As filed with the Securities and Exchange Commission on June 30, 1998
Registration No. 333-53735 and 333-53735-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COPELCO CAPITAL FUNDING CORP. XI
COPELCO CAPITAL FUNDING LLC 98-1
(Exact name of registrants as specified in their respective charters)
-------------------
Copelco Capital Funding Corp. XI
East Gate Drive
Mount Laurel, New Jersey 08054-5404
(609) 231-9600
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<S> <C> <C>
Delaware 6799 pending
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
Copelco Capital Funding LLC 98-1
East Gate Drive
Mount Laurel, New Jersey 08054-5404
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<S> <C> <C>
Delaware 6799 pending
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
-------------------
Spencer N. Lempert, Esq.
Copelco Capital Funding Corp. XI
Copelco Capital Funding LLC 98-1
East Gate Drive
Mount Laurel, New Jersey 08054-5404
(609) 231-9600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Peter Humphreys, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
(212) 259-6730
Approximate Date of Commencement of Proposed Sale to the
Public: As soon as practicable after the effective date of this registration
statement.
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. [ ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Proposed maximum Amount of
Title of each class of Amount to be Proposed maximum offering aggregate offering registration
securities to be registered registered price per unit(1) price(1) fee(2)
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<S> <C> <C> <C> <C>
Class A-1 Lease-Backed Notes............. $ 1,000,000 100% $ 1,000,000 $ 295.00
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Class A-2 Lease-Backed Notes............. $ 1,000,000 100% $ 1,000,000 $ 295.00
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Class A-3 Lease-Backed Notes............. $ 1,000,000 100% $ 1,000,000 $ 295.00
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Class A-4 Lease-Backed Notes............. $ 1,000,000 100% $ 1,000,000 $ 295.00
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Class B Lease-Backed Notes............... $ 1,000,000 100% $ 1,000,000 $ 295.00
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Class C Lease-Backed Notes............... $ 1,000,000 100% $ 1,000,000 $ 295.00
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Class D Lease-Backed Notes............... $ 1,000,000 100% $ 1,000,000 $ 295.00
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
The registrants hereby amend this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the commission, acting pursuant to said
section 8(a), may determine.
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<PAGE>
COPELCO CAPITAL FUNDING CORP. XI
COPELCO CAPITAL FUNDING LLC 98-1
CROSS REFERENCE SHEET
(Pursuant To Rule 404(A) And Item 501 Of Regulation S-K)
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<CAPTION>
Item
No. Name and Caption in Form S-1 Caption in Prospectus
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<S> <C> <C>
1. Forepart of the Registration Statement; Forepart of the Registration Statement; Front Cover Page of
Front Cover Page of Prospectus Prospectus; Cross Reference Sheet
2. Inside Front and Outside Back Cover Pages Inside Front Cover and Outside Back Cover Pages of
of the Prospectus Prospectus; Terms of the Notes; Available Information; Table
of Contents
3. Summary Information; Risk Factors and Prospectus Summary; Risk Factors; Certain Legal Aspects;
Ratio of Earnings to Fixed Charges Prepayment and Yield Considerations
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Underwriting
9. Description of Securities to be Registered Prospectus Summary; Description of the Notes;
10. Interest of Named Experts and Counsel *
11. Material Changes *
12. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
</TABLE>
* Not Applicable
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PROSPECTUS
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$--------------
Copelco Capital Funding Trust 1998-A, Issuer
Copelco Capital, Inc., Servicer
$_________ _____% Class A-1 Lease-Backed Notes, Series 1998-A
$_________ _____% Class A-2 Lease-Backed Notes, Series 1998-A
$_________ _____% Class A-3 Lease-Backed Notes, Series 1998-A
$_________ _____% Class A-4 Lease-Backed Notes, Series 1998-A
$_________ _____% Class B Lease-Backed Notes, Series 1998-A
$_________ _____% Class C Lease-Backed Notes, Series 1998-A
$_________ _____% Class D Lease-Backed Notes, Series 1998-A
The Copelco Lease-Backed Notes, Series 1998-A will consist of the
following classes (each, a "Class"): (i) the Class A-1 Notes (the "Class A-1
Notes"), the Class A-2 Notes (the "Class A-2 Notes"), the Class A-3 Notes (the
"Class A-3 Notes") and the Class A-4 Notes (the "Class A-4 Notes", together with
the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the "Class A Notes"),
(ii) the Class B Notes (the "Class B Notes"), (iii) the Class C Notes (the
"Class C Notes"), (iv) the Class D Notes (the "Class D Notes") and (v) the Class
E Notes (the "Class E Notes", together with the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes, the "Notes").
Only the Class A Notes, the Class B Notes, the Class C Notes and the Class D
Notes (together, the "Offered Notes") will be offered hereby. The Issuer may
also issue one or more classes of residual notes (the "Residual Notes") and one
or more classes of certificates, all of which certificates will be initially
retained by the Sponsor (as defined below), Copelco Capital Funding Corp. XI, a
limited-purpose Delaware corporation ("Copelco Capital XI") and Copelco Capital
(as defined below)(the "Certificates", together with the Notes and the Residual
Notes, the "Securities"). Neither the Residual Notes nor the Certificates are
offered hereby.
The Notes will represent debt obligations of Copelco Capital Funding
Trust 1998-A, a Delaware business trust (the "Issuer"), formed pursuant to a
trust agreement, dated as of July __, 1998 (the "Trust Agreement"), by and among
Copelco Capital Funding LLC 98-1, a Delaware limited liability company, as
sponsor ("Copelco Funding LLC" or the "Sponsor") and [_____________], a [ ]
banking corporation, as owner trustee (the "Owner Trustee"). The assets of the
Issuer securing the Notes will include a pool of healthcare, manufacturing and
business equipment leases, and all of its interest in the equipment underlying
the leases. The leases and the related interests in the equipment were
originated or acquired by Copelco Capital, Inc., a Delaware corporation
("Copelco Capital"), as described herein, sold or contributed by Copelco Capital
to the Sponsor and, in turn, sold by the Sponsor to the Issuer pursuant to a
sale and servicing agreement, dated as of July ___, 1998 (the "Sale and
Servicing Agreement"), by and among the Issuer, Copelco Capital, as seller (in
such capacity, the "Seller") and servicer (in such capacity, the "Servicer"),
the Sponsor, the Owner Trustee and Manufacturers and Traders Trust Company, a
New York banking corporation, as indenture trustee (the "Indenture Trustee") and
pledged by the Issuer to the Indenture Trustee pursuant to an indenture, dated
as of July __, 1998 (the "Indenture"), by and among the Issuer and the Indenture
Trustee.
(cover continued on next page)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
An investment in the Offered Notes involves certain risks. See "Risk
Factors" commencing on page [ ] for a discussion of certain factors that
should be considered in connection with an investment in the securities
offered hereby.
THE OFFERED NOTES WILL NOT REPRESENT AN INTEREST IN OR AN OBLIGATION
OF COPELCO FINANCIAL SERVICES GROUP, INC., COPELCO CAPITAL, INC., COPELCO
CAPITAL FUNDING CORP. XI OR ANY OF THEIR AFFILIATES, NOR WILL THE OFFERED
NOTES BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
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<CAPTION>
Initial Public
Offering Price Underwriting(1) Proceeds to Issuer(2)
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<S> <C> <C> <C>
Per Class A-1 Lease-Backed Note % % %
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</TABLE>
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<S> <C> <C> <C>
Per Class A-2 Lease-Backed Note % % %
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Per Class A-3 Lease-Backed Note % % %
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Per Class A-4 Lease-Backed Note % % %
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Per Class B Lease-Backed Note % % %
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Per Class C Lease-Backed Note % % %
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Per Class D Lease-Backed Note % % %
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Total............................. $ $ $
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</TABLE>
(1) Copelco Capital has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting expenses estimated to be $_______________.
The Offered Notes are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel, or modify any order without notice.
It is expected that delivery of the Offered Notes will be made in book-entry
form through the facilities of The Depository Trust Company, Cedel Bank, S.A. or
the Euroclear System on or about July ___, 1998.
FIRST UNION CAPITAL MARKETS
The date of this Prospectus is July ___, 1998.
2
<PAGE>
(cover page continued)
Payments of principal and interest to the holders of the Class A Notes
(the "Class A Noteholders") will have the benefit of limited credit support
consisting of the subordination of the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Certificates, funds on deposit in the
reserve account and amounts on deposit in certain other accounts, . The holders
of the Class B Notes (the "Class B Noteholders") will have the benefit of
limited credit support in the form of the subordination of the Class C Notes,
the Class D Notes, the Class E Notes, and the Certificates, funds on deposit in
the reserve account and amounts on deposit in certain other accounts. The
holders of the Class C Notes (the "Class C Noteholders") will have the benefit
of limited credit support in the form of the subordination of the Class D Notes,
the Class E Notes and the Certificates, funds on deposit in the reserve account
and amounts on deposit in certain other accounts. The holders of the Class D
Notes (the "Class D Noteholders") will have the benefit of limited credit
support in the form of the subordination of the Class E Notes and the
Certificates, funds on deposit in the reserve account and amounts on deposit in
certain other accounts, . The Class A Noteholders, the Class B Noteholders, the
Class C Noteholders and the Class D Noteholders are sometimes referred to herein
as the "Offered Noteholders". The Class E Notes and the Residual Notes are being
offered in a private placement and therefore are not being offered hereby. The
holders of the Class E Notes are sometimes referred to herein as the "Class E
Noteholders" (together with the Class A Noteholders, the Class B Noteholders,
the Class C Noteholders and the Class D Noteholders, the "Noteholders"), the
holders of the Residual Notes are sometimes referred to herein as the "Residual
Noteholders" and the holders of the Certificates are sometimes referred to
herein as the "Certificateholders". Capitalized terms used herein will have the
meanings ascribed to such terms herein. The pages on which terms are defined are
set forth on the Index of Terms contained herein.
Interest on the Offered Notes will be payable monthly in arrears on the
fifteenth day of the month beginning on August 15, 1998 (each, a "Payment Date")
with respect to the period from and including the immediately preceding Payment
Date (or with respect to the initial Payment Date, the Issuance Date) to the day
prior to such current Payment Date. Principal payments with respect to the
Offered Notes will be payable on each Payment Date beginning on August 15, 1998.
The stated maturity date with respect to the Class A-1 Notes is the Payment Date
in ________ (the "Class A-1 Stated Maturity Date"), the stated maturity date
with respect to the Class A-2 Notes is the Payment Date in __________ (the
"Class A-2 Stated Maturity Date"), the stated maturity date with respect to the
Class A-3 Notes is the Payment Date in ________ (the "Class A-3 Stated Maturity
Date"), the stated maturity date with respect to Class the A-4 Notes is the
Payment Date in ________ (the "Class A-4 Stated Maturity Date"), the stated
maturity date with respect to the Class B Notes is the Payment Date in ________
(the "Class B Stated Maturity Date"), the stated maturity date with respect to
the Class C Notes is the Payment Date in __________ (the "Class C Stated
Maturity Date") and the stated maturity date with respect to the Class D Notes
is the Payment Date in __________ (the "Class D Stated Maturity Date", together
with the Class A-1 Stated Maturity Date, the Class A-2 Stated Maturity Date, the
Class A-3 Stated Maturity Date, the Class A-4 Stated Maturity Date, the Class B
Stated Maturity Date and the Class C Stated Maturity Date, the "Stated Maturity
Dates"). However, if all payments on the Leases are made as scheduled, final
payment with respect to the Offered Notes would occur prior to stated maturity
and it is expected that the Offered Notes will mature prior to stated maturity
See "Prospectus Summary -- Expected Maturity; Stated Maturity." In addition,
should an Event of Default, an Early Lease Termination or a Casualty (each, as
described herein) occur, repayment of principal on the Offered Notes may be
earlier than would otherwise be the case.
The Issuer will have the option, subject to certain conditions, to
redeem all, but not less than all, of the Offered Notes and thereby cause early
repayment of the Offered Notes as of any Payment Date on which the Discounted
Present Value of the Performing Leases is less than or equal to 10% of the
Discounted Present Value of the Leases as of the Cut-Off Date (after giving
effect to the payment of principal on such Payment Date). The Issuer will give
notice of such redemption to each Offered Noteholder and the Indenture Trustee
at least 30 days before the Payment Date fixed for such prepayment. Upon deposit
of funds necessary to effect such redemption, the Indenture Trustee shall pay
the remaining unpaid principal amount on the Offered Notes and all accrued and
unpaid interest as of the Payment Date fixed for redemption. See "Description of
the Notes -- Redemption."
The Offered Notes offered hereby are being offered pursuant to this
Prospectus. Sales of the Offered Notes may not be consummated unless the
purchaser has received this Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF
THE OFFERED NOTES OFFERED HEREBY, INCLUDING PURCHASES OF OFFERED NOTES TO
STABILIZE THE MARKET PRICE AND THE IMPOSITION OF BIDS. FOR A DESCRIPTION OF
THESE ACTIVITIES SEE "UNDERWRITING" HEREIN.
AVAILABLE INFORMATION
The Issuer has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Offered Notes
offered pursuant to this Prospectus and described herein. For further
information, reference is made to the Registration Statement which may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street,
3
<PAGE>
N.W., Room 1024, Washington, D.C. 20549; Citicorp Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of the Registration Statement may be obtained
from the Public Reference Branch of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site
at http://www.sec.gov pursuant to Item 502(a) under Regulation S-K as recently
amended in SEC Release No. 33-7289 (May 9, 1996). The Issuer will file with the
Commission such periodic reports with respect to the Trust as are required under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations of the Commission thereunder.
REPORTS TO NOTEHOLDERS
During such time as the Offered Notes remain in book-entry form, any
quarterly and annual reports containing information concerning the Issuer and
the Offered Notes and required to be filed with the Commission will be sent to
Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC"), the
Euroclear System ("Euroclear") or Cedel Bank, S.A. ("CEDEL") as registered
holders of the Offered Notes pursuant to the Indenture. Such reports will be
made available by DTC, Euroclear or CEDEL and its participants to holders of
interests in the Offered Notes (the "Offered Noteholders") in accordance with
the rules, regulations and procedures creating and affecting DTC, Euroclear and
CEDEL, respectively. See "Description of the Notes--Book Entry Registration
Notes." However, such reports will not be sent directly to each beneficial owner
while the Notes are in book-entry form. Upon the issuance of fully registered,
certificated Notes, such reports will be sent directly to each Noteholder Such
reports will be prepared in accordance with generally accepted accounting
principles.
4
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. A listing of pages on which
some of such terms are defined can be found in the "Index of Terms" herein.
<TABLE>
<S> <C>
Issuer........................ Copelco Capital Funding Trust 1998-A (the "Issuer"), a Delaware business trust.
The Issuer has been formed pursuant to a trust agreement, dated as of July __,
1998 (the "Trust Agreement"), by and among Copelco Capital Funding LLC 98-1, a
Delaware limited liability company, as sponsor ("Copelco Funding LLC" or the
"Sponsor") and [ ], a [ ] banking corporation, as --------- --------- owner
Trustee (the "Owner Trustee"). The Issuer will have no significant assets other
than the Trust Fund (as described below). The Issuer's offices are located at [
].
Securities Offered............ $___________ aggregate principal amount of ____% Class A-1 Lease-Backed Notes,
Series 1998-A, (the "Class A-1 Notes"), $___________ aggregate principal amount
of _____% Class A-2 Lease-Backed Notes, Series 1998-A (the "Class A-2 Notes"),
$___________ aggregate principal amount of ___% Class A-3 Lease-Backed Notes,
Series 1998-A (the "Class A-3 Notes"), and $___________ aggregate principal
amount of ___% Class A-4 Lease-Backed Notes, Series 1998-A (the "Class A-4
Notes", together with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes,
the "Class A Notes"), $_________ aggregate principal amount of ___% Class B
Leased-Backed Notes, Series 1998-A (the "Class B Notes"), $_________ aggregate
principal amount of ___% Class C Leased-Backed Notes, Series 1998-A (the "Class
C Notes") and $___________ aggregate principal amount of ___% Class D
Lease-Backed Notes, Series 1998-A (the "Class D Notes", together with the Class
A Notes, the Class B Notes and the Class C Notes, the "Offered Notes"). The
Class A-1 Notes will be an "eligible security" within the meaning of Rule 2a-7
promulgated under the Investment Company Act of 1940, as amended. In addition,
the Issuer may issue, through a private placement, (i) $___________ aggregate
principal amount of ___% Class E Notes (the "Class E Notes", together with the
Offered Notes, the "Notes") (ii) one or more classes of Residual Notes and
(iii) one or more classes of Certificates (all of which Certificates will be
initially held by the Sponsor, Copelco Capital and Copelco Capital XI).
The combined aggregate principal amount of the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes will comprise the
initial principal amount (the "Initial Principal Amount") of the Notes. The
aggregate principal amounts of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes set forth herein are based upon
the Discounted Present Value of the Leases (as defined herein) as of the close
of business on July ___, 1998 (the "Cut-Off Date") calculated at the Statistical
Discount Rate (defined herein). The Initial Principal Amount of the Notes will
be calculated using the actual Discount Rate.
Issuance Date................. On or about July ___, 1998.
Denominations................. The Offered Notes will be issued in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof, except that one Class A Note,
Class B Note, Class C Notes and Class D Note may be issued in another
denomination.
</TABLE>
5
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Interest Rate................. ___% per annum on the Class A-1 Notes (the "Class A-1 Interest Rate")
calculated on the basis of a year of 360 days and the actual number of days in
such Interest Accrual Period ___% per annum on the Class A-2 Notes (the "Class
A-2 Interest Rate"), ___% per annum on the Class A-3 Notes (the "Class A-3
Interest Rate"), ___% per annum on the Class A-4 Notes (the "Class A-4 Interest
Rate"), ___% per annum on the Class B Notes (the "Class B Interest Rate") ,
___% per annum on the Class C Notes (the "Class C Interest Rate"), ___% per
annum on the Class D Notes (the "Class D Interest Rate") and ___% per annum on
the Class E Notes (the "Class E Interest Rate"), calculated on the basis of a
year of 360 days comprised of twelve 30-day months. With respect to any
particular Class, the "Interest Rate" refers to the applicable rate indicated
in the immediately preceding sentence.
Initial Principal Amount...... $___________ for the Class A-1 Notes (the "Class A-1 Initial Principal
Amount"), $___________ for the Class A-2 Notes (the "Class A-2 Initial
Principal Amount"), $___________ for the Class A-3 Notes (the "Class A-3
Initial Principal Amount"), $___________ for the Class A-4 Notes (the "Class
A-4 Initial Principal Amount", together with the Class A-1 Initial Principal
Amount, Class A-2 Initial Principal Amount, and the Class A-3 Initial Principal
Amount, the "Class A Initial Principal Amount"), $___________ for the Class B
Notes (the "Class B Initial Principal Amount"), $_________ for the Class C
Notes (the "Class C Initial Principal Amount"), $_________ for the Class D
Notes (the "Class D Initial Principal Amount") and $___________ for the Class E
Notes (the "Class E Initial Principal Amount"). See "Description of the Notes."
</TABLE>
6
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<TABLE>
<S> <C>
Discounted Present Value of
the Leases................ The Discounted Present Value of the Leases (the "Discounted Present Value of
the Leases"), at any given time, shall equal the future remaining scheduled
payments (not including delinquent amounts, Excess Copy Charges, Maintenance
Charges and Fee Per Scan Charges (defined below)) from the Leases (including
Non-Performing Leases), discounted at a rate equal to ___% (the "Discount
Rate"), which rate is equal to the sum of (a) the weighted average Interest
Rate of the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes each weighted by (i) the Class A-1 Initial
Principal Amount, the Class A-2 Initial Principal Amount, the Class A-3 Initial
Principal Amount, the Class A-4 Initial Principal Amount, the Class B Initial
Principal Amount, the Class C Initial Principal Amount, the Class D Initial
Principal Amount or the Class E Initial Principal Amount, as applicable, and
(ii) the expected weighted average life of each Class of Notes, as applicable
and (b) the Servicing Fee Rate of ____% per annum. The "Discounted Present
Value of the Performing Leases" equals the Discounted Present Value of the
Leases, reduced by all future remaining scheduled payments on the
Non-Performing Leases (not including delinquent amounts, Excess Copy Charges,
Maintenance Charges or Fee Per Scan Charges), discounted at the Discount Rate.
See "Description of the Notes--General." Each of the Indenture and the Sales
and Servicing Agreement will provide that any calculation of future remaining
scheduled payments made on a Determination Date or with respect to a Payment
Date will be calculated after giving effect to any payments received prior to
such date of calculation to the extent such payments relate to scheduled
payments due and payable by the Lessees with respect to the related Due Period
(defined herein) and all prior Due Periods. "Statistical Discounted Present
Value of the Leases" means an amount equal to the future remaining scheduled
payments (not including delinquent amounts, Excess Copy Charges, Maintenance
Charges and Fee Per Scan Charges) from the Leases as of the Cut-Off Date,
discounted at a rate equal to ___% (the "Statistical Discount Rate"). The
Statistical Discounted Present Value of the Leases as of the Cut-Off Date is
$___________ and will not vary materially from the Discounted Present Value of
the Leases as of the Cut-Off Date. See "The Series Pool--The Equipment." The
aggregate Discounted Present Value of the Leases as of the Cut-Off Date,
calculated at the Discount Rate is $___________.
"Non-Performing Leases" are (a) Leases that have become more than 123 days
delinquent or (b) Leases that have been accelerated by the Servicer or Leases
that the Servicer has determined to be uncollectible in accordance with its
customary practices. See "The Series Pool--The Leases." The Seller will
represent in the Sales and Servicing Agreement that at the time of transfer of
any Lease to the Issuer, such Lease was not a Non-Performing Lease.
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7
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<TABLE>
<S> <C>
Expected Maturity; Stated
Maturity.................. The expected maturity dates with respect to the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes are the Payment Dates on ___________,
___________, ___________ and ___________, respectively. The expected maturity
date with respect to the Class B Notes, Class C Notes and Class D Notes are the
Payment Dates on __________, __________ and _________, respectively. The stated
maturity date with respect to the Class A-1 Notes is the Payment Date in
________ (the "Class A-1 Stated Maturity Date"), the stated maturity date with
respect to the Class A-2 Notes is the Payment Date in __________ (the "Class
A-2 Stated Maturity Date"), the stated maturity date with respect to the Class
A-3 Notes is the Payment Date in ________ (the "Class A-3 Stated Maturity
Date"), the stated maturity date with respect to Class the A-4 Notes is the
Payment Date in ________ (the "Class A-4 Stated Maturity Date"), the stated
maturity date with respect to the Class B Notes is the Payment Date in ________
(the "Class B Stated Maturity Date"), the stated maturity date with respect to
the Class C Notes is the Payment Date in __________ (the "Class C Stated
Maturity Date") and the stated maturity date with respect to the Class D Notes
is the Payment Date in __________ (the "Class D Stated Maturity Date", together
with the Class A-1 Stated Maturity Date, the Class A-2 Stated Maturity Date,
the Class A-3 Stated Maturity Date, the Class A-4 Stated Maturity Date, the
Class B Stated Maturity Date and the Class C Stated Maturity Date, the "Stated
Maturity Dates"). However, if all payments on the Leases are made as scheduled,
final payment with respect to the Notes would occur prior to stated maturity.
The Notes..................... The Notes will represent obligations solely of the Issuer and are secured by
the Trust Fund.
Seller and Servicer........... Copelco Capital, Inc., a Delaware corporation ("Copelco Capital", in its
capacity as seller, the "Seller", and in its capacity as servicer, the
"Servicer"). Copelco Capital will enter into a sales and servicing agreement
(the "Sales and Servicing Agreement") with the Issuer to service the Leases
included in the Series Pool (as defined herein) and make Servicer Advances (as
defined herein). Pursuant to the Sale and Servicing Agreement, Copelco Capital
will sell to the Sponsor all of its right, title and interest in the Leases. In
addition, Copelco Capital will concurrently transfer to the Sponsor all of its
right, title and interest in the related Equipment (of which is either an
ownership interest or security interest) which shall constitute a contribution
of capital. Contemporaneously with the sale, transfer and conveyance by Copelco
Capital to the Sponsor of the Leases and related Equipment, the Sponsor will
sell its right, interest and title of the Leases and related Equipment to the
Issuer pursuant to the Sale and Servicing Agreement and the Issuer will thereby
pledge the Leases and related Equipment to the Indenture Trustee pursuant to
the Indenture.
Trust Fund.................... The "Trust Fund" will consist of a pool (the "Series Pool") of healthcare,
manufacturing and business equipment lease contracts (the "Lease Contracts"),
including payments due thereunder (the "Lease Receivables" together with the
Lease Contracts, the "Leases") and interest in the related leased equipment
(the "Equipment") transferred by the Sponsor to the Issuer. In addition, the
Trust Fund will include the funds on deposit in the Reserve Account.
Indenture Trustee............. Manufacturers and Traders Trust Company (the "Indenture Trustee"). The
Indenture Trustee's offices are located at One M&T Plaza, 7th Floor, Buffalo,
New York 14203.
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Determination Date............ The fifth day prior to each Payment Date (or the preceding business day, if
such day is not a business day). On such date (each, a "Determination Date"),
the Servicer will determine the amount of payments received on the Leases in
respect of the immediately preceding calendar month (each such period, a "Due
Period") which will be available for distribution on the Payment Date. See
"Description of the Notes--Distributions on Notes."
Payment Date.................. Payments on the Notes will be made on the fifteenth day of each month (or if
such day is not a business day, the next succeeding business day), commencing on
August 15, 1998 (each, a "Payment Date"), to holders of record on the last day
of the immediately preceding calendar month (each, a "Record Date"). See
"Description of the Notes--Distributions on Notes."
Interest Payments............. On each Payment Date, the interest due (the "Interest Payments") with respect
to the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes since the last Payment Date will be the interest that has accrued on such
Notes since the last Payment Date, or in the case of the first Payment Date,
since the Issuance Date (the "Interest Accrual Period") at the applicable
Interest Rate applied to the then unpaid principal amounts (the "Outstanding
Principal Amounts") of the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class D
Notes, and the Class E Notes, respectively, after giving effect to payments of
principal to the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3
Noteholders, the Class A-4 Noteholders, the Class B Noteholders, the Class C
Noteholders, the Class D Noteholders and the Class E Noteholders, respectively,
on the preceding Payment Date. See "Description of the Notes--General" and
"Distributions on Notes."
Principal Payments............ For each Payment Date, each of the Class A Noteholders, the Class B
Noteholders, the Class C Noteholders, the Class D Noteholders and the Class E
Noteholders will be entitled to receive payments of principal ("Principal
Payments"), to the extent funds are available therefor, in the priorities set
forth in the Indenture and described herein below and under "Application of
Payments" and "Description of the Notes--Distributions on Notes." On each
Payment Date, to the extent funds are available therefor, the Principal Payment
will be paid to the Noteholders in the following priority: (a) (i) to the Class
A-1 Noteholders only, until the Outstanding Principal Amount on the Class A-1
Notes has been reduced to zero, the Class A Principal Payment, then (ii) to the
Class A-2 Noteholders only, until the Outstanding Principal Amount on the Class
A-2 Notes has been reduced to zero, the Class A Principal Payment, then (iii)
to the Class A-3 Noteholders only, until the Outstanding Principal Amount on
the Class A-3 Notes has been reduced to zero, the Class A Principal Payment,
and (iv) to the Class A-4 Noteholders, until the Outstanding Principal Amount
on the Class A-4 Notes has been reduced to zero, the Class A Principal Payment,
(b) to the Class B Noteholders, the Class B Principal Payment, (c) to the Class
C Noteholders, the Class C Principal Payment, (d) to the Class D Noteholders,
the Class D Principal Payment, (e) to the Class E Noteholders, the Class E
Principal Payment and (f) to the extent that the Class B Floor exceeds the
Class B Target Investor Principal Amount, the Class C Floor exceeds the Class C
Target Investor Principal Amount, the Class D Floor exceeds the Class D Target
Investor Principal Amount and/or the Class E Floor exceeds the Class E Target
Investor Principal Amount, Additional Principal (defined below) shall be
distributed, sequentially, as an additional principal payment on the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes,
the Class C Notes and the Class D Notes, as applicable, until the Outstanding
Principal Amount of each Class has been reduced to zero.
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The "Class A Principal Payment" shall equal (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates prior to the ___________ Payment Date,
the lesser of (1) the amount necessary to reduce the Outstanding Principal
Amount on the Class A-1 Notes to zero and (2) the difference between (A) the
Discounted Present Value of the Performing Leases as of the previous
Determination Date and (B) the Discounted Present Value of the Performing
Leases as of the related Determination Date, and (ii) on the ___________
Payment Date, the entire Outstanding Principal Amount on the Class A-1 Notes
and (b) after the Class A-1 Notes have been paid in full, the amount necessary
to reduce the aggregate Outstanding Principal Amount on the Class A Notes to
the Class A Target Investor Principal Amount (as defined below).
The "Class B Principal Payment" shall equal (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class B
Target Investor Principal Amount and the Class B Floor.
The "Class C Principal Payment" shall equal (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class C Notes to the greater of the Class C
Target Investor Principal Amount and the Class C Floor.
The "Class D Principal Payment" shall equal (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class D Notes to the greater of the Class D
Target Investor Principal Amount and the Class D Floor.
The "Class E Principal Payment" shall equal (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class E Notes to the greater of the Class E
Target Investor Principal Amount and the Class E Floor.
The "Class A Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class A Percentage and (b)
the Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class B Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class B Percentage and (b)
the Discounted Present Value of the Performing Leases as of the related
Determination Date.
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The "Class C Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class C Percentage and (b)
the Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class D Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class D Percentage and (b)
the Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class E Target Investor Principal Amount" (the Class A Target Investor
Principal Amount, the Class B Target Investor Principal Amount, the Class C
Target Investor Principal Amount, the Class D Target Investor Principal Amount
and the Class E Target Investor Principal Amount, collectively, the "Class
Target Investor Principal Amounts") with respect to each Payment Date is an
amount equal to the product of (a) the Class E Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class A Percentage" will be equal to ___%. The "Class B Percentage" will
be equal to ___%. The "Class C Percentage" will be equal to ___%. The "Class D
Percentage" will be equal to ___%. The "Class E Percentage" will equal to ___%.
The "Class B Floor" with respect to each Payment Date means (a) ___% of the
initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b)
the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum
of the Outstanding Principal Amount of the Class C Notes, the Outstanding
Principal Amount of the Class D Notes, the Outstanding Principal Amount of the
Class E Notes, and the Overcollateralization Balance as of the immediately
preceding Payment Date after giving effect to all principal payments made on
that day, minus (d) the amount on deposit in the Reserve Account after giving
effect to withdrawals to be made on such Payment Date.
The "Class C Floor" with respect to each Payment Date means (a) ___% of the
initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b)
the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum
of the Outstanding Principal Amount of the Class D Notes, the Outstanding
Principal Amount of the Class E Notes, and the Overcollateralization Balance as
of the immediately preceding Payment Date after giving effect to all principal
payments made on that day, minus (d) the amount on deposit in the Reserve
Account after giving effect to withdrawals to be made on such Payment Date;
provided, however, that if the Outstanding Principal Amount of the Class B
Notes is less than or equal to the Class B Floor on such Payment Date, the
Class C Floor will equal the Outstanding Principal Amount of the Class C Notes
utilized in the calculation of the Class B Floor for such Payment Date.
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The "Class D Floor" with respect to each Payment Date means (a) ____% of the
initial Discounted Present Value of the Leases as of the Cut-Off Date, plus (b)
the Cumulative Loss Amount with respect to such Payment Date, minus (c) the sum
of the Outstanding Principal Amount of the Class E Notes, and the
Overcollateralization Balance as of the immediately preceding Payment Date
after giving effect to all principal payments made on that day, minus (d) the
amount on deposit in the Reserve Account after giving effect to withdrawals to
be made on such Payment Date; provided, however, that if the Outstanding
Principal Amount of the Class C Notes is less than or equal to the Class C
Floor on such Payment Date, the Class D Floor will equal the Outstanding
Principal Amount of the Class D Notes utilized in the calculation of the Class
C Floor for such Payment Date.
The "Class E Floor" (the Class B Floor, the Class C Floor, the Class D Floor
and the Class E Floor, collectively, the "Class Floors") with respect to each
Payment Date means (a) ___% of the initial Discounted Present Value of the
Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect
to such Payment Date, minus (c) the Overcollateralization Balance as of the
immediately preceding Payment Date after giving effect to all principal
payments made on that day, minus (d) the amount on deposit in the Reserve
Account after giving effect to withdrawals to be made on such Payment Date;
provided, however, that if the Outstanding Principal Amount of the Class D
Notes is less than or equal to the Class D Floor on such Payment Date, the
Class E Floor will equal the Outstanding Principal Amount of the Class E Notes
utilized in the calculation of the Class D Floor for such Payment Date.
The "Additional Principal" with respect to each Payment Date equals zero if
each of the Class Target Investor Principal Amounts for Classes B, C, D, and E
exceed their respective Class Floors on such Payment Date. If any of these
conditions is not met, the "Additional Principal" with respect to each Payment
Date equals the greater of (i) zero and (ii) the excess, if any, of (A) the
Discounted Present Value of the Performing Leases as of the Determination Date
relating to the immediately preceding Payment Date minus the Discounted Present
Value of the Performing Leases as of the related Determination Date, over (B)
the sum of the Class A Principal Payment, the Class B Principal Payment, the
Class C Principal Payment, the Class D Principal Payment and the Class E
Principal Payment to be paid on such Payment Date.
The "Overcollateralization Balance" with respect to each Payment Date is an
amount equal to the excess, if any, of (a) the Discounted Present Value of
Performing Leases as of the related Determination Date over (b) the sum of the
Outstanding Principal Amount of the Notes as of such Payment Date after giving
effect to all principal payments made on that day.
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The "Cumulative Loss Amount" with respect to each Payment Date is an amount
equal to the excess, if any, of (a) the total of (i) the Outstanding Principal
Amount of the Notes as of the immediately preceding Payment Date after giving
effect to all principal payments made on that day, plus (ii) the
Overcollateralization Balance as of the immediately preceding Payment Date,
minus (iii) the lesser of (A) the Discounted Present Value of the Performing
Leases as of the Determination Date relating to the immediately preceding
Payment Date minus the Discounted Present Value of the Performing Leases as of
the related Determination Date and (B) Available Funds remaining after the
payment of amounts owing the Servicer and in respect of interest on the Notes
on such Payment Date, over (b) the Discounted Present Value of the Performing
Leases as of the related Determination Date.
The Series Pool............... The Series Pool will consist of the Leases as of the Cut-Off Date, plus any
Substitute Leases (as defined herein) and any Additional Leases (as defined
herein) excluding any Leases which have been replaced by one or more Additional
Leases or Substitute Leases and, the interest of the Issuer in the related
Equipment. See "The Series Pool" and "Certain Legal Matters Affecting a
Lessee's Rights and Obligations."
Copelco Capital will represent and warrant that, as of the Cut-Off Date, all
Leases were current or less than 63 days delinquent and that, as of the initial
Determination Date, the Lessees have made at least one lease payment.
Equipment..................... The Equipment is comprised primarily of computer systems for healthcare
professionals, medical diagnostic and examination equipment for radiology,
nuclear medicine, ultrasound and laboratory analysis, industrial and business
equipment such as machine tools, graphic arts equipment, electronics testing
equipment, computers for businesses and office products such as copiers and
facsimile machines. As of the Cut-Off Date, the Series Pool had approximately
____ equipment categories.
Lessees....................... Primarily hospitals, non-hospital medical facilities, physicians, businesses
and individual business owners (each, a "Lessee," and collectively, the
"Lessees"). As of the Cut-Off Date, the Series Pool included ___________
separate Leases. As of the Cut-Off Date, Leases relating to Lessees in any one
state did not account for more than ___% of the Statistical Discounted Present
Value of the Leases. See "The Series Pool--The Leases."
Certain Lease Terms........... The Leases are triple-net leases, requiring the Lessee to pay all taxes,
maintenance and insurance associated with the Equipment. The Leases are
non-cancelable by the Lessees. All payments under the Leases are absolute,
unconditional obligations of the Lessees without right of offset for any reason
Each Lessee entered into its Lease for specified Equipment designated in
schedules incorporated into the Lease. The schedules, among other things,
establish the payments and the term of the Lease with respect to such
Equipment. The Leases have remaining terms to maturity, calculated as of the
Cut-Off Date, of between approximately __ and __ months and a weighted average
term to stated maturity of ___ months. See "The Series Pool--The Leases."
Additions, Substitutions and
Adjustments............... Although the Leases will be non-cancelable by the Lessees, Copelco Capital has,
from time to time, permitted early termination by Lessees ("Early Lease
Termination") or other modifications of the lease terms in certain
circumstances more fully specified in the Sales and Servicing Agreement,
including, without limitation, in connection with a full or partial buy-out or
equipment upgrade.
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In the event of an Early Lease Termination which has been prepaid in full or in
part, the Issuer will have the option to reinvest the proceeds of such Early
Termination Lease in one or more Leases having similar characteristics for such
terminated Lease (each, an "Additional Lease").
In addition, Copelco Capital will have the option to substitute one or more
leases having similar characteristics (each, a "Substitute Lease") for (a)
Non-Performing Leases, (b) Leases subject to repurchase as a result of a breach
of representation and warranty (each a "Warranty Lease") and (c) Leases
following a modification or adjustment to the terms of such Lease (each, an
"Adjusted Lease"). The aggregate Discounted Present Value of the Non-Performing
Leases for which Copelco Capital may substitute Substitute Leases is limited to
an amount not in excess of ___% of the aggregate Discounted Present Value of
the Leases as of the Cut-Off Date. The aggregate Discounted Present Value of
Adjusted Leases and Warranty Leases for which Copelco Capital may substitute
Substitute Leases is limited to an amount not in excess of ___% of the
aggregate Discounted Present Value of the Leases as of the Cut-Off Date.
The terms of a Lease may be modified or adjusted for administrative reasons or
at the request of the lessee, vendor or lessor due to a variety of
circumstances, including changes to the delivery date of equipment, the cost of
equipment, the components of leased equipment or to correct information when a
Lease is entered into Copelco Capital's servicing system. Such modifications
may result in adjustments to the lease commencement date, the monthly payment
date, the amount of the monthly payment or the equipment subject to a Lease.
Additional Leases and Substitute Leases will be originated using the same
credit criteria as the initial Leases. To the extent material, information with
respect to such Additional or Substitute Leases will be included in periodic
reports filed with the Commission as are required under the Exchange Act.
In no event will the aggregate scheduled payments of the Leases, after the
inclusion of the Substitute Leases and Additional Leases be materially less
than the aggregate scheduled payments of the Leases prior to such substitution
or reinvestment. Additionally, either the final payment on such Substitute
Lease or Additional Lease will be on or prior to ___________ or, to the extent
the final payment on such Lease is due subsequent to ___________, only
scheduled payments due on or prior to such date may be included in the
Discounted Present Value of such Lease for the purpose of making any
calculation under the Indenture.
In the event that an Early Lease Termination is allowed by Copelco Capital and
an Additional Lease is not provided, the amount prepaid will be equal to at
least the Discounted Present Value of the terminated Lease, plus any delinquent
payments. See "The Series Pool--The Leases."
Payments on Leases............ All payments on Leases will be made by the Lessees to the address specified by
the Servicer. The Servicer will deposit the proceeds of such payments to the
Collection Account (as defined herein) within two Business Days of the receipt
thereof. See "Description of the Notes--Collection Account."
Advances by Servicer.......... Prior to any Payment Date, the Servicer may, but will not be required to,
advance (each, a "Servicer Advance") to the Indenture Trustee, an amount
sufficient to cover delinquencies on Leases in the Trust Fund with respect to
the prior Due Period. The Servicer will be reimbursed for Servicer Advances not
recovered from late payments from Available Funds on the Payment Date following
the date on which the Servicer determined such Lease to be a Non-Performing
Lease. See "Description of the Notes--Advances by Servicer."
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Servicing Fee................. A Servicing Fee (the "Servicing Fee"), will be paid monthly to the Servicer on
each Payment Date from amounts in the Collection Account and will be calculated
by multiplying one-twelfth of ____% times the lesser of (i) the Outstanding
Principal Amount of the Notes or (ii) the Discounted Present Value of the
Performing Leases, each at the Determination Date for such Payment Date before
application of payments with respect thereto.
The Servicing Fee will be paid to the Servicer for servicing the Series Pool
and to pay certain administrative expenses in connection with the Notes,
including Indenture Trustee fees, Owner Trustee fees and expenses. See "Copelco
Capital's Underwriting and Servicing Practices."
Use of Proceeds............... The net proceeds from the sale of the Offered Notes will be used to purchase
the Leases from Copelco Capital. In addition, the net proceeds from the private
placement of the Class E Notes and the Residual Notes will be used for the same
purpose. Copelco Capital will use such amounts to repay bank indebtedness and
for general corporate purposes.
The Indenture................. The Notes and the Residual Notes are to be issued pursuant to, and are to be in
such form, bear interest and be payable on such terms as are prescribed in an
indenture (the "Indenture") to be executed between the Issuer and the Indenture
Trustee.
Available Funds............... On each Payment Date, the Indenture Trustee will use such funds to make
required payments of principal and interest to Noteholders.
Funds received on or prior to the related Determination Date ("Available
Funds") will be available for distribution by the Indenture Trustee on a
Payment Date and will include:
a) Lease Payments due during the prior Due Period (net of any Excess Copy
Charges, Maintenance Charges and Fee Per Scan Charges);
b) recoveries from Non-Performing Leases to the extent Copelco Capital has
not substituted Substitute Leases for such Non-Performing Leases (except to the
extent required to reimburse unreimbursed Servicer Advances);
c) late charges received on delinquent Lease payments not advanced by the
Servicer;
d) proceeds from repurchases by Copelco Capital of Leases as a result of
breaches of representations and warranties to the extent Copelco Capital has
not substituted Substitute Leases for such Leases;
e) proceeds from investment of funds in the Collection Account and the
Reserve Account, if any;
f) Casualty Payments (as defined herein);
g) Servicer Advances;
h) Termination Payments to the extent the Issuer does not reinvest such
Termination Payments in Additional Leases;
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i) to the extent there occurs an Available Funds Shortfall, funds, if any,
on deposit in the Reserve Account; and
j) Available Funds will not include cash flows realized ("Residual
Realizations") from the sale or release of the Equipment following the
expiration dates of the Leases, other than Equipment subject to Non-Performing
Leases.
Application of Payments....... Monthly distributions will be made by the Indenture Trustee from Available
Funds in the following priority:
a) to pay the Servicing Fee;
b) to reimburse unreimbursed Servicer Advances in respect of a prior Payment
Date;
c) to make Interest Payments, owing on the Class A Notes concurrently to the
Class A-1 Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class
A-4 Noteholders;
d) to make Interest Payments owing on the Class B Notes;
e) to make Interest Payments owing on the Class C Notes;
f) to make Interest Payments owing on the Class D Notes;
g) to make Interest Payments owing on the Class E Notes
h) to make the Class A Principal Payment (i) to the Class A-1 Noteholders
only, until the Outstanding Principal Amount on the Class A-1 Notes is reduced
to zero, then (ii) to the Class A-2 Noteholders only, until the Outstanding
Principal Amount on the Class A-2 Notes is reduced to zero, then (iii) to the
Class A-3 Noteholders only, until the Outstanding Principal Amount on the Class
A-3 Notes is reduced to zero and finally, (iv) to the Class A-4 Noteholders
until the Outstanding Principal Amount on the Class A-4 Notes is reduced to
zero;
i) to make the Class B Principal Payment;
j) to make the Class C Principal Payment;
k) to make the Class D Principal Payment;
l) to make the Class E Principal Payment;
m) to pay the Additional Principal, if any, to the Class A Noteholders then
receiving the Class A Principal Payment as provided in clause (h) above until
the Outstanding Principal Amount on all of the Class A Notes has been reduced
to zero, then to the Class B Noteholders until the Outstanding Principal Amount
on the Class B Notes has been reduced to zero, then to the Class C Noteholders
until the Outstanding Principal Amount on the Class C Notes has been reduced to
zero, then to the Class D Noteholders until the Outstanding Principal Amount on
the Class D Notes has been reduced to zero, thereafter to the Class E
Noteholders until the Outstanding Principal Amount on the Class E Notes has
been reduce to zero;
n) to the Reserve Account, an amount equal to the excess of the Required
Reserve Amount over the Available Reserve Amount; and
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o) to the Certificateholder, the balance, if any.
See "Description of the Notes--Distribution on Notes."
Redemption.................... The Issuer will have the option, subject to certain conditions, to redeem
all, but not less than all, of the Notes and thereby cause early repayment of
the Notes as of any Payment Date on which the Discounted Present Value of the
Performing Leases is less than or equal to 10% of the Discounted Present Value
of the Leases as of the Cut-Off Date (after giving effect to the payment of
principal on such Payment Date). The Issuer will give notice of such redemption
to each Noteholder and the Indenture Trustee at least 30 days before the
Payment Date fixed for such prepayment Upon deposit of funds necessary to
effect such redemption, the Indenture Trustee shall pay the remaining unpaid
principal amount on the Notes and all accrued and unpaid interest as of the
Payment Date fixed for redemption. See "Description of the Notes--Redemption."
Subordination................. The Class A Notes will be paid sequentially in accordance with the
provisions of the Indenture and as described in clause (h) under "Application
of Payments." The Class A Notes will be senior in right of payment to the Class
B Notes, the Class B Notes will be senior in right to the Class C Notes, the
Class C Notes will be senior in right to the Class D Notes and the Class E
Notes and the Class D Notes will be senior in right to the Class E Notes to the
extent described herein See "Description of the Notes--Distributions on Notes."
Reserve Account............... The Noteholders will have the benefit of funds on deposit in an account (the
"Reserve Account") to the extent that there is a shortfall in the amount
available to pay amounts owing the Servicer and to make interest and principal
payments on the Notes, on any Payment Date. The Reserve Account will be funded
by an initial deposit of _____% of the Discounted Present Value of the Leases
as of the Cut-Off Date. Thereafter, to the extent provided in the Indenture,
additional deposits will be made to the Reserve Account to the extent that the
amount on deposit in the Reserve Account (the "Available Reserve Amount") is
less than the Required Reserve Amount. The "Required Reserve Amount" equals the
lesser of (a) ____% of the Discounted Present Value of the Leases as of the
Cut-Off Date and (b) the Outstanding Principal Amount of the Notes. Amounts on
deposit in the Reserve Account in excess of the Required Reserve Amount will be
disbursed to the Issuer in accordance with the provisions of the Indenture.
Residual Realizations......... On any Distribution Date, Residual Realizations shall be directed by the
Indenture Trustee to the Residual Noteholders in accordance with the Indenture.
The Noteholders will not have any right to any Residual Realization under any
circumstance and neither the Residual Notes nor the Residual Realizations will
provide credit enhancement for the Class A Noteholders, the Class B
Noteholders, the Class C Noteholders, the Class D Noteholders or the Class E
Noteholders.
Federal Income Tax
Considerations............ It is intended that the Class A Notes, the Class B Notes, the Class C Notes and
the Class D Notes will be characterized as indebtedness of the Issuer for
federal income tax purposes. If characterized as indebtedness, interest on such
Offered Notes will be taxable as ordinary income when received by an Offered
Noteholder on the cash method of accounting and when accrued by Offered
Noteholders on the accrual method of accounting. See "Material Federal Income
Tax Considerations."
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ERISA Considerations.......... The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
places certain restrictions on those pension and other employee benefits plans
to which it applies. Pursuant to regulations issued by the United States
Department of Labor defining "plan assets," if the Offered Notes are considered
to be indebtedness without substantial equity features under local law, the
assets of the Issuer will not be considered assets of any ERISA plan holding
the Notes, thereby generally avoiding potential application of ERISA's
prohibited transaction rules. However, in certain circumstances, the prohibited
transaction rules may be applicable to the purchase of the Offered Notes even
if the Offered Notes are not deemed to have substantial equity features.
Certain exemptions from the prohibited transaction rules could be applicable,
however, with respect to the acquisition and holding of the Offered Notes.
Accordingly, the Offered Notes may be acquired by ERISA plans, subject to
certain restrictions. Before purchasing any of the Offered Notes, fiduciaries
of such plans should determine whether an investment in the Offered Notes is
appropriate under ERISA. See "ERISA Considerations."
Rating........................ It is a condition to the issuance of the Offered Notes that the Class A-1 Notes
be rated at least "___", "___" and "___" , that the Class A-2, A-3 and A-4
Notes be rated at least "___", "___" and "___", that the Class B Notes be rated
at least "___", "___" and "___", that the Class C Notes be rated at least
"___", "___" and "___" and that the Class D Notes be rated at least "___",
"___" and "___" by Standard & Poor's Ratings Group ("S&P"), Duff & Phelps
Credit Ratings Co. ("DCR") and Fitch IBCA, Inc. ("Fitch"), respectively (each a
"Rating Agency"). The ratings assess the likelihood of timely payment of
interest and the ultimate payment of principal to the Offered Noteholders by
the Stated Maturity date. There is no assurance that any rating will not be
lowered or withdrawn if, in the judgement of any Rating Agency, circumstances
in the future so warrant. See "Rating of the Notes."
</TABLE>
18
<PAGE>
RISK FACTORS
Limited Liquidity. There is currently no public market for the Offered
Notes and there is no assurance that one will develop. The Underwriters expect,
but are not obligated, to make a market in the Offered Notes. There is no
assurance that any such market will be created or, if so created, will continue.
If no public market develops, the Offered Noteholders may not be able to
liquidate their investment in the Offered Notes prior to maturity.
Prepayments and Related Reinvestment Risk. Because the rate of payment
of principal on the Notes will depend, among other things, on the rate of
payment on the Leases, such rate of payments of principal on the Notes cannot be
predicted. Payments on the Leases will include scheduled payments as well as
prepayments permitted by Copelco Capital as the Servicer (to the extent not
replaced with Additional Leases), payments as a result of Non-Performing Leases
(to the extent not replaced by Substitute Leases), Casualty Payments (as defined
herein)(to the extent not replaced by Additional Leases), and payments upon
repurchases by Copelco Capital on account of a breach of certain representations
and warranties in the related Sales and Servicing Agreement (to the extent not
replaced by Substitute Leases)(any such voluntary or involuntary prepayment, a
"Prepayment"). The rate of early terminations of Leases due to Prepayments and
defaults may be influenced by a variety of economic and other factors. For
example, adverse economic conditions and certain natural disasters such as
floods, hurricanes, earthquakes and tornadoes may affect Prepayments. The risk
of reinvesting unscheduled distributions resulting from Prepayments of the Notes
will be borne by the Noteholders. See "Prepayment and Yield Considerations."
Additional Leases and Substitute Leases. As described herein, pursuant
to the Sales and Servicing Agreement, Copelco Capital has the option, but not
the obligation, to designate one or more leases in its portfolio to be an
Additional Lease as a replacement for any partially or fully prepaid lease or
upgraded lease, in which event the scheduled payments from such Additional Lease
will replace (in whole or in part) the remaining scheduled payments on a prepaid
in full Lease. In the event (and only to the extent) that Copelco Capital makes
such a designation, the amount (or portion thereof) received by the Issuer with
respect to a Prepayment will be allocated directly to Copelco Capital and the
payments with respect to the related Notes will be dependent upon the scheduled
payments received on such Additional Leases. In addition, pursuant to the Sales
and Servicing Agreement, Copelco Capital has the option, but not the obligation
to substitute one or more leases as Substitute Leases in exchange for
Non-Performing Leases, Warranty Leases and Adjusted Leases. Accordingly,
payments of principal of and interest on the Notes may be dependent, in part,
upon payments received on such Substitute Leases In addition, to the extent that
Copelco Capital does not designate one or more leases as Additional Leases in
connection with the full or partial prepayment of a Lease or Substitute Leases
in the case of Non-Performing Leases, Warranty Leases or Adjusted Leases, the
Discounted Present Value of the Performing Leases will be decreased. See
"Prepayment and Yield Considerations."
Copelco Capital is not required to designate one or more leases as an
Additional Lease or to substitute Substitute Leases. Accordingly, Noteholders
should not expect that Additional Leases or Substitute Leases will be available.
Security Interests in the Equipment; Certain Security Interests Not
Perfected. The Leases will consist of either finance Leases (where substantially
all of the value of the Equipment is financed by the lease payments) or
operating leases (where substantially less than all of the value of the
Equipment is recovered through the lease payments). See "The Series Pool--The
Leases." Finance leases include Leases ("Nominal Buy-Out Leases") which contain
a nominal purchase option upon expiration or other terms which may be deemed
effectively to vest equitable ownership of the Equipment in the Lessee. Prior to
the Cut-Off Date, Copelco Capital will have filed Uniform Commercial Code
("UCC") financing statements in its favor against Lessees in respect of
Equipment, including Equipment subject to Nominal-Buy-Out Leases, with an
original Equipment cost in excess of $25,000 Financing statements in favor of
Copelco Capital with respect to approximately ___% of the Statistical Discounted
Present Value of the Leases will be filed. No action will be taken to perfect
the interest of Copelco Capital in any Equipment to the extent the original
Equipment cost of the related Equipment is less than $25,000. As a result,
Copelco Capital does not have a perfected security interest in Equipment with an
original Equipment cost of less than or equal to $25,000, which represents
approximately ___% of the Statistical Discounted Present Value of the Leases. In
addition, the Indenture and the Sales and Servicing Agreement will require UCC
financing statements identifying security interests in the Equipment as
transferred to, or obtained by, the Issuer or the Indenture Trustee and UCC
financing statements identifying equipment owned by Copelco Capital, transferred
to the Issuer and pledged to the Indenture Trustee to be filed in favor of the
Issuer or the Indenture Trustee in states in which as of the Closing Date (i)
Equipment relating to not less than 75% of the Discounted Present Value of the
Leases as of the Cut-Off Date is located and (ii) Equipment relating to not less
than 75% of the Booked Residual Value of such Equipment as of the Cut-Off Date
is located (the "Filing Locations"). To the extent UCC financing statements
19
<PAGE>
evidencing Copelco Capital's security interest in the Equipment have not been
filed against the Lessee (i.e., with respect to those Leases relating to
Equipment with an original cost of less than $25,000) and to the extent the
Equipment is located in the states other than the Filing Locations, any such
security interests in the Equipment will not be perfected in favor of Copelco
Capital, the Issuer or the Indenture Trustee and another party (such as other
creditors of Copelco Capital) may acquire rights in Copelco Capital's interest
in the Equipment superior to those of the Issuer or the Indenture Trustee. See
"Certain Legal Matters Affecting a Lessee's Rights and Obligations." The lack of
a perfected security interest in certain Equipment will result in claims against
Lessees being unsecured and may adversely affect the ability of the Issuer to
realize on such Equipment.
Restrictions on Recoveries. State laws impose requirements and
restrictions relating to foreclosure sales and obtaining deficiency judgments
following such sales. In the event that the Issuer must rely on repossession and
disposition of Equipment to cover losses on Non-Performing Leases, the Issuer
may not realize the full amount due because of the application of those
requirements and restrictions. Other factors that may affect the ability of the
Issuer to realize the full amount due on a Lease include the failure to file
financing statements to perfect the Issuer's security interest in the Equipment
against a Lessee, depreciation, obsolescence, damage or loss of any item of
Equipment, and the application of federal and state bankruptcy and insolvency
laws. As a result, the Noteholders may be subject to delays in receiving
payments and losses See "Certain Legal Matters Affecting a Lessee's Rights and
Obligations."
Insolvency of Copelco Capital. Copelco Capital believes that each
transfer of the Leases to the Issuer should be treated as an absolute and
unconditional sale or assignment. However, in the event of an insolvency of
Copelco Capital, a court could attempt to recharacterize the sale of the related
Leases by Copelco Capital to the Issuer as a loan to Copelco Capital from the
Issuer, secured by a pledge of such Leases or could allow the trustee in
bankruptcy to repudiate the Leases that are operating leases and all obligations
thereunder. Moreover, in the event of an insolvency of Copelco Capital, a court
could attempt to consolidate the assets of the Issuer with those of Copelco
Capital since Copelco Capital will own all of the stock of the Issuer. Either
attempt, even if unsuccessful, could result in delays in payments of the related
Notes. If such attempts were successful, such Notes would be accelerated, and
the Indenture Trustee's recovery on behalf of the Noteholders could be limited
to the then current value of the Leases or the underlying Equipment. Thus, the
Noteholders could lose the right to future payments and might incur reinvestment
losses on amounts recovered. Although Copelco Capital believes that the transfer
of the Leases to the Issuer should be treated as an absolute and unconditional
sale or assignment, for accounting and tax purposes the Leases will be treated
as assets of Copelco Capital on its consolidated financial statements and on the
tax return for its consolidated group, which might increase the risk of
recharacterization of the transfer to the Issuer as a financing. See "Certain
Legal Matters Affecting a Lessee's Rights and Obligations."
Credit Enhancement. Credit enhancement with respect to the Offered
Notes will be provided by the subordination as follows: the Class A Notes have
the benefit of the subordination of the Class B Notes, Class C Notes, Class D
Notes, Class E Notes, funds on deposit, if any, in the Reserve Account and any
overcollateralization amounts; the Class B Notes have the benefit of
subordination of the Class C Notes, Class D Notes, Class E Notes, funds on
deposit, if any, in the Reserve Account and any overcollateralization amounts;
the Class C Notes have the benefit of subordination of the Class D Notes, Class
E Notes, funds on deposit, if any, in the Reserve Account and any
overcollateralization amounts; and the Class D Notes have the benefit of
subordination of the Class E Notes, funds on deposit, if any, in the Reserve
Account and any overcollateralization amounts. However, on any Payment Date the
amount available to Noteholders is limited to the extent of funds on deposit in
the Collection Account and the Reserve Account.
Non-Recourse Obligations. The Offered Notes represent debt obligations
of the Issuer secured by the Leases only and do not represent interests in or
recourse obligations of Copelco Capital or any of its affiliates other than the
Issuer. The Issuer is a special purpose corporation with limited assets.
Consequently, the Noteholders must rely solely upon the Leases, the Equipment
and funds in the Reserve Account, if any, for payment of principal of and
interest on the Offered Notes. If no funds are on deposit in the Reserve Account
and the payments made on the Leases and the disposition proceeds of the
Equipment upon a default are insufficient to make payments on the Offered Notes,
no other assets will be available for the payment of the deficiency.
Book-Entry Registration. The Offered Notes offered hereby initially
will be represented by one or more notes registered in the name of Cede & Co.
and will not be registered in the names of the beneficial owners or their
nominees. As a result of this, unless and until Definitive Notes are issued,
beneficial owners will not be recognized by the Issuer or the Indenture Trustee
as Offered Noteholders, as that term is used in each Indenture. Hence, until
such time, beneficial owners will only be able to exercise the rights of Offered
Noteholders indirectly, through DTC, Euroclear or CEDEL and their respective
participating organizations, and will receive reports and other information
provided for under the Indenture only if, when and to the extent provided by
DTC, Euroclear or
20
<PAGE>
CEDEL, as the case may be, and its participating organizations. See "Description
of the Notes--Book-Entry Registration."
Geographic Concentration of Leases. As of the Cut-Off Date,
approximately ___%, ___%, ___%, ___%, ___% and ___% of the Leases (based on
statistical Discounted Present Value of the Leases) were located in ________,
__________, _________, ________, _________ and _________, respectively. No other
state accounts for more than 5% of the Leases. See "The Series Pool."
Accordingly, adverse economic conditions or other factors particularly affecting
any of these regions could adversely affect the performance on the Leases.
Commingling of Funds. Under the Indenture, the Servicer is required to
deposit all Lease Payments, Casualty Payments and Termination Payments received
after the Cut-Off Date to the Collection Account within two Business Days of
receipt thereof. If bankruptcy or reorganization proceedings were commenced with
respect to the Seller, those funds held by the Seller may be subject to an
automatic stay resulting in a delay in the transfer of such funds to the Trust
Fund.
Insolvency of Lessees; Insolvency of Third Parties. To the extent
Lessees default on the Leases, including through insolvency, Lease Payments
deposited into the Collection Account will decrease and accordingly Available
Funds will be reduced.
Approximately ___% of the Leases were originated by a third party who
has sold the payment stream on the Leases to Copelco Capital but has not sold
its interest in the Equipment. In the event of a bankruptcy of such third party,
the trustee in bankruptcy may seek to repudiate the Leases and, if successful,
Lease Payments on such Leases will cease. Accordingly, Available Funds could be
reduced.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to purchase
the Leases from Copelco Capital. Copelco Capital will utilize the proceeds from
the sale of the Leases to repay bank debt and for general corporate purposes.
THE SERIES POOL
The Leases. As of the close of business on ________, 1998 (the "Cut-Off
Date"), the Notes will be secured by ________. The Lessees are primarily
hospitals, medical facilities, physicians and business owners throughout the
United States. The Leases were originated or acquired by the Business Technology
Division, the Healthcare Division and the Commercial & Industrial Division of
Copelco Capital (or their predecessors) (the "Origination Divisions"). See "Risk
Factors," "Security for the Notes" and "Certain Legal Matters Affecting a
Lessee's Rights and Obligations." The statistical information included herein
was computed using the Statistical Discounted Present Value of the Leases as of
the Cut-Off Date. The Statistical Discounted Present Value of the Leases will
not vary materially from the Discounted Present Value of the Leases as of the
Cut-Off Date.
Approximately __% of the Leases were originated by a third party who
has sold the payment stream on the Leases to Copelco Capital but has not sold
its interest in the Equipment. In the event of a bankruptcy of such third party,
the trustee in bankruptcy may seek to repudiate the Leases and, if successful,
Lease Payments on such Leases will cease. Accordingly, Available Funds could be
reduced.
The Leases are triple-net leases which impose no affirmative
obligations on the Lessor, and are non-cancelable by the Lessees. Under certain
conditions, however, Copelco Capital may consent to prepayment of the Leases.
Generally, Copelco Capital will consent to a prepayment of a Lease where the
Lessee is upgrading the Equipment. All payments under the Leases are absolute,
unconditional obligations of the Lessees without right of offset for any reason.
Such payments will be made by the Lessees to the Servicer for the account of the
Issuer.
Each Lessee entered into its Lease for specified Equipment which may be
designated in schedules incorporated into the Lease. To the extent not set forth
in the Lease Contract, the schedules, among other things, establish the periodic
payments and the term of the Lease with respect to such Equipment. The Leases
follow one of several different forms of lease agreement, with occasional
modifications which do not materially affect the basic terms of the Leases. The
weighted average remaining term of the Series Pool is ___ months. Copelco
Capital will represent and warrant that, as of Cut-Off Date, all Leases will be
current or less than [63] days delinquent and, as of the initial Determination
Date, all Lessees will have made at least one payment.
Lessees covenant to maintain the Equipment and install it at a place of
business agreed upon with Copelco Capital. Delivery, transportation, repairs and
maintenance are the obligation of the Lessees, and all Lessees
21
<PAGE>
are required to carry, at their respective expense, liability and replacement
cost insurance under terms acceptable to Copelco Capital. Such insurance
proceeds will constitute Casualty Payments (as defined herein). Subject to
certain exceptions, if the Lessee does not provide evidence of insurance
coverage within 90 days of the commencement of the Lease, Copelco Capital
obtains such insurance and invoices the Lessee for the cost thereof. Any
defaults under a Lease (as such, a "Non-Performing Lease," as defined herein)
permit a declaration as immediately due and payable all remaining Lease payments
under the Lease and the immediate return of the Equipment. Generally, any
payments received six days after the scheduled payment date are subject to late
charges.
"Non-Performing Leases" are (a) Leases that have become more than 123
days delinquent or (b) Leases that have been accelerated by the Servicer or
Leases that the Servicer has determined to be uncollectible in accordance with
its customary practices.
At the end of the Lease term, the Lessee must return the Equipment with
certification from the manufacturer that the Equipment is in good working order,
normal wear and tear excepted, unless the Lease is renewed or the Equipment is
purchased by the Lessee.
Historically, approximately 90% of the Equipment leased by the
Origination Divisions is purchased or re-leased by the original lessee at the
expiration of the lease term. "Nominal Buy-Out" Leases comprise ___% of the
Leases (by Statistical Discounted Present Value). Pursuant to the terms of the
Leases, the Lessee is generally required to advise Copelco Capital 90 to 120
days prior to the Lease termination of its intent to return the Equipment at the
expiration of the Lease. In most cases, the failure by a Lessee to so advise
Copelco Capital results in an automatic renewal of the Lease for a specified
period. For Equipment which is returned to Copelco Capital by the lessees,
Copelco Capital participates in an active secondary market for the sale of used
equipment.
The Equipment. The Equipment subject to the Leases is purchased by
Copelco Capital under direct specifications and instructions from the Lessees.
As of the Cut-Off Date, the Series Pool had approximately ___ equipment
categories.
Certain Information with Respect to the Leases and the Lessees. The
following tables summarize certain information with respect to the Leases and
the Lessees as of the Cut-Off Date.
22
<PAGE>
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
Percentage
of
Statistical
Statistical Discounted Percentage
Percentage Discounted Present Aggregate of Original
Number of of Number Present Value Value of Original Equipment
State Leases of Leases of Leases Leases Equipment Cost Cost
----- --------- --------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Alabama % $ % $ %
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
- --------------------------------------------------------------------------------------------------------------------
Total % $ % $ %
====================================================================================================================
</TABLE>
23
<PAGE>
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage of
Percentage of Discounted Discounted Aggregate Original
Statistical Discounted Number of Number of Present Value of Present Value Original Equipment
Present Value of the Leases Leases Leases Leases of Leases Equipment Cost Cost
- --------------------------- --------- ------------- ---------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$0.01 - 5,000.00 % $ % $ %
5,000.01 - 10,000.00
10,000.01 - 15,000.00
15,000.01 - 20,000.00
20,000.01 - 25,000.00
25,000.01 - 30,000.00
30,000.01 - 35,000.00
35,000.01 - 40,000.00
40,000.01 - 45,000.00
45,000.01 - 50,000.00
50,000.01 - 60,000.00
60,000.01 - 70,000.00
70,000.01 - 80,000.00
80,000.01 - 90,000.00
90,000.01 - 100,000.00
100,000.01 - 125,000.00
125,000.01 - 150,000.00
150,000.01 - 175,000.00
175,000.01 - 200,000.00
200,000.01 - 300,000.00
300,000.01 - 400,000.00
400,000.01 - 500,000.00
500,000.01 - 600,000.00
600,000.01 - 700,000.00
700,000.01 - 800,000.00
800,000.01 - 900,000.00
900,000.01 - 1,000,000.00
1,000,000.01 - 1,500,000.00
1,500,000.01 - 2,000,000.00
greater than $2,000,000.01
- ------------------------------------------------------------------------------------------------------------------------------
Total................. % $ % $ %
==============================================================================================================================
</TABLE>
24
<PAGE>
DISTRIBUTION OF LEASES BY REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage of
Percentage of Discounted Discounted Aggregate Original
Number of Number of Present Value of Present Value Original Equipment
Remaining Term Leases Leases Leases of Leases Equipment Cost Cost
-------------- --------- ------------- ---------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 % $ % $ %
13 - 24
25 - 36
37 - 48
49 - 60
61 - 72
73 - 84
- -------------------------------------------------------------------------------------------------------------------------------
Total................. % $ % $ %
===============================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage of
Percentage of Discounted Discounted Aggregate Orginal
Number of Number of Present Value of Present Value Original Equipment
Lease Type Leases Leases Leases of Leases Equipment Cost Cost
- --------------------------- --------- ------------- -------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Finance Lease % $ % $ %
Operating Lease
- -----------------------------------------------------------------------------------------------------------------------------------
Total................. % $ % $ %
===================================================================================================================================
</TABLE>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage of
Percentage of Discounted Discounted Aggregate Orginal
Number of Number of Present Value of Present Value Original Equipment
Lease Type Leases Leases Leases of Leases Equipment Cost Cost
- --------------------------- --------- ------------- -------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Nominal Buyout % $ % $ %
Fair Market Value
Fixed Purchase Option
- -----------------------------------------------------------------------------------------------------------------------------------
Total................. % $ % $ %
===================================================================================================================================
</TABLE>
25
<PAGE>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage of
Percentage Discounted Discounted Aggregate Original
Number of Number of Present Value of Present Value Original Equipment
Equipment Type Leases Leases Leases of Leases Equipment Cost Cost
- ---------------------------- --------- ---------- ---------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Anesthesia EQP % $ % $ %
Automated Chemistry
Systems
Automated Hematology
Systems
C.T. Systems
Carts, Stretchers, Wheel
Chairs
Communication Equipment
Computer Systems-Doctors
& Hospitals
Computers
Copiers
Dental Operatory Equipment
ECG (EKG) and
Defibrillators
EEG
Electronics Production
Equipment
Environmental Control
Equipment
Facsimiles
Furniture and Fixtures
Gamma Cameras
Holter Monitors
Hosp Beds; Elec. Stryker
FRMS, Burn Beds
Industrial Production
Equipment
Lasers
Laundry, Kitchen, Food
Srvc Eqp., Central
Supply
Linear Accelerators
Lithotripters and
Dialysis Equipment
Machine Tools
Mammography
MBL X-Ray Systems; C-Arm;
IMG Intensifier
Miscellaneous
Misc Commercial &
Industrial Equipment
Misc Equipment
Misc Hospital Equipment
Misc Lab Eqp (Pthlgy,
Gas, Chrmts, Cntr, Spc)
Misc Vet Eqp; Cages,
Scales, Tables
Misc X-Ray Eqp (Tnks,
Driers, Tbls, Procsrs)
Miscellaneous Computer
Equipment
MRI Systems
Office Furniture &
Equipment
Operating Microscopes
Opthlmc Diag Eqp (Slit
Lamps, Tonometers)
Opt Eqp; Lens Grinding,
Resurfacing
Other Copying Equipment
Packaging Equipment
Patient Monitoring Systems
Patient Room Furnishing &
Fixtures
Personal Computers
Phone, TV, Comm Equipment
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Percentage of
Percentage Discounted Discounted Aggregate Original
Number of Number of Present Value of Present Value Original Equipment
Equipment Type Leases Leases Leases of Leases Equipment Cost Cost
- ---------------------------- --------- ---------- ---------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Photo Equipment
Photocopy Equipment
Phys Misc Medical Eqp &
Exam Tables
Phys Offc Furn, Fixtures
and Phones
Podiatry Equipment
Processing Equipment
Pulse Oximetry Equipment
Radiographic Fluoroscopic
Systems
Respiratory Therapy
Equipment
Standard X-Ray Systems
Surgical Eqp; Scopes,
Electrosurgical
Telephone
Ultrasound
X-Ray Spec Procdrs
Systems Angiography
- ------------------------------------------------------------------------------------------------------------------------------
Total................. % $ % $ %
==============================================================================================================================
</TABLE>
27
<PAGE>
Historical Delinquency Information. Lease receivables are generally
evaluated by Copelco Capital for write-down when they become over 92 days
delinquent. General delinquency information for equipment leases in the
Origination Divisions that are owned by Copelco Capital is set forth below.
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
[March 31,] 1998 December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1994 December 31, 1993
----------------- ------------------- ------------------- ------------------- ------------------- -------------------
$ % $ % $ % $ % $ % $ %
- ------------------------------------------------------------------------------------------------------------------------------------
Total
Receivables
Balance(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
No. of
Delinquent
Days _______ _____
30-59 Days _______ _____ _______ _______ ________ ______ ________ _____ _______ _____ ______ ______
60-89 Days _______ _____ _______ _______ ________ ______ ________ _____ _______ _____ ______ ______
90 Days + _______ _______ ________ ______ ________ _____ _______ _____ ______ ______
Legal _______ _______ ________ ______ ________ _____ _______ _____ ______ ______
- ------------------------------------------------------------------------------------------------------------------------------------
Total
Delinquency $_______ _____% $_______ _______% $_______ ______% $_______ _____% _______ _____% $______ ______%
</TABLE>
- ---------------------------
(1) The Total Receivables Balance is equal to the aggregate future rent owing on
the leases.
Historical Default Experience. All accounts assessed over 92 days past
due automatically become non-accruing accounts. Any subsequent recoveries offset
net losses. General charge-off information for leases in the Origination
Divisions that are owned and serviced by Copelco Capital for the period January
1, 1993 to March 31, 1998 is set forth below.
HISTORICAL CHARGE-OFF EXPERIENCE
<TABLE>
<CAPTION>
Year Ended December 31
[Three] Months ---------------------------------------------------------
Ended
[March 31,] 1998 1997 1996 1995 1994 1993
------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding(1)........ $___________ $_______ $________ $_______ $_______
Net Losses.............. $___________ $_______ $________ $_______ $_______
Net Losses as a Percentage
of Average Receivables ___________%(2) _____% _____% _____% _____%
</TABLE>
- -
- ---------------------------
(1) Equals the arithmetic average of the beginning of the period Receivable
Balance and the end of the period Receivable Balance. The Receivables
Balance is equal to the aggregate future rent owing on the leases.
(2) Annualized
There can be no assurance that the levels of delinquency and loss
reflected in the above tables are or will be indicative of the performance of
the Leases in the future.
28
<PAGE>
COPELCO CAPITAL'S UNDERWRITING AND SERVICING PRACTICES
General. Copelco Capital, a Delaware corporation, was incorporated in
October 1986. Copelco Capital is a wholly-owned subsidiary of Copelco Financial
Services Group, Inc. ("Copelco Financial") Copelco Capital's primary business
consists of originating and servicing leases to healthcare providers,
businesses, business owners and individuals in the United States and Canada.
Copelco Capital has multiple locations and is headquartered at 700 East Gate
Drive, Mount Laurel, New Jersey 08054-5400 (as is Copelco Financial) and its
phone number is (609) 231-9600.
In May 1993, Copelco Financial (which was incorporated in July
1982) reorganized its two primary operating subsidiaries, Copelco Credit
Corporation ("Copelco Credit") and Copelco Leasing Corporation ("Copelco
Leasing"), into six strategic business units (each, an "SBU"). Then effective
July __, 1994, Copelco Leasing was merged into Copelco Credit with Copelco
Credit as the surviving legal entity; Copelco Credit then changed its name to
Copelco Capital, Inc. merging all of the Copelco Leasing and Copelco Capital
leasing operations.
Copelco Capital currently consists of three separate operating
divisions (each, a "Division"): the Business Technology Division, the Healthcare
Division and the Commercial & Industrial Division. The Business Technology
Division, the Healthcare Division and the Commercial & Industrial Division
originated ___%, ___% and ___%, respectively, of the Leases to be included in
the subject transaction (based upon the Statistical Discounted Present Value of
the Leases.)
The Business Technology Division leases small-ticket office equipment,
primarily photocopiers and computers, to businesses and business owners
throughout the United States and Canada through multiple manufacturer, vendor
and dealer programs. The Business Technology Division is the successor division
to Copelco Capital's Document Imaging, Major Accounts, Computer and Canadian
SBUs. Copelco Capital merged these four units in January 1997 in order to
achieve greater operating and marketing efficiencies.
The Healthcare Division provides a diversified range of leasing
services for the financing of healthcare equipment through multiple
manufacturer, vendor and dealer programs, with particular emphasis upon the
acquisition, leasing and remarketing of high-technology medical equipment to
hospitals, other healthcare facilities, healthcare providers and physicians. The
Healthcare Division is the successor of the Hospital and Healthcare SBU and the
Healthcare Vendor SBU which were consolidated in June, 1995 and the Ambulatory
Care SBU which was merged into the Healthcare Division in November, 1996. The
rationale for the consolidation of the Healthcare Division was to achieve
greater operating efficiencies and eliminate certain operating and marketing
redundancies.
The Commercial & Industrial Division is segmented into three distinct
business units: the Electronics Manufacturing Group, the Financial Intermediary
Group and the Material Handling Group. The Electronics Manufacturing Group
provides equipment leasing services through multiple manufacturer, vendor and
dealer programs, primarily to mid-sized companies. The equipment financed
through this group includes high technology equipment for the electronics
manufacturing service industry, such as printed circuit board assembly and test
equipment. The Financial Intermediary Group purchases equipment lease
transactions from third parties involved in the electronics and other industrial
equipment industries. The Material Handling Group, established in 1998, provides
retail equipment leasing and financing specifically for vendors and
manufacturers in the material handling industry.
As of December 31, 1997, Copelco Capital had total assets of
$2,083,256,000 compared with $1,722,212,000 as of December 31, 1996, total
liabilities of $1,927,558,000 compared with $1,588,614,000 as of December 31,
1996, shareholder's equity of $155,698,000 compared with $133,598,000 as of
December 31, 1996 and total revenues and net income of $253,787,000 and
$32,137,000, respectively, for the year ended December 31, 1997, compared with
$210,461,000 and $29,655,000, respectively, for the year ended December 31,
1996.
Since 1986, Copelco Capital and its predecessors have participated in
35 equipment lease securitizations involving the issuance of in excess of $2.7
billion in securities. Copelco Capital and its predecessors performed all
servicing functions in each of these prior transactions, 16 of which remain
outstanding.
Originations. The Business Technology Division leases small-ticket
office equipment, primarily photocopiers and computers, to businesses and
business owners throughout the United States, Canada and western Europe. The
Business Technology Division originates substantially all of its leases through
marketing programs
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which are directed at major manufacturers and various distributors of copier
equipment (each, a "Vendor") with the balance obtained through new leases with
existing lessees and referrals. The Business Technology Division establishes
both formal and informal relationships with Vendors, several of which provide
Copelco Capital with a right of first refusal on all equipment leases with the
Vendor's customers. This arrangement provides the division with a steady flow of
lease referrals from Vendors which frequently use lease financing as a marketing
tool. In the majority of these vendor programs, Copelco Capital generally owns
the equipment subject to each lease and bills and collects lease payments in its
own name. For some select private label vendor programs, Copelco Capital will
bill and collect in the vendor's name.
The Business Technology Division also offers a cost per copy program
("Cost per Copy"), introduced in late 1990, pursuant to which lessees pay a
fixed monthly payment (the "Fixed Payment") for which they are allowed a certain
minimum monthly copy usage. The monthly Fixed Payment represents equipment
financing (the "Equipment Financing Portion") and a monthly maintenance charge
(the "Maintenance Charge"). Copelco Capital funds the Vendors on the basis of
the Equipment Financing Portion of the Fixed Payment and remits the Maintenance
Charge to the Vendors as it is collected every month. Copelco Capital calculates
usage monthly using automated dialed-in copier meter readings. To the extent
that the usage has exceeded the monthly copy allowance, Copelco Capital bills
the lessee incremental charges for the excess copy usage ("Excess Copy Charge").
This Excess Copy Charge is remitted to the Vendors upon collection by Copelco
Capital. Only the Equipment Financing Portion will be included in the Discounted
Present Value of the Leases.
Vendors may choose to use a Copelco Capital lease form or they may use
their own lease agreement. In either case, the credit approval remains with
Copelco Capital. Lease documents for all leasing programs are either identical
to Copelco Capital's standard lease documents or are reviewed by Copelco Capital
to ensure substantial compliance with its standard terms. Terms of Copelco
Capital's lease documents are standard for virtually all leases, as is
documentation for virtually all private label programs.
The Healthcare Division provides a range of leasing services for the
financing of healthcare equipment with emphasis on the acquisition, leasing and
remarketing of high-technology medical equipment to hospitals, other healthcare
facilities, healthcare providers and physicians. The Healthcare Division
originates leases through five sales groups: National Accounts, Medical
Business, Vendor Services, Home Care, and Ambulatory Care.
The National Accounts sales group solicits contractual arrangements
with major medical equipment manufacturers and distributors throughout the
United States. These contracts usually give Copelco exclusive rights to handle
the financing needs of the manufacturers' customers. Most manufacturers are
publicly-held or subsidiaries of international medical conglomerates.
The Medical Business sales group provides leasing services directly to
hospitals and to physician group practices rather than through vendors or
manufacturers. The Medical Business marketing unit operates Copelco Capital's
Hospital Instant Lease Line ("HILL") program which grants hospitals a
pre-approved line of credit for the leasing of medium-ticket medical equipment
such as computed tomography scanners, radiographic and other imaging equipment,
laboratory and patient monitoring systems.
The Vendor Services sales group solicits exclusive contractual
arrangements and informal non-exclusive arrangements with local and regional
vendors. Such vendors sell medical equipment to physician group medical
practices and to individual physicians who finance the acquisition of the
equipment by leasing it from Copelco Capital. The Vendor Services marketing unit
operates Copelco Capital's Physician's Instant Lease Line ("PILL") program,
which grants individual physicians and physician group practices a pre-approved
line of credit for use in leasing small- and medium-ticket medical equipment.
The Home Care Sales group leases durable medical equipment such as
respiratory care equipment, patient monitoring devices and medication delivery
systems for use by people who are being treated on an out-patient or in-home
basis for either temporary or chronic health problems. Lessees are typically
wholesalers, distributors and service providers that rent the equipment to
patients who are reimbursed for the rental payments by their health care
insurers.
The Ambulatory Care sales group provides equipment leasing to
out-patient sites providing healthcare services such as diagnostic imaging,
surgical procedures and radiation therapy. Customers range from start-up centers
(typically managed by established organizations) to publicly-held companies.
Transactions may involve new equipment or refinancing of existing equipment,
often in conjunction with expansion or upgrading.
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In addition to making fixed payments with respect to certain health
care equipment leases, lessees may pay incremental monthly charges to the extent
the scan usage exceeds the monthly scan allowance ("Fee Per Scan Charges"). Fee
Per Scan Charges will not be included in the Discounted Present Value of the
Leases. The Fee Per Scan Charges are remitted to the Vendors upon collection by
Copelco Capital.
The Commercial & Industrial Division: The Electronics Manufacturing
Group and the Financial Intermediary Group provide equipment leasing services
primarily to mid-sized companies. Since early 1993, the division has focused on
marketing through manufacturers and distributors in the electronics
manufacturing service industry. Currently, approximately ___% of the leases
originated by this division relate to the electronics manufacturing service
industry and approximately ___% represents machine tools and other production
equipment. The Material Handling Group originates a majority of its business
through its relationship with distributors of material handling equipment. The
Material Handling Group establishes both formal and informal relationships with
vendors, manufacturers, and distributors of material handling equipment and
provides retail leasing and financing for the end-user customers.
Credit Review. Copelco Capital, in conjunction with the parent holding
company, provides organizational oversight for investment/risk management
policy, compliance, credit underwriting and due diligence standards, and
coordinates portfolio concentration guidelines and credit personnel training for
each of its Divisions. Within the parameters established by Copelco Capital,
each Division tailors its underwriting policies to reflect their unique
customers and markets.
Certain credit requests are evaluated under credit scoring models
utilized by Copelco Capital. All credit requests not subject to automated credit
scoring must be underwritten by a credit officer. Applicants declined by credit
scoring may be reviewed by a credit officer. Each credit officer has a specific
assigned lending limit based upon experience and seniority. Credit approval
limits, applicable to single transaction size and individual lessee exposure,
are also assigned to assistant credit managers, group credit officers, the
president of Copelco Capital, and the chief credit officer of Copelco Capital.
In general, transactions in excess of $2,000,000 must be approved by the senior
management of Copelco Financial.
Business Technology Division: Prior to a lease being approved by the
Business Technology Division, the vendor's sales personnel are required to
obtain from the prospective lessee historical financial data and/or bank and
trade references. New and repeat applicants must either complete a comprehensive
credit application or provide bank and trade references.
Credit data are submitted for credit review in Mahwah, New Jersey and
Moberley, Missouri for copiers and Mahwah, New Jersey for computers. Credit
review is performed and lease approvals are given at these locations, utilizing
a computer system designed to handle applications which are telephoned or
telecopied from vendors. Using the computer system, the applicant's credit is
investigated and a credit decision is made.
Lessee evaluation includes an analysis of credit payment history,
business structure, banking history and relationships, and economic conditions
as they relate to the prospective lessee. In the case of a credit request for
equipment having a cost greater than approximately $50,000, the information
collected includes the prospect's most recent financial statements. If
individual guarantors are involved, a consumer credit bureau report is generally
obtained for the guarantors. Potential lessees should generally have been in
business for at least two years and a minimum of two trade references are
required.
The Business Technology Division has also implemented an automated
credit scoring system. The system, designed by Dun & Bradstreet specifically for
the Business Technology Division, was in development over a two-year period and
was formally implemented on January 4, 1994. The system utilizes various filters
for adapting "approve" and "decline" threshold scores based upon criteria such
as credit exposure, payment history (by SIC code), Vendor and state. The model
is consistent with the Business Technology Division's traditional credit
decision-making criteria (i.e., Dun & Bradstreet data, consumer credit bureau
information, and bank and trade references).
Healthcare Division: For leases originated by the Medical Business
sales group, full financial statements are required for credit review, and a
thorough history of past payment patterns is examined. Other items such as a
hospital's location, utility to its community and ownership (public or private)
are also considered. Certain of these transactions are credit scored under HILL
credit scoring parameters. The HILL credit scoring parameters include, without
limitation, the number of beds of the potential lessee, its occupancy rate and
Dun & Bradstreet Information Services ("Dun & Bradstreet") financial highlight
information.
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Certain of the leases originated by the Vendor Services group are
credit scored under PILL credit scoring parameters. The PILL credit scoring
parameters include, without limitation, the length of time in practice of the
potential lessee, the potential lessee's medical specialty and a consumer
bankruptcy predictor model acquired by Copelco Capital. The credit review
process for physicians is similar to that of personal lending because the
lessees are predominantly individual physicians (or groups of physicians). Many
of the leases to physicians have personal guarantees associated with them and
spousal guarantees as well. Lessees are not required, however, to give Copelco
Capital liens on property. The predominant reason for delinquencies in such
leases is cash flow deficiencies and, to a lesser extent, death of the lessee,
in which case settlement with the lessee's estate can take several months. Such
leases are typically processed under the PILL program. For inexpensive
equipment, credit review of physician lessees involves analysis of credit bureau
reports, bank references, duration of practice and medical specialty. For more
expensive equipment, the credit review involves analysis of personal income tax
returns and financial statements of the practice in addition to credit bureau
reports and bank references. There is also a focus on the length of time that
the physician has maintained his or her private practice.
The PILL and the HILL programs afford Copelco Capital the ability to
analyze physician, physician group practice and hospital credit quality in
advance of the lease decision, thus providing a means by which physicians in
certain medical specialties and certain hospitals may be pre-approved for a
leasing line of credit. They also provide rapid turnaround of a specific
application when it is submitted.
National Accounts, Home Health and Ambulatory Care generally utilize a
combination of transactional credit analysis and credit scoring. Transactions
not eligible for credit scoring are reviewed by the Healthcare Division's credit
staff under the supervision of a senior credit officer.
Commercial & Industrial Division: In the Electronic Manufacturing Group
and Financial Intermediary Group, all credit decisions are made by credit
analysts. Credit scoring is not used. In general, transactions in excess of
$50,000 require financial statement disclosure consisting of at least the three
most recent fiscal year-end financial statements and interim financial
statements. Additionally, Dun & Bradstreet reports, bank and other credit
references, trade references, and other information may be evaluated.
Transactions involving small, privately held companies exhibiting limited
financial resources require the financial disclosure and personal guaranty of
the principals. Consideration will also be given to the value of the equipment
securing the transaction, based upon a review by the Group's Asset Management
department. An approval might contain restrictive conditions, including, but not
limited to, a reduced term, guaranties, security deposits, down payments, or a
letter of credit.
The Material Handling Group utilizes a credit review system similar to
and based upon that of the Business Technology Division. The majority of
business originates through dealer/vendor networks, with retail and wholesale
credit applications submitted via fax. The assessment of creditworthiness is
determined through both automated systems and credit officer analysis with
emphasis on the following factors: time in business, financial strength,
payment/credit history, transaction structure, collateral and industry outlook.
The evaluation of creditworthiness for retail end-user
customers will be accomplished through a modified version of the Business
Technology Division's credit scoring model, in which the filters and scoring
thresholds are adapted to the needs of the Material Handling Group. Retail lease
applicants will generally have been in business for at least two years with
evidence of satisfactory bank and/or comparable secured lender references.
Consumer credit bureau reports will be obtained if individual guarantors or sole
proprietors are considered in the transaction.
The terms of the Leases originated by each of the Divisions require the
lessees to maintain the equipment and install it at a place of business approved
by Copelco Capital. Delivery, transportation, repairs and maintenance are
obligations of lessees, and lessees are required to carry, at their own expense,
liability and replacement cost insurance under terms acceptable to Copelco
Capital. Any lease payment defaults permit Copelco Capital to declare
immediately due and payable all remaining lease payments. At the end of a lease
term, lessees must return the leased equipment to Copelco Capital in good
working order unless the lease is renewed or the leased equipment is purchased
by the lessee.
Collections. Collection procedures have been instituted by Copelco
Capital and are uniformally utilized throughout Copelco Capital's Divisions. A
late charge is generally assessed to lessees 6 days after payment due date.
Telephone contact is normally initiated when an account is 15 days past due, but
may be initiated more quickly. All collection activity is entered into the
computerized collection system. Activity notes are input directly into the
collection system in order to facilitate routine collection activity. Collectors
have available at their computer terminals the latest status and collection
history on each account.
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Generally, on the day on which a Lease becomes 10 days delinquent,
Copelco Capital's credit and collection review system automatically generates a
computerized late notice which is sent directly to the lessee. When an account
becomes 30 days past due, a default letter is generally sent out to the lessee
and to anyone providing personal guarantees on the Leases. An acceleration
letter is sent to all lessees and guarantors when a Lease becomes 45 days past
due, as circumstances warrant. Telephone contact will be continued throughout
the delinquency period. Accounts which become over 90 days past due are subject
to repossession of Equipment and action by collection agencies and attorneys.
Prior to being written down (which is generally prior to the lease being 123
days delinquent), each lease is evaluated on the merits of the individual
situation, with equipment value being considered as well as the current
financial strength of the lessee.
Sales and Servicing Agreement. Copelco Capital will enter into an
agreement (the "Sales and Servicing Agreement") with the Issuer, pursuant to
which Copelco Capital will, among other things, service the Leases, make
Servicer Advances and forward Excess Copy Charges and Fee Per Scan Charges to
Vendors. In the Sales and Servicing Agreement, Copelco Capital will make certain
representations and warranties regarding the Leases and the Equipment. In the
event that (a) any of such representations and warranties made by Copelco
Capital proves at any time to have been inaccurate in any material respect as of
the Issuance Date or (b) any Lease shall be terminated in whole or in part by a
Lessee, or any amounts due with respect to any Lease shall be reduced or
impaired, as a result of any action or inaction by Copelco Capital (other than
any such action or inaction of Copelco Capital, when acting as Servicer, in
connection with the enforcement of any Lease (other than an Early Lease
Termination) in a manner consistent with the provisions of the Sales and
Servicing Agreement) or any claim by any Lessee against Copelco Capital and, in
any such case, the event or condition causing such inaccuracy, termination,
reduction, impairment or claim shall not have been cured or corrected within 30
days after the earlier of the date on which Copelco Capital is given notice
thereof by the Issuer or the Indenture Trustee or the date on which Copelco
Capital otherwise first has notice thereof, Copelco Capital will repurchase such
Lease (a "Warranty Lease") and the Equipment subject thereto by paying to the
Indenture Trustee for deposit into the Collection Account, not later than the
Determination Date next following the expiration of such 30-day period, an
amount equal to the Discounted Present Value of such Lease plus any amounts
previously due and unpaid thereon. In addition, subject to the satisfaction of
certain requirements set forth in the Sales and Servicing Agreement, Copelco
Capital will have the option to substitute one or more Substitute Leases for
such Warranty Lease. Any inaccuracy in any representation or warranty with
respect to (i) the priority of the lien of the Indenture with respect to any
Lease or (ii) the amount (if less than represented) of the Lease Payments,
Casualty Payments or Termination Payments under any Lease shall be deemed to be
material.
Servicing Fee. The Servicing Fee will be paid monthly on the Payment
Date from amounts in the Collection Account and will be calculated by
multiplying one-twelfth of _____% times the lesser of (i) the Outstanding
Principal Amount of the Notes or (ii) the Discounted Present Value of the
Performing Leases, each at such Payment Date before application of payments with
respect thereto.
The Servicing Fee will be paid to the Servicer for servicing the Series
Pool and for certain administrative expenses in connection with the Notes,
including Indenture Trustee Fees and Owner Trustee fees.
FORMATION OF THE ISSUER
General
The Issuer, Copelco Capital Funding Trust 1998-A, is a business trust
formed in accordance with the laws of the State of Delaware, pursuant to the
Trust Agreement, solely for the purpose of effectuating the transactions
described herein. Prior to formation, the Issuer will have had no assets or
obligations and no operating history. Upon formation, the Issuer will not engage
in any business activity other than (i) acquiring, holding and pledging the
Leases and related interests and property related thereto, (ii) issuing the
Securities and (iii) distributing payments thereon.
The Owner Trustee
[____________________], the Owner Trustee under the Trust
Agreement, is a __________ banking corporation and its principal offices are
located at [____________________________________________]. The Owner Trustee
will perform limited administrative functions under the Trust Agreement. The
Owner Trustee's duties in connection with the issuance and sale of the
Securities is limited solely to the express obligations of the Owner Trustee as
set forth in the Trust Agreement.
Indenture Trustee
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Manufacturers and Traders Trust Company, the Indenture Trustee under
the Indenture, is a New York banking corporation and its principal offices are
located at One M&T Plaza, Buffalo, New York 14203.
Trust Funds
The Trust Funds will consist of a pool (the "Series Pool") of
healthcare, manufacturing and business equipment lease contracts (the "Lease
Contracts"), including payments due thereunder (the "Lease Receivables",
together with the Lease Contracts, the "Leases") and certain interest in the
related leased equipment (the "Equipment") acquired or originated by Copelco
Capital and transferred to the Sponsor, then in turn to the Issuer. The Trust
Funds will, in addition, include the funds on deposit in Collection Account and
the Reserve Account.
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture (the "Indenture")
between the Issuer and Manufacturers and Traders Trust Company, as indenture
trustee (the "Indenture Trustee"). The following statements with respect to the
Notes are subject to the detailed provisions of the Indenture, the form of which
is filed as an exhibit to the registration statement of which this Prospectus
forms a part. Whenever any particular section of the Indenture or any term used
therein is referred to, the statement in connection with which such reference is
made is qualified in its entirety by such reference.
General. The Offered Notes represent secured debt obligations of the
Issuer secured by the Trust Fund, and the privately placed Class E Notes
represent subordinated debt obligations of the Issuer only secured by the Trust
Fund as provided in the related Indenture. Neither represents an interest in or
recourse obligation of Copelco Capital or any of its other affiliates other than
the Issuer. The Issuer is a Delaware business trust with limited assets.
Consequently, Noteholders must rely solely upon the Leases, the interests in the
Equipment, funds on deposit in the Collection Account and the Reserve Account,
for payment of principal of and interest on the Offered Notes.
The Initial Principal Amount of the Notes shall be equal to the
Discounted Present Value of the Leases as of the Cut-Off Date. Such Discounted
Present Value of the Leases, at any given time, shall equal the future remaining
scheduled payments from the related Leases (including Non-Performing Leases),
discounted at the Discount Rate, as set forth in the Indenture.
Each Note will bear interest from the Issuance Date at the
applicable Interest Rate, calculated on the basis of a year of 360 days
comprised of twelve 30-day months, except in the case of the Class A-1 Notes,
which interest will be calculated on the basis of a year of 360 days and the
actual number of days in such Interest Accrual Period, payable on the fifteenth
day of each month (or if such day is not a business day the next succeeding
business day), to the person in whose name the Note was registered at the close
of business on the preceding Record Date. Principal will be payable as set forth
under "Distributions on Notes." Notes may be presented to the corporate trust
office of the Indenture Trustee for registration of transfer or exchange
(Section 2.03). Notes may be exchanged without a service charge, but the Issuer
may require payment to cover taxes or other governmental charges (Section 2.03).
Book-Entry Registration. Class A Noteholders, Class B Noteholders,
Class C Noteholders and Class D Noteholders may hold their notes through DTC (in
the United States) or Cedel or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations which are participants in such
systems.
Cede, as nominee for DTC, will hold the global Class A Note or Notes,
global Class B Note or Notes, global Class C Note or Notes and the global Class
D Note or Notes. Cedel and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective Depositaries (as defined
herein) which in turn will hold such positions in customers' securities accounts
in the Depositaries' names on the books of DTC. Citibank will act as depositary
for Cedel, and Morgan Guaranty Trust will act as depositary for Euroclear (in
such capacities, the "Depositaries").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("Participants") and
facilitate the settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the
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need for physical movement of notes. Participants include the Underwriters,
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("Indirect Participants").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants (as defined herein) and Euroclear
Participants (as defined herein) will occur in accordance with their respective
rules and operating procedures.
Cross-market transfers between persons holding or indirectly through
DTC, on the one hand, and directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected through DTC in accordance
with DTC rules on behalf of the relevant European international clearing systems
by its Depositary. Cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of securities by or through a Cedel Participant
or a Euroclear Participant to a Participant will be received with value on the
DTC settlement date but will be available in the relevant Cedel or Euroclear
cash account only as of the business day following settlement in DTC. For
information with respect to tax documentation procedures relating to the Offered
Notes, see "Material Federal Income Tax Considerations."
Offered Noteholders that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Offered Notes may do so only through Participants and Indirect
Participants. In addition, Offered Noteholders will receive all distributions of
principal and interest on the Offered Notes from the Indenture Trustee through
DTC and its Participants. Under a book-entry format, Offered Noteholders will
receive payments after the related Distribution Date, as the case may be,
because, while payments are required to be forwarded to Cede, as nominee for
DTC, on each such date, DTC will forward such payments to its Participants which
thereafter will be required to forward them to Indirect Participants or holders
of beneficial interests in the Offered Notes. It is anticipated that the only
Class A Noteholder and Class B Noteholder will be Cede, as nominee of DTC, and
that holders of beneficial interests in the Class A Noteholders or Class B
Noteholders, respectively, under the Indenture will only be permitted to
exercise the rights of Class A Noteholders or Class B Noteholders, respectively,
under the Indenture indirectly through DTC and its Participants who in turn will
exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Offered Notes and is
required to receive and transmit distributions of principal of and interest on
the Offered Notes. Participants and Indirect Participants with which holders of
beneficial interests in the Offered Notes have accounts similarly are required
to make book-entry transfers and receive and transmit such payments on behalf of
these respective holders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of holders of
beneficial interests in the Offered Notes to pledge Offered Notes to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such Offered Notes, may be limited due to the lack of a Definitive
Note for such Offered Notes.
DTC has advised the Issuer that it will take any action permitted to be
taken by a Class A Noteholder, Class B Noteholder, Class C Noteholder or Class D
Noteholder under the Indenture only at the direction of one or more Participants
to whose account with DTC the Class A Notes, Class B Notes, Class C Notes or
Class D Notes are credited. Additionally, DTC has advised the Issuer that it may
take actions with respect to the applicable Class A Interest, Class B Interest,
Class C Interest or the Class D Interest that conflict with other of its actions
with respect thereto.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of
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securities transactions between Cedel Participants through electronic book-entry
changes in accounts of Cedel Participants, thereby eliminating the need for
physical movement of certificates. Transactions may be settled in Cedel in any
of 28 currencies, including United States dollars. Cedel provides to Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the Underwriters. Indirect access to Cedel is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedel Participant,
either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Offered Notes held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Material Federal Income Tax Considerations." Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by an Offered Noteholder under the Indenture on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to its Depositary's ability to effect such actions on
its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Notes among participants
of DTC, Cedel and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
Definitive Notes. The Offered Notes will be issued in fully registered,
authenticated form to Beneficial Owners or their nominees (the "Definitive
Notes"), rather than to DTC or its nominee, only if (a) the Issuer advises the
Indenture Trustee in writing that DTC is no longer willing or able to discharge
properly its responsibilities as Depository with respect to such Notes, and the
Indenture Trustee or the Issuer is unable to locate a qualified successor or (b)
the Issuer at its option elects to terminate the book-entry system through DTC
(Section 2.06).
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee is required to notify all Beneficial
Owners through DTC of the availability of Definitive Notes
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or such Class. Upon surrender by DTC of the Definitive Note representing the
Notes and instructions for reregistration, the Indenture Trustee will issue such
Definitive Notes, and thereafter the Indenture Trustee will recognize the
holders of such Definitive Notes as Offered Noteholders under the related
Indenture (the "Holders") (Section 2.07). The Indenture Trustee will also notify
the Holders of any adjustment to the Record Date with respect to the Notes
necessary to enable the Indenture Trustee to make distributions to Holders of
the Definitive Notes for such Class of record as of each Payment Date.
Additionally, upon the occurrence of any such event described above,
distribution of principal of and interest on the Offered Notes will be made by
the Indenture Trustee directly to Holders in accordance with the procedures set
forth herein and in the Indenture. Distributions will be made by check, mailed
to the address of such Holder as it appears on the Note register Upon at least
10 days' notice to Noteholders for such Class; however, the final payment on any
Note (whether the Definitive Notes or the Note for such Class registered in the
name of Cede representing the Notes of such Class) will be made only upon
presentation and surrender of such Note at the office or agency specified in the
notice of final distribution to Noteholders.
Definitive Notes of each Class will be transferable and exchangeable at
the offices of the Indenture Trustee or its agent in New York, New York, which
the Indenture Trustee shall designate on or prior to the issuance of any
Definitive Notes with respect to such Class. No service charge will be imposed
for any registration of transfer or exchange, but the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith (Section 2.03(e)).
Collection Account. The Indenture Trustee will establish and maintain
an Eligible Account (the "Collection Account") into which the Servicer will
deposit all Lease Payments, Casualty Payments, Termination Payments and
recoveries from Non-Performing Leases to the extent Copelco Capital has not
substituted a Substitute Lease for such Non-Performing Lease (except to the
extent required to reimburse unreimbursed Servicer Advances) (each as defined
herein) on or in respect of each Lease included in the Series Pool within two
Business Days of receipt thereof. All Lease Payments, Casualty Payments,
Termination Payments and other payments relating to a Lease received and so
deposited in the Collection Account shall constitute property of the Issuer,
securing payments on the related Notes (Section 3.02(a)).
An "Eligible Account" means either (a) an account maintained with a
depository institution or trust company acceptable to the Rating Agency, or (b)
a trust account or similar account maintained with a federal or state chartered
depository institution, which may be an account maintained with the Indenture
Trustee.
A "Casualty Payment" is any payment pursuant to a Lease on account of
the loss, theft, condemnation, governmental taking, destruction, or damage
beyond repair (each, a "Casualty") of any item of Equipment subject thereto
which results, in accordance with the terms of the Lease, in a reduction in the
number or amount of any future Lease Payments due thereunder or in the
termination of the Lessee's obligation to make future Lease Payments thereunder.
A "Lease Payment" is each periodic installment of rent payable by a
Lessee under a Lease. Casualty Payments, Termination Payments, prepayments of
rent required pursuant to the terms of a Lease at or before the commencement of
the Lease, payments becoming due before the applicable Cut-Off Date and
supplemental or additional payments required by the terms of a Lease with
respect to taxes, insurance, maintenance (including, without limitation any
Maintenance Charges), or other specific charges, (including, without limitation,
any Excess Copy Charges and Fee Per Scan Charges), shall not be Lease Payments
hereunder.
A "Termination Payment" is a payment payable by a Lessee under a Lease
upon the early termination of such lease (but not on account of a casualty or a
Lease default) which may be agreed upon by the Servicer, acting in the name of
the Issuer, and the Lessee.
The Indenture Trustee shall deposit the following funds into the
Collection Account (Section 3.03(a)), which funds received on or prior to the
related Determination Date with respect to the related Due Period, including any
funds deposited into the Collection Account from the Reserve Account, shall be
available for distribution ("Available Funds"), pursuant to the Indenture, on
the next succeeding Payment Date:
a) Lease Payments due during the prior Due Period (net of any
Excess Copy Charges, Maintenance Charges and Fee Per Scan
Charges);
b) recoveries from Non-Performing Leases to the extent Copelco
Capital has not substituted Substitute Leases for such
Non-Performing Leases (except to the extent required to
reimburse unreimbursed Servicer Advances);
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c) late charges received on delinquent Lease payments not advanced
by the Servicer;
d) proceeds from repurchases by Copelco Capital of Leases as a
result of breaches of representations and warranties to the
extent Copelco Capital has not substituted Substitute Leases for
such Leases;
e) proceeds from investment of funds in the Collection Account and
the Reserve Account, if any;
f) Casualty Payments;
g) Servicer Advances;
h) Termination Payments to the extent the Issuer does not reinvest
such Termination Payments in Additional Leases;
i) to the extent there occurs an Available Funds Shortfall, funds,
if any, on deposit in the Reserve Account; and
j) Available Funds will not include cash flows realized ("Residual
Realizations") from the sale or release of the Equipment
following the expiration dates of the Leases, other than
Equipment subject to Non-Performing Leases.
Reserve Account. The Indenture Trustee will establish and maintain an
Eligible Account (the "Reserve Account"). On the Closing Date, the Issuer will
make an initial deposit in an amount equal to ____% of the Discounted Present
Value of the Leases as of the Cut-Off Date into the Reserve Account. In the
event that Available Funds (exclusive of amounts on deposit in the Reserve
Account) are insufficient to pay the amounts owing the Servicer, Interest
Payments on the Notes and the Class A Principal Payment, the Class B Principal
Payment, the Class C Principal Payment, the Class D Principal Payments and the
Class E Principal Payments (such payments, the "Required Payments" and such
shortfall, an "Available Funds Shortfall"), the Indenture Trustee will withdraw
from the Reserve Account an amount equal to the lesser of the funds on deposit
in the Reserve Account (the "Available Reserve Amount") and such deficiency. In
addition, on each Payment Date, Available Funds remaining after the payment of
the Required Payments will be deposited into the Reserve Account to the extent
that the Required Reserve Amount exceeds the Available Reserve Amount. The
"Required Reserve Amount" equals the lesser of (a) _____% of the Discounted
Present Value of the Leases as of the Cut-Off Date and (b) the Outstanding
Principal Amount of the Notes. Any amounts on deposit in the Reserve Account in
excess of the Required Reserve Amount will be released to the Issuer (Section
3.04(c)).
Distributions on Notes. Payments on the Notes will commence on August
15, 1998. On or before the fifth day prior to each Payment Date (or the
preceding business day, if such day is not a business day) (each, a
"Determination Date"), the Servicer will determine the Available Funds and the
Required Payments.
For each Payment Date, the interest due with respect to the Notes will
be the interest that has accrued on such Notes since the last Payment Date, or,
in the case of the first Payment Date, since the Issuance Date, at the
applicable Interest Rates applied to the Outstanding Principal Amount of each
Class, after giving effect to payments of principal to Noteholders on the
preceding Payment Date, plus all previously accrued and unpaid interest on the
Notes (the "Interest Payments") (Section 2.01(c)). Funds in the Collection
Account, together with reinvestment earnings thereon, will be used by the
Indenture Trustee to make required payments of principal and interest on the
related Notes (Section 3.03(b)).
For each Payment Date, Principal Payments due with respect to the Class
A Notes, the Class B Notes, Class C Notes, Class D Notes and the Class E Notes
will be the Class A Principal Payment, the Class B Principal Payment, the Class
C Principal Payment, the Class D Principal Payment and the Class E Principal
Payment, respectively. In addition, to the extent that the Class B Floor exceeds
the Class B Target Investor Principal Amount, the Class C Floor exceeds the
Class C Target Investor Principal Amount, the Class D Floor exceeds the Class D
Target Investor Principal Amount and/or the Class E Floor exceeds the Class E
Target Investor Principal Amount, Additional Principal shall be distributed,
sequentially, as an additional principal payment on the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes, the Class C
Notes and the Class D Notes until the Outstanding Principal Amount of each Class
has been reduced to zero (Section 3.03(b)).
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The "Additional Principal" with respect to each Payment Date equals
zero if each of the Class Target Investor Principal Amounts for Classes B, C, D,
and E exceed their respective Class Floors on such Payment Date. If any of these
conditions is not met, the "Additional Principal" with respect to each Payment
Date equals the greater of (i) zero and (ii) the excess, if any, of (A) the
Discounted Present Value of the Performing Leases as of the Determination Date
relating to the immediately preceding Payment Date minus the Discounted Present
Value of the Performing Leases as of the related Determination Date, over (B)
the sum of the Class A Principal Payment, the Class B Principal Payment, the
Class C Principal Payment, the Class D Principal Payment and the Class E
Principal Payment to be paid on such Payment Date (Section 1.01).
The "Class A Percentage" equals ___% (Section 1.01).
The "Class A Principal Payment" means (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates prior to the ___________ Payment Date, the
lesser of (1) the amount necessary to reduce the Outstanding Principal Amount on
the Class A-1 Notes to zero and (2) the difference between (A) the Discounted
Present Value of the Performing Leases as of the previous Determination Date and
(B) the Discounted Present Value of the Performing Leases as of the related
Determination Date, and (ii) on the ___________ Payment Date, the entire
Outstanding Principal Amount on the Class A-1 Notes and (b) after the Class A-1
Notes have been paid in full, the amount necessary to reduce the aggregate
Outstanding Principal Amount on the Class A Notes to the Class A Target Investor
Principal Amount (Section 1.01).
The "Class A Target Investor Principal Amount" means the product of (a)
the Class A Percentage and (b) the Discounted Present Value of the Performing
Leases as of the related Determination Date (Section 1.01).
The "Class B Floor" with respect to each Payment Date means (a) ___% of
the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the
sum of the Outstanding Principal Amount of the Class C Notes, the Outstanding
Principal Amount of the Class D Notes, the Outstanding Principal Amount of the
Class E Notes, and the Overcollateralization Balance as of the immediately
preceding Payment Date after giving effect to all principal payments made on
that day, minus (d) the amount on deposit in the Reserve Account after giving
effect to withdrawals to be made on such Payment Date (Section 1.01).
The "Class B Percentage" equals ___% (Section 1.01).
The "Class B Principal Payment" shall equal (a) while the Class A-1
Notes are outstanding, zero and (b) after the Outstanding Principal Amount on
the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class A
Target Investor Principal Amount and the Class B Floor (Section 1.01).
The "Class B Target Investor Principal Amount" with respect to each
Payment Date will be an amount equal to the product of (a) the Class B
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date (Section 1.01).
The "Class C Floor" with respect to each Payment Date means (a) ___% of
the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the
sum of the Outstanding Principal Amount of the Class D Notes, the Outstanding
Principal Amount of the Class E Notes, and the Overcollateralization Balance as
of the immediately preceding Payment Date after giving effect to all principal
payments made on that day, minus (d) the amount on deposit in the Reserve
Account after giving effect to withdrawals to be made on such Payment Date;
provided, however, that if the Outstanding Principal Amount of the Class B Notes
is less than or equal to the Class B Floor on such Payment Date, the Class C
Floor will equal the Outstanding Principal Amount of the Class C Notes utilized
in the calculation of the Class B Floor for such Payment Date (Section 1.01).
The "Class C Percentage" equals ___% (Section 1.01).
The "Class C Principal Payment" shall equal (a) while the Class A-1
Notes are outstanding, zero and (b) after the Outstanding Principal Amount on
the Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class C Notes to the greater of the Class C
Target Investor Principal Amount and the Class C Floor (Section 1.01).
The "Class C Target Investor Principal Amount" with respect to each
Payment Date will be an amount equal to the product of (a) the Class C
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date (Section 1.01).
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The "Class D Floor" with respect to each Payment Date means (a) ____% of
the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the
sum of the Outstanding Principal Amount of the Class E Notes, and the
Overcollateralization Balance as of the immediately preceding Payment Date after
giving effect to all principal payments made on that day, minus (d) the amount
on deposit in the Reserve Account after giving effect to withdrawals to be made
on such Payment Date; provided, however, that if the Outstanding Principal
Amount of the Class C Notes is less than or equal to the Class C Floor on such
Payment Date, the Class D Floor will equal the Outstanding Principal Amount of
the Class D Notes utilized in the calculation of the Class C Floor for such
Payment Date (Section 1.01).
The "Class D Percentage" equals ___% (Section 1.01).
The "Class D Principal Payment" payable on each Payment Date will be an
amount equal to (a) while the Class A-1 Notes are outstanding, zero and (b)
after the Outstanding Principal Amount on the Class A-1 Notes has been reduced
to zero, the amount necessary to reduce the Outstanding Principal Amount of the
Class D Notes to the greater of the Class D Target Investor Principal Amount and
the Class D Floor (Section 1.01).
The "Class D Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class D Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date (Section 1.01).
The "Class E Floor" (the Class B Floor, the Class C Floor, the Class D
Floor and the Class E Floor, collectively, the "Class Floors") with respect to
each Payment Date means (a) ___% of the initial Discounted Present Value of the
Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect
to such Payment Date, minus (c) the Overcollateralization Balance as of the
immediately preceding Payment Date after giving effect to all principal payments
made on that day, minus (d) the amount on deposit in the Reserve Account after
giving effect to withdrawals to be made on such Payment Date; provided, however,
that if the Outstanding Principal Amount of the Class D Notes is less than or
equal to the Class D Floor on such Payment Date, the Class E Floor will equal
the Outstanding Principal Amount of the Class E Notes utilized in the
calculation of the Class D Floor for such Payment Date (Section 1.01).
The "Class E Percentage" equals ___% (Section 1.01).
The "Class E Principal Payment" payable on each Payment Date will be an
amount equal to (a) while the Class A-1 Notes are outstanding, zero and (b)
after the Outstanding Principal Amount on the Class A-1 Notes has been reduced
to zero, the amount necessary to reduce the Outstanding Principal Amount of the
Class E Notes to the greater of the Class E Target Investor Principal Amount and
the Class E Floor (Section 1.01)
The "Class E Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class E Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date (Section 1.01).
The "Cumulative Loss Amount" with respect to each Payment Date is an amount
equal to the excess, if any, of (a) the total of (i) the Outstanding Principal
Amount of the Notes as of the immediately preceding Payment Date after giving
effect to all principal payments made on that day, plus (ii) the
Overcollateralization Balance as of the immediately preceding Payment Date,
minus (iii) the lesser of (A) the Discounted Present Value of the Performing
Leases as of the Determination Date relating to the immediately preceding
Payment Date minus the Discounted Present Value of the Performing Leases as of
the related Determination Date and (B) Available Funds remaining after the
payment of amounts owing the Servicer and in respect of interest on the Notes on
such Payment Date, over (b) the Discounted Present Value of the Performing
Leases as of the related Determination Date (Section 1.01).
The "Discounted Present Value of the Leases," with respect to the Trust
Fund at any given time, shall equal the future remaining scheduled payments (not
including delinquent amounts) from the related Leases (including Non-Performing
Leases (as defined herein)), discounted at the Discount Rate. The Discount Rate
will be equal to the sum of (a) the weighted average Interest Rate of the Class
A Notes, the Class B Notes, the Class C Notes, the Class D
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Notes and the Class E Notes each weighted by (i) the Class A-1 Initial Principal
Amount, the Class A-2 Initial Principal Amount, the Class A-3 Initial Principal
Amount, the Class A-4 Initial Principal Amount, the Class B Initial Principal
Amount, the Class C Initial Principal Amount, the Class D Initial Principal
Amount or the Class E Initial Principal Amount, as applicable, and (ii) the
expected weighted average life of each Class of Notes, as applicable, and (b)
the Servicing Fee Rate (Section 1.01).
The "Discounted Present Value of the Performing Leases," with respect to
the Trust Fund at any given time equals the Discounted Present Value of the
Leases, including any Additional Leases and Substitute Leases, reduced by all
future remaining scheduled payments on the related Non-Performing Leases (not
including delinquent amounts), discounted at the Discount Rate. See "Description
of the Notes--General" (Section 1.01).
"Non-Performing Leases" are (a) Leases that are more than 123 days
delinquent or (b) Leases that have been accelerated by the Servicer. See "The
Series Pool--The Leases" (Section 1.01).
The "Overcollateralization Balance" with respect to each Payment Date is an
amount equal to the excess, if any, of (a) the Discounted Present Value of
Performing Leases as of the related Determination Date over (b) the sum of the
Outstanding Principal Amount of the Notes as of such Payment Date after giving
effect to all principal payments made on that day (Section 1.01).
Unless an Event of Default and acceleration of the Notes has occurred, on
or before each Payment Date, the Servicer will instruct the Indenture Trustee to
apply or cause to be applied the Available Funds to make the following payments
in the following priority (Section 3.03(b)):
(a) to pay the Servicing Fee;
(b) to reimburse unreimbursed Servicer Advances in respect of a prior
Payment Date;
(c) to make Interest Payments, owing on the Class A Notes concurrently to
the Class A-1 Noteholders, Class A-2 Noteholders, Class A-3 Noteholders
and Class A-4 Noteholders;
(d) to make Interest Payments on the Class B Notes;
(e) to make Interest Payments on the Class C Notes;
(f) to make Interest Payments on the Class D Notes;
(g) to make Interest Payments on the Class E Notes;
(h) to make the Class A Principal Payment to (i) the Class A-1 Noteholders
only, until the Outstanding Principal Amount on the Class A-1 Notes is
reduced to zero, then (ii) to the Class A-2 Noteholders only, until the
Outstanding Principal Amount on the Class A-2 Notes is reduced to zero,
then (iii) to the Class A-3 Noteholders only, until the Outstanding
Principal Amount on the Class A-3 Notes is reduced to zero, and finally
(iv) to the Class A-4 Noteholders, until the Outstanding Principal
Amount on the Class A-4 Notes is reduced to zero;
(i) to make the Class B Principal Payment to the Class B Noteholders;
(j) to make the Class C Principal Payment to the Class C
Noteholders;
(k) to make the Class D Principal Payment to the Class D Principal
Noteholders;
(l) to make the Class E Principal Payment to the Class E Principal
Noteholders;
(m) to pay the Additional Principal, if any, as an additional reduction of
principal, to the Class A Noteholders then receiving the Class A
Principal Payment, until the Outstanding Principal Amount as provided
in Clause (h) above on all of the Class A Notes has been reduced to
zero, then to Class B Noteholders until the Outstanding Principal
Amount on the Class B Notes has been reduced to zero, then to the
Class C Noteholders until the Outstanding Principal Amount on the
Class C Notes has been reduced to zero, then to the Class D
Noteholders until the Outstanding Principal Amount on the Class D
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Notes has been reduced to zero, and finally to Class E Noteholders,
until the Outstanding Principal Amounts on the Class E Notes has been
reduced to zero;
(n) to make a deposit to the Reserve Account in an amount equal to the
excess of the Required Reserve Amount over the Available Reserve
Amount; and
(o) to the Certificateholder, the balance, if any.
Advances by the Servicer. Prior to any Payment Date, the Servicer may, but
will not be required to, advance (each, a "Servicer Advance") to the Indenture
Trustee an amount sufficient to cover delinquencies on all Leases with respect
to the prior Due Period. The Servicer will be reimbursed for Servicer Advances
from Available Funds on the second following Payment Date See "Distribution on
Notes" above.
Redemption. The Issuer may, at its option, redeem the Notes, as a whole, at
their principal amount, without premium, together with interest accrued to the
date fixed for redemption if on any payment date the Discounted Present Value of
the Performing Leases is less than or equal to 10% of the Discounted Present
Value of the Leases as of the Cut-Off Date (Sections 2.01 and 1.06.). The Issuer
will give notice of such redemption to each Noteholder and the Indenture Trustee
at least 30 days before the Payment Date fixed for such prepayment Upon deposit
of funds necessary to effect such redemption, the Indenture Trustee shall pay
the remaining unpaid principal amount on the Notes and all accrued and unpaid
interest as of the Payment Date fixed for redemption. See "Description of the
Notes--Redemption."
Events of Default and Notice Thereof. The following events will be defined
in the Indenture as "Events of Default":
(a) default in making Principal Payments or Interest Payments when such
become due and payable;
(b) default in the performance, or breach, by the Issuer of certain
negative covenants limiting its actions;
(c) default in the performance, or breach, of any other covenant of the
Issuer in the Indenture or the Sales and Servicing Agreement, and
continuance of such default or breach for a period of 30 days after
the earliest of (i) any officer of the Issuer first acquiring the
knowledge thereof, (ii) the Indenture Trustee's giving written notice
thereof to the Issuer or (iii) the holders of a majority of the then
Outstanding Principal Amount of the Notes giving written notice
thereof to the Issuer and the Indenture Trustee;
(d) if any representation or warranty of the Issuer or Copelco Capital made
in the Indenture or the Sales and Servicing Agreement or any other
writing provided to the holders of the Notes proves to be incorrect in
any material respect as of the time when the same has been made;
provided, however, that the breach of any representation or warranty
made by Copelco Capital in the Sales and Servicing Agreement will be
deemed to be "material" only if it negatively affects the Noteholders,
the enforceability of the Indenture or of the Notes; and provided,
further, that a material breach of any representation or warranty made
by Copelco Capital in the Sales and Servicing Agreement with respect
to any of the Leases or the Equipment subject thereto will not
constitute an Event of Default if Copelco Capital repurchases or
substitutes for such Lease and Equipment in accordance with the Sales
and Servicing Agreement; or
(e) insolvency or bankruptcy events relating to the Issuer. (Section 6.01)
The Indenture will provide that the Indenture Trustee shall give the
Noteholders notice of all uncured defaults known to it (the term "default" to
include the events specified above without grace periods) (Sections 6.03 and
7.02).
If an Event of Default under an Indenture of the kind specified in clause
(e) above occurs, the unpaid principal amount of the related Notes shall
automatically become due and payable together with all accrued and unpaid
interest thereon. If any other Event of Default occurs and is continuing, then
the Indenture Trustee will, if so directed by the holders of 66 2/3% (33 1/3% in
the case of a payment default) of the then Outstanding Principal Amount of the
Class A Notes (or if the Class A Notes are no longer outstanding, the Class B
Notes or if the Class B Notes are no longer outstanding the Class C Notes or if
the Class C Notes are no longer outstanding, the Class D
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Notes or if the Class D Notes are no longer outstanding, the Class E Notes), or
the holders of such percentages of the then Outstanding Principal Amount of such
Notes may declare the unpaid principal amount of all the Notes to be due and
payable immediately, together with all accrued and unpaid interest thereon
(Section 6.02). The Indenture Trustee may, however, if the Event of Default
involves other than non-payment of principal or interest on the Notes, not sell
the related Leases and Equipment unless such sale is for an amount greater than
or equal to the Outstanding Principal Amount of the Notes unless directed to do
so by the holders of 66 2/3% (33 1/3% in the case of a payment default) of the
then Outstanding Principal Amount of the Class A Notes (or if the Class A Notes
are no longer outstanding, the Class B Notes or if the Class B Notes are no
longer outstanding the Class C Notes or if the Class C Notes are no longer
outstanding, the Class D Notes or if the Class D Notes are no longer
outstanding, the Class E Notes) (Section 6.03).
Subsequent to an Event of Default and following any acceleration of the
Notes pursuant to the Indenture, any moneys that may then be held or thereafter
received by the Indenture Trustee shall be applied in the following order of
priority, at the date or dates fixed by the Indenture Trustee and, in case of
the distribution of the entire amount due on account of principal or interest,
upon presentation of the Notes and surrender thereof:
First to the payment of all costs and expenses of collection incurred by
the Indenture Trustee and the Noteholders (including the reasonable fees and
expenses of any counsel to the Indenture Trustee and the Noteholders);
Second if the person then acting as Servicer under the Sales and Servicing
Agreement is not Copelco Capital or an affiliate of Copelco Capital, to the
payment of all Servicer's Fees then due to such person;
Third first, to the payment of all accrued and unpaid interest on the
Outstanding Principal Amount of the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes pro-rata to the date of payment thereof, including (to
the extent permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the date of
payment thereof at the rate per annum equal to the Class A-1 Interest Rate,
Class A-2 Interest Rate, Class A-3 Interest Rate and Class A-4 Interest Rate,
respectively, second to the payment of all accrued and unpaid interest on the
Outstanding Principal Amount of the Class B Notes to the date of payment
thereof, including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to the
Class B Interest Rate, third, to the payment of all accrued and unpaid interest
on the Outstanding Principal Amount of the Class C Notes to the date of payment
thereof, including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to the
Class C Interest Rate, fourth, to the payment of all accrued and unpaid interest
on the Outstanding Principal Amount of the Class D Notes to the date of payment
thereof, including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to the
Class D Interest Rate, fifth to the payment of all accrued and unpaid interest
on the Outstanding Principal Amount of the Class E Notes to the date of payment
thereof, including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to the
Class E Interest Rate, to the payment of the Outstanding Principal Amount of the
Class A-1 Notes, fifth, to the payment of the Outstanding Principal Amount of
the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes pro-rata to the date of
payment thereof, sixth, to the payment of the Outstanding Principal Amount of
the Class B Notes to the date of payment thereof, and seventh, to the payment of
the Outstanding Principal Amount of the Class C Notes, eight, to the payment of
the Outstanding Principal Amount of the Class D Notes, ninth, to the payment of
the Outstanding Principal Amount of the Class E Note; provided, that the
Noteholders may allocate such payments for interest, principal and premium at
their own discretion, except that no such allocation shall affect the allocation
of such amounts or future payments received by any other Noteholder;
Fourth to the payment of amounts then due the Indenture Trustee under the
Indenture; and
Fifth to the payment of the remainder, if any, to the Issuer or any other
Person legally entitled thereto (Section 6.06).
The Issuer will be required to furnish annually to the Indenture Trustee, a
statement of certain officers of the Issuer to the effect that to the best of
their knowledge the Issuer is not in default in the performance and observance
of the terms of the Indenture or, if the Issuer is in default, specifying such
default (Section 8.09).
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<PAGE>
The Indenture will provide that the holders of 66-2/3% in aggregate
principal amount of the Class A Notes then outstanding (or if the Class A Notes
are no longer outstanding, the Class B Notes or if the Class B Notes are no
longer outstanding the Class C Notes or if the Class C Notes are no longer
outstanding, the Class D Notes or if the Class D Notes are no longer
outstanding, the Class E Notes) will have the right to waive certain defaults
and, subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
exercising any trust or power conferred on the Indenture Trustee (Sections 6.12
and 6.13). The Indenture will provide that in case an Event of Default shall
occur (which shall not have been cured or waived), the Indenture Trustee will be
required to exercise such of its rights and powers under such Indenture and to
use the degree of care and skill in their exercise that a prudent man would
exercise or use in the conduct of his own affairs (Section 7.01(b)). Subject to
such provisions, the Indenture Trustee will be under no obligation to exercise
any of its rights or powers under such Indenture at the request of any of the
Noteholders unless they shall have offered to the Indenture Trustee reasonable
security or indemnity(Section 6.12).
Modification of the Indenture. With certain exceptions, under the
Indenture, the rights and obligations of the Issuer and the rights of the
Noteholders may be modified by the Issuer with the consent of the holders of not
less than 66 2/3% in aggregate principal amount of the Notes then outstanding
under the Indenture; but no such modification may be made which would (a) extend
the fixed maturity of any Note, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of principal or interest thereon,
without the consent of the holder of each Note so affected or (b) reduce the
above-stated percentage of Notes, without the consent of the holders of all
Notes then outstanding under such Indenture (Section 9.02).
Servicer Events of Default. The following events and conditions shall be
defined in the Sales and Servicing Agreement as "Servicer Events of Default":
(a) failure on the part of the Servicer to remit to the Indenture Trustee
within three Business Days following the receipt thereof any monies
received by the Servicer required to be remitted to the Indenture
Trustee under the Sales and Servicing Agreement;
(b) so long as Copelco Capital is the Servicer, failure on the part of
Copelco Capital to pay to the Indenture Trustee on the date when due,
any payment required to be made by Copelco Capital pursuant to the
Sales and Servicing Agreement;
(c) default on the part of either the Servicer or (so long as Copelco
Capital is the Servicer) Copelco Capital in its observance or
performance in any material respect of certain covenants or agreements
in the Sales and Servicing Agreement;
(d) if any representation or warranty of Copelco Capital made in the Sales
and Servicing Agreement shall prove to be incorrect in any material
respect as of the time made; provided, however, that the breach of any
representation or warranty made by Copelco Capital in such Sales and
Servicing Agreement will be deemed to be "material" only if it affects
the Noteholders, the enforceability of the Indenture or of the Notes;
and provided, further, that such material breach of any representation
or warranty made by Copelco Capital in such Sales and Servicing
Agreement with respect to any of the Leases or the Equipment subject
thereto will not constitute a Servicer Event of Default if Copelco
Capital repurchases such Lease and Equipment in accordance with the
Sales and Servicing Agreement to the extent provided therein;
(e) certain insolvency or bankruptcy events relating to the Servicer;
(f) the failure of the Servicer to make one or more payments due with
respect to aggregate recourse debt or other obligations exceeding
$5,000,000, or the occurrence of any event or the existence of any
condition, the effect of which event or condition is to cause (or
permit one or more persons to cause) more than $5,000,000 of aggregate
recourse debt or other obligations of the Servicer to become due
before its (or their) stated maturity or before its (or their)
regularly scheduled dates of payment so long as such failure, event or
condition shall be continuing and shall not have been waived by the
Person or Persons entitled to performance;
(g) a final judgment or judgments (or decrees or orders) for the payment of
money aggregating in excess of $5,000,000 and any one of such
judgments (or decrees or orders) has remained unsatisfied and in
effect for any period of 60 consecutive days without a stay of
execution.
44
<PAGE>
Servicer Termination. So long as a Servicer Event of Default under the
Sales and Servicing Agreement is continuing, the Indenture Trustee shall, upon
the instructions of the holders of 66-2/3% in principal amount of the Notes, by
notice in writing to the Servicer terminate all of the rights and obligations of
the Servicer (but not Copelco Capital's obligations which shall survive any such
termination) under Sales and Servicing Agreement (Section 5.01). On the receipt
by the Servicer of such written notice, all authority and power of the Servicer
under the Sales and Servicing Agreement to take any action with respect to any
Lease or Equipment will cease and the same will pass to and be vested in the
Indenture Trustee pursuant to and under the Sales and Servicing Agreement and
the Indenture.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes, the aggregate amount of each
interest payment on such Notes and the yield to maturity of such Notes are
directly related to the rate of payments on the underlying Leases. The payments
on such Leases may be in the form of scheduled payments, Prepayments or
liquidations due to default, casualty and other events, which cannot be
specified at present. Any such payments may result in distributions to
Noteholders of amounts which would otherwise have been distributed over the
remaining term of the Leases. In general, the rate of such payments may be
influenced by a number of other factors, including general economic conditions.
The rate of Principal Payments with respect to any Class may also be affected by
any repurchase of the underlying Leases by Copelco Capital pursuant to the Sales
and Servicing Agreement. In such event, the repurchase price will decrease the
Discounted Present Value of the Performing Leases, causing the corresponding
weighted average life of the Notes to decrease See "Risk Factors--Prepayments."
In the event a Lease becomes a Non-Performing Lease, a Warranty Lease or an
Adjusted Lease, Copelco Capital will have the option to substitute for the
terminated lease another of similar characteristics (a "Substitute Lease") in an
aggregate amount not to exceed 10% of the Discounted Present Value of the Leases
as of the Cut-Off Date with respect to Non-Performing Leases and in an aggregate
amount not to exceed 10% of the Discounted Present Value of the Leases as of the
Cut-Off Date with respect to Adjusted Leases and Warranty Leases In addition, in
the event of an Early Lease Termination which has been prepaid in full, Copelco
Capital will have the option to transfer an additional lease of similar
characteristics (an "Additional Lease"). The Substitute Leases and Additional
Leases will have a Discounted Present Value of the Leases equal to or greater
than that of the Leases being modified and replaced and the monthly payments on
the Substitute Leases or Additional Leases will be at least equal to those of
the terminated Leases through the term of such terminated Leases. In the event
that an Early Lease Termination is allowed by Copelco Capital and a Substitute
Lease is not provided, the amount prepaid will be equal to at least the
Discounted Present Value of the terminated Lease, plus any delinquent payments.
The effective yield to holders of the Notes will depend upon, among other
things, the amount of and rate at which principal is paid to such Noteholders.
The after-tax yield to Noteholders may be affected by lags between the time
interest income accrues to Noteholders and the time the related interest income
is received by the Noteholders.
The following chart sets forth the percentage of the Initial Principal
Amount of the Class A and Class B Notes which would be outstanding on the
Payment Dates set forth below assuming a CPR of ___% and ___%, respectively and
were calculated using the Statistical Discount Rate. Such information is
hypothetical and is set forth for illustrative purposes only. The CPR
("Conditional Payment Rate") assumes that a fraction of the outstanding Series
Pool is prepaid on each Distribution Date, which implies that each Lease in the
Series Pool is equally likely to prepay. This fraction, expressed as a
percentage, is annualized to arrive at the Conditional Payment Rate for the
Contract Pool. The CPR measures prepayments based on the outstanding Discounted
Present Value of the Leases, after the payment of all Scheduled Payments on the
Leases during such Due Period. The CPR further assumes that all Leases are the
same size and amortize at the same rate and that each Lease will be either paid
as scheduled or prepaid in full. The amounts set forth below are based upon the
timely receipt of scheduled monthly Lease payments as of the Cut-Off Date,
assume that the Issuer does not exercise its option to redeem the Notes and
assume the Issuance Date is ________, 1998 and the first Payment Date is
____________, 1998.
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<PAGE>
PERCENTAGE OF THE INITIAL CLASS A-1, A-2, A-3 AND A-4
PRINCIPAL AMOUNTS AND THE INITIAL CLASS B PRINCIPAL
AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
================================================================================
<TABLE>
<CAPTION>
___% CPR ___% CPR
-------- ------- -------- ------- ------- ------- ------- -------- ------- -------- ------- ------- ------- -------
Payment Class Class Class Class Class Class Class Class Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C D A-1 A-2 A-3 A-4 B C D
-------- ------- -------- ------- ------- ------- ------- -------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
% % % % % % % % % % % % % %
= = = = = = = = = = = = = =
Issuance Date
========
August, 1998
September, 1998
October, 1998
November, 1998
December, 1998
January, 1999
February, 1999
March, 1999
April, 1999
May, 1999
June, 1999
July, 1999
August, 1999
September, 1999
October, 1999
November, 1999
December, 1999
January, 2000
February, 2000
March, 2000
April, 2000
May, 2000
June, 2000
July, 2000
August, 2000
September, 2000
October, 2000
November, 2000
December, 2000
January, 2001
February, 2001
March, 2001
April, 2001
May, 2001
June, 2001
July, 2001
August, 2001
September, 2001
October, 2001
November, 2001
December, 2001
January, 2002
February, 2002
March, 2002
April, 2002
May, 2002
June, 2002
July, 2002
August, 2002
September, 2002
October, 2002
November, 2002
December, 2002
January, 2003
February, 2003
March, 2003
April, 2003
</TABLE>
46
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
May, 2003
June, 2003
July, 2003
August, 2003
September, 2003
October, 2003
November, 2003
December, 2003
January, 2004
February, 2004
March, 2004
April, 2004
WEIGHTED
AVERAGE
LIFE(1)(YEARS)
</TABLE>
(1) The weighted average life of a Class A Note or a Class B Note is determined
by (a) multiplying the amount of cash distributions in reduction of the
Outstanding Principal Amount of the respective Offered Note by the number
of years from the Issuance Date to such Payment Date, (b) adding the
results, and (c) dividing the sum by the respective Initial Principal
Amount.
For the ___% CPR and ___% CPR scenarios, if the Issuer exercises its option
to redeem the Notes, the average life of the Class A-1 Notes; Class A-2 Notes;
Class A-3 Notes; Class A-4 Notes; Class B Notes; Class C Notes and Class D Notes
would be ___ years and ___ years; ___ years; ___ years; ___ years and ___ years;
___ years and ___ years; ___ years and ___ years and ___ years and ___ years,
respectively.
SECURITY FOR THE NOTES
General. Repayment of the Notes will be secured by (a) a first priority
security interest in the underlying Leases perfected both by filing UCC
financing statements against the Issuer and Copelco Capital and by taking
possession of the respective Lease documents, (b) an unperfected security
interest in the related Equipment owned by the Issuer and an assignment of the
Issuer's security interest in such Equipment subject to Nominal Buy-Out Leases,
which security interest was originally perfected by Copelco Capital (for
Equipment with an original cost in excess of $25,000 which assignment will be
recorded in the manner described below) and (c) all funds in the Collection
Account and the Reserve Account.
THE INDENTURE TRUSTEE
Manufacturers and Traders Trust Company will be the Indenture. Trustee
under the Indenture Copelco Capital, as Seller or Servicer, and its affiliates
may from time to time enter into normal banking and Indenture Trustee
relationships with the Indenture Trustee and its affiliates. The Indenture
Trustee, the Servicer and any of their respective affiliates may hold Notes in
their own names In addition, for purposes of meeting the legal requirements of
certain local jurisdictions, the Indenture Trustee shall have the power to
appoint a co-Indenture Trustee or a separate Indenture Trustee under each
Indenture. In the event of such appointment, all rights, powers, duties and
obligations conferred or imposed upon the Indenture Trustee by the Indenture
will be conferred or imposed upon the Indenture Trustee and such separate
Indenture Trustee or co-Indenture Trustee jointly, or in any jurisdiction in
which the Indenture Trustee shall be incompetent or unqualified to perform
certain acts, singly upon such separate Indenture Trustee or co-Indenture
Trustee, who shall exercise and perform such rights, powers, duties and
obligations solely at the direction of the Indenture Trustee.
The Indenture Trustee may resign at any time, in which event the Issuer
will be obligated to appoint a successor Indenture Trustee. The Issuer may also
remove each Indenture Trustee if such Indenture Trustee ceases to be eligible to
continue as such under the Indenture, fails to perform in any material respect
its obligations under such Indenture, or becomes insolvent. In such
circumstances, the Issuer will be obligated to appoint a successor Indenture
Trustee. Any resignation or removal of a Indenture Trustee and appointment of a
successor Indenture Trustee will not become effective until acceptance of the
appointment by the successor Indenture Trustee.
47
<PAGE>
THE OWNER TRUSTEE
[________________________], the Owner Trustee under the Trust Agreement, is a
[____________] banking corporation and its principal offices are located at
[___________________________________________].
CERTAIN LEGAL MATTERS AFFECTING A LESSEE'S
RIGHTS AND OBLIGATIONS
General. The Leases are triple-net leases, requiring the Lessees to pay all
taxes, maintenance and insurance associated with the Equipment, and are
primarily non-cancelable by the Lessees.
The Leases are "hell or high water" leases, under which the obligations of
the Lessee are absolute and unconditional, regardless of any defense, setoff or
abatement which the Lessee may have against Copelco Capital, as Seller or
Servicer, the Issuer, or any other person or entity whatsoever.
Events of default under the Leases are generally the result of failure to
pay amounts when due, failure to observe other covenants in the Lease,
misrepresentations by, or the insolvency, bankruptcy or appointment of a trustee
or receiver for the Lessee under a Lease. The remedies of the lessor (and the
Issuer as assignee) following a notice and cure period are generally to seek to
enforce the performance by the Lessee of the terms and covenants of the Lease
(including the Lessee's obligation to make scheduled payments) or recover
damages for the breach thereof, to accelerate the balance of the remaining
scheduled payments paid to terminate the rights of the Lessee under such Lease.
Although the Leases permit the lessor to repossess and dispose of the related
Equipment in the event of a lease default, and to credit such proceeds against
the Lessee's liabilities thereunder, such remedies may be limited where the
Lessee thereunder is subject to bankruptcy, or other insolvency proceedings.
UCC and Bankruptcy Considerations. Pursuant to the Sales and Servicing
Agreement, Copelco Capital will sell the Leases to the Issuer, make a capital
contribution to the Issuer of Equipment owned by Copelco Capital and subject to
the Leases, and assign its security interests in the Equipment subject to
Nominal Buy-Out Leases. Copelco Capital will warrant that the sale of the Leases
to the Issuer is a true sale, that the contributions of its rights in the
Equipment is a valid transfer of Copelco Capital's title to the Equipment and
that Copelco Capital is either the owner of the Equipment or has a valid
perfected first priority security interest in the Equipment (for Leases with
leased Equipment having an original equipment cost in excess of $25,000),
including Equipment, subject to Nominal Buy-Out Leases, and accordingly, Copelco
Capital has filed UCC financing statements in its favor against Lessees in
respect of all Equipment in the Series Pool with an original Equipment cost in
excess of $25,000. No action will be taken to perfect the interest of Copelco
Capital in any Equipment in the Series Pool with an original Equipment cost of
less than $25,000. In addition, UCC financing statements identifying security
interests in the Equipment as transferred to, or obtained by, the Issuer or the
Indenture Trustee and UCC Financing Statements identifying equipment owned by
Copelco Capital, transferred to the Issuer and pledged to the Indenture Trustee
will be filed in favor of the Issuer or the Indenture Trustee in the Filing
Locations. In the event of the repossession and resale of Equipment subject to a
superior lien, the senior lienholder would be entitled to be paid the full
amount of the indebtedness owed to it out of the sale proceeds before such
proceeds could be applied to the payment of claims by the Servicer on behalf of
the Issuer. Certain statutory provisions, including federal and state bankruptcy
and insolvency laws, may limit the ability of the Servicer to repossess and
resell collateral or obtain a deficiency judgment in the event of a Lessee
default. In the event of the bankruptcy or reorganization of a Lessee, or
Copelco Capital, as Seller or Servicer, various provisions of the Bankruptcy
Code of 1978, 11 U.S.Css.ss. 101-1330 (the "Bankruptcy Code"), and related laws
may interfere with, delay or eliminate the ability of Copelco Capital or the
Issuer to enforce its rights under the Leases.
In the case of operating leases, the Bankruptcy Code grants to the
bankruptcy trustee or the debtor-in-possession a right to elect to assume or
reject any executory contract or unexpired lease. Any rejection of such a lease
or contract constitutes a breach of such lease or contract, entitling the
nonbreaching party to a claim for damages for breach of contract. The net
proceeds from any resulting judgment would be deposited by the Servicer into the
Collection Account and allocated to the Noteholders as more fully described
herein. Upon the bankruptcy of a Lessee, if the bankruptcy trustee or
debtor-in-possession elected to reject a Lease, the flow of scheduled payments
to Noteholders would cease. In the event that, as a result of the bankruptcy of
a Lessee, the Servicer is prevented from collecting scheduled payments with
respect to Leases and such Leases become Non-Performing Leases, no recourse
would be available against Copelco Capital (except for misrepresentation or
breach of warranty) and the Noteholders could suffer a loss with respect to the
Notes. Similarly, upon the bankruptcy of the Issuer, if the bankruptcy trustee
or debtor-in-possession elected to reject a Lease, the flow of Lease payments to
the Issuer and the Noteholders would cease. As noted above, however, the Issuer
has been structured so that the filing of a bankruptcy petition with respect to
it is unlikely. See "The Issuer."
48
<PAGE>
These UCC and bankruptcy provisions, in addition to the possible decrease
in value of a repossessed item of Equipment, may limit the amount realized on
the sale of Equipment to less than the amount due on the related Lease.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of material federal income tax
consequences to the original purchasers of the Offered Notes of the purchase,
ownership and disposition of the Offered Notes. It does not purport to discuss
all federal income tax consequences that may be applicable to investment in the
Offered Notes or to particular categories of investors, some of which may be
subject to special rules. In particular, this discussion applies only to
institutional investors that purchase Offered Notes directly from the Issuer and
hold the Offered Notes as capital assets.
The discussion that follows, and the opinion set forth below of Dewey
Ballantine LLP, special tax counsel to the Issuer ("Tax Counsel"), are based on
the provisions of the Internal Revenue Code of 1986, as amended (the "Code") and
treasury regulations promulgated thereunder as in effect on the date hereof and
on existing judicial and administrative interpretations thereof. These
authorities are subject to change and to differing interpretations, which could
apply retroactively. The opinion of Tax Counsel is not binding on the courts or
the Internal Revenue Service (the "IRS"). Potential investors should consult
their own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of the
Offered Notes.
Tax Counsel has prepared the following discussion and is of the opinion
that such discussion is correct in all material respects.
Characterization of the Offered Notes as Indebtedness. In the opinion of
Tax Counsel, although no transaction closely comparable to that contemplated
herein has been the subject of any treasury regulation, revenue ruling or
judicial decision, based on the application of existing law to the facts as set
forth in the applicable agreements, the proper treatment of the Offered Notes is
as indebtedness for federal income tax purposes.
Although it is the opinion of Tax Counsel that the Offered Notes are
properly characterized as indebtedness for federal income tax purposes, no
assurance can be given that such characterization of the Offered Notes will
prevail. If the Offered Notes were treated as an ownership interest in the
Leases, all income on such Leases would be income to the holders of the Offered
Notes, and related fees and expenses would generally be deductible (subject to
certain limitations on the deductibility of miscellaneous itemized deductions by
individuals) and certain market discount and premium provisions of the Code
might apply to a purchase of the Offered Notes.
If, alternatively, the Offered Notes were treated as an equity interest in
the Issuer, distributions on the Offered Notes probably would not be deductible
in computing the taxable income of the Issuer and all or a part of distributions
to the holders of the Offered Notes probably would be treated as dividend income
to those holders. Such an Issuer-level tax could result in a reduced amount of
cash available for distributions to the holders of the Offered Notes.
Taxation of Interest Income of Noteholders. If characterized as
indebtedness, interest on the Offered Notes will be taxable as ordinary income
for federal income tax purposes when received by Noteholders using the cash
method of accounting and when accrued by Noteholders using the accrual method of
accounting. Interest received on the Offered Notes also may constitute
"investment income" for purposes of certain limitations of the Code concerning
the deductibility of investment interest expense.
Original Issue Discount. It is not anticipated that the Offered Notes will
have any original issue discount ("OID") other than possibly OID within a de
minimis exception and that accordingly the provisions of sections 1271 through
1273 and 1275 of the Code generally will not apply to the Offered Notes. OID
will be considered de minimis if it is less than 0.25% of the principal amount
of Note multiplied by its expected weighted average life.
Market Discount. A subsequent purchaser who buys a Note for less than its
principal amount may be subject to the "market discount" rules of Sections 1276
through 1278 of the Code. If a subsequent purchaser of a Note disposes of such
Note (including certain nontaxable dispositions such as a gift), or receives a
principal payment, any gain upon such sale or other disposition will be
recognized, or the amount of such principal payment will be treated, as ordinary
income to the extent of any "market discount" accrued for the period that such
purchaser holds the Note. Such holder may instead elect to include market
discount in income as it accrues with respect to all debt instruments acquired
in the year of acquisition of the Offered Notes and thereafter. Market discount
generally
49
<PAGE>
will equal the excess, if any, of the then-current unpaid principal balance of
the Note over the purchaser's basis in the Note immediately after such purchaser
acquired the Note. In general, market discount on a Note will be treated as
accruing over the term of such Note in the ratio of interest for the current
period over the sum of such current interest and the expected amount of all
remaining interest payments, or at the election of the holder, under a constant
yield method. At the request of a holder of a Note, information will be made
available that will allow the holder to compute the accrual of market discount
under the first method described in the preceding sentence.
The market discount rules also provide that a holder who incurs or
continues indebtedness to acquire a Note at a market discount may be required to
defer the deduction of all or a portion of the interest on such indebtedness
until the corresponding amount of market discount is included in income.
Notwithstanding the above rules, market discount on a Note will be
considered to be zero if it is less than a de minimis amount, which is 0.25% of
the remaining principal balance of the Note multiplied by its expected weighted
average remaining life. If OID or market discount is de minimis, the actual
amount of discount must be allocated to the remaining principal distributions on
the Note and, when each such distribution is received, capital gain equal to the
discount allocated to such distribution will be recognized.
Market Premium. A subsequent purchaser who buys a Note for more than its
principal amount generally will be considered to have purchased the Note at a
premium. Such holder may amortize such premium, using a constant yield method,
over the remaining term of the Note and, except as future regulations may
otherwise provide, may apply such amortized amounts to reduce the amount of
interest income reportable with respect to such Note over the period from the
purchase date to the date of maturity of the Note. Legislative history of the
Tax Reform Act of 1986 indicates that the amortization of such premium on an
obligation that provides for partial principal payments prior to maturity should
be governed by the methods for accrual of market discount on such an obligation
(described above). A holder that elects to amortize such premium must reduce tax
basis in the related obligation by the amount of the aggregate deductions (or
interest offsets) allowable for amortizable premium. If a debt instrument
purchased at a premium is redeemed in full prior to its maturity, a purchaser
who has elected to amortize premium should be entitled to a deduction for any
remaining unamortized premium in the taxable year of redemption.
Sale or Exchange of Offered Notes. If a Note is sold or exchanged, the
seller of the Note will recognize gain or loss equal to the difference between
the amount realized on the sale or exchange and the adjusted basis of the Note.
The adjusted basis of a Note will generally equal its cost, increased by any OID
or market discount includible in income with respect to the Note through the
date of sale and reduced by any principal payments previously received with
respect to the Note, any payments allocable to previously accrued OID or market
discount and any amortized market premium. Subject to the market discount rules,
gain or loss will generally be capital gain or loss if the Note was held as a
capital asset. Capital losses generally may be used only to offset capital
gains.
Backup Withholding with Respect to Offered Notes. Payments of interest and
principal, together with payments of proceeds from the sale of Offered Notes,
may be subject to the "backup withholding tax" under Section 3406 of the Code at
a rate of 31% if recipients of such payments fail to furnish to the payor
certain information, including their taxpayer identification numbers, or
otherwise fail to establish an exemption from such tax. Any amounts deducted and
withheld from a payment to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed by
the IRS on a recipient of payments that is required to supply information but
that does not do so in the proper manner.
Foreign Investors in Offered Notes Certain U.S. Federal Income Tax
Documentation Requirements. A beneficial owner of Offered Notes holding
securities through CEDEL of Euroclear (or through DTC if the holder has an
address outside the U.S.) will be subject to the 30% U.S. withholding tax that
generally applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons (as defined below), unless (i) each
clearing system, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity required to
withhold tax complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners of Offered
Notes that are Non-U.S. Persons (as defined below) can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificates of
Foreign Status). If the information shown on Form W-8 changes, a new Form W-8
must be filed within 30 days of such change.
50
<PAGE>
Exemption for Non-U.S. Persons with effectively connected income (Form
4224). A Non-U.S. Person (as defined below), including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons residing in a country that has a tax treaty with
the United States can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificates). If the treaty provides only for a reduced rate, withholding tax
will be imposed at that rate unless the filer alternatively files Form W-8 Form
1001 may be filed by Certificate Owners or their agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Owner of a Note or, in the
case of a Form 1001 or a Form 4224 filer, his agent, files by submitting the
appropriate form to the person through whom it holds (the clearing agency, in
the case of persons holding directly on the books of the clearing agency). Form
W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
On April 22, 1996 the IRS issued proposed regulations relating to
withholding, backup withholding and information reporting that, if adopted in
their current form would, among other things, unify current certification
procedures and forms and clarify certain reliance standards. The regulations are
proposed to be effective for payments made after December 31, 1997 but provide
that certificates issued on or before the date that is 60 days after the
proposed regulations are made final will continue to be valid until they expire.
Proposed regulations, however, are subject to change prior to their adoption in
final form.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof, (iii) an
estate that is subject to U.S. federal income tax regardless of the source of
its income. The term "Non-U.S. Person" means any person who is not a U.S. Person
or (iv) a trust if a court within the United States can exercise primary
supervision over its administration and at least one United States fiduciary has
the authority to control all substantial decisions of the trust. This summary
does not deal with all aspects of U.S. federal income tax withholding that may
be relevant to foreign holders of the Offered Notes. Investors are advised to
consult their own tax advisors for specific tax advice concerning their holding
and disposing of the Offered Notes.
State, Local and Other Taxes. Investors should consult their own tax
advisors regarding whether the purchase of the Offered Notes, either alone or in
conjunction with an investor's other activities, may subject an investor to any
state or local taxes based on an assertion that the investor is either "doing
business" in, or deriving income from a source located in, any state or local
jurisdiction. Additionally, potential investors should consider the state, local
and other tax consequences of purchasing, owning or disposing of a Note. State
and local tax laws may differ substantially from the corresponding federal tax
law, and the foregoing discussion does not purport to describe any aspect of the
tax laws of any state or other jurisdiction. Accordingly, potential investors
should consult their own tax advisors with regard to such matters.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE OFFERED NOTES, INCLUDING THE TAX CONSEQUENCES
UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES IN FEDERAL OR OTHER TAX LAWS OR IN THE INTERPRETATIONS THEREOF.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements and restrictions on those pension and other
employee benefits plans to which it applies and on those persons who are
fiduciaries with respect to such plans. In accordance with ERISA's fiduciary
standards, before purchasing the Offered Notes, a fiduciary should determine
whether such an investment is permitted under the documents and instruments
governing the plan and is appropriate for the plan in view of its overall
investment policy and the composition of its portfolio.
51
<PAGE>
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of certain plans subject thereto (each
"Benefit Plan") and persons who are "parties in interest," within the meaning of
ERISA, or "disqualified persons," within the meaning of the Code. Certain
transactions involving the purchase, holding or transfer of the Offered Notes
might be deemed to constitute prohibited transactions under ERISA and the Code
if assets of the Issuer were deemed to be assets of a Benefit Plan. Under
regulations issued by the United States Department of Labor set forth in 29
C.F.R. ss. 2510.3101 (the "Plan Asset Regulations"), the assets of the Issuer
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the Code only if the Benefit Plan acquires an "Equity Interest" in the Issuer
and none of the exceptions contained in the Plan Asset Regulations is
applicable. An Equity Interest is defined under the Plan Asset Regulations as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. It is
anticipated that the Offered Notes should be treated as indebtedness without
substantial equity features for purposes of the Plan Asset Regulations. However,
even if the Offered Notes are treated as indebtedness for such purposes, the
acquisition or holding of Offered Notes by or on behalf of a Benefit Plan could
be considered to give rise to a prohibited transaction if the Issuer, the
Indenture Trustee, the Underwriter or any of their respective affiliates is or
becomes a party in interest or disqualified person with respect to such Benefit
Plan. In this event, certain exemptions from the prohibited transaction rules
could be applicable depending on the type and circumstances of the plan
fiduciary making the decision to acquire a Note. Included among these exemptions
are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding investments
by insurance company pooled separate accounts; PTCE 91-38 regarding investments
by bank collective investment funds; PTCE 84-14, regarding transactions effected
by "qualified professional asset managers," PTCE 95-60, regarding investments by
insurance company general accounts and PTCE 96-23 regarding transactions
effected by In-House Asset Managers. Each investor using assets of a Benefit
Plan which acquires the Offered Notes, or to whom the Offered Notes are
transferred, will be deemed to have represented that the acquisition and
continued holding of the Offered Notes will be covered by one of the exemptions
listed above or another Department of Labor class exemption.
Insurance companies considering the purchase of the Offered Notes should
also consult their own counsel as to the application of the recent decision by
the United States Supreme Court in John Hancock Mutual Life Insurance Co. v.
Harris Trust and Savings Bank (114 S. Ct. 517 (1993)) to such a purchase. Under
that decision, assets held in an insurance company's general account may be
deemed assets of ERISA plans under certain circumstances.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is particularly important that a
fiduciary investing assets of an ERISA plan consult with counsel regarding the
consequences under ERISA of the acquisition and holding of Offered Notes,
including the availability of any administrative exemptions from the prohibited
transaction rules.
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement (the "Underwriting Agreement") for the sale of the Offered Notes, the
Issuer has agreed to sell and _____________________, ________________________
and ________________ (the "Underwriters") have agreed to purchase the principal
amount of the Offered Notes set forth opposite their names:
<TABLE>
<CAPTION>
Underwriters of the Class A Notes Principal Amount Principal Amount Principal Amount Principal Amount
of Class A-1 Notes of Class A-2 Notes of Class A-3 Notes of Class A-4 Notes
---------------------------
---------------------------
---------------------------
<S> <C> <C> <C> <C>
Underwriter of the Class B Notes Principal Amount of Class
B Notes
---------------------------
Underwriter of the Class C Notes Principal Amount of Class
C Notes
---------------------------
Underwriter of the Class D Notes Principal Amount of Class
D Notes
---------------------------
</TABLE>
52
<PAGE>
In the Underwriting Agreement, the Underwriters have agreed to purchase the
Offered Notes in the amounts set forth above, subject to the terms and
conditions set forth therein. The Issuer has been advised by First Union Capital
Markets Corp., a division of Wheat First Securities, Inc. ("First Union"), as
the representative of the Underwriters, that the Underwriters propose initially
to offer the Notes to the public at the respective public offering prices set
forth on the cover page of this Prospectus, and to certain dealers at such
price, less a concession not in excess of ___% per Class A-1 Note, ___% per
Class A-2 Note, ___% per Class A-3 Note, ___% per Class A-4 Note, ___% per Class
B Note, ___% per Class C Note and ___% per Class D Note. The Underwriters may
allow and such dealers may reallow to other dealers a discount not in excess of
___% per Class A-1 Note, ___% per Class A-2 Note, ___% per Class A-3 Note, ___%
per Class A-4 Note, ___% per Class B Note, ___% per Class C Note and ___% per
Class D Note. After the initial public offering, the public offering price may
be changed.
The Underwriters will each represent and agree that:
(a) it has not offered or sold, and, prior to the expiry of six months from
the Closing Date, will not offer or sell, any Offered Notes to persons
in the United Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for purposes of their business, or
otherwise in circumstances which have not resulted and will not result
in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995;
(b) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the Offered Notes in, from or otherwise involving the
United Kingdom; and
(c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the
issue of the Offered Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or persons to whom such
document may otherwise lawfully be issued, distributed or passed on.
The Issuer has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Issuer has been advised by the Underwriters that the Underwriters
presently intend to make a market in the Offered Notes, as permitted by
applicable laws and regulations. The Underwriters are not obligated, however, to
make a market in the Offered Notes and any such market making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Offered Notes.
In connection with the offering of the Offered Notes, certain Underwriters
and selling group members and their respective affiliates may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the Offered Notes. Such transactions may include stabilization transactions
effected in accordance with Rule 104 of Regulation M, pursuant to which such
person may bid for or purchase the Offered Notes for the purpose of stabilizing
its market price. In addition, First Union, on behalf of the Underwriters, may
impose "penalty bids" under contractual arrangements with the Underwriters
whereby it may reclaim from an Underwriter (or dealer participating in the
offering) for the account of the other Underwriters, the selling concession with
respect to the Offered Notes that it distributed in the offering but
subsequently purchased for the account of the Underwriters in the open market.
Any of the transactions described in this paragraph may result in the
maintenance of the price of the Offered Notes at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph is required, and, if they are taken, may be discontinued at any time
without notice.
______________ is serving as the placement agent for the Class E Notes and
the Residual Notes.
RATING OF THE OFFERED NOTES
It is a condition to the issuance of the Offered Notes that the Class A-1
Notes be rated at least "___" "___" and "___" and that the Class A-2, A-3 and
A-4 Notes be rated at least "___", "___" and "___", that the Class B Notes be
rated at least "___", "___" and "___" , that the Class C Notes be rated at least
"___", "___" and "___", and that the Class D Notes be rated at least "___",
"___" and "___" by Standard &
53
<PAGE>
Poor's Ratings Group ("S&P"), Duff & Phelps Credit Ratings Co. ("DCR") and Fitch
IBCA, Inc. ("Fitch"), respectively (each a "Rating Agency").
Such rating will reflect only the views of the Rating Agency and will be
based primarily on the amount of subordination, the availability of funds on
deposit in the Reserve Account and the value of the Leases and Equipment. The
ratings are not a recommendation to purchase, hold or sell the related Offered
Notes, inasmuch as such ratings do not comment as to market price or suitability
for a particular investor. There is no assurance that any such rating will
continue for any period of time or that it will not be lowered or withdrawn
entirely by the Rating Agency if, in its judgment, circumstances so warrant. A
revision or withdrawal of such rating may have an adverse affect on the market
price of the Offered Notes. The rating of the Offered Notes addresses the
likelihood of the timely payment of interest and the ultimate payment of
principal on the Offered Notes by the Stated Maturity Date. The rating does not
address the rate of Prepayments that may be experienced on the Leases and,
therefore, does not address the effect of the rate of Lease Prepayments on the
return of principal to the Offered Noteholders.
54
<PAGE>
INDEX OF TERMS
Term(s) Page(s)
Additional Lease...................................................14, 47
Additional Principal...............................................12, 40
Adjusted Lease.........................................................14
Available Funds....................................................15, 39
Available Funds Shortfall..............................................40
Available Reserve Amount...........................................18, 40
Bankruptcy Code........................................................52
Benefit Plan...........................................................55
Casualty...............................................................39
Casualty Payment.......................................................39
Cede....................................................................4
CEDEL...................................................................4
Cedel Participants.....................................................37
Certificates............................................................1
Class...................................................................1
Class A Initial Principal Amount........................................6
Class A Noteholders.....................................................3
Class A Notes........................................................1, 5
Class A Percentage.................................................11, 40
Class A Principal Payment..........................................10, 41
Class A Target Investor Principal Amount...........................10, 41
Class A-1 Initial Principal Amount......................................6
Class A-1 Interest Rate.................................................6
Class A-1 Notes......................................................1, 5
Class A-1 Stated Maturity Date.......................................3, 7
Class A-2 Initial Principal Amount......................................6
Class A-2 Interest Rate.................................................6
Class A-2 Notes......................................................1, 5
Class A-2 Stated Maturity Date.......................................3, 7
Class A-3 Initial Principal Amount......................................6
Class A-3 Interest Rate.................................................6
Class A-3 Notes......................................................1, 5
Class A-3 Stated Maturity Date.......................................3, 7
Class A-4 Initial Principal Amount......................................6
Class A-4 Interest Rate.................................................6
Class A-4 Notes......................................................1, 5
Class A-4 Stated Maturity Date.......................................3, 7
Class B Floor......................................................11, 41
Class B Initial Principal Amount........................................6
Class B Interest Rate...................................................6
Class B Noteholders.....................................................3
Class B Notes........................................................1, 5
Class B Percentage.................................................11, 41
Class B Principal Payment..........................................10, 41
Class B Stated Maturity Date.........................................3, 7
Class B Target Investor Principal Amount...........................10, 41
Class C Floor......................................................11, 41
Class C Initial Principal Amount........................................6
Class C Interest Rate...................................................6
Class C Notes........................................................1, 5
Class C Percentage.................................................11, 41
Class C Principal Payment..........................................10, 41
Class C Stated Maturity Date.........................................3, 7
Class C Target Investor Principal Amount...........................11, 41
Class D Floor......................................................12, 41
55
<PAGE>
Class D Initial Principal Amount........................................6
Class D Interest Rate...................................................6
Class D Percentage.................................................11, 42
Class D Principal Payment..............................................42
Class D Stated Maturity Date.........................................3, 7
Class D Target Investor Principal Amount...........................11, 42
Class E Floor......................................................12, 42
Class E Initial Principal Amount........................................6
Class E Interest Rate...................................................6
Class E Percentage.................................................11, 42
Class E Principal Payment..............................................42
Class E Target Investor Principal Amount...............................42
Class Floors.......................................................12, 42
clearing agency........................................................36
clearing corporation...................................................36
Code...................................................................52
Collection Account.....................................................39
Commission..............................................................3
Conditional Payment Rate...............................................48
Cooperative............................................................37
Copelco Capital.........................................................8
Copelco Credit.........................................................30
Copelco Financial......................................................30
Copelco Funding LLC..................................................1, 5
Copelco Leasing........................................................30
Cost per Copy..........................................................31
Cumulative Loss Amount.............................................13, 42
Cut-Off Date........................................................5, 22
DCR................................................................19, 57
Definitive Notes.......................................................38
Depositaries...........................................................36
Determination Date..................................................8, 40
Discount Rate...........................................................6
Discounted Present Value of the Leases..............................6, 42
Discounted Present Value of the Performing Leases...................6, 43
Division...............................................................30
DTC.....................................................................4
Due Period..............................................................8
Dun & Bradstreet.......................................................33
Early Lease Termination................................................14
Eligible Account.......................................................39
Equipment...............................................................8
Equipment Financing Portion............................................31
ERISA..............................................................18, 55
Euroclear...............................................................4
Euroclear Operator.....................................................37
Euroclear Participants.................................................37
Events of Default......................................................44
Excess Copy Charge.....................................................31
Exchange Act............................................................4
Fee Per Scan Charges...................................................32
Filing Locations.......................................................21
First Union............................................................56
Fitch..............................................................19, 57
Fixed Payment..........................................................31
HILL...................................................................31
Holders................................................................38
Indenture.......................................................1, 15, 35
Indenture Trustee.......................................................1
Indirect Participants..................................................36
F-2
<PAGE>
Initial Principal Amount................................................5
Interest Accrual Period.................................................9
Interest Payments...................................................9, 40
Interest Rate...........................................................6
IRS....................................................................52
Issuer...............................................................1, 5
Lease Contracts.........................................................8
Lease Payment..........................................................39
Lease Receivables.......................................................8
Leases..................................................................8
Lessee.................................................................13
Lessees................................................................13
Maintenance Charge.....................................................31
Nominal Buy-Out........................................................23
Nominal Buy-Out Leases.................................................20
Non-Performing Leases...........................................7, 23, 43
Non-U.S. Person........................................................54
Notes................................................................1, 5
Offered Noteholders.....................................................4
Offered Notes........................................................1, 5
OID....................................................................53
Original Divisions.....................................................22
Outstanding Principal Amounts...........................................9
Overcollateralization Balance......................................12, 43
Owner Trustee...........................................................5
Participants...........................................................36
Payment Date.........................................................3, 8
PILL...................................................................31
Plan Asset Regulations.................................................55
Prepayment.............................................................20
Principal Payments......................................................9
PTCE...................................................................55
Rating Agency......................................................19, 57
Record Date.............................................................8
Registration Statement..................................................3
Required Payments......................................................40
Required Reserve Amount............................................18, 40
Reserve Account....................................................18, 40
S&P................................................................19, 57
Sale and Servicing Agreement............................................1
Sales and Servicing Agreement.......................................8, 34
SBU....................................................................30
Securities..............................................................1
Seller...............................................................1, 8
Series Pool.............................................................8
Service Advance....................................................15, 44
Servicer.............................................................1, 8
Servicer Events of Default.............................................46
Servicing Fee..........................................................15
Sponsor..............................................................1, 5
Stated Maturity Dates................................................3, 7
Statistical Discount Rate...............................................6
Statistical Discounted Present Value of the Leases......................6
Substitute Lease...................................................14, 47
Tax Counsel............................................................52
Termination Payment....................................................39
Terms and Conditions...................................................38
Trust Agreement......................................................1, 5
Trust Fund..............................................................8
Trustee.............................................................9, 35
F-3
<PAGE>
U.SPerson..............................................................54
UCC....................................................................20
Underwriters...........................................................56
Underwriting Agreement.................................................56
Vendor.................................................................31
Warranty Lease.....................................................14, 34
F-4
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given or
made, such information or representations must not be relied upon. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the affairs
of the Seller or the Issuer or any affiliate thereof or the Leases since the
date hereof. This Prospectus does not A constitute an offer or solicitation by
anyone in any state in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so to
anyone to whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Page
----
INFORMATION........................................... 2
REPORTS TO NOTEHOLDERS................................ 2
PROSPECTUS SUMMARY.................................... 3
RISK FACTORS.......................................... 17
USE OF PROCEEDS....................................... 20
THE SERIES POOL....................................... 20
COPELCO CAPITAL'S UNDERWRITING AND
SERVICING PRACTICES.................................. 31
THE ISSUER............................................ 36
DESCRIPTION OF THE NOTES.............................. 38
PREPAYMENT AND YIELD
CONSIDERATIONS....................................... 50
SECURITY FOR THE NOTES................................ 54
THE TRUSTEE........................................... 54
CERTAIN LEGAL MATTERS AFFECTING A
LESSEE'S RIGHTS AND OBLIGATIONS.................... . 54
MATERIAL FEDERAL INCOME TAX
CONSIDERATIONS.................................... .. 56
ERISA CONSIDERATIONS.................................. 59
UNDERWRITING.......................................... 60
EXPERTS............................................... 61
RATING OF THE OFFERED NOTES........................... 62
INDEX OF TERMS................................. ....... i
Until ____________, 1998 (90 days after the d ate of this Prospectus), all
dealers effecting transactions in the Dated July ___, 1998 Notes, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
================================================================================
================================================================================
$_________
Copelco Capital
Funding Trust 1998-A
$________ _____% Class A-1
Lease-Backed Notes, Series 1998-A
$________ _____% Class A-2
Lease-Backed Notes, Series 1998-A
$________ _____% Class A-3
Lease-Backed Notes, Series 1998-A
$________ _____% Class A-4
Lease-Backed Notes, Series 1998-A
$________ _____% Class B
Lease-Backed Notes, Series 1998-A
$________ _____% Class C
Lease-Backed Notes, Series 1998-A
$________ _____% Class D
Lease-Backed Notes, Series 1998-A
-------------------
P R O S P E C T U S
-------------------
FIRST UNION CAPITAL MARKETS
Dated July , 1998
================================================================================
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to
be incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee.................................................. $ 2,065.00
Printing and Engraving Expenses................................... *
Trustee's Fees.................................................... *
Legal Fees and Expenses........................................... *
Blue Sky Fees and Expenses........................................ *
Accountants' Fees and Expenses.................................... *
Rating Agency Fees................................................ *
Miscellaneous Fees................................................ $ *
.................................................................. ================
Total. $ *
</TABLE>
* To be filed by Amendment
Item 14. Indemnification of Directors and Officers
The General Corporation Law of Delaware (Section 145) gives
Delaware corporations and limited liability companies broad powers to indemnify
their own and their members', as applicable, present and former directors and
officers and those affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes said corporation and limited
liability company to buy director's and officers' liability insurance. The
Registrants will indemnify its or its members' directors and officers, as
applicable, to the fullest extent permitted by such law. Such indemnification is
not exclusive of any other right to which those indemnified may be entitled
under any bylaw, agreement, vote of stockholders or otherwise.
Copelco Financial Services Group, Inc. has also purchased
liability policies which indemnify the officers and directors of the Registrants
and their members, as applicable, against loss arising from claims by reason of
their legal liability for acts as officers and directors, subject to limitations
and conditions as set forth in the policies.
Pursuant to agreements which the Registrants may enter into
with underwriters or agents (forms of which will be included as exhibits to this
Registration Statement), officers and directors of the Registrants and their
members, and affiliates thereof, may be entitled to indemnification by such
underwriters or agents against certain liabilities, including liabilities under
the Securities Act of 1933, arising from information which has been or will be
furnished to the Registrant by such underwriters or agents that appears in the
Registration Statement or any Prospectus.
II-1
<PAGE>
Item 16. Exhibits and Financial Statements
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C>
1.1* -- Form of Underwriting Agreement for the Offered Notes.
3.1* -- Certificate of Incorporation of Copelco Capital Funding Corp. XI.
3.2* -- Certificate of Formation of Copelco Capital Funding LLC 98-1.
3.3* -- By-laws of Copelco Capital Funding Corp. XI.
3.4* -- Operating agreement of Copelco Capital Funding LLC 98-1.
4.1* -- Form of Indenture, including forms of the Notes and certain other
related agreements as Exhibits thereto.
5.1* -- Opinion of Dewey Ballantine LLP regarding the securities being
registered.
8.1* -- Opinion of Dewey Ballantine LLP regarding the tax treatment of the
Notes.
10.1* -- Form of Sales and Servicing Agreement.
23.1* -- Consent of Dewey Ballantine LLP is included in the opinion filed as
Exhibit 5.1 hereto.
24.1* -- Power of Attorney (Included on Page II-4 hereof).
25.1* -- Statement of Eligibility and Qualification of Trustee (Form T-1).
</TABLE>
* To be filed by amendment.
(b) All financial statements, schedules and historical
financial information have been omitted as they are not
applicable.
Item 17. Undertakings
The undersigned Registrants hereby undertake:
(a) That insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described under
Item 14 above, or otherwise, the Registrants have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrants of expenses incurred or paid by a director,
officer or controlling person of the managing member of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the act and will be governed by the final
adjudication of such issue.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this Registration Statement as of the time it was declared effective.
II-2
<PAGE>
(c) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Mount
Laurel, State of New Jersey, on June 30, 1998.
COPELCO CAPITAL FUNDING CORP. XI,
Registrant
By /s/ Ian J. Berg
-----------------------------------------
Name: Ian J. Berg
Title: Chief Executive Officer and
Acting Chief Financial Officer
Each person whose signature appears below constitutes and
appoints Stephen W. Shippie as his/her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him/her in
his/her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Form S-1 and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he/she might or could do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent or his substitute may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form S-1 has been signed by the following persons
in the capacities indicated on the dates indicated below.
Signature Title Date
--------- ----- ----
/s/ Ian J. Berg Chairman of the Board May 22, 1998
- --------------------------------
Ian J. Berg Director
/s/ John Hakemian Director May 22, 1998
- --------------------------------
John Hakemian
/s/ Tadayuki Seki Director May 22, 1998
- --------------------------------
Tadayuki Seki
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Mount
Laurel, State of New Jersey, on June 30, 1998.
COPELCO CAPITAL FUNDING LLC 98-1
Registrant
By: COPELCO CAPITAL FUNDING CORP. XI,
as Manager of the Registrant
By /s/ Ian J. Berg
-----------------------------------------
Name: Ian J. Berg
Title: Chief Executive Officer and
Acting Chief Financial Officer
Each person whose signature appears below constitutes and
appoints Stephen W. Shippie as his/her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him/her in
his/her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Form S-1 and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he/she might or could do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent or his substitute may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form S-1 has been signed by the following persons
in the capacities indicated on the dates indicated below.
Signature Title Date
--------- ----- ----
/s/ Ian J. Berg Chairman of the Board June 30, 1998
- --------------------------------
Ian J. Berg Director
/s/ John Hakemian Director June 30, 1998
- --------------------------------
John Hakemian
/s/ Tadayuki Seki Director June 30, 1998
- --------------------------------
Tadayuki Seki
