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COPELCO CAPITAL, INC.,
TRANSFEROR AND SERVICER
AND
COPELCO CAPITAL RECEIVABLES LLC
ISSUER
-------------------------
ASSIGNMENT AND SERVICING AGREEMENT
Dated as of ________, _____
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ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF COPELCO CAPITAL
RECEIVABLES LLC HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN
FAVOR OF [TRUSTEE], AS TRUSTEE, UNDER THE INDENTURE DATED AS OF ________, _____,
FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.
TABLE OF CONTENTS
Page
R E C I T A L S .............................................................1
A G R E E M E N T S..........................................................2
SECTION 1. CAPITAL CONTRIBUTION..............................................2
1.01 Capital Contribution of Leases....................................2
1.02 Capital Contribution of Equipment.................................2
1.03 Contribution of Leases; Grant of Security Interest................2
1.04 Servicer to Act as Custodian......................................3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR..................4
2.01 Corporate Organization and Authority..............................4
2.02 Business and Property.............................................4
2.03 Financial Statements..............................................4
2.04 Equipment and Leases..............................................5
2.05 Payments..........................................................8
2.06 Full Disclosure...................................................8
2.07 Pending Litigation................................................8
2.08 Title to Properties...............................................9
2.09 Transactions Legal and Authorized.................................9
2.10 Governmental Consent..............................................9
2.11 Taxes ............................................................9
2.12 Compliance with Law..............................................10
2.13 ERISA ...........................................................10
2.14 Ability to Perform...............................................10
2.15 Ordinary Course; No Insolvency...................................11
2.16 Assets and Liabilities...........................................11
2.17 Fair Consideration...............................................11
2.18 Ability to Pay Debts.............................................11
2.19 Bulk Transfer Provisions.........................................11
2.20 Transfer Taxes...................................................12
2.21 Principal Executive Office.......................................12
2.22 Servicing Provisions Customary...................................12
2.23 Nonconsolidation.................................................12
2.24 Contribution Treatment...........................................13
SECTION 3. ADMINISTRATION OF LEASES.........................................13
3.01 Servicer to Act..................................................13
3.02 Lease Amendments and Modifications...............................15
3.03 Non-Performing Leases............................................16
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3.04 Costs of Servicing; Servicing Fee; Administrative Expenses.......17
3.05 Other Transactions...............................................17
SECTION 4. SERVICER ADVANCES AND TRANSFEROR'S SUPPORT.......................17
4.01 Late Lease Payments..............................................17
4.02 Early Termination Leases.........................................18
4.03 Indemnification..................................................18
4.04 Purchases; Other Payments........................................19
4.05 Payment Advice...................................................20
SECTION 5. INFORMATION TO BE PROVIDED.......................................20
5.01 Monthly Status Reports; Servicing Reports........................20
5.02 Annual Independent Public Accountant's Report....................22
SECTION 6. THE SERVICER.....................................................22
6.01 Merger or Consolidation of the Servicer..........................22
6.02 Limitation on Liability of the Servicer and Others...............22
6.03 Servicer Not to Resign or Be Removed.............................23
6.04 Financial and Business Information...............................23
6.05 Officers' Certificates...........................................24
6.06 Inspection.......................................................25
6.07 Servicer Records.................................................25
SECTION 7. THE TRANSFEROR...................................................25
7.01 Merger or Consolidation of the Transferor........................25
7.02 Control of Issuer................................................26
7.03 Financial and Business Information...............................26
7.04 Officers' Certificates...........................................27
7.05 Inspection.......................................................27
7.06 Books and Records................................................27
7.07 Communications...................................................28
SECTION 8. DEFAULT .........................................................28
8.01 Servicer Events of Default.......................................28
8.02 Termination......................................................30
8.03 Trustee to Act; Appointment of Successor.........................30
8.04 Servicer to Cooperate............................................31
8.05 Notification to Noteholders......................................31
8.06 Remedies Not Exclusive...........................................31
SECTION 9. SUBSTITUTION AND ADDITION OF LEASES..............................31
9.01 Substitution and Addition........................................31
9.02 Procedure........................................................33
9.03 Objection and Purchase...........................................34
9.04 Transferor's and Servicer's Subsequent Obligations...............34
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SECTION 10. ASSIGNMENT......................................................34
10.01 Assignment to Trustee...........................................34
10.02 Assignment by Transferoror Servicer.............................35
SECTION 11. NATURE OF OBLIGATIONS AND SECURITY THEREFOR.....................35
11.01 Obligations Absolute............................................35
11.02 Security for Obligations........................................35
11.03 Further Assurances; Financing Statements........................36
SECTION 12. DEFINITIONS.....................................................36
SECTION 13. INTER-COMPANY LOANS.............................................42
13.01 Inter-Company Loans.............................................42
SECTION 14. MISCELLANEOUS...................................................42
14.01 Continuing Obligations..........................................42
14.02 GOVERNING LAW...................................................42
14.03 Successors and Assigns..........................................42
14.04 Modification....................................................43
14.05 No Proceedings..................................................43
14.06 Notices.........................................................43
14.07 Counterparts....................................................43
14.08 Nonpetition Covenant............................................43
Schedule 1 - Subsidiaries of the Transferor
Exhibit A - Schedule of Leases and Equipment
Exhibit B - Form of Inter-Company Loan Note
Exhibit C - Form of Receivables Servicing Report
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ASSIGNMENT AND SERVICING AGREEMENT
This ASSIGNMENT AND SERVICING AGREEMENT is made and dated as of ________,
_____, by and between COPELCO CAPITAL RECEIVABLES LLC, a Delaware limited
liability company, as issuer hereunder (the "Issuer") and COPELCO CAPITAL, INC.,
a Delaware corporation, as originator and transferor of the Leases (in such
capacity, the "Transferor") and servicer (in such capacity, the "Servicer").
R E C I T A L S
A. The Transferor wishes to contribute and assign to the Issuer, and the
Issuer wishes to acquire from the Transferor, all right, title and interest of
the Transferor in, to and under the Leases and the Equipment subject to the
Leases (such terms and all other capitalized terms used herein having the
meanings ascribed thereto in Section 12 hereof unless otherwise indicated).
B. Pursuant to the Indenture, the Issuer is issuing one class of _____%
Class A-1 Lease-Backed Notes, Series ______ in the aggregate principal amount of
$__________ (the "Class A-1 Notes"), one class of _____% Class A-2 Lease-Backed
Notes, Series ______ in the aggregate principal amount of $__________ (the
"Class A-2 Notes"), one class of _____% Class A-3 Lease-Backed Notes, Series
______ in the aggregate principal amount of $__________ (the "Class A-3 Notes"),
one class of _____% Class A-4 Lease-Backed Notes, Series ______ in the aggregate
principal amount of $__________ (the "Class A-4 Notes"), _____% Class A-5
Lease-Backed Notes, Series ______ in the aggregate principal amount of
$__________ (the "Class A-5 Notes"); together with the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes (the "Class A
Notes"), one class of _____% Class B Leased-Backed Notes, Series ______ (the
"Class B Notes"), in the aggregate principal amount of $__________, one class of
_____% Class C Lease-Backed Notes, Series ______, in the aggregate principal
amount of $__________ (the "Class C Notes"), one class of _____% Class D
Leased-Backed Notes, Series ______ in the aggregate principal amount of
$__________ (the "Class D Notes"), one class of _____% Class E Lease-Backed
Notes, Series ______, 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 ______ in the aggregate principal amount of
$__________ (the "Class R-1 Notes") and one class of _____% Class R-2 Residual
Notes, Series ______ in the aggregate principal amount of $__________ (the Class
R-2 Notes; together with the Class R-1 Notes, the "Class R Notes"; the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class R Notes are referred to collectively as the "Notes"), the
proceeds of which are being used by the Issuer to make a distribution to the
Transferor.
C. Pursuant to the Indenture, the Issuer is granting, inter alia, to the
Trustee, for the benefit of the holders from time to time of the Notes, a
security interest in all right, title and interest of the Issuer in, to and
under the Leases, the interests in the Equipment and this Assignment and
Servicing Agreement.
A G R E E M E N T S
SECTION 1. CAPITAL CONTRIBUTION
1.01 Capital Contribution of Leases.
By their execution and delivery of this Assignment and Servicing Agreement,
the Transferor hereby contributes and assigns to the Issuer, and the Issuer
hereby acquires from the Transferor without recourse (except to the extent of
the Transferor's purchase obligations as set forth herein), all of the
Transferor's right, title and interest in and to each of the Leases (including
the right to receive all payments due or to become due thereunder since the
Cut-Off Date).
1.02 Capital Contribution of Equipment.
The Transferor and the Issuer each acknowledge and confirm that
contemporaneously with the contribution of the Leases as hereinabove provided,
the Transferor, as a holder of beneficial interests in the Issuer, is
contributing and transferring to the Issuer, and in connection with each
transfer and assignment of Additional Leases and Substitute Leases the
Transferor will contribute and transfer to the Issuer, without recourse, all
right, title and interest of the Transferor in and to each item of Equipment
subject to each Lease, Additional Lease and Substitute Lease. After such
contribution and transfer by the Transferor to the Issuer, all right, title and
interest of the Transferor in and to each item of Equipment subject to each
Lease shall be vested in the Issuer.
1.03 Contribution of Leases; Grant of Security Interest.
It is the intention of the parties hereto that each transfer of Leases,
Additional Leases, Substitute Leases, Lease Payments and all other amounts due
or becoming due with respect thereto and Equipment (or interests therein) being
made hereunder shall constitute a capital contribution and not a loan. The
Transferor shall not take any action inconsistent with the treatment of such
transfers as capital contributions or with the Issuer's ownership of the Leases,
the Lease Receivables and all other amounts due or becoming due with respect
thereto and the interests in the Equipment. The Transferor shall indicate in its
records that ownership of each of the Leases, the Lease Receivables and the
interests in the Equipment is held by the Issuer, and each shall respond to any
inquiries from third parties by indicating that its ownership in the Leases,
Additional Leases, Substitute Leases, the Lease Receivables and all other
amounts due or becoming due with respect thereto and the interests in the
Equipment is held by the Issuer and pledged to the Trustee. In the event,
however, that a court of competent jurisdiction were to hold that any
transaction evidenced hereby constitutes a loan and not a capital contribution,
it is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law and that the Issuer and the Trustee
shall be deemed to have been granted a first priority security interest in (a)
the Leases and all Lease Payments, Casualty Payments, Termination Payments,
Residual Realizations and other amounts now due or becoming due with respect
thereto since the Cut-Off Date (other than any prepayments of rent required
pursuant to the terms of any Lease at or before the commencement of the Lease
and any payments due before the Cut-Off Date) and all Additional Leases and
Substitute Leases and all Lease Payments, Casualty Payments, Termination
Payments, Residual Realizations and other amounts
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due or becoming due with respect thereto since the effective date of their
respective addition or substitution (other than any prepayments of rent required
by the terms of any Lease at or before the commencement of the Lease and any
payments due before the effective date of such addition or substitution), (b)
all rights of the Issuer to or under any guarantees of or collateral (including
all rights of the Issuer in any security deposits) for the Lessee's obligations
under any Lease, (c) all interests of the Issuer in the Equipment at any time
subject to any Lease including any security interest of the Transferor in the
Equipment and (d) all proceeds of the conversion, whether voluntary or
involuntary, of any of the foregoing into cash or other property.
1.04 Servicer to Act as Custodian.
(a) The Servicer shall hold and acknowledges that it is holding the Leases
and all other Granted Assets that it may from time to time receive hereunder as
custodian for the Trustee.
(b) The Servicer shall perform its duties under this Section 1.04 in
accordance with the standard set forth in Section 3.01 as such standard applies
to servicers acting as custodial agents. The Servicer shall promptly report to
the Trustee any failure by it to hold the complete Leases as herein provided and
shall promptly take appropriate action to remedy any such failure but only to
the extent (i) any such failure is caused by the acts or omissions of the
Servicer and (ii) such remedial action is otherwise within its capabilities or
control. As custodian, the Servicer shall have and perform the following powers
and duties:
(A) hold the Leases on behalf of the Trustee for the benefit of the
Noteholders, maintain accurate records pertaining to each Lease to enable
it to comply with the terms and conditions of this Assignment and Servicing
Agreement, and maintain a current inventory thereof;
(B) implement policies and procedures in accordance with the
Servicer's normal business practices with respect to the handling and
custody of the Leases so that the integrity and physical possession of the
Leases will be maintained; and
(C) attend to all details in connection with maintaining custody of
the Leases on behalf of the Trustee on behalf of the Noteholders.
(c) In acting as custodian of the Leases, the Servicer agrees further that
it does not and will not have or assert any beneficial ownership interest in
such Leases. The Servicer on behalf of the Noteholders shall 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 TRANSFEROR
The Transferor hereby represents and warrants as follows:
2.01 Corporate Organization and Authority.
The Transferor:
(a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation,
(b) has all requisite power and authority and all necessary licenses and
permits to own and operate its properties and to carry on its business
as now conducted (except where the failure to have such licenses and
permits would not have a material adverse effect on the business or
condition (financial or otherwise) of the Transferor or impair the
enforceability of any Lease) and to enter into and perform its
obligations under this Assignment and Servicing Agreement, and the
transactions contemplated hereby, including performance of the duties
of the Servicer and the Transferor's support obligations hereunder,
and
(c) has duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary (except where the failure to be so qualified
or in good standing would not have a material adverse effect on the
Trust Estate or the business or condition (financial or otherwise) of
the Transferor or impair the enforceability of any Lease).
2.02 Business and Property.
The Prospectus and the Private Placement Memoranda, accurately describe in
all material respects the general nature of the business of the Transferor.
2.03 Financial Statements.
(a) The consolidated balance sheet of the Transferor and its consolidated
subsidiaries for the fiscal periods ended __________, and __________, 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 _______, 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
______, _____ there has been no change in the business, condition or prospects
(financial or otherwise) of the Transferor except changes in the ordinary course
of business, none of which individually or in the aggregate has been materially
adverse. Neither the Transferor nor any of its subsidiaries has any material
liabilities or obligations not incurred in the ordinary course of business other
than those disclosed in the financial statements referred to in Section 2.03(a)
or for which adequate reserves are reflected in such financial statements and
certain contingent obligations of the Transferor relating to other asset
securitization transactions involving the Transferor.
2.04 Equipment and Leases.
(a) Prior to the date of each transfer of any Leases and Equipment in
accordance with Sections 1.01 and 1.02, respectively, the Transferor purchased
each item of Equipment from either (i) the manufacturer or other supplier
following receipt of an invoice from such manufacturer or supplier or (ii) a
Lessee following confirmation that such item of Equipment was on such Lessee's
premises. The Transferor has paid in full, to the manufacturer or supplier or
Lessee, as the case may be, the purchase price and any related charges in
connection with the acquisition of the Equipment. The transfer to the Issuer of
the Leases and all of the Transferor's right, title and interest in each item of
Equipment does not violate the terms or provisions of any Lease or any other
agreement to which the Transferor is a party or by which it is bound.
(b) Upon completion of the transfer described in Article I hereof, the
Issuer will (i) be the legal owner of the Leases (including the right to receive
all payments due or to become due thereunder), (ii) have good title to each item
of the Equipment subject to any Lease other than a Nominal Buy-Out Lease (or
other finance lease), (iii) have a valid security interest in each item of
Equipment subject to any Lease other than a Nominal Buy-Out Lease (or other
finance lease) and (iv) have a perfected security interest in each item of
Equipment with a purchase price in excess of $25,000 subject to a Nominal
Buy-Out Lease (or other finance lease). At such time, the Leases (including the
right to receive all payments due or to become due thereunder) and the
Transferor's interest in the Equipment will be free and clear of all Liens other
than the rights of each Lessee under the Lease to which such Lessee is a party
and the Lien created by the Indenture; and there will be no delinquent taxes or
other outstanding charges affecting the Equipment which are or may be Liens
prior to, or equal or coordinate with, the Lien of the Trustee under the
Indenture.
(c) At the time of each transfer of a Lease hereunder, each such Lease (i)
is or will be a triple-net lease, (ii) is or will be a legal, valid and binding
full recourse obligation of the Lessee thereunder, enforceable by the Issuer
(and by the Trustee as assignee of the Issuer) against such Lessee in accordance
with the terms thereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights and by general equity principles, (iii) is
noncancellable by the Lessee and is in full force and effect, and any and all
requirements of any federal, state or local law, including, without limitation,
usury, truth-in-lending and equal credit opportunity laws applicable to each
Lease have been complied with; and the Transferor has no knowledge (after due
inquiry) of any challenge, dispute or claim by or against the Lessee under or
affecting any
5
Lease or of the bankruptcy or insolvency of any such Lessee and (iv) is
assignable. As of the initial Determination Date, or the effective date of the
transfer of any Additional Lease or Substitute Lease, each Lessee has paid at
least one installment of rent under its respective Lease.
(d) As of the Cut-Off Date, each Lease hereunder is not a Non-Performing
Lease.
(e) At the time that any item of Equipment (including the Transferor's
security interest in any item not owned by it) is contributed hereunder, the
Transferor will have no knowledge that any item of the Equipment has suffered
any loss or damage which has not been repaired.
(f) Each Lease requires the Lessee thereunder to maintain insurance on the
Equipment subject thereto in an amount at least equal to the fair market value
thereof.
(g) In addition to the insurance maintained by the Lessees with respect to
the Equipment, the Transferor (or an Affiliate of the Transferor) maintains (i)
one or more casualty insurance policies which, in the aggregate, are in an
amount not less than the aggregate Outstanding Principal Amount of the Notes,
(ii) a general liability insurance policy in the aggregate amount of $1,000,000
and (iii) an excess liability insurance policy in umbrella form in the aggregate
amount of $10,000,000. Each of such policies is in full force and effect and
covers all equipment owned by the Transferor and the Issuer. All premiums in
respect of such policies have been paid. Each of the Trustee and the Issuer are
named as loss payees and additional insureds, as their interests may appear, on
such casualty and liability policies maintained by the Transferor.
(h) At the time of each transfer of a Lease hereunder, no Lease had
outstanding rent which was 63 or more days past due as of the Cut-Off Date.
(i) Each Lease was entered into or acquired by the Transferor in accordance
with the Transferor's regular credit approval process described in the
Prospectus, and no selection procedures adverse to the credit quality of the
Leases were employed in selecting the Leases for contribution under this
Assignment and Servicing Agreement.
(j) The obligation of each Lessee to pay rent under each of the Leases
throughout the term thereof is and will be unconditional, without any right of
setoff by such Lessee and without regard to any event affecting the Equipment,
the obsolescence of any Equipment, any claim of such Lessee against the Issuer,
the Transferor or the Servicer or any change in circumstance of such Lessee or
any other circumstance whatsoever except to the extent that in the event of a
casualty of any item of Equipment, the Lessee is obligated to pay, in lieu of
the future Lease Payments with respect to such item, an amount which equals or
exceeds the Discounted Present Value of the Lease as of the Payment Date next
succeeding the making of such payment (plus any unpaid rents).
(k) In the case of each Lease which consists of a master lease and one or
more exhibits or schedules thereto, the Transferor has neither assigned such
master lease in its entirety, nor delivered physical possession of such master
lease, to any Person other than the Issuer or the Trustee (including the trustee
under another indenture in a transaction substantially similar to the
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transaction contemplated hereby, which other indenture provides that the lien
thereof on such master lease extends only to such master lease insofar as it
relates to lease schedules which are not part of the Trust Estate).
(l) As of the time of each transfer of Leases and Equipment hereunder,
there are no facts or circumstances which give rise, or would give rise at any
time in the future, to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, to obligations of any Lessee, including the
obligation of such Lessee to pay all amounts due with respect to any Lease to
which such Lessee is a party, and neither the operation of any of the terms of
any Lease or the exercise of any right thereunder will render such Lease
unenforceable in whole or in part or subject to any right of rescission, setoff,
counterclaim or defense, including the defense of usury, and no such right of
rescission, setoff, counterclaim or defense has been asserted with respect
thereto.
(m) As of the time of each transfer of Leases and Equipment hereunder, no
Lease has been amended, altered or modified in any respect, except in writing
and copies of all such writings are attached to the Lease delivered to the
Trustee.
(n) As of the time of each transfer of Leases and Equipment hereunder, no
Lessee will have been released, in whole or in part, from any of its obligations
in respect of any Lease; no Lease will have been satisfied, cancelled or
subordinated, in whole, or in part, or rescinded, and no Equipment covered by
any Lease will have been released from such Lease, in whole or in part, nor has
any instrument been executed that would effect any such satisfaction, release,
cancellation, subordination or rescission.
(o) As of the time of each transfer of Leases and Equipment hereunder, each
Lease was either (i) originated by the Transferor in the ordinary course of its
business or (ii) purchased by the Transferor for value and taken into possession
prior to the Cut-Off Date in the ordinary course of its business.
(p) No Lease was originated in or is subject to the laws of any
jurisdiction whose laws would make any of the transfers thereof under this
Assignment and Servicing Agreement unlawful.
(q) All parties to each Lease had all requisite authority and capacity to
execute such Lease.
(r) None of the Leases is a consumer lease and each Lessee has accepted the
Equipment leased to it.
(s) The Booked Residual Value of the Equipment as of the Cut-Off Date
equals $___________.
(t) As of the Cut-Off Date, the final lease payment on each Lease was due
and payable on or prior to __________.
(u) Each Lease agreement is "chattel paper" within the meaning of The
Uniform Commercial Code in the states of New York and New Jersey.
7
2.05 Payments.
(a) The aggregate amounts of Lease Payments payable by the Lessees under
the Leases during each lease payment period, including amounts on deposit in the
Reserve Account, are sufficient to cover the Servicing Fee and pay the principal
and interest on the Receivable Notes, as such payments become due and payable.
(b) The aggregate amount of Residual Realizations using the average
historical realization rate, including amounts on deposit in the Liquidity
Reserve Account, is sufficient to cover the Residual Servicing Fee and pay the
principal and interest on the Class R Notes as such payments become due and
payable.
(c) The portfolio detail delivered or to be delivered to the Trustee on or
prior to the Issuance Date (i) accurately sets forth, as of the Cut-Off Date,
the amount of each Lease Payment due under each of the Leases and the month in
which such Lease Payment is to be paid in accordance with the terms of the Lease
under which the same is to be paid, (ii) accurately sets forth, as of the
Cut-Off Date, the information with respect to certain other characteristics of
the Leases and the Equipment described in such portfolio detail and (iii) is
otherwise true and correct in all respects.
2.06 Full Disclosure.
The Prospectus and the Private Placement Memoranda (including, without
limitation, the statistical and descriptive information with respect to the
initial Leases, Lessees and Equipment), as of their respective dates, do not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
peculiar to the Transferor or any Affiliate of the Transferor or, to the
knowledge of the Transferor, any Lease, Lessee or item of Equipment, which the
Transferor has not or will not disclose in the Prospectus or the Private
Placement Memoranda which materially affects adversely nor, so far as the
Transferor can now reasonably foresee, will materially affect adversely the
ability of the Transferor to perform the transactions contemplated by this
Assignment and Servicing Agreement.
2.07 Pending Litigation.
There are no proceedings or investigations pending, or to the knowledge
(after due inquiry) of the Transferor threatened, against or affecting the
Transferor or any subsidiary in or before any court, governmental authority or
agency or arbitration board or tribunal, including, but not limited to, any such
proceeding or investigation with respect to any environmental or other liability
resulting from the ownership or use of any of the Equipment, which, individually
or in the aggregate, involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition (financial
or otherwise) of the Transferor and its subsidiaries, or the ability of the
Transferor or the Servicer to perform its obligations under this Assignment and
Servicing Agreement. The Transferor is not in default with respect to any order
of any court, governmental authority or agency or arbitration board or tribunal.
8
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%.
3.05 Other Transactions.
Nothing in this Assignment and Servicing Agreement shall preclude the
Transferor or the Servicer from entering into other leases or other financial
transactions with any Lessee or selling or discounting any such lease with any
Person.
SECTION 4. SERVICER ADVANCES AND TRANSFEROR'S SUPPORT
4.01 Late Lease Payments.
(a) On each Determination Date, the Servicer may, but will not be required
to, advance and remit to the Trustee for deposit in the Collection Account, in
such manner as will ensure that the Trustee will have immediately available
funds on account thereof by 11:00 A.M.
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New York City time on the second Business Day prior to the next succeeding
Payment Date, an amount (a "Servicer Advance") equal to any Lease Payment due
during the prior Lease Payment Period but unpaid prior to such Determination
Date with respect to any Lease. In consideration of each Servicer Advance the
Servicer will be entitled to retain any late payment fees recovered from the
Lessee with respect to any Lease Payment covered by a Servicer Advance. In
addition, the Servicer will be reimbursed for Servicer Advances from funds in
the Collection Account in accordance with the Indenture on the second following
Payment Date.
(b) On each Determination Date, the Servicer will be required to advance
and remit to the Trustee for deposit in the Residual Account, in such manner as
will ensure that the Trustee will have immediately available funds on account
thereof by 11:00 A.M. New York City time on the second Business Day prior to the
next succeeding Payment Date, an amount (a "Residual Servicer Advance") equal to
the difference between distributions due to be made pursuant to Section
3.02(b)(i)-(iv) of the Indenture and the amounts then on deposit in the Residual
Account and the Liquidity Reserve Account. The Servicer will be reimbursed for
Residual Servicer Advances from funds in the Residual Account in accordance with
the Indenture on the second following Payment Date.
4.02 Early Termination Leases.
Following the Determination Date as of which any Lease first becomes an
Early Termination Lease the Transferor may, but shall have no obligation to,
either (a) substitute one or more Eligible Leases and the Equipment subject
thereto for such Lease and the Equipment subject thereto pursuant to Section 9
hereof (if the Transferor is then entitled to substitute Leases and Equipment in
accordance with the provisions of Section 9.01 hereof) on or before the second
Business Day prior to the next succeeding Payment Date, (b) purchase from the
Issuer such Lease and the related Equipment by remitting to the Trustee an
amount equal to the Lease Purchase Amount in such manner as will ensure that the
Trustee will have immediately available funds therefor by 11:00 A.M. New York
City time on the second Business Day prior to the next succeeding Payment Date
or (c) transfer to the Issuer one or more Additional Leases in consideration of
the proceeds thereof in accordance with Section 9 hereof. Unless the Transferor
takes one of the actions set forth in the prior sentence, the Servicer will not
permit a voluntary termination of a Lease prior to its stated maturity unless it
receives a payment in connection with such termination equal to at least the
Lease Purchase Amount. Any Early Termination Lease and the Equipment subject
thereto which is acquired, or for which Additional Leases have been acquired or
Substitute Leases transferred, pursuant to this Section 4.02 shall nevertheless
remain subject to the Lien of the Indenture until such time as an Additional
Lease or Additional Leases have been acquired or Substitute Lease or Substitute
Leases have been transferred in accordance with the provisions of Section 9
hereof or the Lease Purchase Amount has been paid. A Lease will be considered to
be an "Eligible Lease" if on the date such Lease is substituted for or added in
replacement of an Early Termination Lease, such Lease satisfies the
representations and warranties set forth in Section 2.04(a) through (u) and the
requirements of Section 9 hereof.
4.03 Indemnification.
The Transferor in its capacity as Servicer, agrees to indemnify and hold
harmless the Issuer, the Servicer, the Trustee and each holder of the Notes
(each an "Indemnified Party")
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against any and all liabilities, losses, damages, penalties, costs and expenses
(including costs of defense and legal fees and expenses) which may be incurred
or suffered by such Indemnified Party (except to the extent arising out of the
gross negligence or willful misconduct on the part of the Indemnified Party) as
a result of claims, actions, suits or judgments asserted or imposed against it
and arising out of the transactions contemplated hereby or by the Indenture,
including, without limitation, any claims resulting from any use, operation,
maintenance, repair, storage or transportation of any item of Equipment, whether
or not in the Servicer's possession or under its control pursuant to this
Assignment and Servicing Agreement, and any tort claims and any fines or
penalties arising from any violation of the laws or regulations of the United
States or any state or local government or governmental authority; provided that
the foregoing indemnity shall in no way be deemed to impose on the Transferor
any obligation, other than to the extent specifically set forth in this Section
4, to make any payment with respect to principal or interest on the Notes or to
reimburse the Issuer for any payments on account of the Notes. This Section 4.03
shall bind any successor Servicer hereunder.
4.04 Purchases; Other Payments.
(a) In the event that (i) any of the representations or warranties made by
the Transferor in Sections 2.04 and 2.05 hereof with respect to any of the
Leases or the Equipment subject thereto proves at any time to have been
inaccurate in any material respect as of the Issuance Date or related transfer
date, as the case may be or (ii) any Lease shall be terminated in whole or in
part by a Lessee, or any amounts due with respect to any Lease shall be reduced
or impaired, as a result of any action or inaction by the Transferor (other than
any such action or inaction of the Transferor, when acting as Servicer, in
connection with the enforcement of any Lease in a manner consistent with the
provisions of this Assignment and Servicing Agreement) or any claim by any
Lessee against the Transferor and, in any such case, the event or condition
causing such inaccuracy, termination, reduction, impairment or claim shall not
have been cured or corrected within 30 days after the earlier of the date on
which the Transferor is given notice thereof by the Issuer or the Trustee or the
date on which the Transferor otherwise first has notice thereof, the Transferor
will purchase such Lease and the Equipment subject thereto by paying to the
Trustee, not later than the third Business Day after the Determination Date next
following the expiration of such 30-day period with respect to the events
referenced in Section 4.04(a)(i) and (ii), an amount equal to the Lease Purchase
Amount, and simultaneously with such purchase, the Transferor shall reimburse
the Servicer for all amounts, if any, theretofore advanced by the Servicer
pursuant to Section 4.01 with respect to such Lease. Without limiting the
generality of the foregoing, it is agreed and understood that for purposes of
this Section 4.04, any inaccuracy in any representation or warranty with respect
to (i) the priority of the Lien of the Indenture with respect to any Lease or
(ii) the amount (if less than represented) of the Lease Payments, Casualty
Payments, Termination Payment or Booked Residual Value under any Lease shall be
deemed to be material.
(b) By the Issuance Date, the Transferor agrees to obtain and provide to
the Trustee UCC searches against it from the central filing offices in New
Jersey confirming the absence of any UCC filings (other than those in the
process of being released pursuant to releases delivered on the Issuance Date)
against the Transferor with respect to the Leases (including the right to
receive all payments due or to become due thereunder) and the Equipment, other
than those naming the Transferor or the Issuer as the owner of the Leases or the
Trustee as secured
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party. In the event the Transferor fails to provide any such searches required
by the preceding sentence of this Section 4.04(b) within the required time
period or any search reveals the existence of any conflicting Liens (which are
not removed within 30 days of receipt of such search), the Transferor shall be
required to purchase not later than the third Business Day after the
Determination Date following the expiration of the time period during which such
search was to be obtained or such Lien released, as the case may be, any Lease
of Equipment in any such state for which such searches are not provided or with
respect to which conflicting Liens are found to exist at the Lease Purchase
Amount for such Lease.
(c) The Transferor's obligations under this Section 4.04 are the full
recourse obligations of the Transferor and shall in no way be limited or
discharged by the application of any funds constituting part of the Trust
Estate.
4.05 Payment Advice.
Each payment to the Trustee pursuant to any of the provisions of this
Assignment and Servicing Agreement shall be accompanied by written advice
containing sufficient information to identify the Lease and/or Equipment to
which such payment relates, the Section of this Assignment and Servicing
Agreement pursuant to which such payment is made, and the proper application
pursuant to the provisions of the Indenture of the amounts being paid.
SECTION 5. INFORMATION TO BE PROVIDED
5.01 Monthly Status Reports; Servicing Reports.
(a) Within five Business Days following each Payment Date, the Servicer
will send to the Trustee (copies of which the Trustee shall send to each Rating
Agency and to each holder of the Notes as provided in the Indenture) a written
report, signed by one of the Servicer's financial officers, (i) identifying each
Lease with respect to which any Lease Payment was 30 or more days overdue as of
the end of the immediately preceding Lease Payment Period, the Discounted
Present Value of such Lease as of such Payment Date, the amount advanced by the
Servicer with respect to such Lease pursuant to Section 4.01 hereof since the
Servicer's previous monthly report (or, in the case of the first such report,
since the Cut-Off Date), (ii) identifying each Lease with respect to which any
Lease Payment was 60 or more days overdue as of the end of the immediately
preceding Lease Payment Period, the Discounted Present Value of such Lease as of
such Payment Date, the amount advanced by the Servicer with respect to such
Lease pursuant to Section 4.01 hereof since the Servicer's previous monthly
report (or, in the case of the first such report, since the Issuance Date),
(iii) identifying each Lease with respect to which any Lease Payment was 93 or
more days overdue as of the end of the immediately preceding Lease Payment
Period, the Discounted Present Value of such Lease as of such Payment Date, the
amount advanced by the Servicer with respect to such Lease pursuant to Section
4.01 hereof since the Servicer's previous monthly report (or, in the case of the
first such report, since the Issuance Date), (iv) identifying each Lease which
became a Non-Performing Lease as of the preceding Determination Date and
specifying the Discounted Present Value of such Lease as of such Determination
Date (or,
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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, Termination
Payment or Residual Realizations, and (iii) identifying the lease or leases to
which such amounts relate.
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5.02 Annual Independent Public Accountant's Report.
The Servicer shall cause a firm of independent public accountants (who may
also render other services to the Servicer or to the Transferor) to deliver to
the Trustee, with a copy to each Rating Agency, within 135 days following the
end of each fiscal year of the Servicer, beginning with the Servicer's fiscal
year ending __________, _____, a written statement to the effect that such firm
has (a) obtained from the Servicer a copy of the monthly status report pursuant
to Section 5.01 for a single month during the previous calendar year; (b)
compared the information contained in such monthly status report and in the
monthly summaries prepared by the Servicer in support of such monthly status
report to the computer printouts and accounts prepared by the Servicer and
supporting such reports; and (c) selected, at random, 25 Leases included in the
Trust Estate and compared the activity in the files maintained by the Servicer
for such Leases to the activity as reported for those Leases to the monthly
summaries prepared by the Servicer and supporting the monthly status report, and
that, on the basis of such examination and comparison, such firm is of the
opinion that the Servicer has prepared such monthly status report and summaries
in agreement with the computer printouts, accounts and individual Lease files,
except in each case for (x) such exceptions as such firm shall believe to be
immaterial and (y) such other exceptions as shall be set forth in such
statement.
SECTION 6. THE SERVICER
6.01 Merger or Consolidation of the Servicer.
The Servicer will keep in full force and effect its existence, rights and
franchise as a corporation under the laws of its jurisdiction of incorporation
and will preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is necessary to protect the
validity and enforceability of any of the Leases or to permit performance of the
Servicer's duties under this Assignment and Servicing Agreement.
The Servicer shall not merge or consolidate with any other Person unless
(i) the entity surviving such merger or consolidation is a corporation organized
under the laws of the United States or any jurisdiction thereof and (ii) the
surviving entity, if not the Servicer, shall execute and deliver to the Issuer,
the Servicer and the Trustee, in form and substance satisfactory to each of
them, (a) an instrument expressly assuming all of the obligations of the
Servicer hereunder and (b) an opinion of counsel to the effect that such Person
is a corporation of the type described in the preceding clause (i) and has
effectively assumed the obligations of the Servicer hereunder. Upon the
occurrence of any such merger or consolidation, the Servicer shall give notice
promptly to the Rating Agencies.
6.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall incur any liability to the Issuer, the Trustee or
the holders of the Notes for any action taken or not taken in good faith
pursuant to the terms of this Assignment and Servicing Agreement with respect to
any Lease (including any Non-Performing Lease) or the Equipment subject thereto;
provided, however, that this provision shall not protect the Servicer or any
such person against any breach of warranties, representations or covenants made
by it herein or in any
22
certificate delivered in conjunction with the purchase of the Notes or for any
liability which would otherwise be imposed for any action or inaction resulting
from willful misconduct or bad faith or for negligence in the performance or
nonperformance of its duties hereunder.
6.03 Servicer Not to Resign or Be Removed.
The Servicer shall not resign from the servicing obligations and duties
hereby imposed on it except upon determination that such duties hereunder are no
longer permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an opinion of independent
counsel to the Servicer, in form and substance satisfactory to the holders of
the Notes, to such effect delivered to the Trustee.
Except as provided in Section 8.02 hereof, the Servicer shall not be
removed or be replaced as Servicer with respect to any Lease or any of the
Equipment.
No resignation or removal of the Servicer shall in any event (i) become
effective until the Trustee or a successor servicer shall have assumed the
Servicer's servicing responsibilities and obligations in accordance with Section
8.02 hereof, or (ii) affect the Transferor's obligations pursuant to Section 3
hereof.
6.04 Financial and Business Information.
The Servicer will deliver to the Issuer and the Trustee upon receipt
thereof shall deliver to each Rating Agency and upon request, to any holder of
outstanding Notes evidencing not less than 25% of the Outstanding Principal
Amount of the Receivable Notes or the Class R Notes (and, upon the request of
any holder of outstanding Notes, to any prospective transferee of any Notes)
and, in the case of subsection (c) below:
(a) Quarterly Statements - within 45 days after the end of each of the
first three quarterly fiscal periods in each fiscal year of the Servicer, a copy
of:
(1) a consolidated balance sheet of the Servicer (or its parent) and
its consolidated subsidiaries at the end of such quarter, and
(2) consolidated statements of income, retained earnings and cash flow
of the Servicer (or its parent) and its consolidated subsidiaries for that
quarter and for the portion of the fiscal year ending with such quarter,
accompanied by a certificate signed by a principal financial officer of the
Servicer stating that such financial statements present fairly the financial
condition of the Servicer and its consolidated subsidiaries and have been
prepared in accordance with generally accepted accounting principles
consistently applied;
(b) Annual Statements - within 135 days after the end of each fiscal year
of the Servicer, a copy of:
(1) a consolidated balance sheet of the Servicer (or its parent) and
its consolidated subsidiaries, at the end of that year, and
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(2) consolidated statements of income, retained earnings and cash flow
of the Servicer (or its parent) and its consolidated subsidiaries for that
year, setting forth in each case in comparative form the figures for the
previous fiscal year,
all in reasonable detail and accompanied by an opinion of a firm of independent
certified public accountants of recognized national standing stating that such
financial statements present fairly the financial condition of the Servicer and
its consolidated subsidiaries and have been prepared in accordance with
generally accepted accounting principles consistently applied (except for
changes in application in which such accountants concur and footnote), and that
the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances;
(c) Notice of Servicer Event of Default - immediately upon becoming aware
of the existence of any condition or event which constitutes a Servicer Event of
Default, a written notice, by certified mail return receipt requested, hand
delivery or overnight courier, describing its nature and period of existence and
what action the Servicer is taking or proposes to take with respect thereto;
(d) SEC and Other Reports - promptly upon their becoming available, one
copy of each report (including the Servicer's annual report to shareholders and
reports on Form 8-K, 10-K, and 10-Q), proxy statement, registration statement,
prospectus and notice filed with or delivered to any securities exchange, the
Securities and Exchange Commission or any successor agencies; and
(e) Report on Proceedings - promptly upon the Servicer's becoming aware of
(1) any proposed or pending investigation of it by any governmental
authority or agency, or
(2) any court or administrative proceeding
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or conditions (financial
or otherwise) of the Servicer, a written notice specifying the nature of such
investigation or proceeding and what action the Servicer is taking or proposes
to take with respect thereto and evaluating its merits; and
(f) Requested Information - with respect to the Class E Notes and the Class
R Notes, with reasonable promptness, any other data and information which may be
reasonably requested from time to time, including, without limitation, any
information required to be made available at any time to any prospective
transferee of any Notes in order to satisfy the requirements of Rule 144A under
the Securities Act of 1933, as amended.
6.05 Officers' Certificates.
With each set of financial statements delivered pursuant to Section 6.04,
the Servicer will deliver an Officers' Certificate stating (i) that the officers
signing such Officers' Certificate have reviewed the relevant terms of this
Assignment and Servicing Agreement and
24
have made, or caused to be made under such officers' supervision, a review of
the activities of the Servicer during the period covered by the statements then
being furnished, (ii) that the review has not disclosed the existence of any
Servicer Event of Default or, if a Servicer Event of Default exists, describing
its nature and what action the Servicer has taken and is taking with respect
thereto, and (iii) that on the basis of such review the officers signing such
certificate are of the opinion that during such period the Servicer has serviced
the Leases in compliance with the procedures hereof except as described in such
certificate.
6.06 Inspection.
The Servicer will permit, on reasonable prior notice, the representatives
of the Issuer and the Trustee and the holder of any Notes evidencing not less
than 25% of the Outstanding Principal Amount of any class of Notes to inspect
the servicing operations and discuss the servicing operations of the Servicer
with any of its officers or employees all at such reasonable times and as often
as may be reasonably requested for the purpose of reviewing the Servicer or the
Servicer's performance of its duties and obligations hereunder. Any expense
incident to the exercise by the Issuer, the Trustee, or any holder of the Notes
during the continuance of any Servicer Event of Default, or any event or
condition which with the giving of notice or the lapse of time or both would
become a Servicer Event of Default, of any right under this Section 6.06 shall
be borne by the Servicer.
6.07 Servicer Records.
The Servicer will indicate in its records that it is servicing and
administering each Lease in its capacity as Servicer hereunder, and to the
extent it is in possession of any original Lease agreement, will hold such
Lease, subject to the provisions of the Indenture as Custodian for the Trustee.
SECTION 7. THE TRANSFEROR
7.01 Merger or Consolidation of the Transferor.
The Transferor will keep in full force and effect its existence, rights and
franchise as a corporation under the laws of its jurisdiction of incorporation
and will preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is necessary to protect the
validity and enforceability of any of the Leases or to permit performance of the
Transferor's duties under this Assignment and Servicing Agreement.
The Transferor shall not merge or consolidate with any other Person unless
(i) the entity surviving such merger or consolidation is a corporation organized
under the laws of the United States or any jurisdiction thereof and (ii) the
surviving entity, if not the Transferor, shall execute and deliver to the Issuer
or the Servicer and the Trustee, in form and substance satisfactory to each of
them, (a) an instrument expressly assuming all of the obligations of the
Transferor hereunder and (b) an opinion of counsel to the effect that such
Person is a corporation of the type described in the preceding clause (i) and
has effectively assumed the obligations of the Transferor hereunder.
25
7.02 Control of Issuer.
So long as any of the Notes or the other obligations secured by the
Indenture remain outstanding, the Transferor will not (i) sell, pledge or
otherwise transfer any of its membership interest in the Issuer held by the
Transferor or (ii) vote such beneficial interests in favor of any amendment to
or alteration of the certificate of formation of the Issuer.
7.03 Financial and Business Information.
The Transferor will deliver to the Issuer and the Trustee and upon receipt
thereof the Trustee shall deliver to each Rating Agency and upon request, to any
holder of outstanding Notes evidencing not less than 25% of the Outstanding
Principal Amount of Receivable Notes or to any holder of Outstanding Notes
evidencing not less than 25% of the Outstanding Principal Amount of the Class R
Notes (and, upon the request of any holder of outstanding Notes, to any
prospective transferee of any Notes):
(a) Notice of Servicer Event of Default - immediately upon becoming aware
of the existence of any condition or event which constitutes a Servicer Event of
Default, a written notice (with a copy to each Rating Agency) describing its
nature and period of existence and what action the Transferor is taking or
proposes to take with respect thereto;
(b) SEC and Other Reports - promptly upon their becoming available, one
copy of each report (including the Transferor's annual report to shareholders
and reports on Form 8-K, 10-K, and 10-Q), proxy statement, registration
statement, prospectus and notice filed with or delivered to any securities
exchange, the Securities and Exchange Commission or any successor agencies;
(c) Report on Proceedings - promptly upon the Transferor's becoming aware
of
(1) any proposed or pending investigation of it by any governmental
authority or agency, or
(2) any court or administrative proceeding,
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition (financial
or otherwise) of the Transferor, a written notice specifying the nature of such
investigation or proceeding and what action the Transferor is taking or proposes
to take with respect thereto and evaluating its merits;
(d) ERISA - (i) promptly and in any event within ten days after the
Transferor knows or has reason to know of the occurrence of a Reportable Event
with respect to a Pension Plan with regard to which notice must be provided to
the PBGC, a copy of such materials required to be filed with the PBGC with
respect to such Reportable Event and in each such case a statement of the chief
financial officer of the Transferor setting forth details as to such Reportable
Event and the action which the Transferor proposes to take with respect thereto;
(ii) at least ten days prior to the filing by any plan administrator of a
Pension Plan of a notice of intent to terminate such Pension Plan, a copy of
such notice; (iii) upon request of the Issuer and
26
the Trustee, and in no event more than ten days after such request, copies of
each annual report which is filed on Form 5500, together with certified
financial statements for the Pension Plan (if any) as of the end of such year
and actuarial statements on Schedule B to such Form 5500; (iv) promptly and in
any event within ten days after it knows or has reason to know of any event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
a statement of the chief financial officer of the Transferor describing such
event or condition; (v) promptly and in no event more than ten days after
receipt thereof by the Transferor or any Related Person, each notice received by
the Transferor or any Related Person concerning the imposition of any withdrawal
liability under Section 4202 of ERISA; and (vi) promptly after receipt thereof a
copy of any notice the Transferor or any Related Person may receive from the
PBGC or the Internal Revenue Service with respect to any Pension Plan; provided,
however, that this subsection (vi) shall not apply to notices of general
application promulgated by the PBGC or the Internal Revenue Service or notices
which would not require any material payment by the Transferor or any Related
Person; and
(e) Requested Information - with reasonable promptness, any other data and
information which may be reasonably requested from time to time.
7.04 Officers' Certificates.
With each set of financial statements delivered pursuant to Section 7.03,
the Transferor will deliver an Officers' Certificate stating that the officers
signing such Certificate have reviewed the relevant terms of this Assignment and
Servicing Agreement and have made, or caused to be made under such officers'
supervision, a review of the activities of the Transferor during the period
covered by the income statements then being furnished and, so long as the
Transferor is Servicer hereunder, that the review has not disclosed the
existence of any Servicer Event of Default or, if a Servicer Event of Default
exists, describing its nature and what action the Transferor has taken and is
taking with respect thereto.
7.05 Inspection.
The Transferor will permit, on reasonable prior notice, the representatives
of the Issuer, the Servicer, the Trustee, or any holder of the Notes evidencing
not less than 25% of the Outstanding Principal Amount of any class of Notes to
examine the servicing operations and discuss the servicing operations of the
Transferor with any of its officers or employees, all at such reasonable times
and as often as may be reasonably requested for the purpose of reviewing its
performance as a Servicer hereunder. Any expense incident to the exercise by the
Issuer, the Trustee or any holder of the Notes during the continuance of any
default by the Transferor in any of its obligations hereunder of any right under
this Section 7.05 shall be borne by the Transferor.
7.06 Books and Records.
The Transferor will clearly xxxx its books and records to reflect
contributions of Leases and Equipment pursuant to this Agreement.
27
7.07 Communications.
The Transferor will reply to all inquiries by third parties with respect to
the transactions contemplated by this Agreement by indicating that it has
contributed the Leases and its right, title and interest in the related
Equipment and that the Issuer now holds title to the Leases and such interest in
the related Equipment.
SECTION 8. DEFAULT
8.01 Servicer Events of Default.
The following events and conditions shall constitute Servicer Events of
Default hereunder:
(i) failure on the part of the Servicer to deposit to the Collection
Account, Residual Account or other applicable account in accordance with
the terms of the Indenture within three Business Days following the receipt
thereof any monies received by the Servicer (including, without limitation,
any Lease Payments and any Non-Performing Lease Payments) and required to
be deposited hereunder;
(ii) so long as the Transferor is the Servicer hereunder, failure on
the part of the Transferor to pay to the Trustee on the date when due in
accordance with the terms hereof, any payment required to be made by the
Transferor pursuant to Section 4 hereof;
(iii) failure on the part of either the Servicer or (so long as the
Transferor is the Servicer) the Transferor to observe or perform in any
material respect any other of their respective covenants or agreements in
this Assignment and Servicing Agreement which failure continues unremedied
for a period of 30 days after the earlier of (A) the date it first becomes
known to any officer of the Transferor or the Servicer, as the case may be,
and (B) the date on which written notice thereof requiring the same to be
remedied shall have been given to the Transferor or the Servicer, as the
case may be, by the Trustee, or to the Transferor or the Servicer, as the
case may be, and the Trustee by any holder of the Notes;
(iv) if any representation or warranty made by the Transferor in this
Assignment and Servicing Agreement or in any certificate or other writing
delivered pursuant hereto or made by any successor Servicer in connection
with such successor Servicer's assumption of the duties of the Servicer
shall prove to be incorrect in any material respect as of the time when the
same shall have been made; provided, however, that the breach of any
representation or warranty made by the Transferor or Servicer in this
Assignment and Servicing Agreement will be deemed to be "material" only if
it affects the Noteholders, the enforceability of the Indenture or of the
Notes; and provided, further, that a material breach of any representation
or warranty made by the Transferor in this Assignment and Servicing
Agreement with respect to any of the Leases or the Equipment subject
thereto will not constitute a Servicer Event of Default if the Transferor
purchases
28
such Lease and Equipment in accordance with this Assignment and Servicing
Agreement;
(v) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Servicer in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or (B) a decree or order
adjudging the Servicer bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of the Servicer under any applicable federal
or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Servicer or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period of 60
consecutive days;
(vi) the commencement by the Servicer of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Servicer in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it,
or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Servicer or of any substantial
part of its property, or the making by it of an assignment for the benefit
of creditors, or the failure by the Servicer to pay its debts generally as
they become due, or the taking of corporate action by the Servicer in
furtherance of any such action;
(vii) the failure of the Servicer to make one or more payments due
with respect to aggregate recourse debt or other obligations exceeding
$5,000,000, or the occurrence of any event or the existence of any
condition, the effect of which event or condition is to cause (or permit
one or more persons to cause) more than $5,000,000 of aggregate recourse
debt or other obligations of the Servicer to become due before its (or
their) stated maturity or before its (or their) regularly scheduled dates
of payment so long as such failure, event or condition shall be continuing
and shall not have been waived by the Person or Persons entitled to
performance; or
(viii) a final judgment or judgments (or decrees or orders) for the
payment of money aggregating in excess of $5,000,000 and any one of such
judgments (or decrees or orders) has remained unsatisfied and in effect for
any period of 60 consecutive days without a stay of execution.
29
8.02 Termination.
So long as a Servicer Event of Default shall be continuing, the Trustee
shall, upon the instructions of the holders of 66-2/3% in Outstanding Principal
Amount of the Notes, by notice in writing to the Servicer terminate all of the
rights and obligations of the Servicer (but not the Transferor's obligations
which shall survive any such termination) under this Assignment and Servicing
Agreement. On the receipt by the Servicer of such written notice, all authority
and power of the Servicer under this Assignment and Servicing Agreement to take
any action with respect to any Lease or Equipment shall cease and the same shall
pass to and be vested in the Trustee pursuant to and under this Section and the
Indenture; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and assignment of any Lease and the related Equipment, or otherwise.
8.03 Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 hereof, the Trustee, subject to the terms of Section
4.02 of the Indenture, shall be the successor in all respects to the Servicer in
its capacity as servicer of the Leases under this Assignment and Servicing
Agreement and, to such extent, shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof (but not the obligations of the Transferor contained in
Section 4 hereof which shall survive any such termination as above provided) and
shall be entitled to receive from the Issuer the Servicing Fee provided for in
Section 3.04 hereof; provided that the Trustee shall in no way be responsible or
liable for any action or actions of the Servicer before the time the Servicer
receives such a notice of termination.
(b) Notwithstanding the above, the Trustee may, if it shall be unwilling to
so act, or shall, if it is unable to so act, give notice of such fact to each
holder of the Notes and (i) appoint an established institution satisfactory to
the holders of 66-2/3% in Outstanding Principal Amount of the Notes as the
successor to the Servicer hereunder to assume all of the rights and obligations
of the Servicer hereunder, including, without limitation, the Servicer's right
hereunder to receive the Servicing Fee (but not the obligations of the
Transferor contained in Section 4 hereof) or, (ii) if no such institution
satisfactory to the holders of 66-2/3% in Outstanding Principal Amount of the
Notes is so appointed within 60 days following the giving of such notice,
appoint a bank or other established institution, which has experience in
servicing lease contracts and equipment similar to the Leases and Equipment and
as to which each of [________], [________] and [________] 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
30
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 right to recover full and
complete damages on account thereof to the extent not inconsistent with Section
6.02 hereof.
SECTION 9. SUBSTITUTION AND ADDITION OF LEASES
9.01 Substitution and Addition.
(a) Subject to the satisfaction of the requirements set forth in Section
9.01(b) hereof, the Transferor will have the right (but not the obligation) at
any time to substitute one or more Eligible Leases and the Equipment subject
thereto (each, a "Substitute Lease") for a Lease (for purposes of this Section 9
referred to as a "Predecessor Lease") and the Equipment subject thereto if:
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(i) the Predecessor Lease became (A) a Non-Performing Lease, (B) a
Warranty Lease or (C) an Adjusted Lease during the immediately preceding
Due Period;
(ii) the aggregate Discounted Present Value of the Non-Performing
Leases that are Predecessor Leases shall not in the aggregate exceed 10% of
the Discounted Present Value of the Leases on the Cut-Off Date; and
(iii) the aggregate Discounted Present Value of the Adjusted Leases
and Warranty Leases that are Predecessor Leases shall not exceed 10% of the
Discounted Present Value of the Leases on the Cut-off Date.
Subject to the satisfaction of the requirements set forth in Section 4 and
Section 9.01(b) hereof, in the event of an Early Lease Termination which has
been prepaid in full, the Issuer will have the option to reinvest the proceeds
of such Early Termination Lease in one or more Additional Leases. The purchase
price of such Additional Lease or Leases will be an amount equal to the proceeds
of such Early Termination Lease.
(b) Each transfer of Substitute Leases and addition of Additional Leases
will be subject to the satisfaction of the following conditions precedent:
(i) after giving effect to such additions and substitutions and any
adjustments pursuant to Section 4.02 thereof, the aggregate Booked Residual
Value of such Leases must be not less than 100% of the Booked Residual
Value of the Leases added, substituted or adjusted since the Issuance Date.
(ii) the final payment on such Substitute Lease or Additional Lease
must be on or prior to ________.
(iii) after giving effect to such additions and substitutions and any
adjustments pursuant to Section 4.02 hereof the aggregate amount of Lease
Payments through the term of the Leases (including the Substitute Leases
and the Additional Leases) and the Discounted Present Value of the
Performing Leases will not be materially less than the aggregate scheduled
Lease Payments of the Leases and the Discounted Present Value of the
Leases, respectively prior to such substitution or addition or adjustment;
and
(iv) after giving effect to such adjustments, additions and
substitutions, the Discounted Present Value of the Performing Leases must
not be less than the Discounted Present Value of the Performing Leases
prior to such adjustment, substitution or addition.
(v) after giving effect to such adjustments, additions, and
substitutions pursuant to Section 9, the weighted average remaining term of
the Performing Leases must not be greater than the weighted average
remaining term of the Performing Leases prior to such adjustment, addition,
and substitution.
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(vi) such Additional Lease or Substitute Lease was originated in the
Healthcare Group, the Commercial and Industrial Group and the Business
Technology Group or its predecessors or successors.
(c) Each addition and substitution pursuant to this Section 9.01 shall
include the right to receive all amounts due or to become due under each
Substitute Lease being substituted or Additional Leases being purchased and any
security deposits paid by the related Lessee to the Transferor in connection
therewith (other than any prepayments of rent required pursuant to the terms
thereof at or before the commencement of such Lease and any payments due before
the Lease Payment Period during which such substitution or addition is made). At
the time of each such substitution and addition, the Transferor shall transfer
to the Trustee all Lease Payments actually received by the Transferor which
became due during the current Lease Payment Period.
9.02 Procedure.
(a) By 11:00 A.M. on the third Business Day following each Determination
Date, the Transferor shall give written notice to the Servicer of any
substitution pursuant to Section 9.01 of Substitute Leases for Predecessor
Leases or addition of Additional Leases for Early Termination Leases which have
been prepaid in full during the preceding Lease Payment Period. By 11:00 A.M. on
the fourth Business Day following each Payment Date, the Transferor shall
deliver to the Servicer and the Trustee and, to the extent not included in the
Monthly Servicer Report, the Trustee shall promptly deliver to each Rating
Agency (i) a supplement to Exhibit A hereto setting forth the information shown
thereon for each such Substitute Lease and Additional Lease, (ii) an Officer's
Certificate (A) certifying that each such Substitute Lease and Additional Lease
is an "Eligible Lease", (B) specifying each Predecessor Lease for which a
substitution has been made and each Early Termination Lease which is being
replaced by an Additional Lease and the amount of each periodic Lease Payment
and the Booked Residual Value under each such Predecessor Lease and the amount
of each periodic Lease Payment and the Booked Residual Value under each
Additional Lease and Substitute Lease being transferred thereby and (C) that all
conditions precedent to such addition or substitution have been satisfied and
(iii) such additional information concerning such Additional Leases, Substitute
Leases, Early Termination Leases or Predecessor Leases as may be needed for the
Servicer to prepare its monthly reports pursuant to Section 5.01 hereof and to
otherwise carry out its duties as servicer hereunder.
(b) Subject to the provisions of Section 9.03, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section 9.02(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Lease Payment Period (i) the Transferor contributed as a
contribution to capital to the Issuer pursuant to Section 9.01 hereof all of the
Transferor's right, title and interest in and to the Substitute Leases and
Additional Leases identified in such supplement and the related rights described
in Section 9.01 hereof, (ii) the Transferor transferred to the Issuer, as a
contribution to capital, all of the Transferor's right, title and interest in
and to the Equipment subject to such Substitute Leases (to the extent of the
Transferor's interest in such Equipment, including the Transferor's security
interest in any Equipment which is not owned by the Transferor), and (iii) the
Issuer assigned and transferred to the Transferor, without representation or
warranty, all of the Issuer's right, title and interest in
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and to the Predecessor Leases and Early Termination Leases identified in such
Officer's Certificate and the Equipment subject thereto (to the extent of the
Issuer's interest in such Equipment, including the Issuer's security interest in
any Equipment which is not owned by the Issuer). The Transferor shall promptly
deliver to the Trustee (or a custodian on its behalf) the original executed
counterpart of each Substitute Lease and Early Termination Lease assigned to the
Issuer pursuant to Section 9.01 hereof and the Issuer shall promptly request the
Trustee to deliver to the Transferor the original executed counterpart of each
Predecessor Lease for which substitution has been made pursuant to Section 11.01
hereof.
9.03 Objection and Purchase.
If any holder of the Notes objects to any substitution of Leases within ten
days of receipt of the Servicer's monthly report providing notice thereof
pursuant to Section 5.01 above, on the grounds either that any Substitute Lease
or Additional Lease is not an Eligible Lease within the meaning of the
definition thereof or that such substitution or addition is otherwise not
permitted under the provisions of Section 9.01 hereof, the Transferor shall be
entitled to present such additional information as it deems appropriate in an
effort to demonstrate that such Lease is an Eligible Lease and that such
substitution is permitted under the provisions of Section 11.01 hereof.
Following such presentation, the substitution shall remain effective if each
person originally objecting to the substitution withdraws his objection. If the
conditions specified in the preceding sentence are not satisfied, or if at any
time it is established that any lease was not, at the time of substitution, an
Eligible Lease, then the Transferor shall be required to purchase such Lease in
accordance with the provisions of Section 4.04 hereof.
9.04 Transferor's and Servicer's Subsequent Obligations.
Upon any substitution of Leases in accordance with the provisions of this
Section 9, the Transferor's and the Servicer's obligations hereunder with
respect to the Predecessor Lease shall cease but the Transferor and the Servicer
shall each thereafter have the same obligations with respect to the Substitute
Lease substituted as it has with respect to all other Leases subject to the
terms hereof.
SECTION 10. ASSIGNMENT
10.01 Assignment to Trustee.
It is understood that this Assignment and Servicing Agreement and all
rights of the Issuer hereunder will be assigned by the Issuer to the Trustee
pursuant to the Indenture, for the benefit of the Trustee, the holders from time
to time of the Notes as provided in the Indenture, and may be subsequently
assigned by the Trustee to any successor Trustee or as otherwise provided in the
Indenture. Each of the Transferor and the Servicer hereby expressly agrees to
each such assignment and agrees that all of its duties, obligations,
representations and warranties hereunder shall be for the benefit of, and may be
enforced by, the Trustee, the holders from time to time of the Notes, and any
successor to or assignee of any thereof.
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10.02 Assignment by Transferor or Servicer.
None of the respective rights or obligations of the Transferor and the
Servicer hereunder may be assigned without the prior written consent of the
Issuer and the Trustee (acting upon the instructions of the holders of 66-2/3%
of the then aggregate unpaid Outstanding Principal Amount of the Notes);
provided, that nothing herein shall preclude the Servicer from performing its
duties hereunder through the use of agents to the extent that such use is
consistent with the Servicer's business practices in dealing with leases and
equipment for its own account.
SECTION 11. NATURE OF OBLIGATIONS AND SECURITY THEREFOR
11.01 Obligations Absolute.
The obligations of the Transferor hereunder, and the rights of the Trustee,
as assignee of the Issuer, in and to all amounts payable by the Transferor
hereunder, shall be absolute and unconditional and shall not be subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment whatsoever,
including, without limitation, abatements, reductions, setoffs, defenses,
counterclaims or recoupments due or alleged to be due to, or by reason of, any
past, present or future claims which the Transferor may have against the
Servicer, the Issuer, the Trustee, and any holder of the Notes or any other
Person for any reason whatsoever; nor, except as otherwise expressly provided
herein, shall this Assignment and Servicing Agreement terminate, or the
respective obligations of the Issuer, the Transferor or the Servicer be
otherwise affected, by reason of any defect in any Lease or in any unit of
Equipment or in the respective rights and interests of the Issuer, the
Transferor and the Trustee therein, or by reason of any Liens, encumbrances,
security interests or rights of others with respect to any Lease or any unit of
Equipment, or any failure by the Issuer or the Servicer to perform any of its
obligations herein contained, or by reason of any other indebtedness or
liability, howsoever and whenever arising, of the Issuer, the Servicer, the
Trustee, or any holder of the Notes to the Transferor or any other Person or by
reason of any insolvency, bankruptcy, or similar proceedings by or against the
Transferor, the Servicer, the Issuer, the Trustee or any other Person or for any
other cause whether similar or dissimilar to the foregoing, any present or
future law to the contrary notwithstanding, it being the intention of the
parties hereto that all obligations of the Transferor hereunder and all amounts
payable by the Transferor hereunder shall continue to be due and payable in all
events and in the manner and at the times herein provided unless and until the
obligation to perform or pay the same shall be terminated or limited pursuant to
the express provisions of this Assignment and Servicing Agreement.
11.02 Security for Obligations.
As security for the full and timely performance by the Transferor and the
Servicer of each of its obligations hereunder, and by the Issuer of each of its
obligations hereunder and under the Notes and the Indenture, the Transferor
hereby pledges and grants to the Trustee (as a precaution in the event that,
contrary to the intent of the parties to the transactions contemplated hereby,
it is contended that either has any continuing interest in any Lease or item of
Equipment subject to the Indenture) a first priority Lien on and security
interest in all right, title and interest of the Transferor now or hereafter
acquired in and to each Lease (including the right to receive all payments due
or to become due thereunder) and each item of Equipment at any time subject
35
to the Indenture. The foregoing security interest is granted upon and is subject
to the same terms and provisions as are set forth in the Indenture and shall
continue in full force and effect until the same is discharged in accordance
with the terms therein, notwithstanding any waiver or modification of any of the
terms hereof or thereof or of any of the Notes, whether with or without the
consent of the Transferor.
11.03 Further Assurances; Financing Statements.
Each of the Transferor and the Servicer severally agrees that at any time
and from time to time, at its expense, it shall promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable or that the Issuer or the Trustee may request to perfect
and protect the assignments and security interests granted or purported to be
granted herein with respect to the Leases and the Lease Payments or to enable
the Issuer or the Trustee to exercise and enforce its rights and remedies under
this Agreement with respect to any Leases and the Lease Payments. Without
limiting the generality of the foregoing, each of the Transferor shall execute
and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices as may be necessary or desirable or that the
Issuer or the Trustee may request to protect and preserve the assignments and
security interests granted by this Agreement with respect to the Leases.
SECTION 12. DEFINITIONS
As used in this Assignment and Servicing Agreement, the following terms
have the respective meanings set forth below or set forth in the Section hereof
or in any other agreement indicated:
Accumulated Funding Deficiency - a funding deficiency described in Section
302 of ERISA.
Additional Lease - each separate lease agreement and each lease schedule or
supplement (and each master lease agreement insofar as the same relates to any
such schedule or supplement) acquired by the Issuer from the Transferor with all
or a portion of the proceeds of an Early Termination Lease that has been prepaid
in full pursuant to Section 9 hereof.
Adjusted Lease - a Lease which has had one or more non-credit related terms
adjusted or modified by the Servicer.
Affiliate - Section 1.01 of the Indenture.
Booked Residual Value - the estimated residual value of the Equipment
recorded on the books of the Transferor as of the Cut-Off Date in the case of
the initial Leases, and as of the date of substitution in the case of a
Substitute Lease.
Business Day - any day that is not a Saturday, Sunday or other day on which
commercial banking institutions in the city in which the Corporate Trust Office
or the Servicer is located are authorized or obligated by law or executive order
to remain closed.
36
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, Class A-4 Notes and Class A-5 Notes.
Class A-1 Notes - the Issuer's _____% Class A-1 Lease-Backed Notes, Series
______.
Class A-2 Notes - the Issuer's _____% Class A-2 Lease-Backed Notes, Series
______.
Class A-3 Notes - the Issuer's _____% Class A-3 Lease-Backed Notes, Series
______.
Class A-4 Notes - the Issuer's _____% Class A-4 Lease-Backed Notes, Series
______.
Class A-5 Notes - the Issuer's _____% Class A-5 Lease-Backed Notes, Series
______.
Class B Notes - the Issuer's _____% Class B Lease-Backed Notes, Series
______.
Class C Notes - the Issuer's _____% Class C Lease-Backed Notes, Series
______.
Class D Notes - the Issuer's _____% Class D Lease-Backed Notes, Series
______.
Class E Notes - the Issuer's _____% Class E Lease-Backed Notes, Series
______.
Class R Notes - the Issuer's Class R-1 Notes and Class R-2 Notes.
Class R-1 Notes - the Issuer's _____% Class R-1 Lease-Backed Notes, Series
______.
Class R-2 Notes - the Issuer's _____% Class R-2 Lease-Backed Notes, Series
______.
Code - the Internal Revenue Code of 1986, as amended.
Collection Account - Section 1.01 of the Indenture.
Corporate Trust Office - Section 1.01 of the Indenture.
Cut-Off Date - opening of business on _______, _____.
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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.
Indemnified Party - Section 4.03 hereof.
Indenture - the Indenture dated as of ________, _____, 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 - ________, _____.
Issuer - Copelco Capital Receivables LLC, a Delaware limited liability
company.
38
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 of determination with respect to any
Lease, means an amount equal to the sum of (a) the sum of (i) the Discounted
Present Value of the Lease as of the beginning of the Due Period relating to
such date of determination (plus any amounts previously due and unpaid) and (ii)
the product of (x) the amount described in the foregoing clause (i) and (y)
one-twelfth of the Discount Rate and (b) the product of (i) the Initial ADRB and
(ii) the ratio, as of the Cut-Off Date, that the Booked Residual Value of the
Lease bears to the aggregate Booked Residual Value of all Leases.
Lessee - each lessee under a Lease.
Lien - means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics liens, and any liens
that attach to a Lease by operation of law.
Liquidity Reserve Account - Section 1.01 of the Indenture.
Maintenance Charges - Section 1.01 of the Indenture.
Nominal Buy-Out Lease - each Lease identified on Exhibit A hereto as having
an estimated residual value of $10 or less in the column under the-heading
"RESIDUAL".
Non-Performing Lease - Section 1.01 of the Indenture.
Nonrecoverable Advance - any advance made or to be made by the Servicer
pursuant to Section 4.01 hereof which, in the good faith judgment of the
Servicer, will ultimately not be recoverable by the Servicer under the terms of
this Assignment and Servicing Agreement and the Indenture.
Noteholder - at any time, any Person in whose name a note is registered in
the Note Register (as defined in the Indenture).
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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 18th day of each calendar month (or the next Business
Day thereafter if such day is not a Business Day).
Predecessor Lease - Section 11.01 hereof.
Pension Plan - Section 2.13 hereof.
Person - an individual, partnership, corporation, joint venture,
association, limited liability company, trust (including any beneficiary
thereof) or unincorporated organization, or a government or agency or political
subdivision thereof.
Prime Rate - the [Trustee] prime lending rate.
Private Placement Memoranda - each final Private Placement Memoranda used
in connection with the private offering of the Class E Notes and the Class R
Notes.
Prohibited Transaction - any transaction described in Section 406 of ERISA
which is not exempt by reason of Section 408 of ERISA or the transitional rules
set forth in Section 414(c) of ERISA and any transaction described in Section
4975(c) of the Code which is not exempt by reason of Section 4975(c)(2) or
Section 4975(d) of the Code, or the transitional rules of Section 2003(c) of
ERISA.
Prospectus - the form of final prospectus to be used in connection with the
public offering of the Class A Notes, the Class B Notes, the Class C Notes and
Class D Notes as filed with the Securities and Exchange Commission pursuant to
Rule 424(b).
Rating Agency - [_____________], [_____________] or [_____________]
40
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.
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 - [Trustee], and any successor thereto, as trustee under the
Indenture.
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Underwriting Agreement - the Underwriting Agreement dated _________, _____
among the Issuer, the Servicer and First Union Capital Markets Corp., as
representative of the underwriters for the purchase and sale of the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes.
Uniform Commercial Code or UCC - with respect to a particular jurisdiction,
the Uniform Commercial Code, as in effect from time to time in such
jurisdiction, or any successor statute thereto.
Utilized Residual Amount - Section 1.01 of the Indenture.
Warranty Lease - Section 1.01 of the Indenture.
SECTION 13. INTER-COMPANY LOANS
13.01 Inter-Company Loans.
With the contribution of the Leases, the Issuer has acquired the right to
hold and apply in accordance with the provisions of certain of the Leases,
security deposits. The Issuer may from time to time, to the extent permitted by
law, lend such security deposits and any amounts disbursed to the Issuer
pursuant to Sections 3.04(b), 3.05(b) or 6.06 of the Indenture to the Transferor
(each such advance, an "Inter-Company Loan"). Each Inter-Company Loan shall be
on a demand basis, shall bear interest at an annual rate equal to the Prime Rate
plus one percent, shall be in the form attached hereto as Exhibit B and shall
otherwise be on such arm's-length terms and conditions as the Issuer and the
Transferor may agree.
SECTION 14. MISCELLANEOUS
14.01 Continuing Obligations.
This Assignment and Servicing Agreement shall continue in full force and
effect until each of the Notes and any other amounts due to any holder of the
Notes have been paid in full and all other obligations, if any, secured by the
Lien of the Indenture have been fully satisfied.
14.02 GOVERNING LAW.
THIS ASSIGNMENT AND SERVICING AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK. IF ANY PROVISION OF THIS ASSIGNMENT AND SERVICING
AGREEMENT IS DEEMED INVALID, IT SHALL NOT AFFECT THE BALANCE OF THIS ASSIGNMENT
AND SERVICING AGREEMENT.
14.03 Successors and Assigns.
This Assignment and Servicing Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Issuer, the Transferor, the
Servicer and the Trustee
42
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: [ ] with a copy to the General Counsel (telecopy: 856-273-9288) and
in the case of the Issuer, the Servicer and the Trustee and the holders of the
Notes, to such addresses as are provided pursuant to Sections 1.05 and 1.06 of
the Indenture or to such other address as either party may specify to the other
from time to time in accordance with this Section 14.06.
14.07 Counterparts.
This Assignment and Servicing Agreement may be executed in any number of
counterparts, each counterpart constituting an original, but all together
constituting only one Agreement.
14.08 Nonpetition Covenant.
The Transferor, by entering into this Assignment and Servicing Agreement,
hereby covenants and agrees that it will not at any time institute against the
Issuer or cooperate with or encourage others to or join in any action against
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings, under any federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes or the related Indenture until the expiration of one year and one day (or
if a preference period of a jurisdiction is longer, the applicable preference
period under that bankruptcy or similar law) from the date the Notes are paid in
full.
43
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 RECEIVABLES LLC
By: COPELCO MANAGER, INC.,
as manager
By:
----------------------------
Name:
Title:
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.
[TRUSTEE],
as Trustee
By:
----------------------------
Name:
Title:
[Signature Page to the Assignment and Servicing Agreement]
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
[On file with Trustee]
A-1
INTER-COMPANY LOAN NOTE
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS PROMISSORY NOTE ON THE PART OF
COPELCO CAPITAL RECEIVABLES LLC HAS BEEN ASSIGNED TO AND IS SUBJECT TO A
SECURITY INTEREST IN FAVOR OF [TRUSTEE], AS TRUSTEE, UNDER AN INDENTURE DATED AS
OF _________, _____, FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.
$_____________ ________, _____
COPELCO CAPITAL, INC., a Delaware corporation (the "Maker"), with its
principal office at Xxx Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxxx, XX 00000-0000, FOR
VALUE RECEIVED, hereby promises to pay to the order of Copelco Capital
Receivables LLC, a Delaware limited liability company or its assignee (the
"Payee"), for its account, the principal sum of ____________________
($____________) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Payee to the Maker under the
Assignment Agreement (as defined below)), together with interest per annum on
the unpaid principal amount hereof at the Prime Rate plus one per cent, in
lawful money of the United States of America and in immediately available funds
immediately on the demand of the Payee.
The date, amount and interest rate, of each Loan made by the Payee to the
Maker, and each payment made on account of the principal thereof, shall be
recorded by the Payee on its books and, prior to any transfer of this Note,
endorsed by the Payee on the schedule attached hereto or any continuation
thereof.
This Note evidences certain Inter-Company Loans from Payee to Maker
pursuant to Section 13.01 of that certain Assignment and Servicing Agreement
dated as of ________, _____, 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
----------------------------
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 Interest Amount Unpaid Principal Notation
Date of Loan Rate Paid or Prepaid Amount Made By
---- ---------------- -------- --------------- ---------------- ---------
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======================================================================================================================
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
================================================================================
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
================================================================================
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 A-5 Interest Paid ____%
C/6 Class B Interest Paid ____%
C/7 Class C Interest Paid ____%
C/8 Class D Interest Paid ____%
C/9 Class E Interest Paid ____%
C/10 Beginning Class A-1 Note Balance
C/11 Class A-1 Note Value Target (___% of 1/9)
C/12 Class A-1 Principal Paid
C/13 Beginning Class A-2 Note Balance
C/14 Class A-2 Note Value
C/15 Ending Class A-2 Note Balance
C/16 Class A-2 Principal Paid
C/17 Beginning Class A-3 Note Balance
C/17 Class A-3 Note Value
C/19 Ending Class A-3 Note Balance
C/20 Class A-3 Principal Paid
C/21 Beginning Class A-4 Note Balance
C/22 Class A-4 Note Value
C/23 Class A-4 Principal Paid
C/24 Ending Class A-4 Note Balance
C/25 Beginning Class A-5 Note Balance
C/26 Class A-5 Note Value
C/27 Ending Class A-5 Balance
C/28 Class A-5 Principal Paid
C/29 Beginning Class B Note Balance
C/30a Class B Note Value Target (__% of 1/9)
C/30b Class B Note Value Floor (__% of $__________ + Cum. Losses-C/12-6/4)
C-3
C/31 Class B Principal Paid
C/32 Ending Class B Note Balance
C/33 Beginning Class C Note Balance
C/34a Class C Note Value Target (__% of 1/9)
C/34b Class C Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/35 Class C Principal Paid
C/36 Ending Class C Note Balance
C/37 Beginning Class D Note Balance
C/38 Class D Note Value Target (__% of 1/9)
C/39 Class D Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/40 Class D Principal Paid
C/41 Ending Class D Note Balance
C/42 Beginning Class E Note Balance
C/43 Class E Note Value Target (__% of 1/9)
C/44 Class E Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/45 Class E Principal Paid
C/46 Ending Class E Note Balance
C/47 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
