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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.
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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
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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
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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
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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.
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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
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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 xxxx conspicuously each original contractual document
with a Lessee, and its master data processing records evidencing each Lease
with a legend, acceptable to the Trustee, evidencing that all right, title
and interest in the Leases has been granted to the Trustee as provided in
the Indenture.
(d) The Servicer agrees to maintain the Leases at its office
in Mt. Laurel, New Jersey or Mahwah, New Jersey or Moberly, Missouri or at
such other offices of the Servicer as shall from time to time be identified
by prior written notice to the Trustee. Subject to the foregoing, the
Servicer may temporarily move individual Leases or any portion thereof
without notice as necessary to conduct collection and other servicing
activities.
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE 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.
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(b) Except as disclosed in the Prospectus, the Private
Placement Memoranda and the financial statements referred to in the preceding
Section 2.03(a), since 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
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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
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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.
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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.
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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.
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(b) The provisions for taxes on the books of the Transferor
and each of its subsidiaries are in accordance with generally accepted
accounting principles.
2.12 Compliance with Law.
The Transferor:
(a) is not in violation of any laws, ordinances,
governmental rules or regulations to which
it is subject;
(b) has not failed to obtain any licenses,
permits, franchises or other governmental
authorizations necessary to the ownership of
its property or to the conduct of its
business; and
(c) is not in violation in any material respect
of any term of any agreement, charter
instrument, by-law or other instrument to
which it is a party or by which it may be
bound, which violation or failure to obtain
might materially adversely affect the
business or condition (financial or
otherwise) of the Transferor and its
subsidiaries.
2.13 ERISA.
(a) The present value of all benefits vested under all
"employee pension benefit plans", as such term is defined in Section 3(2) of
ERISA, maintained by or contributed to by the Transferor and its Related Persons
(other than "multiemployer plans", as such term is defined in Section 3(37) of
ERISA), as from time to time in effect (herein called the "Pension Plans"), does
not exceed the value of the assets of the Pension Plans allocable to such vested
benefits;
(b) No Prohibited Transactions, Accumulated Funding
Deficiencies or Reportable Events have occurred with respect to any Pension
Plans that, in the aggregate, could subject the Transferor to any material tax,
penalty or other liability; and
(c) No notice of intent to terminate a Pension Plan under a
distress termination has been filed, nor has the PBGC instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has
occurred or condition exists which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan.
2.14 Ability to Perform.
At the date hereof, the Transferor does not believe, nor does
it have any reasonable cause to believe, that it cannot perform each and every
covenant contained in this Assignment and Servicing Agreement or its ability to
perform as Servicer.
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2.15 Ordinary Course; No Insolvency.
The transactions contemplated by the Notes, the Indenture and
this Assignment and Servicing Agreement are being consummated by the Transferor
in furtherance of the Transferor's ordinary business purposes and constitute a
practical and reasonable course of action by the Transferor designed to improve
the financial position of the Transferor, with no contemplation of insolvency
and with no intent to hinder, delay or defraud any of its present or future
creditors. The Transferor will not, either as a result of the transaction
contemplated by this Assignment and Servicing Agreement, or immediately before
or after such transaction, be insolvent or have an unreasonably small capital
for the conduct of its business and the payment of anticipated obligations.
2.16 Assets and Liabilities.
(a) Both immediately before and after any transfer of Leases
(including the right to receive all payments due or to become due thereunder)
and the transfer of the interests in the Equipment contemplated by this
Assignment and Servicing Agreement, the present fair salable value of the
Transferor's assets was or will be in excess of the amount that will be required
to pay the Transferor's probable liabilities as they then exist and as they
become absolute and matured; and
(b) Both immediately before and after any transfer of Leases
(including the right to receive all payments due or to become due thereunder)
and the transfer of the interests in the Equipment contemplated by this
Assignment and Servicing Agreement, the sum of the Transferor's assets was or
will be greater than the sum of the Transferor's debts, valuing the Transferor's
assets at a fair salable value.
2.17 Fair Consideration.
The consideration received by the Transferor, in exchange for
the Leases (including the right to receive all payments due or to become due
thereunder) and the transfer of its interests in the Equipment, is fair
consideration having value equivalent to or in excess of the value of the assets
being transferred by the Transferor.
2.18 Ability to Pay Debts.
Neither as a result of the transaction contemplated by this
Assignment and Servicing Agreement nor otherwise does the Transferor believe
that it will incur debts beyond its ability to pay or which would be prohibited
by its charter documents or by-laws. The Transferor's assets and cash flow
enable it to meet its present obligations in the ordinary course of business as
they become due.
2.19 Bulk Transfer Provisions.
The transfer, assignment and conveyance of the Leases and its
interests in the Equipment by the Transferor pursuant to this Assignment and
Servicing Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
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2.20 Transfer Taxes.
The transfer, assignment and conveyance of the Leases
(including all payments due or to become due thereunder) and its interests in
the Equipment by the Transferor pursuant to this Assignment and Servicing
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Transferor to any federal, state or local government
("Transfer Taxes"). In the event that the Issuer receives actual notice of any
Transfer Taxes arising out of the transfer, assignment and conveyance of the
Leases and/or its interests in the Equipment, on written demand by the Issuer,
or upon the Transferor otherwise being given notice thereof, the Transferor
shall pay, and otherwise indemnify and hold the Issuer, the Trustee and the
holders of the Notes harmless, on an after-tax basis, from and against any and
all such Transfer Taxes (it being understood that the holders of the Notes and
the Trustee shall have no obligation to pay such Transfer Taxes).
2.21 Principal Executive Office.
The principal executive office of each of the Transferor and
the Servicer is located at Xxx Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxxx, Xxx Xxxxxx
00000-0000.
2.22 Servicing Provisions Customary.
The servicing arrangements hereunder, including without
limitation the terms and conditions pursuant to which the Transferor will act as
Servicer and the Servicing Fee to be paid to the Transferor, are consistent with
the arrangements and customary practices of the Transferor when providing
comparable services to non-affiliated entities and of other servicers in the
equipment leasing industry.
2.23 Nonconsolidation.
The Transferor is and at all times since its incorporation has
been operated in such a manner that it would not be substantively consolidated
with the Issuer, such that the separate existence of the Transferor and the
Issuer would be disregarded in the event of a bankruptcy or insolvency of the
Transferor or the Issuer, and in such regard:
(a) the Transferor is not involved in the day-to-day
management of the Issuer;
(b) the Transferor maintains separate corporate records and
books of account from the Issuer and otherwise observes corporate formalities
and has a separate business office from the Issuer;
(c) the financial statements and books and records of the
Transferor prepared after the Issuance Date will reflect the separate existence
of the Issuer;
(d) the Transferor maintains its assets separately from the
assets of the Issuer (including through the maintenance of a separate bank
account), the Transferor's funds and assets, and records relating thereto, have
not been and are not commingled with those of the Issuer and the separate
creditors of the Transferor and the Issuer will be entitled to be satisfied
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out of the Transferor's and the Issuer's assets prior to any value in the
Transferor or the Issuer becoming available to the Issuer's equityholders or the
Transferor's creditors;
(e) all business correspondence of the Transferor and other
communications are conducted in the Transferor's own name and on its own
stationery; and
(f) the Issuer does not act as an agent of the Transferor in
any capacity and the Transferor does not act as agent for the Issuer, but
instead presents itself to the public as a corporation separate from the Issuer.
2.24 Contribution Treatment.
The Transferor will treat the transfer to the Issuer of the
Leases and the Lease Receivables as a capital contribution and absolute
assignment for tax reporting and accounting purposes.
SECTION 3. ADMINISTRATION OF LEASES
3.01 Servicer to Act.
(a) Notwithstanding the transfers and assignments of the
Leases (including the right to receive all payments due or to become due
thereunder) and the related interests in the Equipment contemplated hereby, the
Servicer, for the benefit of the Issuer, will service and administer each Lease
in accordance with the terms thereof and of this Assignment and Servicing
Agreement. The Servicer shall take, or cause to be taken, all such actions as
may be necessary or advisable to service, administer and collect each Lease from
time to time, all in accordance with (i) customary and prudent servicing
procedures for leases of a similar type, (ii) all applicable laws, rules and
regulations, and (iii) without limitation as to its obligations under the
preceding clauses (i) and (ii), no less a standard of care than that which it
applies to Leases it services for its own account. The Servicer shall provide
the Lessees with appropriate invoices and such other notices as may be required
to ensure that all Lease Payments, Casualty Payments and Termination Payments on
or in respect of each Lease are remitted by the Lessees to the address specified
by the Servicer. The Servicer shall deposit such payments to the Collection
Account or the Residual Account, as applicable, within two Business Days of the
receipt thereof. Any other amount received by the Servicer from time to time
from the Issuer or any Lessee which is or is intended to be subject to the Lien
of the Indenture shall be held in trust by the Servicer, as agent for the
Trustee and promptly turned over to the Trustee or deposited into the Collection
Account or Residual Account, as applicable, for application in accordance with
the provisions of the Indenture.
(b) The Servicer shall do, and shall have full power and
authority to do, subject only to the specific requirements and prohibitions of
this Assignment and Servicing Agreement, any and all things in connection with
the servicing and administration of the Leases and the interests in the
Equipment which are consistent with the manner in which it services leases and
equipment constituting part of its own portfolio and consistent with the
customary practices of servicers in the equipment leasing industry, but in
performing its duties hereunder, the Servicer will act on behalf and for the
benefit of the Issuer, the Trustee and the holders of the Notes, subject at all
times to the provisions of the Indenture, without regard to any relationship
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which the Servicer or any Affiliate of the Servicer may otherwise have with a
Lessee. The Servicer shall at all times act in accordance with the provisions of
each Lease, and shall observe and comply with all requirements of law applicable
to it. Except as permitted by the terms of any Lease following a default
thereunder, the Servicer shall not take any action which would result in the
interference with the Lessee's right to quiet enjoyment of the Equipment subject
to the Lease during the term thereof. The Servicer shall exercise with respect
to each item of Equipment all rights and remedies it, the Issuer or the Trustee
shall have against any vendor of the Equipment, subject to the provisions of any
Lease, and shall promptly pay all amounts realized from such actions to the
Trustee for deposit in the Collection Account or Residual Account, in accordance
with the terms of the Indenture.
(c) Without limiting the generality of the foregoing, the
Servicer agrees to (i) invoice each Lessee monthly (except quarterly,
semi-annually or annually in the case of Leases which provide for quarterly,
semi-annual or annual Lease Payments, respectively) for all Lease Payments
required to be paid by such Lessee in such manner and to the same extent as the
Servicer does with respect to leases held for its own account, (ii) maintain
with respect to each Lease and each item of Equipment, and with respect to each
payment by each Lessee and compliance by each Lessee with the provisions of each
Lease, complete and accurate records in the same form and to the same extent as
the Servicer does with respect to leases and equipment held for its own account
(which records shall be at least as complete and accurate as those maintained by
the Servicer as of the date of this Assignment and Servicing Agreement), and
(iii) from time to time execute, deliver and file (or cause the same to be
done), and the Servicer is hereby authorized and empowered to execute, deliver,
and file on behalf of the Issuer and the Trustee, any and all tax returns with
respect to sales, use, personal property and other taxes (other than corporate
income tax returns) and any and all reports or licensing applications required
to be filed in any jurisdiction with respect to any Lease or any item of
Equipment and any and all required Financing Statements and assignments of
Financing Statements and such additional Financing Statements and continuation
statements with respect thereto as may from time to time be necessary because of
Lease substitutions, equipment replacements in accordance with the provisions of
any Lease or otherwise so that the security interest contemplated by the
Indenture in favor of the Trustee in each of the Leases, at all times will be
perfected by such filings with the appropriate Uniform Commercial Code filing
offices. The Transferor and the Servicer agree to file Financing Statements on
Form UCC-1 to perfect the security interest of the Trustee in the Leases and the
Lease Payments, and to the extent provided herein, the Equipment.
(d) The Servicer will maintain, or cause to be maintained,
with respect to the Leases and the Equipment casualty and liability insurance in
amounts at least as great as those described in Section 2.04(f). Each such
casualty and liability policy (i) if maintained by the Servicer, shall name the
Issuer and Trustee as loss payees or additional insureds and (ii) if maintained
by the Lessee, shall name the Servicer or the Trustee as loss payee and
additional insured; provided that the Servicer shall cause all such policies to
name the Trustee and the Issuer as loss payees and additional insureds if (A)
the Transferor is no longer the Servicer, (B) an Event of Default shall have
occurred and be continuing or (C) a Servicer Event of Default shall have
occurred and be continuing.
(e) On or prior to the Issuance Date, the Servicer will file
the Financing Statements and assignments of Financing Statements in accordance
with the Filing Requirements
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and thereafter will file such additional Financing Statements and continuation
statements and assignments with respect to the Leases as may be necessary
because of equipment replacements in accordance with the provisions of any
Lease, purchases of Additional Leases in accordance with Section 9 and Lease
substitutions pursuant to Section 9 hereof or otherwise so that (i) the
ownership interest contemplated by this Agreement in favor of the Issuer and the
security interest contemplated by the Indenture in favor of the Trustee in each
of the Leases and the Equipment will be perfected by such filings with the
appropriate Uniform Commercial Code filing offices (to the extent this may be
achieved by central filing), and (ii) the security interest contemplated by the
Assignment and Servicing Agreement in favor of the Transferor and the Issuer in
each of the Leases and Equipment will be perfected by such filings with the
appropriate Uniform Commercial Code filing offices (to the extent this may be
achieved by central filing).
(f) The Servicer shall pay the Excess Copy Charges,
Maintenance Charges and Fee Per Scan Charges, if any, owing the related vendor
in a timely fashion.
3.02 Lease Amendments and Modifications.
In performing its obligations hereunder, the Servicer may,
acting in the name of the Issuer and without the necessity of obtaining the
prior consent of the Issuer or the Trustee, enter into and grant modifications,
waivers and amendments to the terms of any Lease except for modifications,
waivers or amendments that (a) are inconsistent with the servicing standards set
forth in Section 3.01 above, (b) would reduce the amount or extend the time for
payment of any Lease Payment, Casualty Payment, Termination Payment or Residual
Realizations to be made under a Lease (other than to permit termination of a
Lease which does not otherwise provide for termination by requiring the payment,
in lieu of all future Lease Payments with respect to the Lease or Equipment
subject thereto, an amount which equals or exceeds the Lease Purchase Amount for
such Lease as of such date) or the Lessee's absolute and unconditional
obligation to make payment of the same, (c) would reduce or adversely affect the
Lessee's obligation to maintain, service, insure and care for the Equipment or
would permit the alteration of any item of Equipment in any way which could
adversely affect its present or future value or (d) otherwise could adversely
affect the interests of any of the Issuer, the Trustee or the holders of the
Notes.
In addition, following the transfer of any Lease to the Issuer
in accordance herewith, the Servicer may make adjustments to such Lease which
modify one or more terms of such Lease, such as payment amount or payment date.
Such administrative adjustments may result in a re-booking of such Lease and the
assignment of a new Lease number, but will not be considered to be a
substitution or prepayment of such Lease. Except to the extent the Transferor
substitutes a Substitute Lease therefor in accordance with Section 9 hereof, the
Servicer may permit such adjustments so long as the following conditions
precedent have been satisfied:
(i) after giving effect to such adjustments and any
additions and substitutions pursuant to Section 9, the
aggregate Booked Residual Value of such Leases will not be
less than 100% of the aggregate Booked Residual Value of the
Leases adjusted, replaced or substituted since the Issuance
Date.
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(ii) after giving effect to such adjustment and any
additions and substitutions pursuant to Section 9, the final
payment on such Lease must be on or prior to __________.
(iii) after giving effect to such adjustments and any
additions and substitutions pursuant to Section 9 the
aggregate amount of Lease Payments through the term of the
Leases (including the Substitute Leases and the Additional
Leases) will not be materially less than the aggregate
scheduled Lease Payments of the Leases prior to such
adjustment, substitution or addition.
(iv) after giving effect to such adjustments,
additions and substitutions pursuant to Section 9, the
Discounted Present Value of the Performing Leases must not be
less than the Discounted Present Value of the Performing
Leases prior to such adjustment, addition and substitution.
(v) after giving effect to such adjustments,
additions, and substitutions pursuant to Section 9, the
weighted average remaining term of the Performing Leases must
not be greater than the weighted average remaining term of the
Performing Leases prior to such adjustment, addition, and
substitution.
3.03 Non-Performing Leases.
(a) Upon receipt of notice from the Issuer, the Trustee or any
other Person, or if the Servicer otherwise learns that any Lease is a
Non-Performing Lease, the Servicer will take such action as is appropriate,
consistent with the Servicer's administration of leases in its own portfolio and
consistent with the customary practices of servicers in the equipment leasing
industry, including such action as may be necessary to cause, or attempt to
cause, the Lessee thereunder to cure such non-performance (if the same may be
cured) or to terminate or attempt to terminate such Lease and to recover, or
attempt to recover, all damages resulting from such default. The Servicer shall
demand, on behalf of the Issuer, that the Transferor immediately repay any
Inter-Company Loan representing the advance pursuant to Section 13.01 hereof of
any security deposit with respect to any Lease which becomes a Non-Performing
Lease, and the Servicer shall apply such security deposit in accordance with
Section 3.03(d) hereof.
(b) The Servicer will use its best efforts to sell or lease
any Equipment upon the expiration or early termination of a Lease or that is
subject to a Non-Performing Lease in a timely manner and upon the most favorable
terms and conditions available at the time. In the event of an early lease
termination, any Substitute Lease must have a Discounted Present Value equal to
or greater than that of the Terminated Lease, monthly payments at least equal to
those of the Terminated Lease through the remaining term of such Terminated
Lease, a remaining term less than or equal to that of the Terminated Lease and a
Booked Residual Value at least equal to that of such Terminated Lease.
(c) In the event that the Servicer is required to sell or
lease any item of Equipment pursuant to the provisions of this Section 3.03 at a
time when the Servicer has other similar items of equipment available to it, the
Servicer will not favor any such other item in its remarketing efforts.
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(d) All amounts realized by the Servicer in the performance of
its duties hereunder with respect to any Lease or Equipment remaining subject to
the Lien of the Indenture (net of the Servicer's actual out-of-pocket expenses
reasonably incurred in such realization) shall be held in trust by the Servicer,
as agent for the Trustee and deposited into the Collection Account for
application in accordance with the provisions of the Indenture; provided that,
to the extent that (i) the Servicer has made any advances pursuant to Section
4.01 hereof with respect to any Lease which thereafter became a Non-Performing
Lease, and (ii) the Servicer has not otherwise been fully reimbursed for such
advances or payments, the Servicer shall reimburse itself for such advances or
payments from any amounts recovered with respect to such Non-Performing Lease
before depositing any such amounts pursuant to this Section 3.03(d).
3.04 Costs of Servicing; Servicing Fee; Administrative
Expenses.
(a) All costs of servicing each Lease in the manner required
by this Section 3 shall be borne by the Servicer, but the Servicer shall be
entitled to retain, out of any amounts actually recovered by the Servicer in the
performance of its obligations under Section 3.03 hereof with respect to any
Lease or the interests in the Equipment subject thereto, the Servicer's actual
out-of-pocket expenses reasonably incurred in the course of such performance
with respect to such Lease or the interests in the Equipment. (For all purposes
of this Section 3 the Servicer's "out-of-pocket expenses" means only those
expenses incurred to third parties (e.g., reasonable fees of outside counsel in
a collection suit) and not salaries, operating costs, overtime wages and other
such "overhead" costs or expenses of the Servicer.) In addition, the Servicer
shall be entitled to receive from the Issuer on each Payment Date following the
Issuance Date a servicing fee with respect to the Receivables Notes (the
"Servicing Fee") and a servicing fee with respect to the Class R Notes (the
"Residual Servicing Fee") in the amounts described in paragraph (b) below.
(b) The amount of the Servicing Fee which the Servicer shall
be entitled to receive on each Payment Date following the original issuance of
the Receivables Notes shall be determined by multiplying (i) the Discounted
Present Value of Performing Leases as of the prior Payment Date times (ii)
one-twelfth of 0.75%. The amount of the Residual Servicing Fee which the
Servicer shall be entitled to receive on each Payment Date following the
issuance of the Class R Notes shall be determined by multiplying (i) the Booked
Residual Values as of the prior Payment Date for all Performing Leases times
(ii) one-twelfth of 0.75%.
(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.
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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
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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.
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(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
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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,
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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
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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:
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(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.
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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
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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;
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(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
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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 xxxx 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;
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(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
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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
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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
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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
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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
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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.
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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
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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.
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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.
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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.
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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.
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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
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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 XxXxxx-Xxxx Companies, Fitch IBCA, Inc., Xxxxx'x Investors' Service, Inc.
or Duff & Xxxxxx 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.
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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
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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, 000 Xxxx Xxxx Xxxxx, Xxxxx Xxxxxx, Xxx Xxxxxx 00000-0000,
Attention: Xxxxxxx Xxxxxxx 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.
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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.
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IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Servicing Agreement as of the date and year first written above.
COPELCO CAPITAL, INC., as
Transferor and Servicer
By: __________________________________
Name:
Title:
COPELCO CAPITAL FUNDING LLC 99-1
By: [COPELCO CAPITAL FUNDING CORP. XI,]
as manager
By: ______________________________
Name: XXXXXXX X. XXXXXXX
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.
$______________ ____________, 1999
COPELCO CAPITAL, INC., a Delaware corporation (the "Maker"),
with its principal office at Xxx Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxxx, XX 00000-0000,
FOR VALUE RECEIVED, hereby promises to pay to the order of Copelco Capital
Funding LLC 99-1, a Delaware limited liability company or its assignee (the
"Payee"), for its account, the principal sum ______________________________
($___________) (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
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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
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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
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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
