221 6.217 6.212 6.208 First Payment 0.850 0.850 0.767 0.683 0.683 Average Life 2.583 2.495 2.400 2.305 2.221 Last Payment 4.933 4.850 4.767 4.767 4.683
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 23 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $15,925,000.00 COUPON: TBD ORIGINAL BALANCE: $15,925,000.00 Copelco99 BOND D BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 ** TO CALL **
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 7.139 7.143 7.147 7.152 7.157 99-24+ 7.132 7.136 7.140 7.144 7.149 99-25 7.125 7.129 7.132 7.136 7.141 99-25+ 7.118 7.121 7.125 7.129 7.132 99-26 7.111 7.114 7.117 7.121 7.124 99-26+ 7.103 7.106 7.109 7.113 7.116 99-27 7.096 7.099 7.102 7.105 7.108 99-27+ 7.089 7.092 7.094 7.097 7.099 99-28 7.082 7.084 7.086 7.089 7.091 99-28+ 7.075 7.077 7.079 7.081 7.083 99-29 7.068 7.070 7.071 7.073 7.075 99-29+ 7.061 7.062 7.064 7.065 7.067 99-30 7.054 7.055 7.056 7.057 7.058 99-30+ 7.047 7.048 7.048 7.049 7.050 99-31 7.040 7.040 7.041 7.041 7.042 99-31+ 7.033 7.033 7.033 7.033 7.034 100-00 7.026 7.025 7.025 7.025 7.025 100-00+ 7.018 7.018 7.018 7.018 7.017 100-01 7.011 7.011 7.010 7.010 7.009 100-01+ 7.004 7.003 7.003 7.002 7.001 100-02 6.997 6.996 6.995 6.994 6.993 100-02+ 6.990 6.989 6.987 6.986 6.984 100-03 6.983 6.981 6.980 6.978 6.976 100-03+ 6.976 6.974 6.972 6.970 6.968 100-04 6.969 6.967 6.965 6.962 6.960 100-04+ 6.962 6.959 6.957 6.954 6.952 100-05 6.955 6.952 6.949 6.946 6.943 100-05+ 6.948 6.945 6.942 6.939 6.935 100-06 6.941 6.937 6.934 6.931 6.927 100-06+ 6.934 6.930 6.927 6.923 6.919 100-07 6.927 6.923 6.919 6.915 6.911 100-07+ 6.920 6.915 6.912 6.907 6.903 First Payment 0.850 0.850 0.767 0.683 0.683 Average Life 2.519 2.418 2.331 2.235 2.150 Last Payment 4.350 4.267 4.267 4.183 4.100
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 24 FINANCIAL STRATEGIES GROUP PRUDENTIAL SECURITIES INCORPORATED - -------------------------- ---------------------------------- CURRENT BALANCE: $15,925,000.00 COUPON: TBD ORIGINAL BALANCE: $15,925,000.00 Copelco99 BOND D BE-YIELD TABLE PREPAYMENT SPEED DATED DATE: 03/09/99 FIRST PAYMENT: 04/15/99 YIELD TABLE DATE: 03/09/99 **TO MATURITY**
PRICE 0.0% CPR 3.00% CPR 6.00% CPR 9.00% CPR 12.00% CPR 99-24 7.135 7.139 7.144 7.149 7.153 99-24+ 7.128 7.132 7.137 7.141 7.145 99-25 7.121 7.125 7.129 7.133 7.137 99-25+ 7.115 7.118 7.122 7.125 7.129 99-26 7.108 7.111 7.114 7.118 7.121 99-26+ 7.101 7.104 7.107 7.110 7.113 99-27 7.094 7.097 7.099 7.102 7.105 99-27+ 7.087 7.090 7.092 7.095 7.097 99-28 7.080 7.082 7.085 7.087 7.089 99-28+ 7.073 7.075 7.077 7.079 7.081 99-29 7.067 7.068 7.070 7.072 7.073 99-29+ 7.060 7.061 7.062 7.064 7.065 99-30 7.053 7.054 7.055 7.056 7.057 99-30+ 7.046 7.047 7.048 7.049 7.049 99-31 7.039 7.040 7.040 7.041 7.041 99-31+ 7.032 7.033 7.033 7.033 7.033 100-00 7.026 7.025 7.025 7.025 7.025 100-00+ 7.019 7.018 7.018 7.018 7.018 100-01 7.012 7.011 7.011 7.010 7.010 100-01+ 7.005 7.004 7.003 7.002 7.002 100-02 6.998 6.997 6.996 6.995 6.994 100-02+ 6.991 6.990 6.989 6.987 6.986 100-03 6.984 6.983 6.981 6.979 6.978 100-03+ 6.978 6.976 6.974 6.972 6.970 100-04 6.971 6.969 6.966 6.964 6.962 100-04+ 6.964 6.962 6.959 6.956 6.954 100-05 6.957 6.954 6.952 6.949 6.946 100-05+ 6.950 6.947 6.944 6.941 6.938 100-06 6.944 6.940 6.937 6.933 6.930 100-06+ 6.937 6.933 6.930 6.926 6.922 100-07 6.930 6.926 6.922 6.918 6.915 100-07+ 6.923 6.919 6.915 6.910 6.907 First Payment 0.850 0.850 0.767 0.683 0.683 Average Life 2.627 2.521 2.418 2.320 2.243 Last Payment 5.267 5.183 5.017 4.933 4.850
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 25 Exhibit 99.1 COPELCO SUMMARY SHEET Equipment Leases Cut-off Date of Tape is 2/11/99 - ------------------------------------------------------------- Assumed Discount Rate: 6.75% Total Number of Contracts: 36,029 Aggregate Discounted Principal Balance: 579,105,376.99 Aggregate Discounted Residual Balance: 45,307,451.43 Aggregate Equipment Cost: 625,601,890.56 - ------------------------------------------------------------- Average Discounted Principal Balance: 16,073.31 Maximum Discounted Principal Balance: 4,449,563.47 Minimum Discounted Principal Balance: 80.07 Average Discounted Residual Balance: 1,257.53 Maximum Discounted Residual Balance: 215,128.67 Minimum Discounted Residual Balance: 0.00 Average Equipment Cost: 17,363.84 Maximum Equipment Cost: 4,560,150.00 Minimum Equipment Cost: 80.00 Weighted Average Original Term: 52.686 Original Term Range: 10 - 88 Weighted Average Age: 5.732 Age Range: 1 - 63 Weighted Average Remaining Term: 46.954 Remaining Term Range: 7 - 82 Aggregate Cash Flow Payments: 660,968,273.68 - -------------------------------------------------------------
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 26 STATE
STATE COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST AK 38 0.105% 629,328.70 0.109% 698,584.49 0.112% AL 252 0.699% 4,101,671.77 0.708% 4,482,672.28 0.717% AR 62 0.172% 4,036,402.01 0.697% 3,931,536.13 0.628% AZ 420 1.166% 8,518,039.36 1.471% 9,363,133.71 1.497% CA 6,321 17.544% 105,627,694.23 18.240% 113,286,210.11 18.108% CO 749 2.079% 10,322,675.69 1.783% 11,089,877.23 1.773% CT 758 2.104% 9,045,712.08 1.562% 9,773,060.27 1.562% DC 260 0.722% 4,380,171.96 0.756% 4,837,286.73 0.773% DE 76 0.211% 1,056,181.81 0.182% 1,162,769.43 0.186% FL 2,003 5.559% 32,029,403.74 5.531% 34,368,582.58 5.494% GA 989 2.745% 17,933,966.76 3.097% 18,950,301.41 3.029% HI 52 0.144% 788,053.14 0.136% 817,866.26 0.131% IA 74 0.205% 1,001,510.12 0.173% 1,067,787.51 0.171% ID 68 0.189% 599,665.76 0.104% 634,636.74 0.101% IL 1,499 4.161% 21,695,549.35 3.746% 23,243,596.46 3.715% IN 433 1.202% 5,763,119.26 0.995% 6,424,314.92 1.027% KS 139 0.386% 3,962,800.14 0.684% 4,005,123.87 0.640% KY 201 0.558% 3,349,691.35 0.578% 3,975,821.94 0.636% LA 1,137 3.156% 10,392,923.89 1.795% 13,007,123.36 2.079% MA 1,177 3.267% 14,884,810.10 2.570% 15,960,476.12 2.551% MD 406 1.127% 6,224,124.90 1.075% 6,691,705.12 1.070% ME 320 0.888% 3,309,967.98 0.572% 3,455,903.69 0.552% MI 383 1.063% 7,253,190.74 1.252% 8,102,519.49 1.295% MN 191 0.530% 4,910,196.52 0.848% 5,601,404.94 0.895% MO 334 0.927% 7,294,605.49 1.260% 7,405,179.69 1.184% MS 193 0.536% 2,847,752.01 0.492% 2,948,199.35 0.471% MT 59 0.164% 873,373.40 0.151% 931,235.95 0.149% NC 666 1.849% 10,415,591.40 1.799% 11,101,323.80 1.775% ND 4 0.011% 30,102.05 0.005% 33,402.41 0.005% NE 74 0.205% 1,133,218.89 0.196% 1,227,253.14 0.196% NH 252 0.699% 3,000,375.37 0.518% 3,255,954.65 0.520% NJ 1,851 5.138% 27,739,453.31 4.790% 30,175,612.07 4.823% NM 143 0.397% 5,265,763.44 0.909% 5,911,245.03 0.945% NV 330 0.916% 4,327,404.63 0.747% 4,590,473.55 0.734% NY 5,436 15.088% 80,809,149.44 13.954% 88,937,803.48 14.216% OH 1,014 2.814% 18,326,823.00 3.165% 19,546,904.48 3.124% OK 189 0.525% 6,153,399.96 1.063% 6,236,443.35 0.997% OR 358 0.994% 5,455,494.76 0.942% 6,025,066.27 0.963% PA 1,390 3.858% 23,606,739.24 4.076% 25,285,699.41 4.042% PR 4 0.011% 352,667.29 0.061% 357,279.64 0.057% RI 236 0.655% 4,283,473.59 0.740% 4,392,229.47 0.702%
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 2 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 27 STATE
STATE COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST SC 266 0.738% 3,312,135.78 0.572% 3,813,693.83 0.610% SD 14 0.039% 147,939.72 0.026% 159,060.04 0.025% TN 280 0.777% 5,055,224.40 0.873% 5,401,918.77 0.863% TX 2,754 7.644% 47,940,745.52 8.278% 50,919,574.36 8.139% UT 218 0.605% 3,697,977.33 0.639% 3,883,623.92 0.621% VA 733 2.034% 9,909,546.40 1.711% 10,917,639.91 1.745% VT 33 0.092% 426,822.78 0.074% 452,067.84 0.072% WA 848 2.354% 13,611,079.04 2.350% 14,758,291.37 2.359% WI 211 0.586% 9,534,673.73 1.646% 10,129,593.02 1.619% WV 119 0.330% 1,546,068.41 0.267% 1,674,924.47 0.268% WY 12 0.033% 190,925.27 0.033% 197,902.50 0.032% TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
TUESDAY, FEBRUARY 23, 1999 PAGE 2 OF 2 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 28 DISCOUNTED BALANCE
% POOL COUNT OF DISCOUNTED USING BALANCE RANGE CONTRACTS % POOL BALANCE BALANCE 0 (less than) Discounted Balance (less than equal to) 5,000 13,245 36.762% 37,327,809.53 6.446% 5,000 (less than) Discounted Balance (less than equal to) 10,000 9,090 25.230% 65,855,255.63 11.372% 10,000 (less than) Discounted Balance (less than equal to) 15,000 4,850 13.461% 59,483,189.73 10.272% 15,000 (less than) Discounted Balance (less than equal to) 20,000 2,751 7.636% 47,545,164.01 8.210% 20,000 (less than) Discounted Balance (less than equal to) 25,000 1,637 4.544% 36,550,419.35 6.312% 25,000 (less than) Discounted Balance (less than equal to) 30,000 1,032 2.864% 28,210,382.60 4.871% 30,000 (less than) Discounted Balance (less than equal to) 35,000 673 1.868% 21,776,321.12 3.760% 35,000 (less than) Discounted Balance (less than equal to) 40,000 424 1.177% 15,821,223.21 2.732% 40,000 (less than) Discounted Balance (less than equal to) 45,000 344 0.955% 14,543,684.13 2.511% 45,000 (less than) Discounted Balance (less than equal to) 50,000 274 0.760% 12,954,807.26 2.237% 50,000 (less than) Discounted Balance (less than equal to) 60,000 391 1.085% 21,419,472.19 3.699% 60,000 (less than) Discounted Balance (less than equal to) 70,000 281 0.780% 18,155,025.75 3.135% 70,000 (less than) Discounted Balance (less than equal to) 80,000 196 0.544% 14,711,000.53 2.540% 80,000 (less than) Discounted Balance (less than equal to) 90,000 141 0.391% 11,953,617.66 2.064% 90,000 (less than) Discounted Balance (less than equal to) 100,000 93 0.258% 8,843,510.32 1.527% 100,000 (less than) Discounted Balance (less than equal to) 125,000 176 0.488% 19,508,129.01 3.369% 125,000 (less than) Discounted Balance (less than equal to) 150,000 108 0.300% 14,903,495.41 2.574% 150,000 (less than) Discounted Balance (less than equal to) 175,000 60 0.167% 9,627,953.07 1.663% 175,000 (less than) Discounted Balance (less than equal to) 200,000 52 0.144% 9,701,713.75 1.675% 200,000 (less than) Discounted Balance (less than equal to) 300,000 73 0.203% 17,744,491.08 3.064% 300,000 (less than) Discounted Balance (less than equal to) 400,000 45 0.125% 15,594,570.62 2.693% 400,000 (less than) Discounted Balance (less than equal to) 500,000 29 0.080% 12,983,107.75 2.242% 500,000 (less than) Discounted Balance (less than equal to) 600,000 15 0.042% 8,212,540.34 1.418% 600,000 (less than) Discounted Balance (less than equal to) 700,000 13 0.036% 8,732,300.17 1.508% 700,000 (less than) Discounted Balance (less than equal to) 800,000 6 0.017% 4,426,118.94 0.764% 800,000 (less than) Discounted Balance (less than equal to) 900,000 2 0.006% 1,711,244.87 0.295% 900,000 (less than) Discounted Balance (less than equal to) 1,000,000 6 0.017% 5,683,745.42 0.981% 1,000,000 (less than) Discounted Balance (less than equal to) 1,500,000 16 0.044% 18,668,159.85 3.224% 1,500,000 (less than) Discounted Balance (less than equal to) 2,000,000 2 0.006% 3,715,484.23 0.642% 2,000,000 (less than) Discounted Balance 4 0.011% 12,741,439.46 2.200% TOTALS: 36,029 100.000% 579,105,376.99 100.000%
SUM OF % POOL EQUIP USING BALANCE RANGE COST COST 0 (less than) Discounted Balance (less than equal to) 5,000 45,732,625.75 7.310% 5,000 (less than) Discounted Balance (less than equal to) 10,000 73,776,533.44 11.793% 10,000 (less than) Discounted Balance (less than equal to) 15,000 65,238,482.06 10.428% 15,000 (less than) Discounted Balance (less than equal to) 20,000 50,980,068.69 8.149% 20,000 (less than) Discounted Balance (less than equal to) 25,000 39,313,580.37 6.284% 25,000 (less than) Discounted Balance (less than equal to) 30,000 30,228,935.61 4.832% 30,000 (less than) Discounted Balance (less than equal to) 35,000 23,235,106.83 3.714% 35,000 (less than) Discounted Balance (less than equal to) 40,000 16,520,678.05 2.641% 40,000 (less than) Discounted Balance (less than equal to) 45,000 15,279,910.17 2.442% 45,000 (less than) Discounted Balance (less than equal to) 50,000 13,913,936.20 2.224% 50,000 (less than) Discounted Balance (less than equal to) 60,000 22,397,259.09 3.580% 60,000 (less than) Discounted Balance (less than equal to) 70,000 19,291,034.06 3.084% 70,000 (less than) Discounted Balance (less than equal to) 80,000 15,789,581.94 2.524% 80,000 (less than) Discounted Balance (less than equal to) 90,000 12,459,756.55 1.992% 90,000 (less than) Discounted Balance (less than equal to) 100,000 9,853,853.68 1.575% 100,000 (less than) Discounted Balance (less than equal to) 125,000 20,591,878.95 3.292% 125,000 (less than) Discounted Balance (less than equal to) 150,000 16,326,784.34 2.610% 150,000 (less than) Discounted Balance (less than equal to) 175,000 10,068,077.44 1.609% 175,000 (less than) Discounted Balance (less than equal to) 200,000 10,474,791.21 1.674% 200,000 (less than) Discounted Balance (less than equal to) 300,000 19,283,108.68 3.082% 300,000 (less than) Discounted Balance (less than equal to) 400,000 16,712,088.23 2.671% 400,000 (less than) Discounted Balance (less than equal to) 500,000 13,708,203.11 2.191% 500,000 (less than) Discounted Balance (less than equal to) 600,000 9,089,861.67 1.453% 600,000 (less than) Discounted Balance (less than equal to) 700,000 8,886,114.23 1.420% 700,000 (less than) Discounted Balance (less than equal to) 800,000 4,782,921.98 0.765% 800,000 (less than) Discounted Balance (less than equal to) 900,000 1,676,079.00 0.268% 900,000 (less than) Discounted Balance (less than equal to) 1,000,000 5,626,494.71 0.899% 1,000,000 (less than) Discounted Balance (less than equal to) 1,500,000 18,936,950.67 3.027% 1,500,000 (less than) Discounted Balance (less than equal to) 2,000,000 3,416,250.00 0.546% 2,000,000 (less than) Discounted Balance 12,010,943.85 1.920% TOTALS: 625,601,890.56 100.000%
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 29 REMAINING TERM
% POOL SUM OF % POOL COUNT OF DISCOUNTED USING EQUIP USING REMAINING TERM RANGE CONTRACTS % POOL BALANCE BALANCE COST COST 0 (less than) Remaining Term (less than equal to) 12 1,323 3.672% 7,447,405.73 1.286% 16,248,199.65 2.597% 12 (less than) Remaining Term (less than equal to) 24 2,647 7.347% 18,971,848.45 3.276% 26,935,964.07 4.306% 24 (less than) Remaining Term (less than equal to) 36 16,022 44.470% 152,681,866.61 26.365% 174,022,920.62 27.817% 36 (less than) Remaining Term (less than equal to) 48 5,160 14.322% 82,536,829.93 14.252% 88,426,560.80 14.135% 48 (less than) Remaining Term (less than equal to) 60 10,614 29.460% 281,652,759.58 48.636% 285,871,185.19 45.695% 60 (less than) Remaining Term (less than equal to) 72 207 0.575% 19,182,085.65 3.312% 18,568,395.52 2.968% 72 (less than) Remaining Term (less than equal to) 84 56 0.155% 16,632,581.05 2.872% 15,528,664.71 2.482% TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 30 ORIGINAL TERM
% POOL SUM OF % POOL COUNT OF DISCOUNTED USING EQUIP USING ORIGINAL TERM RANGE CONTRACTS % POOL BALANCE BALANCE COST COST 0 (less than) Original Term (less than equal to) 12 237 0.658% 2,116,299.09 0.365% 2,705,498.42 0.432% 12 (less than) Original Term (less than equal to) 24 1,095 3.039% 8,900,516.36 1.537% 11,187,095.37 1.788% 24 (less than) Original Term (less than equal to) 36 3,503 9.723% 37,957,386.80 6.554% 45,934,304.61 7.342% 36 (less than) Original Term (less than equal to) 48 15,656 43.454% 144,905,047.84 25.022% 166,226,218.12 26.571% 48 (less than) Original Term (less than equal to) 60 6,484 17.997% 142,977,578.86 24.689% 152,031,550.42 24.302% 60 (less than) Original Term (less than equal to) 72 8,972 24.902% 217,248,058.67 37.514% 223,244,176.41 35.685% 72 (less than) Original Term (less than equal to) 84 72 0.200% 18,716,309.40 3.232% 17,869,682.99 2.856% 84 (less than) Original Term (less than equal to) 96 10 0.028% 6,284,179.97 1.085% 6,403,364.22 1.024% TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 31 LEASE TYPE
TYPE COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST Finance Lease 35,938 99.747% 569,341,250.88 98.314% 612,670,878.20 97.933% Operating Lease 91 0.253% 9,764,126.12 1.686% 12,931,012.36 2.067% TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 32 PURCHASE OPTION
PURCHASE OPTION COUNT OF CONTRACTS % POOL DISCOUNTED BALANCE % POOL USING BALANCE SUM OF EQUIP COST % POOL USING COST Fixed Purchase Option 3,283 9.112% 71,715,198.61 12.384% 79,439,976.44 12.698% Fair Market Value 24,276 67.379% 307,906,221.51 53.169% 338,334,820.24 54.081% Nominal Buyout 8,470 23.509% 199,483,956.87 34.447% 207,827,093.88 33.220% TOTALS: 36,029 100.000% 579,105,376.99 100.000% 625,601,890.56 100.000%
TUESDAY, FEBRUARY 23, 1999 PAGE 1 OF 1 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 33 EQUIPMENT DESCRIPTION
% POOL SUM OF % POOL COUNT OF DISCOUNTED USING EQUIP USING DESCRIPTION CONTRACTS % POOL BALANCE BALANCE COST COST * MULTIPLE PRODUCT 141 0.391% 2,553,602.71 0.441% 4,212,218.19 0.673% ANESTHESIA EQP 13 0.036% 558,211.61 0.096% 784,352.44 0.125% AUTOMATED CHEMISTRY 168 0.466% 6,721,582.38 1.161% 7,613,215.53 1.217% AUTOMATED 249 0.691% 5,591,379.54 0.966% 6,072,774.59 0.971% AUTOMATED TEST 8 0.022% 113,023.46 0.020% 170,741.16 0.027% AUTOMOBILE SHOP 6 0.017% 92,442.92 0.016% 80,515.00 0.013% C. T. SYSTEMS 4 0.011% 1,791,003.81 0.309% 2,038,020.70 0.326% CARTS, STRETCHERS, 56 0.155% 863,385.57 0.149% 902,062.46 0.144% CASH REGISTERS, POINT 83 0.230% 2,345,494.84 0.405% 2,488,156.83 0.398% COBALT AND X-RAY 1 0.003% 16,354.80 0.003% 16,500.00 0.003% COMMUNICATION 22 0.061% 686,218.56 0.118% 719,554.01 0.115% COMPUTER 2,440 6.772% 28,999,010.90 5.008% 34,413,680.87 5.501% COMPUTER 579 1.607% 13,829,672.61 2.388% 14,427,473.74 2.306% CONSTRUCTION 7 0.019% 326,643.70 0.056% 292,638.73 0.047% COPIER 25,562 70.948% 299,580,916.86 51.732% 323,872,861.44 51.770% CRANES & DERRICKS 2 0.006% 29,954.26 0.005% 25,800.00 0.004% DATA PROCESSING 1 0.003% 63,030.75 0.011% 56,085.00 0.009% DENTAL OPERATORY 477 1.324% 10,782,993.68 1.862% 10,820,841.99 1.730% DIGITAL CAMERAS 1 0.003% 5,667.88 0.001% 6,213.39 0.001% Document Imaging Equipment 353 0.980% 6,647,848.43 1.148% 7,128,829.46 1.140% ECG (EKG) AND 99 0.275% 1,720,973.79 0.297% 1,829,466.76 0.292% EEG 2 0.006% 24,265.99 0.004% 24,754.00 0.004% ELECTRONICS 181 0.502% 30,914,636.05 5.338% 36,417,060.37 5.821% FABRICATION EQUIPMENT 4 0.011% 1,019,672.09 0.176% 1,081,561.72 0.173% FACSIMILE 1,853 5.143% 6,559,439.96 1.133% 7,389,237.53 1.181% FOOD PROCESSING 2 0.006% 108,416.80 0.019% 95,834.29 0.015% FURNITURE AND 14 0.039% 566,965.12 0.098% 543,446.59 0.087% GAMMA CAMERAS 27 0.075% 4,499,304.47 0.777% 4,982,225.05 0.796% HEATING & AIR 2 0.006% 29,125.53 0.005% 25,870.00 0.004% HOLTER MONITORS 39 0.108% 619,056.78 0.107% 648,810.99 0.104% HOSP BEDS;ELEC,STRYKER 25 0.069% 320,368.91 0.055% 331,594.93 0.053%
SUNDAY, FEBRUARY 28, 1999 PAGE 1 OF 3 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 34
% POOL SUM OF % POOL COUNT OF DISCOUNTED USING EQUIP USING DESCRIPTION CONTRACTS % POOL BALANCE BALANCE COST COST Image Setters 1 0.003% 92,509.50 0.016% 121,195.00 0.019% INDUSTRIAL PRODUCTION 3 0.008% 171,501.38 0.030% 149,531.25 0.024% Jukeboxes/Storage 2 0.006% 27,817.13 0.005% 28,400.00 0.005% Laminating Devices 2 0.006% 16,157.08 0.003% 15,626.69 0.002% LASERS 27 0.075% 1,734,880.74 0.300% 1,921,502.30 0.307% LAUN,KTCHN,FOOD SRVC 3 0.008% 50,880.81 0.009% 43,485.10 0.007% LAUNDRY EQUIPMENT 1 0.003% 115,925.91 0.020% 120,000.00 0.019% LIFT TRUCKS 2 0.006% 21,931.69 0.004% 43,067.22 0.007% LINEAR ACCELERATORS 1 0.003% 535,390.95 0.092% 960,012.50 0.153% LITHOTRIPTERS AND 6 0.017% 621,047.95 0.107% 649,049.00 0.104% MACHINE TOOLS 2 0.006% 245,529.86 0.042% 247,015.00 0.039% MAILING EQUIPMENT 39 0.108% 407,569.49 0.070% 407,532.91 0.065% MAMMOGRAPHY 11 0.031% 1,178,601.28 0.204% 1,380,290.54 0.221% MATERIALS HANDLING 1 0.003% 5,385.47 0.001% 4,858.00 0.001% MBL X-RAY SYSTMS; 4 0.011% 314,313.59 0.054% 352,376.31 0.056% MEDICAL EQUIPMENT 11 0.031% 630,771.92 0.109% 622,355.87 0.099% MICROFILM EQUIPMENT 4 0.011% 76,099.89 0.013% 92,866.12 0.015% MICROGRAPHICS(MICROFI 2 0.006% 41,509.23 0.007% 41,673.00 0.007% MISC COMMERCIAL & 84 0.233% 1,528,605.43 0.264% 1,776,955.28 0.284% MISC HOSP EQP 286 0.794% 61,742,560.58 10.662% 60,451,330.80 9.663% MISC LAB 7 0.019% 191,352.06 0.033% 184,913.42 0.030% MISC VET EQP; CAGES, 4 0.011% 36,119.74 0.006% 59,793.00 0.010% MISC X-RAY 14 0.039% 774,590.25 0.134% 828,802.16 0.132% MISCELLANEOUS 121 0.336% 1,861,701.66 0.321% 1,879,393.86 0.300% MRI SYSTEMS 4 0.011% 1,807,076.92 0.312% 2,056,507.07 0.329% OFFICE FURNITURE 31 0.086% 656,191.69 0.113% 638,707.31 0.102% OPERATING MICROSCOPES 7 0.019% 139,323.16 0.024% 222,546.31 0.036% OPHTLMC DIAG EQP(SLIT 150 0.416% 3,198,659.98 0.552% 3,337,217.75 0.533% OPT EQP;LENS 386 1.071% 4,719,383.80 0.815% 5,215,735.15 0.834% PACKAGING EQUIPMENT 42 0.117% 1,403,419.91 0.242% 1,602,221.75 0.256% PATIENT MONITORING 122 0.339% 4,394,101.66 0.759% 4,688,692.91 0.749% PATIENT ROOM 5 0.014% 34,905.65 0.006% 53,216.45 0.009% PHONE, TV, COMM EQUIP 18 0.050% 220,405.02 0.038% 225,225.14 0.036% PHOTO EQUIPMENT 2 0.006% 29,389.25 0.005% 26,395.00 0.004%
SUNDAY, FEBRUARY 28, 1999 PAGE 2 OF 3 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. 35
% POOL SUM OF % POOL COUNT OF DISCOUNTED USING EQUIP USING DESCRIPTION CONTRACTS % POOL BALANCE BALANCE COST COST PHOTOCOPY EQUIPMENT 3 0.008% 92,409.66 0.016% 104,897.35 0.017% PHYS MISC MEDICAL EQP 882 2.448% 21,429,056.23 3.700% 22,334,278.53 3.570% PHYS OFFC FURN, 24 0.067% 434,642.73 0.075% 522,730.49 0.084% PODIATRY EQUIPMENT 2 0.006% 29,724.97 0.005% 29,650.00 0.005% PRINTING EQUIPMENT 200 0.555% 6,838,084.06 1.181% 6,776,333.97 1.083% PROCESSING EQUIPMENT 4 0.011% 208,962.35 0.036% 214,505.00 0.034% PULSE OXIMETRY 2 0.006% 25,044.27 0.004% 30,235.50 0.005% RADIOGRAPHIC 3 0.008% 318,084.44 0.055% 336,670.00 0.054% RESPIRATORY THERAPY 753 2.090% 20,388,913.25 3.521% 22,189,415.91 3.547% RESTAURANT, HOTEL & 3 0.008% 120,341.03 0.021% 109,170.73 0.017% SALES TAX-PO 1 0.003% 42,417.87 0.007% 42,325.75 0.007% Scanners 8 0.022% 140,029.79 0.024% 153,230.85 0.024% SECURITY SYSTEMS 3 0.008% 37,473.64 0.006% 34,743.67 0.006% Standard Printers 41 0.114% 580,318.63 0.100% 635,318.14 0.102% STANDARD TEST AND 1 0.003% 2,554.69 0.000% 2,708.48 0.000% STANDARD X-RAY 28 0.078% 1,380,892.41 0.238% 1,466,565.70 0.234% SURGICAL EQP; SCOPES, 9 0.025% 174,476.45 0.030% 171,598.28 0.027% TELEPHONE 45 0.125% 816,197.09 0.141% 832,829.94 0.133% TELEX 1 0.003% 8,466.19 0.001% 15,221.00 0.002% TRANSPORTATION 1 0.003% 5,599.92 0.001% 5,950.00 0.001% ULTRASOUND 126 0.350% 7,195,679.48 1.243% 7,887,466.31 1.261% VENDING MACHINES 8 0.022% 102,038.24 0.018% 82,500.00 0.013% Wide Format Printers 1 0.003% 13,582.83 0.002% 20,034.48 0.003% WOODWORKING 1 0.003% 26,747.66 0.005% 23,320.00 0.004% WORKING CAPITAL 51 0.142% 1,461,160.75 0.252% 1,408,745.89 0.225% X-RAY SPEC PROCDRS 2 0.006% 226,202.96 0.039% 210,556.66 0.034% TOTALS: 36,029 100.000% 579,105,377 100.000% 625,601,891 100.000%
SUNDAY, FEBRUARY 28, 1999 PAGE 3 OF 3 THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED ADVISOR IMMEDIATELY. EX-99.2 13 INDEPENDENT AUDITORS' REPORT 1 EXHIBIT Independent Auditors' Report The Board of Directors Copelco Capital Funding LLC 99-1: We have audited the accompanying balance sheet of Copelco Capital Funding LLC 99-1 (an indirect wholly owned subsidiary of Copelco Capital, Inc.) as of February 24, 1999. This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit of a balance sheet includes examining, on a test basis, evidence supporting the amounts and disclosures in that balance sheet. An audit of a balance sheet also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Copelco Capital Funding LLC 99-1 as of February 24, 1999, in conformity with generally accepted accounting principles. KPMG LLP February 24, 1999 New York, New York 3 2 COPELCO CAPITAL FUNDING LLC 99-1 (an indirect wholly owned subsidiary of Copelco Capital, Inc.) Balance Sheet February 24, 1999
Assets ------ Cash $1,000 ------ $1,000 ====== Stockholder's Equity Stockholder's Equity Common Stock (authorized 1,000 shares, $ 100 $1 par value, issued and outstanding 100 shares) Additional paid-in capital 900 ------ $1,000 ======
See accompanying notes to balance sheet. 4 3 COPELCO CAPITAL FUNDING LLC 99-1 (an indirect wholly owned subsidiary of Copelco Capital, Inc.) Notes to Balance Sheet February 24, 1999 (1) Organization Copelco Capital Funding LLC 99-1 is an indirect wholly owned subsidiary of Copelco Capital Inc. (Copelco Capital). Copelco Funding LLC 99-1 was organized to engage exclusively in the following business and financial activities: to acquire equipment described in certain equipment leases and to purchase equipment leases and lease receivables from Copelco Capital and any of its affiliates; to issue and sell notes collateralized by any or all of its assets pursuant to one or more indentures between Copelco Capital Funding LLC 99-1 and an indenture trustee; and to engage in any lawful act or activity and to exercise any power that is incidental and is necessary or convenient to the foregoing and permitted under Delaware law. (2) Capital Contribution Copelco Capital has made an initial capital contribution of $1,000 to Copelco Capital Funding LLC 99-1. 5 -----END PRIVACY-ENHANCED MESSAGE-----