<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 11, 1999
Registration No. 333-69983
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COPELCO CAPITAL FUNDING LLC 99-1
(Exact name of registrant as specified in its charter)
-------------------
<TABLE>
<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 99-1
700 EAST GATE DRIVE
MOUNT LAUREL, NEW JERSEY 08054-5404
(609) 231-9600
(Name, address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Copies to:
SPENCER LEMPERT, ESQ. PETER HUMPHREYS, ESQ.
COPELCO CAPITAL FINANCIAL SERVICES GROUP, INC. DEWEY BALLANTINE
700 EAST GATE DRIVE 1301 AVENUE OF THE AMERICAS
MOUNT LAUREL, NJ 08054 NEW YORK, NEW YORK 10019
(609) 231-9600 (212) 259-6730
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate Date of Commencement of Proposed Sale to the Public: As
soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Title of each class of Amount to be offering aggregate offering Amount of
securities to be registered registered price per unit(1) price(1) registration fee
<S> <C> <C> <C> <C>
Class A-1 Lease-Backed Notes............. $139,000,000.00 100% 100% $38,642.00
Class A-2 Lease-Backed Notes............. $ 95,000,000.00 100% 100% $26,410.00
Class A-3 Lease-Backed Notes............. $110,000,000.00 100% 100% $30,580.00
Class A-4 Lease-Backed Notes............. $ 90,000,000.00 100% 100% $25,020.00
Class A-5 Lease-Backed Notes............. $ 76,000,000.00 100% 100% $21,128.00
Class B Lease-Backed Notes............... $ 12,200,000.00 100% 100% $ 3,391.60
Class C Lease-Backed Notes............... $ 9,300,000.00 100% 100% $ 2,585.40
Class D Lease-Backed Notes............... $ 16,000,000.00 100% 100% $ 4,448.00
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
COPELCO CAPITAL FUNDING LLC 99-1
CROSS REFERENCE SHEET
(PURSUANT TO RULE 404(A) AND ITEM 501 OF REGULATION S-K)
<TABLE>
<CAPTION>
ITEM
NO. NAME AND CAPTION IN FORM S-1 CAPTION IN PROSPECTUS
- ---- ---------------------------- ---------------------
<S> <C> <C>
1. Forepart of the Registration Statement; 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
<PAGE> 3
(SUBJECT TO COMPLETION, DATED MARCH 11, 1999)
$548,701,000
COPELCO CAPITAL FUNDING LLC 99-1, ISSUER
COPELCO CAPITAL, INC., SERVICER
SERIES 1999-A
LEASE-BACKED NOTES
YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" STARTING ON PAGE 6 OF THIS
PROSPECTUS AND CONSIDER THESE FACTORS BEFORE MAKING A DECISION TO INVEST IN THE
NOTES.
The notes are only secured by the assets of the issuer. The notes are not debt
obligations of any other person.
The notes will not be insured or guaranteed by any governmental agency or
instrumentality.
THE ISSUER WILL ISSUE --
- - Eight classes of notes which are to be offered by this prospectus; and
- - Class E Lease-Backed Notes, which are not offered by this prospectus
but serve as credit support to the notes offered by this prospectus;
THE NOTES --
- - Are backed by a pledge of assets of the issuer. The assets of the
issuer securing the notes will include a pool of copier, electronic,
manufacturing and healthcare equipment leases, and all of its interest
in the equipment underlying the leases;
- - Receive distributions beginning on April 15, 1999;
- - Represent debt obligations of Copelco Capital Funding LLC 99-1; and
- - Currently have no trading market.
<TABLE>
<CAPTION>
Initial Public Initial Ratings
Issuance Interest Offering -----------------------------
Amount Rate Price Moody's DCR Fitch
------------ -------- -------------- ------- --- -------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Notes $139,000,000 % % P-1 D-1+ F1+/AAA
Class A-2 Notes $ 95,000,000 % % Aaa AAA AAA
Class A-3 Notes $110,000,000 % % Aaa AAA AAA
Class A-4 Notes $ 90,000,000 % % Aaa AAA AAA
Class A-5 Notes $ 75,613,000 % % Aaa AAA AAA
Class B Notes $ 13,029,000 % % Aa2 AA+ AA
Class C Notes $ 10,134,000 % % A2 A+ A
Class D Notes $ 15,925,000 % % Baa2 BBB+ BBB
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PRUDENTIAL SECURITIES FIRST UNION CAPITAL MARKETS CORP.
The date of this Prospectus is March ___, 1999
<PAGE> 4
We include cross-references in this prospectus to captions in these
materials where you can find further related discussions. The following table of
contents provides the pages on which these captions are located.
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. If given or made, the information or representations must not be
relied upon. We are stating this information as of the date of this prospectus.
TABLE OF CONTENTS
Page
----
Prospectus Summary......................................................... 3
Issuer..................................................................... 3
Manager.................................................................... 3
Servicer................................................................... 3
Trustee.................................................................... 3
The Pledged Assets......................................................... 3
Leases..................................................................... 3
Cut-off Date............................................................... 3
Payment Date............................................................... 3
Determination Date......................................................... 3
Record Date................................................................ 4
Issuance Date.............................................................. 4
Denominations.............................................................. 4
Priority of Distributions.................................................. 4
Reserve Account............................................................ 4
Optional Redemption........................................................ 5
Final Scheduled Payment Date............................................... 5
Federal Income Tax Consequences............................................ 5
ERISA Considerations....................................................... 5
Ratings.................................................................... 5
Risk Factors............................................................... 6
Use of Proceeds............................................................ 11
The Series Pool............................................................ 11
Copelco Capital's Underwriting and Servicing Practices..................... 20
The Issuer................................................................. 25
Management's Discussion and Analysis of Financial Condition................ 25
Directors and Executive Officers of the Manager of the Issuer.............. 25
Description of the Notes................................................... 26
Prepayment and Yield Considerations........................................ 40
Security for the Notes..................................................... 43
The Indenture Trustee...................................................... 43
Certain Legal Matters Affecting a Lessee's Rights and Obligations......... 43
Material Federal Income Tax Consequences................................... 44
ERISA Considerations....................................................... 47
Underwriting............................................................... 48
Experts.................................................................... 49
Legal Matters.............................................................. 49
Rating of the Offered Notes................................................ 49
Index of Terms............................................................. 55
2
<PAGE> 5
PROSPECTUS SUMMARY
- - This summary highlights select information from this prospectus and
does not contain all of the information that you need to consider in
making your investment decision. This summary provides general,
simplified descriptions of matters which, in some cases, are highly
technical and complex. To understand all of the terms of the offering
of the notes, carefully read this entire prospectus.
- - This summary provides an overview of certain calculations, cash flows
and other information to aid your understanding. To understand all of
the terms of the offering, carefully read this entire document and, in
particular, the full description of these calculations, cash flows and
other information in this prospectus.
LEASE-BACKED NOTES
SERIES 1999-A
The issuer will issue the notes offered by this prospectus in book-entry form
through the facilities of The Depository Trust Company.
ISSUER
- - Copelco Capital Funding LLC 99-1. The address of the issuer is 700 East Gate
Drive, Mt. Laurel, NJ 08054.
- - The issuer will be a limited liability company formed under the laws of the
State of Delaware.
MANAGER
The issuer will be managed by Copelco Manager, Inc. The address of the manager
is 700 East Gate Drive, Mt. Laurel, NJ 08054.
SERVICER
Copelco Capital, Inc. The address of the servicer is One International
Boulevard, Mahwah, NJ 07430.
TRUSTEE
Manufacturers and Traders Trust Company. The address of the trustee is One M&T
Plaza, Buffalo, NY 14248.
THE PLEDGED ASSETS
The issuer will pledge its property to secure payments on the notes. The pledged
assets will include a pool of leases, cash on deposit in a reserve account and
the collection account and other assets as described in detail elsewhere in this
prospectus.
LEASES
- - On or about March 19, 1999, Copelco Capital, Inc. will contribute to the
issuer a pool of leases and the related equipment. Payments on the notes will be
made from payments on these leases.
- - The leases will include copier, electronic, manufacturing and healthcare
equipment leases. As of February 1, 1999, copiers make up the majority of the
total original equipment cost of the leased equipment in this pool.
- - The lessees under the leases are primarily hospitals, non-hospital medical
facilities, physicians, and businesses.
- - The leases are triple-net leases, which means that the lessee is required to
pay all taxes, maintenance and insurance associated with the equipment. The
leases are non-cancelable by the lessees. All payments under the leases are
absolute, unconditional obligations of the lessees without right of offset for
any reason.
- - We will calculate the principal value of the pool of leases at any time by
discounting their remaining payments (except for certain minor charges and
delinquent payments) at a rate equal to ___.
- - We will pay the notes from payments on the leases. Noteholders should not rely
on the sale of leased equipment for payments on the notes.
CUT-OFF DATE
The opening of business on February 1, 1999.
PAYMENT DATE
The 15th day of each month if the fifteenth is a business day. If the fifteenth
is not a business day, the payment date will be the following day that is a
business day. The first payment date will be April 15, 1999.
DETERMINATION DATE
Five business days before the payment date. The trustee will calculate the
amounts to be paid on the notes on this date.
3
<PAGE> 6
RECORD DATE
The last business day preceding a payment date unless the notes are no longer
book-entry notes. If the notes are definitive notes, the record date is the last
business day of the month preceding a payment date.
ISSUANCE DATE
On or about March 19, 1999.
DENOMINATIONS
The issuer will issue the notes in minimum denominations of $1,000 and integral
multiples of $1,000. One note of each class may be issued in another
denomination.
PRIORITY OF DISTRIBUTIONS
Each month, the issuer will distribute the amounts received on the leases and
any other collections available as property of the issuer as follows:
Interest Distributions
On each payment date, the issuer will pay interest at the applicable interest
rate that accrued during the prior interest accrual period.
Principal Distributions
On each payment date, the issuer will pay principal in reduction of the
outstanding principal balance of the notes.
Principal payments will be an amount usually equal to the decrease in the
principal value of the leases between determination dates. The issuer will pay
principal in the following priority:
- - to the Class A-1 noteholders only, until the principal amount on the
Class A-1 Notes has been reduced to zero;
- - when the Class A-1 Notes have been paid in full:
- to the Class A-2 noteholders, until the principal amount on
the Class A-2 Notes has been reduced to zero, an amount
generally equal to 84.21% of the decrease in the principal
value of the leases;
- when the Class A-2 Notes have been paid in full, to the Class
A-3 noteholders, until the principal amount on the Class A-3
Notes has been reduced to zero, an amount generally equal to
84.21% of the decrease in the principal value of the leases;
- when the Class A-3 Notes have been paid in full, to the Class
A-4 noteholders, until the principal amount on the Class A-4
Notes has been reduced to zero, an amount generally equal to
84.21% of the decrease in the principal value of the leases;
- when the Class A-4 Notes have been paid in full, to the Class
A-5 noteholders, until the principal amount on the Class A-5
Notes has been reduced to zero, an amount generally equal to
84.21% of the decrease in the principal value of the leases;
- to the Class B noteholders, an amount generally equal to 2.96%
of the decrease in the principal value of the leases;
- to the Class C noteholders, an amount generally equal to 2.30%
of the decrease in the principal value of the leases;
- to the Class D noteholders, an amount generally equal to 3.62%
of the decrease in the principal value of the leases;
- to the Class E noteholders, an amount generally equal to 3.95%
of the decrease in the principal value of the leases.
This general description of distributions of principal to the notes is subject
to certain targets and floors. We refer you to "Descriptions of the Notes --
Distributions" in this prospectus for further information regarding the payment
of interest and principal on the notes.
RESERVE ACCOUNT
The trustee will hold the reserve account. The servicer will deposit collections
received from the leases into the reserve account on any payment date after
interest and principal payments on the notes have been made. The servicer will
continue to make such deposits until the balance in the reserve account is at
the lesser of 1% of the principal value of the leases at February 1, 1999 and
the outstanding principal amount of the notes. We will use funds
4
<PAGE> 7
in the reserve account to pay shortfalls in amounts due to the noteholders.
OPTIONAL REDEMPTION
The issuer may, on any payment date, redeem the notes when the total lease
principal balance of the performing leases is less than or equal to 5% of the
total principal value of the leases as of February 1, 1999. If a redemption
occurs, we will pay you a final distribution equaling the entire unpaid
principal balance of the notes plus any accrued and unpaid interest.
FINAL SCHEDULED PAYMENT DATE
If the notes have not already been paid in full, we will pay the outstanding
principal amount of the notes in full on the following payment dates:
Class A-1 March 15, 2000
Class A-2 March 15, 2001
Class A-3 March 15, 2002
Class A-4 April 15, 2003
Class A-5 June 15, 2004
Class B January 15, 2005
Class C February 15, 2005
Class D June 15, 2005
Final payment on the notes will probably be earlier than the final scheduled
payment date set forth above for the related class of notes.
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes:
- - Dewey Ballantine LLP, special tax counsel to the issuer and counsel to the
underwriters, is of the opinion that the notes will be treated as debt and the
issuer will be treated as a partnership and not as an association (or publicly
traded partnership) taxable as a corporation. By your acceptance of a note, you
agree to treat the notes as debt.
- - Interest on the notes will be taxable as ordinary income when received by a
holder on the cash method of accounting and when accrued by a holder on the
accrual method of accounting.
- - Dewey Ballantine LLP has prepared the discussion under "Material Federal
Income Tax Consequences" and is of the opinion that such discussion accurately
states all material federal income tax consequences of the purchase, ownership
and disposition of the Offered Notes to their original purchaser.
ERISA CONSIDERATIONS
Subject to the important considerations described under "ERISA Considerations"
in this prospectus, pension, profit-sharing and other employee benefit plans may
purchase notes. You should consult with your counsel regarding the applicability
of the provisions of the Employee Retirement Income Security Act of 1974, as
amended, before purchasing a note.
RATINGS
- - The issuer will not issue the notes unless they have been assigned the ratings
set forth on the cover page of this prospectus.
- - You must not assume that the ratings will not be lowered, qualified or
withdrawn by the rating agencies.
5
<PAGE> 8
RISK FACTORS
You should carefully consider, among other things, the following risk factors
before deciding to invest in the notes offered by this prospectus.
YOU MAY NOT BE ABLE TO SELL If no public market develops, as a
YOUR NOTES noteholder, you may not be able to
liquidate your investment in the notes
prior to maturity. There is currently no
public market for the notes. We offer no
assurance that one will develop. The
underwriters expect, but are not
obligated, to make a market in the notes.
There is no assurance that any such
market will be created or, if created,
will continue.
PREPAYMENTS AND RELATED In the case of notes purchased at a
REINVESTMENT RISK MAY discount, you should consider the risk
REDUCE YIELD TO NOTEHOLDERS that slower than anticipated rates of
prepayments could result in an actual
yield that is less than the anticipated
yield. Conversely, you should consider
that in the case of notes purchased at a
premium, the risk that faster than the
anticipated rate of prepayments could
result in an actual yield that is less
than the anticipated yield.
Be aware that you bear the risk of
reinvesting unscheduled distributions
resulting from prepayments of the notes.
The rate of payment of principal is
unpredictable because the rate on the
notes will depend on, among other things,
the rate of payment on the underlying
equipment leases. In addition to the
normally scheduled payments on the leases,
payments may come from a number of
different sources. Payments on the leases
will include the following:
- prepayments permitted by the servicer;
- payments as a result of leases which
are defaulted;
- payments as a result of leases
accelerated by the servicer;
- payments due to loss, theft,
destruction or other casualty; and
- payments upon repurchases by Copelco
Capital, Inc. on account of a breach of
certain representations and warranties.
Copelco Capital, Inc. may elect to
reinvest the proceeds of a lease which
was partially or fully repaid or upgraded
in one or more leases having similar
characteristics to such terminated lease.
The rate of early terminations of leases
due to prepayments and various
non-payments may be influenced by a
variety of economic and other factors.
For example, adverse economic conditions
and certain natural disasters such as
floods, hurricanes, earthquakes and
tornadoes may affect prepayments.
CERTAIN SECURITY INTERESTS In the event the issuer has insufficient
ARE NOT PERFECTED AND assets available to pay the notes, the
OTHER CREDITORS MAY HAVE issuer may sell the equipment upon a
RIGHTS TO THE EQUIPMENT lease default in order to meet payments
on the notes. The lack of a perfected
security interest in certain equipment
may adversely affect the ability of the
issuer to recoup any moneys on such
equipment following a lease default. This
could reduce the funds available to pay
the notes.
6
<PAGE> 9
Prior to February 1, 1999, Copelco
Capital, Inc. filed Uniform Commercial
Code financing statements against lessees
with respect to equipment with an
original equipment cost equal to or more
than $25,000. Financing statements with
respect to approximately 59.11% of the
discounted present value of the leases
have been filed. In addition, the
indenture and the assignment and
servicing agreement will require certain
Uniform Commercial Code financing
statements with respect to such equipment
to be filed in favor of the trustee
against the issuer and Copelco Capital,
Inc.
Copelco Capital, Inc. did not perfect its
interest in any equipment if the original
cost of the related equipment is less
than $25,000. As a result, Copelco
Capital, Inc. does not have a perfected
security interest in such equipment,
which represents approximately 40.89% of
the discounted present value of the
leases. Other creditors of the related
lessees may acquire rights in the
equipment superior to those of the issuer
or the trustee. In such cases, security
interests in the equipment will also not
be perfected in favor of the issuer or
the trustee. Additionally, because the
indenture and the assignment and
servicing agreement will only require
Uniform Commercial Code financing
statements to be filed in central
locations for any given state, security
interests in the equipment will also not
be perfected in favor of the issuer or
the trustee in any state requiring other
than central filings. Therefore, other
creditors of Copelco Capital, Inc., may
acquire rights in the equipment superior
to those of the issuer or the trustee.
STATE LAW AND OTHER FACTORS The application of state law requirements
MAY IMPEDE RECOVERY may limit recoveries on equipment. State
EFFORTS AND AFFECT THE laws impose requirements and restrictions
ABILITY OF ISSUER TO relating to foreclosure sales and
RECOUP THE FULL AMOUNT obtaining deficiency judgments following
DUE ON THE LEASES such sales. In the event that the issuer
must rely on repossession and sale of
equipment to recover losses on
non-performing leases, the issuer may not
recoup the full amount due because of the
application of those requirements and
restrictions.
Additional factors that may affect the
ability of the issuer to recoup 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.
INSOLVENCY OF COPELCO CAPITAL, In some circumstances, a bankruptcy of
INC. MAY REDUCE PAYMENTS TO Copelco Capital, Inc. may reduce payments
NOTEHOLDERS to noteholders. Copelco Capital, Inc.
believes that each contribution of the
leases should be treated as an absolute
and unconditional assignment.
However, in the event of an insolvency of
Copelco Capital, Inc., a court or
bankruptcy trustee could attempt to -
7
<PAGE> 10
- recharacterize the contribution of the
related leases by Copelco Capital, Inc.
to the issuer as a loan to the Copelco
Capital, Inc from the issuer, secured
by a pledge of such leases; or
- consolidate the assets of the issuer
with those of Copelco Capital, Inc.
since Copelco Capital, Inc. will
indirectly own all of the membership
interests in the issuer.
If the recharacterization were
successful, the bankruptcy trustee could
repudiate the leases that are operating
leases and all obligations relating to
such operating leases. Either attempt,
even if unsuccessful, could result in
delays in payments to you. If such
attempts were successful, such notes
would be accelerated, and the trustee's
recovery on behalf of you could be
limited to the then current value of the
leases or the underlying equipment.
Consequently, you could lose the right to
future payments and you might incur
reinvestment losses on amounts recovered.
Thus, you will not receive your
anticipated principal and interest on the
notes.
Although Copelco Capital, Inc. believes
that the contribution of the leases
should be treated as an absolute and
unconditional assignment, for accounting
and tax purposes, the leases will be
treated as assets of Copelco Capital,
Inc. on its consolidated financial
statements and on the tax return for its
consolidated group. Such treatment of the
assets might increase the risk of
recharacterization of the transfer to the
issuer as a financing.
NO RECOURSE AGAINST THE There is no recourse against any
AFFILIATES OF COPELCO affiliates of the issuer. The notes
CAPITAL LLC 99-1 represent debt of the issuer secured
primarily by the leases. If the lease
payments and other assets pledged to
secure the notes are insufficient to pay
the notes in full, you have no rights to
obtain payment from Copelco Capital, Inc.
or any of its affiliates other than the
issuer. The issuer is a limited liability
company with limited assets.
Consequently, the noteholders must rely
solely upon the leases, the equipment and
funds in the reserve account and in the
collection account for repayment.
GEOGRAPHIC CONCENTRATION OF Adverse economic conditions or other
LEASES MAY ADVERSELY factors particularly affecting any state
AFFECT THE LEASES or region where a high concentration of
leases is located could adversely affect
the performance on the leases. As of
February 1, 1999, approximately 18.24%,
5.53%, 13.95% and 8.28% of the leases
(based on the statistical discounted
present value of the leases) were located
in California, Florida, New York and
Texas, respectively. No other state
accounts for more than 5% of the leases.
The issuer is unable to determine and has
no basis to predict, with respect to any
state or region, whether any such events
have occurred or may occur, or to what
extent any such events may affect the
leases or the repayment of amounts due
under the notes.
COMMINGLING OF FUNDS WITH Should bankruptcy or reorganization
COPELCO CAPITAL, INC. MAY proceedings be commenced with respect to
RESULT IN REDUCED OR the servicer, any funds held by the
DELAYED PAYMENTS TO servicer and not transferred to the
NOTEHOLDERS collection account may not be available
to noteholders. Under the Indenture, the
servicer is required to deposit all
periodic lease payments, payments
resulting from loss, theft or other
casualty and payments as a result of
early termination received after February
1, 1999 to the collection account. The
servicer must deposit such amounts within
two business days of receipt of those
payments. If the funds are not
transferred to the trustee, in the event
of bankruptcy or insolvency of the
servicer, this could result in delayed or
reduced payments to you.
DEFAULT OR INSOLVENCY OF To the extent lessees default on the
LESSEES MAY REDUCE leases, including through insolvency,
PAYMENTS TO NOTEHOLDERS lease payments will decrease and,
accordingly, funds available for payment
to you, as a noteholder, will be reduced.
8
<PAGE> 11
RISKS ASSOCIATED WITH YEAR The servicer is faced with the task of
2000 COMPLIANCE completing its goals for compliance in
connection with the year 2000 issue. The
year 2000 issue is the result of prior
computer programs being written using two
digits to define the applicable year. Any
computer programs that have
time-sensitive software may recognize a
date using "00" as the year 1900 rather
than the year 2000. Any such occurrence
could result in major computer system
failure or miscalculations. Although the
servicer reasonably believes that its
servicing system will be year 2000
compliant prior to the year 2000, it is
presently engaged in various procedures
to determine if its computer systems and
software, and those of its material
suppliers, customers, brokers and agents
will be year 2000 compliant.
In the event that the servicer, any
subservicer or any of their suppliers,
customers, brokers or agents do not
successfully and timely achieve year 2000
compliance, the servicer's performance of
its obligations under the Assignment and
Servicing Agreement could be adversely
affected. This could result in delays in
processing payments on the leases and
could cause a delay in distributions to
you.
TECHNOLOGICAL OBSOLESCENCE OF If technological advances relating to
COPIERS MAY REDUCE VALUE copiers causes the leased copiers to
OF COLLATERAL become obsolete, the value of these
copiers will decrease. This will reduce
the amount of monies recoverable should
the servicer sell the copiers following a
lease default. Leases on copiers
represent 51.73% by statistical
discounted present value of the total
pool of leases as of February 1, 1999. As
such, you may not recoup the full amount
due to you if payments on the notes
become dependent upon the proceeds from
the sale of these obsolete copiers.
THE ADDITION AND SUBSTITUTION If a significant number of leases are
OF LEASES MAY ADVERSELY added or replaced, this could affect the
AFFECT CASHFLOW AND MAY rate at which funds are distributed on
DECREASE THE YIELD ON THE the notes and decrease the yield to
NOTES noteholders. The Assignment and Servicing
Agreement permits Copelco Capital, Inc.,
under certain circumstances, to
substitute or add certain qualifying
leases. The addition or substitution of
leases may include leases that possess
different payment due dates and
installment amounts than its predecessor
lease. It may also include leases with
maturity dates that are different from
the maturity dates of its predecessor
lease.
Copelco Capital, Inc. may only add or
substitute leases that meet certain
qualifying characteristics and
conditions. The ability of Copelco
Capital, Inc. to acquire such leases is
dependent upon its ability to originate a
sufficient amount of leases that meet the
specified eligibility criteria. This may
be affected by a variety of social and
economic factors, including interest
rates, unemployment levels, the rate of
inflation and public perception of
economic conditions generally. As such,
the addition or substitution of leases
could change the concentration of leases
from the current characteristics of the
pool described as of February 1, 1999.
This may increase the geographic
concentration or equipment concentration
of certain leases. Consequently, any
adverse economic or social factors that
particularly affect a certain geographic
area or a certain type of equipment may
adversely affect the performance of the
leases.
9
<PAGE> 12
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires the filing of certain information with
the Securities and Exchange Commission, including annual, quarterly and special
reports, proxy statements and other information. You can read and copy these
documents at the public reference facility maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, NW, Room 1024, Washington, DC 20549. You can also copy
and inspect such reports, proxy statements and other information at the
following regional offices of the SEC:
New York Regional Office Chicago Regional Office
Seven World Trade Center Citicorp Center
Suite 1300 500 West Madison Street, Suite 1400
New York, NY 10048 Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. SEC filings are also available to the public on the
SEC's web site at http://www.sec.gov.
This prospectus is part of a registration statement filed by the
Sponsor with the SEC (Registration No. 333-69983). You may request a free copy
of this filing by writing or calling:
Copelco Capital, Inc.
700 East Gate Drive
Mount Laurel, New Jersey 08054-5404
Attention: Stephen W. Shippie
(609) 231-9600
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the cover page of
this prospectus.
You can find a listing of the pages where capitalized terms used in
this prospectus are defined under "Index of Terms" beginning on page 57 in this
prospectus.
10
<PAGE> 13
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be distributed to the
owners of Copelco Capital Funding LLC 99-1 (the "Issuer"). The distribution will
occur after the contribution from Copelco Capital, Inc. ("Copelco Capital" or
the "Servicer") of the pool of copiers, electronics, manufacturing, and
healthcare equipment lease contracts (each a "Lease Contract", collectively the
"Lease Contracts"), including payments due thereunder (the "Lease Receivables",
together with the Lease Contracts, the "Leases") and interests in the related
equipment (the "Equipment") to the Issuer. The net proceeds will be utilized to
repay bank debt and for general corporate purposes.
THE SERIES POOL
The Leases. As of the opening of business on February 1, 1999 (the
"Cut-Off Date"), the Notes will be secured by a pool (the "Series Pool") that
includes equipment lease contracts. The Lessees (as defined herein) are
primarily hospitals, medical facilities, physicians and business owners
throughout the United States. The Leases were originated or acquired by the
Business Technology Group, the Healthcare Group and the Commercial & Industrial
Group of Copelco Capital (or their predecessors) (collectively, the "Origination
Groups"). See "Risk Factors," "Security for the Notes" and "Certain Legal
Matters Affecting a Lessee's Rights and Obligations." Unless otherwise noted,
the statistical information included herein was computed using the Statistical
Discounted Present Value of the Leases as of the Cut-Off Date. The actual
principal value of the Leases on March 19, 1999 (the "Issuance Date") will be
calculated using the Discounted Present Value of the Leases (as defined herein).
The Statistical Discounted Present Value of the Leases as of the Cut-Off Date
will not vary materially from the Discounted Present Value of the Leases as of
the Cut-Off Date.
The Leases are triple-net leases, which means that the terms of the
leases require the lessees to pay all taxes, maintenance and insurance
associated with the Equipment, and impose no affirmative obligations on the
lessor, and are non-cancelable by the Lessees (as defined herein). Under certain
conditions, however, Copelco Capital may consent to prepayment of the Leases.
Generally, Copelco Capital will consent to a prepayment of a Lease where the
Lessee is upgrading the Equipment. All payments under the Leases are absolute,
unconditional obligations of the hospitals, non-hospital medical facilities,
physicians, businesses and individual business owners who lease the Equipment
(each, a "Lessee," and collectively, the "Lessees"). Lessees are without right
of offset for any reason. Such payments will be made by the Lessees to Copelco
Capital, as servicer, for the account of Copelco Capital Funding LLC 99-1.
Each Lessee entered into its Lease for specified Equipment which may be
designated in schedules incorporated into the Lease. To the extent not set forth
in the Lease Contract, the schedules, among other things, establish the periodic
payments and the term of the Lease with respect to such Equipment. The Leases
follow one of several different forms of lease agreement, with occasional
modifications which do not materially affect the basic terms of the Leases. The
weighted average remaining term of the Series Pool is 46.954 months. Copelco
Capital will represent and warrant that, as of the Cut-Off Date, all Leases will
be current or less than 63 days delinquent and, as of the initial Determination
Date (as defined herein), all Lessees will have made at least one payment.
Lessees covenant to maintain the Equipment and install it at a place of
business agreed upon with Copelco Capital. Delivery, transportation, repairs and
maintenance are the obligation of the Lessees, and all Lessees are required to
carry, at their respective expense, liability and replacement cost insurance
under terms acceptable to Copelco Capital. Such insurance proceeds will
constitute Casualty Payments (as defined herein). Subject to certain exceptions,
if the Lessee does not provide evidence of insurance coverage within 90 days of
the commencement of the Lease, Copelco Capital may obtain such insurance and
invoice the Lessee for the cost thereof. Any defaults under a Lease (as such, a
"Non-Performing Lease," as defined herein) permit a declaration, as immediately
due and payable, of all remaining Lease payments under the Lease and the
immediate return of the Equipment. Generally, any payments received six days
after the scheduled payment date are subject to late charges.
"Non-Performing Leases" are (a) Leases that have become more than 123
days delinquent or (b) Leases that have been accelerated by the Servicer or
Leases that the Servicer has determined to be uncollectible in accordance with
its customary practices. Copelco Capital, Inc. will represent and warrant that,
as of the Cut-Off Date, none of the Leases are Non-Performing Leases.
The Servicer's customary practices with respect to Non-Performing
Leases include such action as is necessary to cause, or attempt to cause, the
Lessee thereunder to cure such non-performance or to terminate such lease and
recover the outstanding amount owed under the lease and all damages resulting
from any default on the Non-Performing Leases. The Servicer will take action
that is consistent with the customary practices of servicers in
11
<PAGE> 14
the equipment leasing industry. In addition, the Servicer will use its best
efforts to sell or lease any Equipment that is subject to a Non-Performing Lease
in a timely manner and upon the most favorable terms and conditions available at
the time in order to recoup any amounts still due on the Lease.
At the end of the Lease term, the Lessee must return the Equipment with
certification from the manufacturer that the Equipment is in good working order,
normal wear and tear excepted, unless the Lease is renewed or the Equipment is
purchased by the Lessee.
Historically, approximately 90% of the Equipment leased by the
Origination Groups is purchased or re-leased by the original lessee at the
expiration of the lease term. Pursuant to the terms of the Leases, the Lessee is
generally required to advise Copelco Capital 90 to 120 days prior to the Lease
termination of its intent to return the Equipment at the expiration of the
Lease. In most cases, the failure by a Lessee to so advise Copelco Capital
results in an automatic renewal of the Lease for a specified period. For
Equipment which is returned to Copelco Capital by the Lessees, Copelco Capital
participates in an active secondary market for the sale of used Equipment.
The Equipment. The Equipment subject to the Leases is purchased by
Copelco Capital under direct specifications and instructions from the Lessees.
As of the Cut-Off Date, the Series Pool had approximately 93 equipment
categories.
Certain Information with Respect to the Leases and the
Lessees. The following tables summarize certain information with respect to the
Leases and the Lessees as of the Cut-Off Date. The issuer is not aware of any
trends or changes relating to the data in the following tables that would be
expected to impact the future performance of the pool of leases.
The Pledged Assets. The assets pledged to secure the Notes
(the "Pledged Assets") will consist of a pool of copier, electronic,
manufacturing, and healthcare equipment lease contracts, including payments due
thereunder and certain interests in the related leased equipment acquired or
originated by Copelco Capital and transferred to the Issuer. The Pledged Assets
will, in addition, include the funds on deposit in Collection Account (as
defined herein) and the Reserve Account (as defined herein).
12
<PAGE> 15
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE OF DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
NUMBER OF NUMBER OF PRESENT VALUE OF PRESENT VALUE ORIGINAL EQUIPMENT
STATE LEASES LEASES LEASES OF LEASES EQUIPMENT COST COST
----- --------- ------------- ---------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alaska 38 0.105% $ 629,328.70 0.109% $ 698,584.49 0.112%
Alabama 252 0.699 4,101,671.77 0.708 4,482,672.28 0.717
Arkansas 62 0.172 4,036,402.01 0.697 3,931,536.13 0.628
Arizona 420 1.166 8,518,039.36 1.471 9,363,133.71 1.497
California 6,321 17.544 105,627,694.23 18.240 113,286,210.11 18.108
Colorado 749 2.079 10,322,675.69 1.783 11,089,877.23 1.773
Connecticut 758 2.104 9,045,712.08 1.562 9,773,060.27 1.562
District of Columbia 260 0.722 4,380,171.96 0.756 4,837,286.73 0.773
Delaware 76 0.211 1,056,181.81 0.182 1,162,769.43 0.186
Florida 2,003 5.559 32,029,403.74 5.531 34,368,582.58 5.494
Georgia 989 2.745 17,933,966.76 3.097 18,950,301.41 3.029
Hawaii 52 0.144 788,053.14 0.136 817,866.26 0.131
Iowa 74 0.205 1,001,510.12 0.173 1,067,787.51 0.171
Idaho 68 0.189 599,665.76 0.104 634,636.74 0.101
Illinois 1,499 4.161 21,695,549.35 3.746 23,243,596.46 3.715
Indiana 433 1.202 5,763,119.26 0.995 6,424,314.92 1.027
Kansas 139 0.386 3,962,800.14 0.684 4,005,123.87 0.640
Kentucky 201 0.558 3,349,691.35 0.578 3,975,821.94 0.636
Louisiana 1,137 3.156 10,392,923.89 1.795 13,007,123.36 2.079
Massachusetts 1,177 3.267 14,884,810.10 2.570 15,960,476.12 2.551
Maryland 406 1.127 6,224,124.90 1.075 6,691,705.12 1.070
Maine 320 0.888 3,309,967.98 0.572 3,455,903.69 0.552
Michigan 383 1.063 7,253,190.74 1.252 8,102,519.49 1.295
Minnesota 191 0.530 4,910,196.52 0.848 5,601,404.94 0.895
Missouri 334 0.927 7,294,605.49 1.260 7,405,179.69 1.184
Mississippi 193 0.536 2,847,752.01 0.492 2,948,199.35 0.471
Montana 59 0.164 873,373.40 0.151 931,235.95 0.149
North Carolina 666 1.849 10,415,591.40 1.799 11,101,323.80 1.775
North Dakota 4 0.011 30,102.05 0.005 33,402.41 0.005
Nebraska 74 0.205 1,133,218.89 0.196 1,227,253.14 0.196
New Hampshire 252 0.699 3,000,375.37 0.518 3,255,954.65 0.520
New Jersey 1,851 5.138 27,739,453.31 4.790 30,175,612.07 4.823
New Mexico 143 0.397 5,265,763.44 0.909 5,911,245.03 0.945
Nevada 330 0.916 4,327,404.63 0.747 4,590,473.55 0.734
New York 5,436 15.088 80,809,149.44 13.954 88,937,803.48 14.216
Ohio 1,014 2.814 18,326,823.00 3.165 19,546,904.48 3.124
Oklahoma 189 0.525 6,153,399.96 1.063 6,236,443.35 0.997
Oregon 358 0.994 5,455,494.76 0.942 6,025,066.27 0.963
Pennsylvania 1,390 3.858 23,606,739.24 4.076 25,285,699.41 4.042
Puerto Rico 4 0.011 352,667.29 0.061 357,279.64 0.057
Rhode Island 236 0.655 4,283,473.59 0.740 4,392,229.47 0.702
South Carolina 266 0.738 3,312,135.78 0.572 3,813,693.83 0.610
South Dakota 14 0.039 147,939.72 0.026 159,060.04 0.025
Tennessee 280 0.777 5,055,224.40 0.873 5,401,918.77 0.863
Texas 2,754 7.644 47,940,745.52 8.278 50,919,574.36 8.139
Utah 218 0.605 3,697,977.33 0.639 3,883,623.92 0.621
Virginia 733 2.034 9,909,546.40 1.711 10,917,639.91 1.745
Vermont 33 0.092 426,822.78 0.074 452,067.84 0.072
Washington 848 2.354 13,611,079.04 2.350 14,758,291.37 2.359
Wisconsin 211 0.586 9,534,673.73 1.646 10,129,593.02 1.619
West Virginia 119 0.330 1,546,068.41 0.267 1,674,924.47 0.268
Wyoming 12 0.033 190,925.27 0.033 197,902.50 0.032
=============================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
=============================================================================================================================
</TABLE>
13
<PAGE> 16
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
DISCOUNTED STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE OF DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
STATISTICAL DISCOUNTED PRESENT NUMBER OF NUMBER OF PRESENT VALUE OF PRESENT VALUE ORIGINAL EQUIPMENT
VALUE OF THE LEASES LEASES LEASES LEASES OF LEASES EQUIPMENT COST COST
- ------------------------------ --------- ------------- ---------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 0.01 - 5,000.00 13,245 36.762% $ 37,327,809.53 6.446% $45,732,625.75 7.310%
5,000.01 - 10,000.00 9,090 25.230 65,855,255.63 11.372 73,776,533.44 11.793
10,000.01 - 15,000.00 4,850 13.461 59,483,189.73 10.272 65,238,482.06 10.428
15,000.01 - 20,000.00 2,751 7.636 47,545,164.01 8.210 50,980,068.69 8.149
20,000.01 - 25,000.00 1,637 4.544 36,550,419.35 6.312 39,313,580.37 6.284
25,000.01 - 30,000.00 1,032 2.864 28,210,382.60 4.871 30,228,935.61 4.832
30,000.01 - 35,000.00 673 1.868 21,776,321.12 3.760 23,235,106.83 3.714
35,000.01 - 40,000.00 424 1.177 15,821,223.21 2.732 16,520,678.05 2.641
40,000.01 - 45,000.00 344 0.955 14,543,684.13 2.511 15,279,910.17 2.442
45,000.01 - 50,000.00 274 0.760 12,954,807.26 2.237 13,913,936.20 2.224
50,000.01 - 60,000.00 391 1.085 21,419,472.19 3.699 22,397,259.09 3.580
60,000.01 - 70,000.00 281 0.780 18,155,025.75 3.135 19,291,034.06 3.084
70,000.01 - 80,000.00 196 0.544 14,711,000.53 2.540 15,789,581.94 2.524
80,000.01 - 90,000.00 141 0.391 11,953,617.66 2.064 12,459,756.55 1.992
90,000.01 - 100,000.00 93 0.258 8,843,510.32 1.527 9,853,853.68 1.575
100,000.01 - 125,000.00 176 0.488 19,508,129.01 3.369 20,591,878.95 3.292
125,000.01 - 150,000.00 108 0.300 14,903,495.41 2.574 16,326,784.34 2.610
150,000.01 - 175,000.00 60 0.167 9,627,953.07 1.663 10,068,077.44 1.609
175,000.01 - 200,000.00 52 0.144 9,701,713.75 1.675 10,474,791.21 1.674
200,000.01 - 300,000.00 73 0.203 17,744,491.08 3.064 19,283,108.68 3.082
300,000.01 - 400,000.00 45 0.125 15,594,570.62 2.693 16,712,088.23 2.671
400,000.01 - 500,000.00 29 0.080 12,983,107.75 2.242 13,708,203.11 2.191
500,000.01 - 600,000.00 15 0.042 8,212,540.34 1.418 9,089,861.67 1.453
600,000.01 - 700,000.00 13 0.036 8,732,300.17 1.508 8,886,114.23 1.420
700,000.01 - 800,000.00 6 0.017 4,426,118.94 0.764 4,782,921.98 0.765
800,000.01 - 900,000.00 2 0.006 1,711,244.87 0.295 1,676,079.00 0.268
900,000.01 -1,000,000.00 6 0.017 5,683,745.42 0.981 5,626,494.71 0.899
1,000,000.01 -1,500,000.00 16 0.044 18,668,159.85 3.224 18,936,950.67 3.027
1,500,000.01 -2,000,000.00 2 0.006 3,715,484.23 0.642 3,416,250.00 0.546
greater than 2,000,000.00 4 0.011 12,741,439.46 2.200 12,010,943.85 1.920
=============================================================================================================================
Total 36,029 100.000% $ 579,105,376.99 100.000% $625,601,890.56 100.000%
=============================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
STATISTICAL PERCENTAGE OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE OF DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF NUMBER OF PRESENT VALUE ORIGINAL EQUIPMENT
REMAINING TERM (MONTHS) LEASES LEASES VALUE OF LEASES OF LEASES EQUIPMENT COST COST
- ------------------------- --------- ------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0 - 12 1,323 3.672% $ 7,447,405.73 1.286% $16,248,199.65 2.597%
13 - 24 2,647 7.347 18,971,848.45 3.276 26,935,964.07 4.306
25 - 36 16,022 44.470 152,681,866.61 26.365 174,022,920.62 27.817
37 - 48 5,160 14.322 82,536,829.93 14.252 88,426,560.80 14.135
49 - 60 10,614 29.460 281,652,759.58 48.636 285,871,185.19 45.695
61 - 72 207 0.575 19,182,085.65 3.312 18,568,395.52 2.968
73 - 84 56 0.155 16,632,581.05 2.872 15,528,664.71 2.482
========================================================================================================================
Total: 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
========================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE OF DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
NUMBER OF NUMBER OF PRESENT VALUE PRESENT VALUE ORIGINAL EQUIPMENT
ORIGINAL TERM (MONTHS) LEASES LEASES OF LEASES OF LEASES EQUIPMENT COST COST
---------------------- --------- ------------- --------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0 - 12 237 0.658% $ 2,116,299.09 0.365% $ 2,705,498.42 0.432%
13 - 24 1,095 3.039 8,900,516.36 1.537 11,187,095.37 1.788
25 - 36 3,503 9.723 37,957,386.80 6.554 45,934,304.61 7.342
37 - 48 15,656 43.454 144,905,047.84 25.022 166,226,218.12 26.571
49 - 60 6,484 17.997 142,977,578.86 24.689 152,031,550.42 24.302
61 - 72 8,972 24.902 217,248,058.67 37.514 223,244,176.41 35.685
73 - 84 72 0.200 18,716,309.40 3.232 17,869,682.99 2.856
85 - 96 10 0.028 6,284,179.97 1.085 6,403,364.22 1.024
====================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
====================================================================================================================
</TABLE>
14
<PAGE> 17
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE OF DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
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 35,938 99.747% $569,341,250.88 98.314% $612,670,878.20 97.933%
Operating Lease 91 0.253 9,764,126.12 1.686 12,931,012.36 2.067
======================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
======================================================================================================================
</TABLE>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
NUMBER OF OF NUMBER OF PRESENT VALUE OF PRESENT VALUE ORIGINAL EQUIPMENT
PURCHASE OPTION LEASES LEASES LEASES OF LEASES EQUIPMENT COST COST
- --------------------- --------- ------------ ---------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fixed Purchase Option 3,283 9.112% $ 71,715,198.61 12.384% $79,439,976.44 12.698%
Fair Market Value 24,276 67.379 307,906,221.51 53.169 338,334,820.24 54.081
Nominal Buyout 8,470 23.509 199,483,956.87 34.447 207,827,093.88 33.220
=============================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
=============================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY DELINQUENCIES
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
NUMBER OF OF NUMBER OF PRESENT VALUE OF PRESENT VALUE ORIGINAL EQUIPMENT
DAYS DELINQUENT LEASES LEASES LEASES OF LEASES EQUIPMENT COST COST
--------------- --------- ------------ ---------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0 - 29 34,538 95.862% $556,539,974.86 96.103% $600,246,377.88 95.947%
30 - 59 1,477 4.099 22,498,894.41 3.885 25,274,231.71 4.040
60 - 62 14 0.039 66,507.73 0.011 81,280.97 0.013
=========================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
=========================================================================================================================
</TABLE>
15
<PAGE> 18
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
NUMBER OF 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>
Multiple Product 141 0.391% $ 2,553,602.71 0.441% $ 4,212,218.19 0.673%
Anesthesia Equipment 13 0.036 558,211.61 0.096 784,352.44 0.125
Automated Chemistry Systems 171 0.475 6,830,475.98 1.179 7,716,069.54 1.233
Automated Hematology Systems 249 0.691 5,591,379.54 0.966 6,072,774.59 0.971
Automated Test Equipment 8 0.022 113,023.46 0.020 170,741.16 0.027
Automobile Shop 6 0.017 92,442.92 0.016 80,515.00 0.013
C.T. Systems 8 0.022 4,164,616.85 0.719 4,322,834.57 0.690
Carts, Stretchers, Wheel Chairs 56 0.155 863,385.57 0.149 902,062.46 0.144
Cash Registers 83 0.230 2,345,494.84 0.405 2,488,156.83 0.398
Cobalt and X-Ray Therapy 1 0.003 16,354.80 0.003 16,500.00 0.003
Equipment
Communication Equipment 22 0.061 686,218.56 0.118 719,554.01 0.115
Computer Systems-Doctors & 579 1.607 13,829,672.61 2.388 14,427,473.74 2.306
Hospitals
Computer 2,440 6.772 28,999,010.93 5.008 34,413,680.87 5.501
Construction Equipment 7 0.019 326,643.70 0.056 292,638.73 0.047
Copiers 25,562 70.948 299,580,916.86 51.732 323,872,861.44 51.770
Cranes and Derricks 2 0.006 29,954.26 0.005 25,800.00 0.004
Data Processing 1 0.003 63,030.75 0.011 56,085.00 0.009
Dental Operatory Equipment 477 1.324 10,782,993.68 1.862 10,820,841.99 1.730
Digital Cameras 1 0.003 5,667.88 0.001 6,213.39 0.001
Document Imaging Equipment 353 0.980 6,647,848.43 1.148 7,128,829.46 1.140
ECG (EKG) and Defibrillators 99 0.275 1,720,973.79 0.297 1,829,466.76 0.292
EEG 2 0.006 24,265.99 0.004 24,754.00 0.004
Electronics Production 181 0.502 30,914,636.05 5.338 36,417,060.37 5.821
Equipment
Fabrication Equipment 4 0.011 1,019,672.09 0.176 1,081,561.72 0.173
Facsimiles 1,853 5.143 6,559,439.96 1.133 7,389,237.53 1.181
Food Processing 2 0.006 108,416.80 0.019 95,834.29 0.015
Furniture and Fixtures 14 0.039 566,965.12 0.098 543,446.59 0.087
Gamma Cameras 27 0.075 4,499,304.47 0.777 4,982,225.05 0.796
Heating and Air 2 0.006 29,125.53 0.005 25,870.00 0.004
Holter Monitors 39 0.108 619,056.78 0.107 648,810.99 0.104
Home Healthcare Equipment 140 0.389 3,008,819.24 0.520 3,207,826.14 0.513
Hospital Room Equipment 44 0.122 9,066,095.83 1.566 9,953,393.44 1.591
Hosp Beds; Elec. Stryker 25 0.069 320,368.91 0.055 331,594.93 0.053
FRMS, Burn Beds
Image Setters 1 0.003 92,509.50 0.016 121,195.00 0.019
Industrial Production 3 0.008 171,501.38 0.030 149,531.25 0.024
Jukeboxes/storage 2 0.006 27,817.13 0.005 28,400.00 0.005
Laminating Devices 2 0.006 16,157.08 0.003 15,626.69 0.002
Lasers 27 0.075 1,734,880.74 0.300 1,921,502.30 0.307
Laundry, Kitchen, Food Srvc 3 0.008 50,880.81 0.009 43,485.10 0.007
Eqp., Central Supply
Laundry Equipment Lift Trucks 1 0.003 115,925.91 0.020 120,000.00 0.019
Leasehold Improvements 20 0.056 5,935,130.80 1.025 5,477,535.14 0.876
Lift Trucks 2 0.006 21,931.69 0.004 43,067.22 0.007
Linear Accelerators 1 0.003 535,390.95 0.092 960,012.50 0.153
Lithotripters and Dialysis 6 0.017 621,047.95 0.107 649,049.00 0.104
Equipment
Machine Tools 2 0.006 245,529.86 0.042 247,015.00 0.039
Mailing Equipment 39 0.108 407,569.49 0.070 407,532.91 0.065
Mammography 11 0.031 1,178,601.28 0.204 1,380,290.54 0.221
Materials Handling 1 0.003 5,385.47 0.001 4,858.00 0.001
Mobile X-Ray Systems 4 0.011 314,313.59 0.054 352,376.31 0.056
Medical Equipment 11 0.031 630,771.92 0.109 622,355.87 0.099
Microfilm Equipment 4 0.011 76,099.89 0.013 92,866.12 0.015
Micrographics 2 0.006 41,509.23 0.007 41,673.00 0.007
Misc. Comm. & Indus. Equip. 84 0.233 1,528,605.43 0.264 1,776,955.28 0.284
Misc Lab Eqp 7 0.019 191,352.06 0.033 184,913.42 0.030
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE
PERCENTAGE DISCOUNTED DISCOUNTED AGGREGATE ORIGINAL
NUMBER OF 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>
Misc Vet Eqp; Cages, Scales, 4 0.011 36,119.74 0.006 59,793.00 0.010
Tables
Misc X-Ray Eqp 14 0.039 774,590.25 0.134 828,802.16 0.132
Miscellaneous 121 0.336 1,861,701.66 0.321 1,879,393.86 0.300
MRI Systems 15 0.042 9,836,811.94 1.699 10,218,904.57 1.633
Office Furniture & Equipment 31 0.086 656,191.69 0.113 638,707.31 0.102
Operating Microscopes 7 0.019 139,323.16 0.024 222,546.31 0.036
Opthlmc Diag Eqp (Slit 150 0.416 3,198,659.98 0.552 3,337,217.75 0.533
Lamps, Tonometers)
Opt Eqp; Lens Grinding, 386 1.071 4,719,383.80 0.815 5,215,735.15 0.834
Resurfacing
Packaging Equipment 42 0.117 1,403,419.91 0.242 1,602,221.75 0.256
Patient Monitoring Systems 130 0.361 4,490,914.03 0.775 4,816,818.41 0.770
Patient Room Furnishing & 5 0.014 34,905.65 0.006 53,216.45 0.009
Fixtures
Phone, TV, Comm Equipment 18 0.050 220,405.02 0.038 225,225.14 0.036
Photo Equipment 2 0.006 29,389.25 0.005 26,395.00 0.004
Photocopy Equipment 3 0.008 92,409.66 0.016 104,897.35 0.017
Physician Misc Medical Eqp & 885 2.466 21,439,820.47 3.702 22,346,297.14 3.572
Exam Tables
Physician Office Furn, 24 0.067 434,642.73 0.075 522,730.49 0.084
Fixtures and Phones
Podiatry Equipment 2 0.006 29,724.97 0.005 29,650.00 0.005
Printing Equipment 200 0.555 6,838,084.06 1.181 6,776,333.97 1.083
Processing Equipment 4 0.011 208,962.35 0.036 214,505.00 0.034
Pulse Oximetry Equipment 2 0.006 25,044.27 0.004 30,235.50 0.005
Radiographic Fluoroscopic 3 0.008 318,084.44 0.055 336,670.00 0.054
Systems
Respiratory Therapy Equipment 753 2.090 20,388,913.25 3.521 22,189,415.91 3.547
Restaurant, Motel Equipment 3 0.008 120,341.03 0.021 109,170.73 0.017
Sales Tax 1 0.003 42,417.87 0.007 42,325.75 0.007
Scanners 8 0.022 140,029.79 0.024 153,230.85 0.024
Security Systems 3 0.008 37,473.64 0.006 34,743.67 0.006
Standard Printers 41 0.114 580,318.63 0.100 635,318.14 0.102
Standard Test Systems 1 0.003 2,554.69 0.000 2,708.48 0.000
Standard X-Ray Systems 28 0.078 1,380,892.41 0.238 1,466,565.70 0.234
Surgical Equip. Scopes, 52 0.144 24,422,446.21 4.217 22,460,204.25 3.590
Electrosurgical
Telephone 45 0.125 816,197.09 0.141 832,829.94 0.133
Telex 1 0.003 8,466.19 0.001 15,221.00 0.002
Transportation 1 0.003 5,599.92 0.001 5,950.00 0.001
Ultrasound 134 0.372 15,014,706.99 2.593 15,821,226.93 2.529
Vending Machines 8 0.022 102,038.24 0.018 82,500.00 0.013
Wide Format Printers 1 0.003 13,582.83 0.002 20,034.48 0.003
Woodworking 1 0.003 26,747.66 0.005 23,320.00 0.004
Working Capital 51 0.142 1,461,160.75 0.252 1,408,745.89 0.225
X-Ray Spec Systems; 4 0.011 1,271,902.00 0.220 1,110,556.66 0.177
Angiography
============================================================================================================================
Total 36,029 100.000% $579,105,376.99 100.000% $625,601,890.56 100.000%
============================================================================================================================
</TABLE>
1 The following abbreviations used in this table have the following meanings:
"Eqp." -- Equipment
"Misc." -- Miscellaneous
17
<PAGE> 20
Historical Delinquency Information. Lease receivables are
generally evaluated by Copelco Capital for write-down when they become over 92
days delinquent. General delinquency information for equipment leases not
written down in the Origination Groups that are owned by Copelco Capital is set
forth below.
Historical Delinquency Experience
Copelco Capital Combined Portfolio
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997 December 31, 1996
------------------ ----------------- -----------------
<S> <C> <C> <C>
Total
Receivables
Balance (1) $2,000,113,149 $1,732,009,721 $1,503,055,810
- ------------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 43,823,866 2.19% 38,610,259 2.23% 34,481,668 2.29%
60-89 days 16,739,163 0.84% 11,999,057 0.69% 8,136,578 0.54%
90 Days+ 5,720,230 0.29% 10,437,965 0.60% 7,587,972 0.50%
- ------------------------------------------------------------------------------------
Total
Delinquencies $ 66,283,259 3.31% $ 61,047,28 3.52% $ 50,206,218 3.34%
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994 December 31, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Total
Receivables
Balance (1) $ 1,238,424,241 $1,000,488,313 $736,373,700
- -------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 26,255,335 2.12% 14,846,559 1.48% 9,184,216 1.25%
60-89 days 4,976,920 0.40% 3,971,389 0.40% 1,886,765 0.26%
90 Days+ 6,703,063 0.54% 6,748,827 0.67% 5,099,200 0.69%
- ------------------------------------------------------------------------------------
Total
Delinquencies $ 37,935,318 3.06% $ 25,566,775 2.56% $ 16,170,181 2.20%
</TABLE>
(1) The Total Receivables Balance is equal to the aggregate future rent owing on
the leases.
Business Technology
<TABLE>
<CAPTION>
September 30, December 31, December 31,
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Total
Receivables
Balance (1) $1,137,122,973 $964,765,984 $ 812,719,952
- -----------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 24,718,601 2.17% 21,036,692 2.18% 24,072,598 2.96%
60-89 days 7,367,101 0.65% 5,451,379 0.57% 5,249,429 0.65%
90 Days+ 3,438,342 0.30% 6,432,173 0.67% 4,940,285 0.61%
- -----------------------------------------------------------------------------
Total
Delinquencies $35,524,044 3.12% $ 32,920,244 3.41% $ 34,262,311 4.22%
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1995 1994 1993
------------- ------------- --------------
<S> <C> <C> <C>
Total
Receivables
Balance (1) $669,800,055 $543,197,213 $ 385,838,619
- -------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 18,298,832 2.73% 8,636,836 1.59% 5,401,741 1.40%
60-89 days 3,492,843 0.52% 2,281,428 0.42% 1,234,684 0.32%
90 Days+ 4,867,482 0.73% 3,096,224 0.57% 2,315,032 0.60%
- -------------------------------------------------------------------------------
Total
Delinquencies $ 26,659,157 3.98% $ 14,014,488 2.58% $ 8,951,457 2.32%
</TABLE>
(1) The Total Receivables Balance is equal to the aggregate future rent owing on
the leases.
Healthcare Commercial & Industrial Group
<TABLE>
<CAPTION>
September 30, December 31, December 31,
1998 1997 1996
------------------ ------------------ ----------------
<S> <C> <C> <C>
Total
Receivables
Balance (1) $862,990,176 $767,243,737 $690,335,858
- ------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 19,105,265 2.21% 17,573,567 2.29% 10,409,069 1.51%
60-89 days 9,372,062 1.09% 6,547,678 0.85% 2,887,149 0.42%
90 Days+ 2,281,888 0.26% 4,005,792 0.52% 2,647,688 0.38%
- ------------------------------------------------------------------------------
Total
Delinquencies $ 30,759,215 3.56% $ 28,127,037 3.67% $ 15,943,906 2.31%
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1995 1994 1993
------------------ ----------------- -----------------
<S> <C> <C> <C>
Total
Receivables
Balance (1) $568,624,186 $457,291,099 $350,535,081
- ---------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 7,956,503 1.40% 6,209,723 1.36% 3,782,475 1.08%
60-89 days 1,484,077 0.26% 1,689,961 0.37% 652,082 0.19%
90 Days+ 1,835,581 0.32% 3,652,603 0.80% 2,784,168 0.79%
- -----------------------------------------------------------------------------
Total
Delinquencies $ 11,276,161 1.98% $ 11,552,287 2.53% $ 7,218,725 2.06%
</TABLE>
(1) The Total Receivables Balance is equal to the aggregate future rent owing on
the leases.
18
<PAGE> 21
Historical Default Experience. All accounts assessed over 92
days past due automatically become non-accruing accounts. Any subsequent
recoveries offset net losses. General charge-off information for Leases in the
Origination Groups that are owned and serviced by Copelco Capital for the period
January 1, 1993 to September 30, 1998 is set forth below.
Historical Charge-Off Experience
(Dollars in Thousands)
Copelco Capital Combined Portfolio
<TABLE>
<CAPTION>
September 30, December 31, December 31, December 31, December 31, December 31,
1998 1997 1996 1995 1994 1993
------------ ----------- ----------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $1,866,061 $1,617,532 $1,370,740 $1,119,456 $ 868,431 $ 649,278
- ----------------------------------------------------------------------------------------------------------------------
Net Losses $ 21,476 $ 22,138 $ 15,713 $ 11,457 $ 10,328 $ 8,842
Net Losses as a % of Avg.
Receivables 1.53%(2) 1.37% 1.15% 1.02% 1.19% 1.36%
</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
Business Technology
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, December 31, December 31, December 31, December 31, December 31,
1998 1997 1996 1995 1994 1993
------------ ----------- ----------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $1,050,944 $ 888,742 $ 741,260 $ 606,499 $ 464,518 $ 321,439
- --------------------------------------------------------------------------------------------------------------------------
Net Losses $ 16,326 $ 16,295 $ 13,386 $ 9,969 $ 7,415 $ 5,307
Net Losses as a % of Avg.
Receivables 2.07%(2) 1.83% 1.81% 1.64% 1.60% 1.65%
</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
Healthcare Commercial & Industrial Group
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, December 31, December 31, December 31, December 31, December 31,
1998 1997 1996 1995 1994 1993
------------ ----------- ----------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $ 815,117 $ 728,790 $ 629,480 $ 512,958 $ 403,913 $ 327,840
- ----------------------------------------------------------------------------------------------------------------------
Net Losses $ 5,150 $ 5,843 $ 2,327 $ 1,488 $ 2,913 $ 3,535
Net Losses as a % of Avg.
Receivables 0.84%(2) 0.80% 0.37% 0.29% 0.72% 1.08%
</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.
19
<PAGE> 22
Copelco Capital's Underwriting and Servicing Practices
General. Copelco Capital, a Delaware corporation, was incorporated in
October 1986. Copelco Capital is a wholly-owned subsidiary of Copelco Financial
Services Group, Inc. ("Copelco Financial"). Copelco Capital's primary business
consists of originating and servicing leases to healthcare providers,
businesses, business owners and individuals in the United States and Canada.
Copelco Capital has multiple locations and is headquartered at One International
Boulevard, Mahwah, New Jersey 07430 and its phone number is (609) 231-9600.
In May 1993, Copelco Financial (which was incorporated in July 1982)
reorganized its two primary operating subsidiaries, Copelco Credit Corporation
("Copelco Credit") and Copelco Leasing Corporation ("Copelco Leasing"), into six
strategic business units (each, an "SBU"). Then, effective July 1994, Copelco
Leasing was merged into Copelco Credit with Copelco Credit as the surviving
legal entity; Copelco Credit then changed its name to Copelco Capital, Inc.,
merging all of Copelco Leasing's and Copelco Capital's leasing operations.
Copelco Capital currently consists of three separate operating groups
(each, a "Group") the Business Technology Group, the Healthcare Group and the
Commercial & Industrial Group. The Business Technology Group, the Healthcare
Group and the Commercial & Industrial Group originated 61.96%, 32.41% and 5.63%,
respectively, of the Leases to be included in the subject transaction (based
upon the Statistical Discounted Present Value of the Leases as of the Cut-Off
Date).
The Business Technology Group leases small-ticket office equipment,
primarily photocopiers and computers, to businesses and business owners
throughout the United States and Canada through multiple manufacturer, vendor
and dealer programs. The Business Technology Group is the successor Group to
Copelco Capital's Document Imaging, Major Accounts, Computer and Canadian SBUs.
Copelco Capital merged these four units in January 1997 in order to achieve
greater operating and marketing efficiencies.
The Healthcare Group provides a diversified range of leasing services
for the financing of healthcare equipment through multiple manufacturer, vendor
and dealer programs, with particular emphasis upon the acquisition, leasing and
remarketing of high-technology medical equipment to hospitals, other healthcare
facilities, healthcare providers and physicians. The Healthcare Group is the
successor of the Hospital and Healthcare SBU and the Healthcare Vendor SBU which
were consolidated in June 1995 and the Ambulatory Care SBU which was merged into
the Healthcare Group in November 1996. The rationale for the consolidation of
the Healthcare Group was to achieve greater operating efficiencies and eliminate
certain operating and marketing redundancies.
The Commercial & Industrial Group is segmented into three distinct
business units: the Manufacturing Technology Group, the Financial Intermediary
Group and the Material Handling Group. The Manufacturing Technology Group
provides equipment leasing services through multiple manufacturer, vendor and
dealer programs, primarily to mid-sized companies. The equipment financed
through this group includes high technology equipment for the electronics
manufacturing service industry, such as printed circuit board assembly and test
equipment. The Financial Intermediary Group purchases equipment lease
transactions from third parties involved in the electronics and other industrial
equipment industries. The Material Handling Group, established in 1998, provides
retail equipment leasing and financing specifically for vendors and
manufacturers in the material handling industry.
As of September 30, 1998, Copelco Capital had total assets of
$2,525,448,000 compared with $2,083,256,000 as of December 31, 1997, total
liabilities of $2,342,868,000 compared with $1,927,558,000 as of December 31,
1997, shareholder's equity of $182,580,000 compared with $155,698,000 as of
December 31, 1997 and total revenues and net income of $217,683,000 and
$26,382,000, respectively, for the nine months ended September 30, 1998,
compared with $253,787,000 and $32,137,000, respectively, for the year ended
December 31, 1997.
Since 1986, Copelco Capital and its predecessors have participated in
38 equipment lease securitizations involving the issuance of in excess of $3.8
billion in securities. Copelco Capital and its predecessors performed all
servicing functions in each of these prior transactions, 9 of which remain
outstanding.
Originations. The Business Technology Group leases small-ticket office
equipment, primarily photocopiers and computers, to businesses and business
owners throughout the United States. The Business Technology Group originates
substantially all of its leases through marketing programs which are directed at
major manufacturers and various distributors of copier equipment (each, a
"Vendor") with the balance obtained through
20
<PAGE> 23
new leases with existing lessees and referrals. The Business Technology Group
establishes both formal and informal relationships with Vendors, several of
which provide Copelco Capital with a right of first refusal on all equipment
leases with the Vendor's customers. This arrangement provides the Business
Technology Group with a steady flow of lease referrals from Vendors which
frequently use lease financing as a marketing tool. In the majority of these
vendor programs, Copelco Capital generally owns the equipment subject to each
lease and bills and collects lease payments in its own name. For some select
private label vendor programs, Copelco Capital will bill and collect in the
vendor's name.
The Business Technology Group also offers a cost per copy program
("Cost per Copy"), introduced in late 1990, pursuant to which lessees pay a
fixed monthly payment (the "Fixed Payment") for which they are allowed a certain
minimum monthly copy usage. The monthly Fixed Payment represents equipment
financing (the "Equipment Financing Portion") and a monthly maintenance charge
(the "Maintenance Charge"). Copelco Capital funds the Vendors on the basis of
the Equipment Financing Portion of the Fixed Payment and remits the Maintenance
Charge to the Vendors as it is collected every month. Copelco Capital calculates
usage monthly using automated dialed-in copier meter readings. To the extent
that the usage has exceeded the monthly copy allowance, Copelco Capital bills
the lessee incremental charges for the excess copy usage ("Excess Copy Charge").
This Excess Copy Charge is remitted to the Vendors upon collection by Copelco
Capital. Only the Equipment Financing Portion will be included in the Discounted
Present Value of the Leases.
Vendors may choose to use a Copelco Capital lease form or they may use
their own lease agreement. In either case, the credit approval remains with
Copelco Capital. Lease documents for all leasing programs are either identical
to Copelco Capital's standard lease documents or are reviewed by Copelco Capital
to ensure substantial compliance with its standard terms. Terms of Copelco
Capital's lease documents are standard for virtually all leases, as is
documentation for virtually all private label programs.
The Healthcare Group provides a range of leasing services for the
financing of healthcare equipment with emphasis on the acquisition, leasing and
remarketing of high-technology medical equipment to hospitals, other healthcare
facilities, healthcare providers and physicians. The Healthcare Group originates
leases through five sales groups: National Accounts, Medical Business, Vendor
Services, Home Care, and Ambulatory Care.
The National Accounts sales group solicits contractual arrangements
with major medical equipment manufacturers and distributors throughout the
United States. These contracts usually give Copelco exclusive rights to handle
the financing needs of the manufacturers' customers. Most manufacturers are
publicly-held or subsidiaries of international medical conglomerates.
The Medical Business sales group provides leasing services directly to
hospitals and to physician group practices rather than through vendors or
manufacturers. The Medical Business marketing unit operates Copelco Capital's
Hospital Instant Lease Line ("HILL") program which grants hospitals a
pre-approved leasing line of credit for the leasing of medium-ticket medical
equipment such as computed topography scanners, radiographic and other imaging
equipment, laboratory and patient monitoring systems.
The Vendor Services sales group solicits exclusive contractual
arrangements and informal non-exclusive arrangements with local and regional
vendors. Such vendors sell medical equipment to physician group medical
practices and to individual physicians who finance the acquisition of the
equipment by leasing it from Copelco Capital. The Vendor Services marketing unit
operates Copelco Capital's Physician's Instant Lease Line ("PILL") program,
which grants individual physicians and physician group practices a pre-approved
leasing line of credit for use in leasing small- and medium-ticket medical
equipment. Approximately 25% of all leases originated by the Healthcare Group
are made to individual physicians. The average size of such Leases are generally
less than or equal to $50,000. Copelco Capital requires individual physicians to
meet the same rigorous criteria and credit scores as a physician group.
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
21
<PAGE> 24
start-up centers (typically managed by established organizations) to
publicly-held companies. Transactions may involve new equipment or refinancing
of existing equipment, often in conjunction with expansion or upgrading.
In addition to making fixed payments with respect to certain health
care equipment leases, lessees may pay incremental monthly charges to the extent
the scan usage exceeds the monthly scan allowance ("Fee Per Scan Charges"). Fee
Per Scan Charges will not be included in the Discounted Present Value of the
Leases. The Fee Per Scan Charges are remitted to the Vendors upon collection by
Copelco Capital.
The Commercial & Industrial Group: The Manufacturing Technology Group
and the Financial Intermediary Group provide equipment leasing services
primarily to mid-sized companies. Since early 1993, the Group has focused on
marketing through manufacturers and distributors in the electronics
manufacturing service industry. Currently, approximately 90% of the leases
originated by this Group relate to the electronics manufacturing service
industry and approximately 10% represents machine tools and other production
equipment. The Material Handling Group originates a majority of its business
through its relationship with distributors of material handling equipment. The
Material Handling Group establishes both formal and informal relationships with
vendors, manufacturers, and distributors of material handling equipment and
provides retail leasing and financing for the end-user customers.
Credit Review. Copelco Capital, in conjunction with the parent holding
company, provides organizational oversight for investment/risk management
policy, compliance, credit underwriting and due diligence standards, and
coordinates portfolio concentration guidelines and credit personnel training for
each of its Groups. Within the parameters established by Copelco Capital, each
Group tailors its underwriting policies to reflect their unique customers and
markets.
Certain credit requests are evaluated under credit scoring models
utilized by Copelco Capital. All credit requests not subject to automated credit
scoring must be underwritten by a credit officer. Applicants declined by credit
scoring may be reviewed by a credit officer. Each credit officer has a specific
assigned lending limit based upon experience and seniority. Credit approval
limits, applicable to single transaction size and individual lessee exposure,
are also assigned to assistant credit managers, group credit officers, the
president of Copelco Capital, and the chief credit officer of Copelco Capital.
In general, transactions in excess of $3,000,000 must be approved by the senior
management of Copelco Financial.
Business Technology Group: Prior to a lease being approved by the
Business Technology Group, the vendor's sales personnel are required to obtain
from the prospective lessee historical financial data and/or bank and trade
references. New and repeat applicants must either complete a comprehensive
credit application or provide bank and trade references.
Credit data are submitted for credit review in Mahwah, New Jersey and
Moberly, Missouri. Credit review is performed and lease approvals are given at
these locations, utilizing a computer system designed to handle applications
which are telephoned or telecopied from vendors. Using the computer system, the
applicant's credit is investigated and a credit decision is made.
Lessee evaluation includes an analysis of credit payment history,
business structure, banking history and relationships, and economic conditions
as they relate to the prospective lessee. In the case of a credit request for
equipment having a cost greater than approximately $50,000, the information
collected includes the prospect's most recent financial statements. If
individual guarantors are involved, a consumer credit bureau report is generally
obtained for the guarantors. Potential lessees should generally have been in
business for at least two years and a minimum of two trade references are
required.
The Business Technology Group has also implemented an automated credit
scoring system. The system, designed by Dun & Bradstreet Information Services
("Dun & Bradstreet") specifically for the Business Technology Group, was in
development over a two-year period and was formally implemented on January 4,
1994. The system utilizes various filters for adapting "approve" and "decline"
threshold scores based upon criteria such as credit exposure, payment history
(by SIC code), Vendor and state. The model is consistent with the Business
Technology Group's traditional credit decision-making criteria (i.e., Dun &
Bradstreet data, consumer credit bureau information, and bank and trade
references).
Healthcare Group: For leases originated by the Medical Business sales
group, full financial statements are required for credit review, and a thorough
history of past payment patterns is examined. Other items such as a hospital's
location, utility to its community and ownership (public or private) are also
considered. Certain of these transactions are credit scored under HILL credit
scoring parameters. The HILL credit scoring parameters
22
<PAGE> 25
include, without limitation, the number of beds of the potential lessee, its
occupancy rate and Dun & Bradstreet financial highlight information.
Certain of the leases originated by the Vendor Services group are
credit scored under PILL credit scoring parameters. The PILL credit scoring
parameters include, without limitation, the length of time in practice of the
potential lessee, the potential lessee's medical specialty and a consumer
bankruptcy predictor model acquired by Copelco Capital. The credit review
process for physicians is similar to that of personal lending because the
lessees are predominantly individual physicians (or groups of physicians). Many
of the leases to physicians have personal guarantees associated with them and
spousal guarantees as well. Lessees are not required, however, to give Copelco
Capital liens on property. The predominant reason for delinquencies in such
leases is cash flow deficiencies and, to a lesser extent, death of the lessee,
in which case settlement with the lessee's estate can take several months. Such
leases are typically processed under the PILL program. For inexpensive
equipment, credit review of physician lessees involves analysis of credit bureau
reports, bank references, duration of practice and medical specialty. For more
expensive equipment, the credit review involves analysis of personal income tax
returns and financial statements of the practice in addition to credit bureau
reports and bank references. There is also a focus on the length of time that
the physician has maintained his or her private practice.
The PILL and the HILL programs afford Copelco Capital the ability to
analyze physician, physician group practice and hospital credit quality in
advance of the lease decision, thus providing a means by which physicians in
certain medical specialties and certain hospitals may be pre-approved for a
leasing line of credit. They also provide rapid turnaround of a specific
application when it is submitted.
National Accounts, Home Care and Ambulatory Care generally utilize a
combination of transactional credit analysis and credit scoring. Transactions
not eligible for credit scoring are reviewed by the Healthcare Group's credit
staff under the supervision of a senior credit officer.
Commercial & Industrial Group: In the Manufacturing Technology Group
and Financial Intermediary Group, all credit decisions are made by credit
analysts. Credit scoring is not used. In general, transactions in excess of
$50,000 require financial statement disclosure consisting of at least the three
most recent fiscal year-end financial statements and interim financial
statements. Additionally, Dun & Bradstreet reports, bank and other credit
references, trade references, and other information may be evaluated.
Transactions involving small, privately held companies exhibiting limited
financial resources require the financial disclosure and personal guaranty of
the principals. Consideration will also be given to the value of the equipment
securing the transaction, based upon a review by the Group's Asset Management
department. An approval might contain restrictive conditions, including, but not
limited to, a reduced term, guaranties, security deposits, down payments, or a
letter of credit.
The Material Handling Group utilizes a credit review system similar to
and based upon that of the Business Technology Group. The majority of business
is originated through dealer/vendor networks, with retail and wholesale credit
applications submitted via fax. The assessment of creditworthiness is determined
through both automated systems and credit officer analysis with emphasis on the
following factors: time in business, financial strength, payment/credit history,
transaction structure, collateral and industry outlook.
The evaluation of creditworthiness for retail end-user customers will
be accomplished through a modified version of the Business Technology Group's
credit scoring model, in which the filters and scoring thresholds are adapted to
the needs of the Material Handling Group. Retail lease applicants will generally
have been in business for at least two years with evidence of satisfactory bank
and/or comparable secured lender references. Consumer credit bureau reports will
be obtained if individual guarantors or sole proprietors are considered in the
transaction.
The terms of the Leases originated by each of the Groups require the
Lessees to maintain the equipment and install it at a place of business approved
by Copelco Capital. Delivery, transportation, repairs and maintenance are
obligations of Lessees, and Lessees are required to carry, at their own expense,
liability and replacement cost insurance under terms acceptable to Copelco
Capital. Any Lease payment defaults permit Copelco Capital to declare
immediately due and payable all remaining lease payments. At the end of a lease
term, lessees must return the leased equipment to Copelco Capital in good
working order unless the lease is renewed or the leased equipment is purchased
by the Lessee.
Collections. Collection procedures have been instituted by Copelco
Capital and are uniformly utilized throughout Copelco Capital's Groups. A late
charge is generally assessed to Lessees 6 days after the payment due date.
Telephone contact is normally initiated when an account is 15 days past due, but
may be initiated
23
<PAGE> 26
more quickly. All collection activity is entered into the computerized
collection system. Activity notes are input directly into the collection system
in order to facilitate routine collection activity. Collectors have available at
their computer terminals the latest status and collection history on each
account.
Generally, on the day on which a Lease becomes 10 days delinquent,
Copelco Capital's credit and collection review system automatically generates a
computerized late notice which is sent directly to the lessee. When an account
becomes 30 days past due, a default letter is generally sent out to the Lessee
and to anyone providing personal guarantees on the Leases. An acceleration
letter is sent to the lessee and any guarantors when a Lease becomes 45 days
past due, as circumstances warrant. Telephone contact will be continued
throughout the delinquency period. Accounts which become over 90 days past due
are subject to repossession of Equipment and action by collection agencies and
attorneys. Prior to being written down (which is generally prior to the lease
being 123 days delinquent), each lease is evaluated on the merits of the
individual situation, with equipment value being considered as well as the
current financial strength of the Lessee.
Additions, Substitutions and Adjustments. Although the Leases will be
non-cancelable by the Lessees, Copelco Capital has, from time to time, permitted
early termination by Lessees ("Early Lease Termination") or other modifications
of the lease terms in certain circumstances more fully specified in the
Assignment and Servicing Agreement, including, without limitation, in connection
with a full or partial buy-out or equipment upgrade.
In the event of an Early Lease Termination which has been prepaid in
full or in part, the Issuer will have the option to reinvest the proceeds of
such Early Termination Lease in one or more Leases having similar
characteristics for such terminated Lease (each, an "Additional Lease").
In addition, Copelco Capital will have the option to substitute one or
more leases having similar characteristics (each, a "Substitute Lease") for (a)
Non-Performing Leases, (b) Leases subject to repurchase as a result of a breach
of representation and warranty (each a "Warranty Lease") and (c) Leases
following a modification or adjustment to the terms of such Lease (each, an
"Adjusted Lease"). The aggregate Discounted Present Value of the Non-Performing
Leases for which Copelco Capital may substitute Substitute Leases is limited to
an amount not in excess of 10% of the aggregate Discounted Present Value of the
Leases as of the Cut-Off Date. The aggregate Discounted Present Value of
Adjusted Leases and Warranty Leases for which Copelco Capital may substitute
Substitute Leases is limited to an amount not in excess of 10% of the aggregate
Discounted Present Value of the Leases as of the Cut-Off Date.
The terms of a Lease may be modified or adjusted for administrative
reasons or at the request of the lessee, vendor or lessor due to a variety of
circumstances, including changes to the delivery date of equipment, the cost of
equipment, the components of leased equipment or to correct information when a
Lease is entered into Copelco Capital's servicing system. Such modifications may
result in adjustments to the lease commencement date, the monthly payment date,
the amount of the monthly payment or the equipment subject to a Lease.
Additional Leases and Substitute Leases will be originated using the
same credit criteria as the initial Leases. To the extent material, information
with respect to such Additional or Substitute Leases will be included in
periodic reports filed with the Commission as are required under the Exchange
Act.
In no event will the aggregate scheduled payments of the Leases, after
the inclusion of the Substitute Leases and Additional Leases be materially less
than the aggregate scheduled payments of the Leases prior to such substitution
or reinvestment. In addition, after giving effect to such additions and
substitutions, the aggregate Booked Residual Value of the Leases will not be
materially less than the aggregate Booked Residual Value of the Leases
immediately prior to such substitutions or additions. Additionally, either the
final payment on such Substitute Lease or Additional Lease will be on or prior
to December 30, 2005, or, to the extent the final payment on such Lease is due
subsequent to December 30, 2005, only scheduled payments due on or prior to such
date may be included in the Discounted Present Value of such Lease for the
purpose of making any calculation under the Indenture.
In the event that an Early Lease Termination is allowed by Copelco
Capital and an Additional Lease is not provided, the amount prepaid will be
equal to at least the Discounted Present Value of the terminated Lease, plus any
delinquent payments. See "The Series Pool -- The Leases."
Assignment and Servicing Agreement. Copelco Capital will enter into an
agreement (the "Assignment and Servicing Agreement") with Copelco Capital
Funding LLC 99-1 as Transferor (in such capacity, the "Transferor") and
Manufacturers and Traders Trust Company, a New York banking corporation, as
indenture
<PAGE> 27
trustee (the "Trustee"), pursuant to which Copelco Capital will, among other
things, service the Leases, make Servicer Advances and forward Excess Copy
Charges, Maintenance Charges and Fee Per Scan Charges to Vendors. In the
Assignment and Servicing Agreement, Copelco Capital will make certain
representations and warranties regarding the Leases and the Equipment. In the
event that (a) any of such representations and warranties made by Copelco
Capital proves at any time to have been inaccurate in any material respect as
of the Issuance Date or (b) any Lease shall be terminated in whole or in part
by a Lessee, or any amounts due with respect to any Lease shall be reduced or
impaired, as a result of any action or inaction by Copelco Capital (other than
any such action or inaction of Copelco Capital, when acting as Servicer, in
connection with the enforcement of any Lease (other than those leases Copelco
Capital permitted to be terminated early in a manner consistent with the
provisions of the Assignment and Servicing Agreement) or any claim by any
Lessee against Copelco Capital and, in any such case, the event or condition
causing such inaccuracy, termination, reduction, impairment or claim shall not
have been cured or corrected within 30 days after the earlier of the date on
which Copelco Capital is given notice thereof by Copelco Capital Funding LLC
99-1 or the Trustee or the date on which Copelco Capital otherwise first has
notice thereof), Copelco Capital will repurchase such Lease (a "Warranty
Lease") and the Equipment subject thereto by paying to the Trustee for deposit
into the Collection Account, not later than the Determination Date next
following the expiration of such 30-day period, an amount at least equal to the
Discounted Present Value of such Lease plus any amounts previously due and
unpaid thereon. In the alternative, subject to the satisfaction of certain
requirements set forth in the Assignment and Servicing Agreement, Copelco
Capital will have the option to substitute one or more Substitute Leases (as
defined herein) for such Warranty Lease. Any inaccuracy in any representation
or warranty with respect to (i) the priority of the lien of the Indenture with
respect to any Lease or (ii) the amount (if less than represented) of the Lease
Payments, Casualty Payments, Termination Payments or Booked Residual Value
under any Lease shall be deemed to be material. "Booked Residual Value" means
the amount booked by Copelco Capital as expected to be realized upon scheduled
termination of a Lease through sale or other disposition of the related
Equipment.
Servicing Fee. The Servicing Fee with respect to the Notes will be paid
monthly on the Payment Date from amounts in the Collection Account and will be
calculated by multiplying one-twelfth of 0.75% times the Discounted Present
Value of the Performing Leases, as of the prior Payment Date (the "Servicing
Fee").
The Servicing Fee will be paid to the Servicer for servicing the Series
Pool and for certain administrative expenses in connection with the Notes,
including Trustee fees.
The Issuer
General. Copelco Capital Funding LLC 99-1 is a bankruptcy remote,
limited liability company formed in accordance with the laws of the State of
Delaware, pursuant to the limited liability company agreement between Copelco
Capital, Inc. and Copelco Manager, Inc., dated as of February 23, 1999, solely
for the purpose of effectuating the transactions described herein. Prior to
formation, the Issuer will have had no assets or obligations and no operating
history. Upon formation, the Issuer is structured to insulate it from bankruptcy
risk and will not engage in any business activity other than (i) acquiring,
holding and pledging the Leases and related interests and property related
thereto, (ii) issuing the Notes and (iii) distributing payments thereon.
Management's Discussion and Analysis of Financial Condition
As of the date of this Prospectus, the Issuer has had no operating
history. The net proceeds of the sale of the Notes will be distributed to the
owners of the Issuer. See "Use of Proceeds." The Issuer is prohibited by its
Limited Liability Company Agreement from engaging in business other than (i) the
purchase of equipment leases and lease receivables (including equipment) from
Copelco Capital and its affiliates, (ii) the issuance of notes collateralized
by its assets and (iii) engaging in acts incidental, necessary or convenient to
the foregoing and permitted under Delaware law. The Issuer's ability to incur,
assume or guaranty indebtedness for borrowed money is also restricted by its
Limited Liability Company Agreement to only such activities that relate to the
leases and lease receivables.
Directors and Executive Officers of the Manager of the Issuer
The following table sets forth the executive officers and directors of
Copelco Manager, Inc., the manager of the Issuer ("Manager") and their ages and
positions as of February 26, 1999. Because the Issuer is organized as a special
purpose company and will be largely passive, it is expected that the officers
and directors of the Manager will participate in the management of the Issuer to
a limited extent. Most of the actions related to maintaining and servicing the
assets will be performed by the Servicer.
25
<PAGE> 28
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Ian J. Berg 55 Chairman of the Board (Principal Executive Officer), Director
Robert J. Lemenze, Jr. 39 President, Chief Operating Officer
John Hakemian 58 Director
Nicholas Antonaccio 50 Vice President - Finance
Tadeyuki Seki 47 Director
Stephen W. Shippie 47 Vice President
Spencer Lempert 52 Secretary
</TABLE>
Ian J. Berg has served as Chairman of the Board, (Principal Executive
Officer) and Director of the Manager since being appointed/elected on February
23, 1999. Mr. Berg founded Copelco Financial in October 1972 and has
continuously served as its President and CEO from inception. Prior to founding
Copelco Financial, Mr. Berg served as Senior Vice President and Director of MDC
Corporation (an AMEX listed corporation) and as President and Director of MDC
Leasing Corporation from 1967 through 1972. He is a past Vice President and
Director of the Equipment Leasing Association (the industry trade association)
and a founder, past officer and Director of the Eastern Association of Equipment
Lessors.
Robert J. Lemenze, Jr. has served as President of the Manager since
being appointed/elected on February 23, 1999. Mr. Lemenze was elected President
and Chief Operating Officer of Copelco Capital in January 1997. Prior to this he
served as Vice President of Sales and head of the Document Imaging Sales Group
since joining Copelco Capital in 1987.
John Hakemian has served as Director since being elected on February
23, 1999. For the last five years, Mr. Hakemian has served, initially, as the
chief financial officer for a subsidiary of Itochu International (the Issuer's
ultimate parent company in the United States) and, more recently, as the Vice
President - Finance of Itochu International Enterprise.
Nicholas Antonaccio has served as Vice President - Finance and
Treasurer since being elected on February 23, 1999. Mr. Antonaccio joined
Copelco Capital as a Senior Vice President and Chief Financial Officer in
September 1995. He formerly served as the Treasurer of Concord Leasing Company.
Tadeyuki Seki has served as Director since being elected on February
23, 1999. For the last six months, Mr. Seki has served as the Vice President and
Treasurer of Itochu International and for the year and a half prior, as
Assistant Senior Manager and for the three years prior to that, as General
Manager of the Credit Finance Department of the Itochu Corporation in Japan.
Stephen W. Shippie has served as Vice President since being elected on
February 23, 1999. For the last five years, Mr. Shippie has served as the Vice
President-Finance of Copelco Financial.
Spencer Lempert has served as Secretary since being elected on February
23, 1999. For the last five years, Mr. Lempert has served as the General Counsel
for Copelco Financial.
None of the above-listed directors and officers of the Manager will be
compensated directly by the Issuer or the Manager nor with any funds or assets
of the Issuer or the Manager nor will any such directors and officers receive
compensation in the capacities in which they act for the Manager of the Issuer.
Description of the Notes
The ___% Class A-1 Lease-Backed Notes (the "Class A-1 Notes"), ____%
Class A-2 Lease-Backed Notes (the "Class A-2 Notes"), ___% Class A-3
Lease-Backed Notes (the "Class A-3 Notes"), % Class A-4 Lease-Backed Notes (the
"Class A-4 Notes") and ____% Class A-5 Lease-Backed Notes (the "Class A-5 Notes,
together with the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes, the "Class A Notes"), ____% Class B Lease-Backed Notes (the "Class B
Notes"), _____% Class C Lease-Backed Notes (the "Class C Notes") and _____%
Class D Lease-Backed Notes (the "Class D Notes", together with the Class A
Notes, the Class B Notes and the Class C Notes, the "Offered Notes") and the %
Class E Lease-Backed Notes (the "Class E Notes", together with the Offered
Notes, the "Notes") will be issued pursuant to the Indenture (the "Indenture")
between the Issuer and the Trustee. The following statements with respect to the
Notes is a summary of all material terms relating to a description of the
Offered Notes. However, investors in the Offered Notes should review the
Indenture, the form of which is filed as an exhibit to the registration
statement of which this Prospectus forms a part.
26
<PAGE> 29
Whenever any particular section of the Indenture or any term used therein is
referred to, the section in the Indenture or the term used therein should be
reviewed by you in order to fully understand this offering.
The Offered Notes represent secured debt obligations of the Issuer
secured by the Pledged Assets and the privately placed Class E Notes represent
subordinated debt obligations of the Issuer secured by certain assets in the
Pledged Assets as provided in the related Indenture. The Class E Notes are
subordinated to the Offered Notes for the purpose of, among other things,
offsetting losses and other shortfalls. Neither represents an interest in or
recourse obligation of Copelco Capital or any of its other affiliates other than
the Issuer. The Issuer is a Delaware limited liability company with limited
assets. Consequently, Noteholders must rely solely upon the Leases, the
interests in the Equipment, funds on deposit in the Collection Account and the
Reserve Account, for payment of principal of and interest on the Offered Notes.
The combined aggregate principal amount of the Class A Notes, the Class
B Notes, the Class C Notes, the Class D Notes and the Class E Notes will
comprise the initial principal amount (the "Initial Principal Amount") of the
Notes. The Discounted Present Value of the Leases, at any given time, shall
equal the future remaining scheduled payments from the related Leases (including
Non-Performing Leases), discounted at the Discount Rate, as set forth in the
Indenture.
The Notes will bear interest from the Issuance Date at the applicable
interest rate for the respective class as set forth below. The Interest Rate is
calculated on the basis of a year of 360 days comprised of twelve 30-day months,
except in the case of the Class A-1 Notes, for which interest will be calculated
on the basis of a year of 360 days and the actual number of days in such
interest accrual period, payable on the fifteenth day of each month (or if such
day is not a business day the next succeeding business day), to the person in
whose name the Note was registered at the close of business on the preceding
Record Date (as defined herein). The interest rate for the Notes is as follows:
____% per annum on the Class A-1 Notes (the "Class A-1 Interest Rate"), ____%
per annum on the Class A-2 Notes (the "Class A-2 Interest Rate"), ____% per
annum on the Class A-3 Notes (the "Class A-3 Interest Rate"), ____% per annum on
the Class A-4 Notes (the "Class A-4 Interest Rate"), _____% per annum on the
Class A-5 Notes (the "Class A-5 Interest Rate"), ____% per annum on the Class B
Notes (the "Class B Interest Rate") , ____% per annum on the Class C Notes (the
"Class C Interest Rate"), ____% per annum on the Class D Notes (the "Class D
Interest Rate") and ____% per annum on the Class E Notes (the "Class E Interest
Rate"). With respect to any particular Class, the "Interest Rate" refers to the
applicable rate indicated in the immediately preceding sentence.
Principal will be payable as set forth under "Distributions on Notes."
Notes may be presented to the corporate trust office of the Trustee for
registration of transfer or exchange (Section 2.03). Notes may be exchanged
without a service charge, but the Issuer may require payment to cover taxes or
other governmental charges (Section 2.03).
Book-Entry Registration. The holders of the Class A-1 Notes (the "Class
A-1 Noteholders"), the holders of the Class A-2 Notes (the "Class A-2
Noteholders"), the holders of the Class A-3 Notes (the "Class A-3 Noteholders"),
the holders of the Class A-4 Notes ( the "Class A-4 Noteholders"), the holders
of the Class A-5 Notes (the "Class A-5 Noteholders," together with the Class A-1
Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, and the Class
A-4 Noteholders, the "Class A Noteholders"), the holders of the Class B Notes
(the "Class B Noteholders"), the holders of the Class C Notes (the "Class C
Noteholders") and the holders of the Class D Notes the ("Class D Noteholders,"
together with the Class A Noteholders, the Class B Noteholders and the Class C
Noteholders, the "Offered Noteholders") may hold their notes through The
Depository Trust Company ("DTC") (in the United States) or Cedel Bank ("CEDEL")
and the Euroclear System ("Euroclear") (in Europe) if they are participants of
such systems, or indirectly through organizations which are participants in such
systems.
Cede & Co. ("Cede"), as nominee for DTC, will hold the global Class A
Note or Notes, global Class B Note or Notes, global Class C Note or Notes and
the global Class D Note or Notes. CEDEL and Euroclear will hold omnibus
positions on behalf of their participants through customers' securities accounts
in CEDEL's and Euroclear's names on the books of their respective Depositaries
(as defined herein) which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC. Citibank
will act as depositary for CEDEL, and Morgan Guaranty Trust will act as
depositary for Euroclear (in such capacities, the "Depositaries").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("Participants") and
facilitate the settlement of securities transactions
27
<PAGE> 30
between Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of notes.
Participants include the Underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants (as defined herein) and Euroclear
Participants (as defined herein) will occur in accordance with their respective
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected through
DTC in accordance with DTC rules on behalf of the relevant European
international clearing systems by its Depositary. Cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of securities by or through a Cedel Participant
or a Euroclear Participant to a Participant will be received with value on the
DTC settlement date but will be available in the relevant Cedel or Euroclear
cash account only as of the business day following settlement in DTC. For
information with respect to tax documentation procedures relating to the Offered
Notes, see "Material Federal Income Tax Considerations."
Offered Noteholders that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Offered Notes may do so only through Participants and Indirect
Participants. In addition, Offered Noteholders will receive all distributions of
principal and interest on the Offered Notes from the Trustee through DTC and its
Participants. Under a book-entry format, Offered Noteholders will receive
payments after the related Distribution Date, as the case may be, because, while
payments are required to be forwarded to Cede, as nominee for DTC, on each such
date, DTC will forward such payments to its Participants which thereafter will
be required to forward them to Indirect Participants or holders of beneficial
interests in the Offered Notes. It is anticipated that the only Noteholder of
the Offered Notes will be Cede, as nominee of DTC, and that holders of
beneficial interests in the Offered Notes, under the Indenture will only be
permitted to exercise rights under the Indenture indirectly through DTC and its
Participants who in turn will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Offered Notes and is
required to receive and transmit distributions of principal of and interest on
the Offered Notes. Participants and Indirect Participants with which holders of
beneficial interests in the Offered Notes have accounts similarly are required
to make book-entry transfers and receive and transmit such payments on behalf of
these respective holders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of holders of
beneficial interests in the Offered Notes to pledge Offered Notes to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such Offered Notes, may be limited due to the lack of a Definitive
Note for such Offered Notes.
DTC has advised the Issuer that it will take any action permitted to be
taken by a Class A Noteholder, Class B Noteholder, Class C Noteholder or Class D
Noteholder under the Indenture only at the direction of one or more Participants
to whose account with DTC the Class A Notes, Class B Notes, Class C Notes or
Class D Notes are credited. Additionally, DTC has advised the Issuer that it may
take actions with respect to the applicable Offered Notes that conflict with
other of its actions with respect thereto.
28
<PAGE> 31
CEDEL is incorporated under the laws of Luxembourg as a
professional depository. CEDEL holds securities for its participating
organizations ("CEDEL Participants") and facilitates the clearance and
settlement of securities transactions between CEDEL Participants through
electronic book-entry changes in accounts of CEDEL Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in CEDEL in any of 38 currencies, including United States dollars. CEDEL
provides to CEDEL Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. CEDEL interfaces with domestic markets in
several countries. As a professional depository, CEDEL is subject to regulation
by the Luxembourg Monetary Institute. CEDEL Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters. Indirect access to CEDEL
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a CEDEL
Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 37 currencies,
including United States dollars. Euroclear includes various other services,
including securities lending and borrowing and interfaces with domestic markets
in several countries generally similar to the arrangements for cross-market
transfers with DTC described above. Euroclear is operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York (the "Euroclear
Operator"), under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator and all Euroclear securities clearance accounts and Euroclear
cash accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York
banking corporation which is a member bank of the Federal Reserve System. As
such, it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Euroclear, withdrawals
of securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Terms and Conditions
only on behalf of Euroclear Participants, and has no record of or relationship
with persons holding through Euroclear Participants.
Distributions with respect to Offered Notes held through CEDEL
or Euroclear will be credited to the cash accounts of CEDEL Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Material Federal Income Tax Considerations." CEDEL or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by an Offered Noteholder under the Indenture on behalf of a CEDEL
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to its Depositary's ability to effect such actions on
its behalf through DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Notes among participants
of DTC, CEDEL and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
DTC management is aware that some computer applications,
systems, and the like for processing data ("SYSTEMS") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its Participants and other
members of the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and interest payments) to security
holders, book-
29
<PAGE> 32
entry deliveries, and settlement of trades within DTC ("DTC Services"), continue
to function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to properly perform its services is
also dependent upon other parties, including, but not limited to, issuers and
their agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information and the
provision of services, including telecommunications and electrical utility
service providers, among others. DTC has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (i) impress upon them the importance of such services
being Year 2000 compliant; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
additional, DTC is in the process of developing such contingency plans as it
deems appropriate.
According to DTC, the foregoing information with respect to
DTC has been provided to the Industry for informational purposes only and is not
intended to serve as a representation, warranty, or contract modification of any
kind.
DEFINITIVE NOTES. The Offered Notes will be issued in fully
registered, authenticated form to Beneficial Owners or their nominees (the
"Definitive Notes"), rather than to DTC or its nominee, only if (a) the Issuer
advises the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Depository with respect to such
Notes, and the Trustee or the Issuer is unable to locate a qualified successor
or (b) the Issuer at its option elects to terminate the book-entry system
through DTC (Section 2.07).
Upon the occurrence of any of the events described in the
immediately preceding paragraph, the Trustee is required to notify all
Beneficial Owners through DTC of the availability of Definitive Notes for such
Class. Upon surrender by DTC of the Definitive Note representing the Notes and
instructions for reregistration, the Trustee will issue such Definitive Notes,
and thereafter the Trustee will recognize the holders of such Definitive Notes
as Offered Noteholders under the related Indenture (the "Holders") (Section
2.07). The Trustee will also notify the Holders of any adjustment to the Record
Date with respect to the Notes necessary to enable the Trustee to make
distributions to Holders of the Definitive Notes for such Class of record as of
each Payment Date.
Additionally, upon the occurrence of any such event described
above, distribution of principal of and interest on the Offered Notes will be
made by the Trustee directly to Holders in accordance with the procedures set
forth herein and in the Indenture. Distributions will be made by check, mailed
to the address of such Holder as it appears on the Note register upon at least
10 days notice to Noteholders for such Class; however, the final payment on any
Note (whether the Definitive Notes or the Note for such Class registered in the
name of Cede representing the Notes of such Class) will be made only upon
presentation and surrender of such Note at the office or agency specified in the
notice of final distribution to Noteholders.
Definitive Notes of each Class will be transferable and
exchangeable at the offices of the Trustee or its agent in New York, New York,
which the Trustee shall designate on or prior to the issuance of any Definitive
Notes with respect to such Class. No service charge will be imposed for any
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith (Section 2.03(f)).
INITIAL PRINCIPAL AMOUNT. $139,000,000 for the Class A-1 Notes
(the "Class A-1 Initial Principal Amount"), $95,000,000 for the Class A-2 Notes
(the "Class A-2 Initial Principal Amount"), $110,000,000 for the Class A-3 Notes
(the "Class A-3 Initial Principal Amount"), $90,000,000 for the Class A-4 Notes
(the "Class A-4 Initial Principal Amount"), $75,613,000 for the Class A-5 Notes
(the "Class A-5 Initial Principal Amount," together with the Class A-1 Initial
Principal Amount, the Class A-2 Initial Principal Amount, the Class A-3 Initial
Principal Amount and the Class A-4 Initial Principal Amount, the "Class A
Initial Principal Amount"), $13,029,000 for the Class B Notes (the "Class B
Initial Principal Amount"), $10,134,000 for the Class C Notes (the "Class C
Initial Principal Amount"), $15,925,000 for the Class D Notes (the "Class D
Initial Principal Amount") and $17,373,000 for the Class E Notes (the "Class E
Initial Principal Amount"). See "Description of the Notes."
DISCOUNTED PRESENT VALUE OF THE LEASES. The discounted present
value of the leases (the "Discounted Present Value of the Leases"), at any given
time, shall equal the future remaining scheduled payments (not including
delinquent amounts, Excess Copy Charges, Maintenance Charges and Fee Per Scan
Charges) from the Leases (including non-performing leases), discounted at a rate
equal to ______%, (the "Discount Rate") which rate is equal to the sum of (a)
the weighted average interest rate of the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B
Notes, the Class C Notes, the Class D Notes
30
<PAGE> 33
and the Class E Notes, each weighted by (i) the initial principal amount of the
Class A-1 Notes, the initial principal amount of the Class A-2 Notes, the
initial principal amount of the Class A-3 Notes, the initial principal amount of
the Class A-4 Notes, the initial principal amount of the Class A-5 Notes, the
initial principal amount of the Class B Notes, the initial principal amount of
the Class C Notes, the initial principal amount of the Class D Notes, and the
initial principal amount of the Class E Notes, as applicable, and (ii) the
expected weighted average life (under a zero prepayment, and no loss scenario)
of each class of Notes, as applicable, and (b) the servicing fee rate of 0.75%
per annum. The discounted present value of the Performing Leases (the
"Discounted Present Value of the Performing Leases") equals the Discounted
Present Value of the Leases, reduced by all future remaining scheduled payments
on the Non-Performing Leases (not including delinquent amounts, Excess Copy
Charges, Maintenance Charges or Fee Per Scan Charges), discounted at the
Discount Rate. See "Description of the Notes--General." Each of the Indenture
and the Assignment and Servicing Agreement will provide that any calculation of
future remaining scheduled payments made on a Determination Date or with respect
to a Payment Date will be calculated after giving effect to any payments
received prior to such date of calculation to the extent such payments relate to
scheduled payments due and payable by the Lessees with respect to the related
Due Period (defined herein) and all prior Due Periods. "Statistical Discounted
Present Value of the Leases" means an amount equal to the future remaining
scheduled payments (not including delinquent amounts, Excess Copy Charges,
Maintenance Charges and Fee Per Scan Charges) from the Leases as of the Cut-Off
Date, discounted at a rate equal to 6.75% (the "Statistical Discount Rate"). The
Statistical Discounted Present Value of the Leases as of the Cut-Off Date is
$579,105,376.99 and will not vary materially from the Discounted Present Value
of the Leases as of the Cut-Off Date. See "The Series Pool--The Equipment." The
aggregate Discounted Present Value of the Leases as of the Cut-Off Date,
calculated at the Discount Rate is $_____________.
"Non-Performing Leases" are (a) Leases that have become more
than 123 days delinquent or (b) Leases that have been accelerated by the
Servicer or Leases that the Servicer has determined to be uncollectible in
accordance with its customary practices. See "The Series Pool--The Leases." The
Transferor will represent in the Assignment and Servicing Agreement that at the
time of transfer of any Lease to Copelco Capital Funding LLC 99-1, such Lease
was not a Non-Performing Lease.
EXPECTED MATURITY; STATED MATURITY. The expected maturity
dates with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes and Class A-5 Notes are the Payment Dates on January 15, 2000,
October 15, 2000, September 15, 2001, October 15, 2002, and December 15, 2003,
respectively. The expected maturity date with respect to the Class B Notes,
Class C Notes and Class D Notes are the Payment Dates on January 15, 2004,
February 15, 2004 and June 15, 2004, respectively. The stated maturity date with
respect to the Class A-1 Notes is the Payment Date on March 15, 2000 (the "Class
A-1 Stated Maturity Date"), the stated maturity date with respect to the Class
A-2 Notes is the Payment Date on March 15, 2001 (the "Class A-2 Stated Maturity
Date"), the stated maturity date with respect to the Class A-3 Notes is the
Payment Date on March 15, 2002 (the "Class A-3 Stated Maturity Date"), the
stated maturity date with respect to the Class A-4 Notes is the Payment Date on
April 15, 2003 (the "Class A-4 Stated Maturity Date"), the stated maturity with
respect to the Class A-5 Notes is the Payment Date on June 15, 2004 (the "Class
A-5 Stated Maturity Date"), the stated maturity date with respect to the Class B
Notes is the Payment Date on January 15, 2005 (the "Class B Stated Maturity
Date"), the stated maturity date with respect to the Class C Notes is the
Payment Date on February 15, 2005 (the "Class C Stated Maturity Date") and the
stated maturity date with respect to the Class D Notes is the Payment Date on
June 15, 2005 (the "Class D Stated Maturity Date"). However, if all payments on
the Leases are made as scheduled, final payment with respect to the Notes would
occur prior to stated maturity.
DETERMINATION DATE. The fifth day prior to each Payment Date
(or the preceding business day, if such day is not a business day). On such date
(each, a "Determination Date"), the Servicer will determine the amount of
payments received on the Leases in respect of the immediately preceding calendar
month (each such period, a "Due Period") which will be available for
distribution on the Payment Date. See "Description of the Notes--Distributions
on Notes."
PAYMENT DATE. Payments on the Notes will be made on the
fifteenth day of each month (or if such day is not a business day, the next
succeeding business day), commencing on April 15, 1999, to holders of record on
the last day of the immediately preceding calendar month (each, a "Record
Date"). See "Description of the Notes--Distributions on Notes."
INTEREST PAYMENTS. On each Payment Date, the interest due (the
"Interest Payments") with respect to the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes since the last
Payment Date will be the interest that has accrued on such Notes since the last
Payment Date (or in the case of the first Payment Date, since the Issuance Date)
(the "Interest Accrual Period") at the applicable Interest Rate applied to the
then unpaid
31
<PAGE> 34
principal amounts (the "Outstanding Principal Amounts") of the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes, respectively, after giving effect to payments of principal to the Class
A-1 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, the Class
A-4 Noteholders, the Class A-5 Noteholders, the Class B Noteholders, the Class C
Noteholders, the Class D Noteholders and the Class E Noteholders, respectively,
on the preceding Payment Date. See "Description of the Notes--General" and
"Distributions on Notes."
PRINCIPAL PAYMENTS. For each Payment Date, each of the
Class A Noteholders, the Class B Noteholders, the Class C Noteholders, the Class
D Noteholders and the Class E Noteholders will be entitled to receive payments
of principal ("Principal Payments"), to the extent funds are available therefor,
in the priorities set forth in the Indenture and described herein below and
under "Description of the Notes--Distributions on Notes." On each Payment Date,
to the extent funds are available therefor, the Principal Payment will be paid
to the Noteholders in the following priority: (a) (i) to the Class A-1
Noteholders only, until the Outstanding Principal Amount on the Class A-1 Notes
has been reduced to zero, the Class A Principal Payment, then (ii) to the Class
A-2 Noteholders only, until the Outstanding Principal Amount on the Class A-2
Notes has been reduced to zero, the Class A Principal Payment, then (iii) to the
Class A-3 Noteholders only, until the Outstanding Principal Amount on the Class
A-3 Notes has been reduced to zero, the Class A Principal Payment, (iv) to the
Class A-4 Noteholders, until the Outstanding Principal Amount on the Class A-4
Notes has been reduced to zero, the Class A Principal Payment and (v) to the
Class A-5 Noteholders, until the Outstanding Principal Amount on the Class A-5
Notes has been reduced to zero, the Class A Principal Payment, (b) to the Class
B Noteholders, the Class B Principal Payment, (c) to the Class C Noteholders,
the Class C Principal Payment, (d) to the Class D Noteholders, the Class D
Principal Payment, (e) to the Class E Noteholders, the Class E Principal Payment
and (f) to the extent that the Class B Floor exceeds the Class B Target Investor
Principal Amount, the Class C Floor exceeds the Class C Target Investor
Principal Amount, the Class D Floor exceeds the Class D Target Investor
Principal Amount and/or the Class E Floor exceeds the Class E Target Investor
Principal Amount, Additional Principal (defined below) shall be distributed,
sequentially, as an additional principal payment on the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes as
applicable, until the Outstanding Principal Amount of each Class has been
reduced to zero.
"Additional Principal" with respect to each Payment Date
equals (a) zero if each of the Class Target Investor Principal Amounts for
Classes B, C, D and E exceed their respective Class Floors on such Payment Date
and (b) in each other case, the excess, if any, of (i)(A) the Outstanding
Principal Balance of the Notes plus the Overcollateralization Balance as of the
immediately preceding Payment Date after giving effect to payments on such
Payment Date, minus (B) the Discounted Present Value of the Performing Leases as
of the related Determination Date, over (ii) the sum of the Class A Principal
Payment, the Class B Principal Payment, the Class C Principal Payment, the Class
D Principal Payment and the Class E Principal Payment to be paid on such Payment
Date.
The "Class A Principal Payment" shall equal (a) while the
Class A-1 Notes are outstanding, (i) on all Payment Dates prior to the March
2000 Payment Date, the lesser of (1) the amount necessary to reduce the
Outstanding Principal Amount on the Class A-1 Notes to zero and (2) the
difference between (A) the Discounted Present Value of the Performing Leases as
of the previous Determination Date and (B) the Discounted Present Value of the
Performing Leases as of the related Determination Date, and (ii) on and after
the March 2000 Payment Date, the entire Outstanding Principal Amount on the
Class A-1 Notes and (b) after the Class A-1 Notes have been paid in full, the
amount necessary to reduce the aggregate Outstanding Principal Amount on the
Class A Notes to the Class A Target Investor Principal Amount.
The "Class B Principal Payment" shall equal (a) while the
Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal
Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to
reduce the Outstanding Principal Amount of the Class B Notes to the greater of
the Class B Target Investor Principal Amount and the Class B Floor.
The "Class C Principal Payment" shall equal (a) while the
Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal
Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to
reduce the Outstanding Principal Amount of the Class C Notes to the greater of
the Class C Target Investor Principal Amount and the Class C Floor.
The "Class D Principal Payment" shall equal (a) while the
Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal
Amount on the Class A-1 Notes has been reduced to zero, the amount 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.
32
<PAGE> 35
The "Class E Principal Payment" shall equal (a) while the
Class A-1 Notes are outstanding, zero and (b) after the Outstanding Principal
Amount on the Class A-1 Notes has been reduced to zero, the amount necessary to
reduce the Outstanding Principal Amount of the Class E Notes to the greater of
the Class E Target Investor Principal Amount and the Class E Floor.
The "Class A Target Investor Principal Amount" with respect to
each Payment Date is an amount equal to the product of (a) the Class A
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
The "Class B Target Investor Principal Amount" with respect to
each Payment Date is an amount equal to the product of (a) the Class B
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
The "Class C Target Investor Principal Amount" with respect to
each Payment Date is an amount equal to the product of (a) the Class C
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
The "Class D Target Investor Principal Amount" with respect to
each Payment Date is an amount equal to the product of (a) the Class D
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
The "Class E Target Investor Principal Amount with respect to
each Payment Date is an amount equal to the product of (a) the Class E
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
The "Class Floors" means the Class B Floor, the Class C Floor,
the Class D Floor or the Class E Floor.
The "Class Target Investor Principal Amounts" means the Class
A Target Investor Principal Amount or the Class B Target Investor Principal
Amounts or the Class C Target Investor Principal Amount or the Class D Target
Investor Principal Amount or the Class E Target Investor Principal Amounts,
respectively.
The "Class A Percentage" will be equal approximately to
84.21%. The "Class B Percentage" will be equal approximately to 2.96%. The
"Class C Percentage" will be equal approximately to 2.30%. The "Class D
Percentage" will be equal approximately to 3.62%. The "Class E Percentage" will
be equal approximately to 3.95%.
The "Class B Floor" with respect to each Payment Date means
(a) 2.7% of the initial Discounted Present Value of the Leases as of the Cut-Off
Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date,
minus (c) the sum of the Outstanding Principal Amount of the Class C Notes, the
Outstanding Principal Amount of the Class D Notes, the Outstanding Principal
Amount of the Class E Notes, and the Overcollateralization Balance as of the
immediately preceding Payment Date after giving effect to all principal payments
made on that day, minus (d) the amount on deposit in the Reserve Account after
giving effect to withdrawals to be made on such Payment Date.
The "Class C Floor" with respect to each Payment Date means
(a) 2.2% of the initial Discounted Present Value of the Leases as of the Cut-Off
Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date,
minus (c) the sum of the Outstanding Principal Amount of the Class D Notes, the
Outstanding Principal Amount of the Class E Notes, and the Overcollateralization
Balance as of the immediately preceding Payment Date after giving effect to all
principal payments made on that day, minus (d) the amount on deposit in the
Reserve Account after giving effect to withdrawals to be made on such Payment
Date; provided, however, that if the Outstanding Principal Amount of the Class B
Notes is less than or equal to the Class B Floor on such Payment Date, the Class
C Floor will equal the Outstanding Principal Amount of the Class C Notes
utilized in the calculation of the Class B Floor for such Payment Date.
The "Class D Floor" with respect to each Payment Date means
(a) 1.8% of the initial Discounted Present Value of the Leases as of the Cut-Off
Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date,
minus (c) the sum of the Outstanding Principal Amount of the Class E Notes, and
the Overcollateralization Balance as of the immediately preceding Payment Date
after giving effect to all principal payments made on that day, minus (d) the
amount on deposit in the Reserve Account after giving effect to withdrawals to
be made on such Payment Date; provided, however, that if the Outstanding
Principal Amount of the Class C Notes is less than or equal to the Class C Floor
on such Payment Date, the Class D Floor will equal the
33
<PAGE> 36
Outstanding Principal Amount of the Class D Notes utilized in the calculation of
the Class C Floor for such Payment Date.
The "Class E Floor" with respect to each Payment Date means
(a) 1.2% of the initial Discounted Present Value of the Leases as of the Cut-Off
Date, plus (b) the Cumulative Loss Amount with respect to such Payment Date,
minus (c) the Overcollateralization Balance as of the immediately preceding
Payment Date after giving effect to all principal payments made on that day,
minus (d) the amount on deposit in the Reserve Account after giving effect to
withdrawals to be made on such Payment Date; provided, however, that if the
Outstanding Principal Amount of the Class D Notes is less than or equal to the
Class D Floor on such Payment Date, the Class E Floor will equal the Outstanding
Principal Amount of the Class E Notes utilized in the calculation of the Class D
Floor for such Payment Date.
The "Overcollateralization Balance" with respect to each
Payment Date is an amount equal to the excess, if any, of (a) the Discounted
Present Value of Performing Leases as of the related Determination Date over (b)
the Outstanding Principal Amount of the Notes as of such Payment Date after
giving effect to all principal payments made on that day.
The "Cumulative Loss Amount" with respect to each Payment Date
is an amount equal to the excess, if any, of (a) the total of (i) the
Outstanding Principal Amount of the Notes as of the immediately preceding
Payment Date after giving effect to all principal payments made on that day,
plus (ii) the Overcollateralization Balance as of the immediately preceding
Payment Date, minus (iii) the lesser of (A) the Discounted Present Value of the
Performing Leases as of the Determination Date relating to the immediately
preceding Payment Date minus the Discounted Present Value of the Performing
Leases as of the related Determination Date and (B) Available Funds remaining
after the payment of amounts owing the Servicer and in respect of interest on
the Notes on such Payment Date, over (b) the Discounted Present Value of the
Performing Leases as of the related Determination Date.
COLLECTION ACCOUNT. The Trustee will establish and maintain an
Eligible Account (as defined herein) (the "Collection Account") into which the
Servicer will deposit all Lease Payments, Casualty Payments, Termination
Payments, certain proceeds from repurchases by Copelco Capital of Leases as a
result of breaches of representations and warranties, and recoveries from
Non-Performing Leases to the extent Copelco Capital has not substituted a
Substitute Lease for such Non-Performing Lease (except to the extent required to
reimburse unreimbursed Servicer Advances) (each as defined herein) on or in
respect of each Lease included in the Series Pool within two Business Days of
receipt thereof; provided that Residual Realizations (as defined herein) will
not be deposited in the Collection Account. All Lease Payments, Casualty
Payments, Termination Payments and other payments relating to a Lease received
and so deposited in the Collection Account shall constitute property of the
Issuer, securing payments on the related Notes (Section 3.02(a)).
An "Eligible Account" means either (a) an account maintained
with a depository institution or trust company acceptable to each of the Rating
Agencies, or (b) a trust account or similar account maintained with a federal or
state chartered depository institution, which may be an account maintained with
the Trustee.
A "Casualty Payment" is any payment pursuant to a Lease on
account of the loss, theft, condemnation, governmental taking, destruction, or
damage beyond repair (each, a "Casualty") of any item of Equipment subject
thereto which results, in accordance with the terms of the Lease, in a reduction
in the number or amount of any future Lease Payments due thereunder or in the
termination of the Lessee's obligation to make future Lease Payments thereunder.
A "Lease Payment" is each periodic installment of rent payable
by a Lessee under a Lease. Casualty Payments, Termination Payments, prepayments
of rent required pursuant to the terms of a Lease at or before the commencement
of the Lease, payments becoming due before the applicable Cut-Off Date and
supplemental or additional payments required by the terms of a Lease with
respect to taxes, insurance, maintenance (including, without limitation any
Maintenance Charges), or other specific charges, (including, without limitation,
any Excess Copy Charges and Fee Per Scan Charges), shall not be Lease Payments
hereunder.
A "Termination Payment" is a payment payable by a Lessee under
a Lease upon the early termination of such Lease (but not on account of a
casualty or a Lease default) which may be agreed upon by the Servicer, acting in
the name of the Issuer, and the Lessee.
The Trustee shall deposit within two Business Days of receipt
the following funds, as received, into the Collection Account (Section 3.03(a)),
including any funds deposited into the Collection Account from the Reserve
Account, ("Available Funds"):
34
<PAGE> 37
(a) Lease Payments due during the prior Due Period (net of
any Excess Copy Charges, Maintenance Charges and Fee
Per Scan Charges);
(b) recoveries from Non-Performing Leases to the extent
Copelco Capital has not substituted Substitute Leases
for such Non-Performing Leases (except to the extent
required to reimburse unreimbursed Servicer Advances);
(c) late charges received on delinquent Lease payments not
advanced by the Servicer;
(d) proceeds from repurchases by Copelco Capital of Leases
as a result of breaches of representations and
warranties to the extent Copelco Capital has not
substituted Substitute Leases for such Leases other
than, with respect to a Warranty Lease, the Residual
Warranty Payments. "Residual Warranty Payments" means
the excess of (a) the repurchase price related to the
Warranty Lease over (b) the Discounted Present Value of
the remaining Lease Payments related to the Warranty
Lease as of the beginning of the Due Period relating to
such date of determination (plus any amounts previously
due and unpaid);
(e) proceeds from investment of funds in the Collection
Account and the Reserve Account, if any; (f) Casualty
Payments other than residual casualty payments
("Residual Casualty Payments") which are, at any date
of determination with respect to a Lease, the excess of
(a) the Casualty Payment related to the Lease over (b)
the Discounted Present Value of the remaining Lease
Payments related to the Lease as of the beginning of
the Due Period relating to such date of determination
(plus any amounts previously unpaid);
(g) Servicer Advances (as defined herein);
(h) Termination Payments to the extent the Issuer does not
reinvest such Termination Payments in Additional Leases
(as defined herein) other than Residual Prepayments (as
defined below); and
(i) proceeds received once the Issuer exercises its right
to redeem the Notes;
(j) to the extent there occurs an Available Funds Shortfall
(as defined below), funds, if any, on deposit in the
Reserve Account to the extent of such Available Funds
Shortfall.
Available Funds will not include (a) cash flows realized from
the sale or release of the Equipment following the expiration dates of the
Leases, other than Equipment subject to Non-Performing Leases, (b) Residual
Warranty Payments, (c) Residual Casualty Payments and (d) Residual Prepayments
(as defined below) ("Residual Realizations").
"Residual Prepayments" means, at any date of determination
with respect to a Terminated Lease, the excess of (a) the payment related to the
Terminated Lease over (b) the Discounted Present Value of the remaining Lease
Payments of the Terminated Lease as of the beginning of the Due Period relating
to such date of determination (plus any amounts previously due and unpaid).
RESERVE ACCOUNT. The Trustee will establish and maintain an
Eligible Account (the "Reserve Account"). On the Issuance Date, the Issuer will
make an initial deposit in an amount equal to 1% of the Discounted Present Value
of the Leases as of the Cut-Off Date into the Reserve Account. In the event that
Available Funds (exclusive of amounts on deposit in the Reserve Account) are
insufficient to pay the amounts owing the Servicer, Interest Payments (as
defined herein) on the Notes and the Class A Principal Payment, the Class B
Principal Payment, the Class C Principal Payment, the Class D Principal Payment
and the Class E Principal Payment (such payments, the "Required Payments" and
such shortfall, an "Available Funds Shortfall"), the Trustee will withdraw from
the Reserve Account an amount equal to the lesser of the funds on deposit in the
Reserve Account (the "Available Reserve Amount") and such deficiency. In
addition, on each Payment Date, Available Funds remaining after the payment of
the Required Payments will be deposited into the Reserve Account to the extent
that the Required Reserve Amount exceeds the Available Reserve Amount. The
"Required Reserve Amount" equals the lesser of (a) 1.00% of the Discounted
Present Value of the Leases as of the Cut-Off Date and (b) the then unpaid
principal amounts (the "Outstanding Principal Amount") of the Notes. Any amounts
on deposit in the Reserve Account in excess of the Required Reserve Amount will
be released to the Issuer (Section 3.05(c)).
35
<PAGE> 38
DISTRIBUTIONS ON NOTES. Payments on the Notes will commence on
April 15, 1999. On each Determination Date, the Servicer will determine the
Available Funds and the Required Payments.
For each Payment Date, the interest due with respect to the
Notes will be the interest that has accrued on such Notes since the last Payment
Date (or, in the case of the first Payment Date, since the Issuance Date), at
the applicable Interest Rates applied to the Outstanding Principal Amount of
each Class, after giving effect to payments of principal to Noteholders on the
preceding Payment Date (or, in the case of the first Payment Date, the Issuance
Date), plus all previously accrued and unpaid interest on the Notes (Section
2.01(c)). Funds in the Collection Account, together with reinvestment earnings
thereon, will be used by the Trustee to make required payments of principal and
interest on the related Notes (Section 3.03(b)).
For each Payment Date, Principal Payments due with respect to
the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and
the Class E Notes will be the Class A Principal Payment, the Class B Principal
Payment, the Class C Principal Payment, the Class D Principal Payment and the
Class E Principal Payment, respectively. In addition, to the extent that the
Class B Floor exceeds the Class B Target Investor Principal Amount, the Class C
Floor exceeds the Class C Target Investor Principal Amount, the Class D Floor
exceeds the Class D Target Investor Principal Amount and/or the Class E Floor
exceeds the Class E Target Investor Principal Amount, Additional Principal shall
be distributed, sequentially, as an additional principal payment on the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class A-5 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes until the Outstanding Principal Amount of each Class has been
reduced to zero (Section 3.03(b)).
Unless an Event of Default (as defined herein) and
acceleration of the Notes has occurred, on or before each Payment Date, the
Servicer will instruct the Trustee to apply or cause to be applied the Available
Funds to make the following payments in the following priority (Section
3.03(b)):
(a) to pay the Servicing Fee;
(b) to reimburse unreimbursed Servicer Advances (as defined
herein) in respect of a prior Payment Date;
(c) to make Interest Payments, owing on the Class A Notes
concurrently to the Class A-1 Noteholders, Class A-2
Noteholders, Class A-3 Noteholders, Class A-4
Noteholders and Class A-5 Noteholders;
(d) to make Interest Payments on the Class B Notes;
(e) to make Interest Payments on the Class C Notes;
(f) to make Interest Payments on the Class D Notes;
(g) to make Interest Payments on the Class E Notes;
(h) to make the Class A Principal Payment to (i) the Class
A-1 Noteholders only, until the Outstanding Principal
Amount on the Class A-1 Notes is reduced to zero, then
(ii) to the Class A-2 Noteholders only, until the
Outstanding Principal Amount on the Class A-2 Notes is
reduced to zero, then (iii) to the Class A-3
Noteholders only, until the Outstanding Principal
Amount on the Class A-3 Notes is reduced to zero, then
(iv) to the Class A-4 Noteholders, until the
Outstanding Principal Amount on the Class A-4 Notes is
reduced to zero, and finally (v) to the Class A-5
Noteholders, until the Outstanding Principal Amount on
the Class A-5 Notes is reduced to zero;
(i) to make the Class B Principal Payment to the Class B
Noteholders;
(j) to make the Class C Principal Payment to the Class C
Noteholders;
(k) to make the Class D Principal Payment to the Class D
Noteholders;
(l) to make the Class E Principal Payment to the Class E
Noteholders;
(m) to pay the Additional Principal, if any, as an
additional reduction of principal to the Class A
Noteholders, as provided in Clause (h) above, until the
Outstanding Principal
36
<PAGE> 39
Amount on all of the Class A Notes has been reduced to zero,
then to Class B Noteholders until the Outstanding Principal
Amount on the Class B Notes has been reduced to zero, then
to the Class C Noteholders until the Outstanding Principal
Amount on the Class C Notes has been reduced to zero, then
to the Class D Noteholders until the Outstanding Principal
Amount on the Class D Notes has been reduced to zero, and
finally to the Class E Noteholders, until the Outstanding
Principal Amounts on the Class E Notes has been reduced to
zero;
(n) to make a deposit to the Reserve Account in an amount equal
to the excess of the Required Reserve Amount over the
Available Reserve Amount; and
(o) to the Issuer, the balance, if any.
ADVANCES BY THE SERVICER. Prior to any Payment Date, the
Servicer may, but will not be required to, advance (each, a "Servicer Advance")
to the Trustee an amount sufficient to cover delinquencies on some or all Leases
with respect to prior Due Periods. The Servicer will be reimbursed for such
Servicer Advances from Available Funds on the following Payment Date. See
"Distribution on Notes" above.
REDEMPTION. The Issuer may, at its option, redeem the Notes,
as a whole, at their principal amount, without premium, together with interest
accrued to the date fixed for redemption if on any payment date the Discounted
Present Value of the Performing Leases is less than or equal to 5% of the
Discounted Present Value of the Leases as of the Cut-Off Date (Sections 2.01).
The Issuer will give notice of such redemption to each Noteholder and the
Trustee at least 30 days before the Payment Date fixed for such prepayment. Upon
deposit of funds necessary to effect such redemption, the Trustee shall pay the
remaining unpaid principal amount on the Notes and all accrued and unpaid
interest as of the Payment Date fixed for redemption. See "Description of the
Notes--Redemption."
EVENTS OF DEFAULT AND NOTICE THEREOF. The following events
will be defined in the Indenture as "Events of Default" with respect to the
Notes:
(a) default in making Interest Payments when such become due and
payable;
(b) default in making Principal Payments at Stated Maturity; or
(c) insolvency or bankruptcy events relating to the Issuer.
(Section 6.01)
The Indenture will provide that the Trustee shall give the
Noteholders notice of all uncured defaults known to it (the term "default" to
include the events specified above without grace periods) (Sections 6.03 and
7.02).
If an Event of Default occurs, the unpaid principal amount of
the related Notes shall automatically become due and payable together with all
accrued and unpaid interest thereon. The Trustee may, however, if the Event of
Default involves other than non-payment of principal or interest on the Notes,
not sell the related Leases and Equipment unless such sale is for an amount
greater than or equal to the Outstanding Principal Amount of the Notes unless
directed to do so by the holders of 66-2/3% of the then Outstanding Principal
Amount of the Notes (Section 6.03).
Subsequent to an Event of Default and following any
acceleration of the Notes pursuant to the Indenture, any moneys that may then be
held or thereafter received by the Trustee shall be applied in the following
order of priority, at the date or dates fixed by the Trustee and, in case of the
distribution of the entire amount due on account of principal or interest, upon
presentation of the Notes and surrender thereof:
First to the payment of all costs and expenses of collection
incurred by the Trustee and the Noteholders (including the reasonable
fees and expenses of any counsel to the Trustee and the Noteholders);
Second if the person then acting as Servicer under the
Assignment and Servicing Agreement is not Copelco Capital or an
affiliate of Copelco Capital, to the payment of all Servicer's Fees
then due to such person;
Third first, to the payment of all accrued and unpaid interest
on the Outstanding Principal Amount of the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes and Class A-5 Notes
37
<PAGE> 40
pro rata to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the date
of payment thereof at the rate per annum equal to the Class A-1 Interest
Rate, Class A-2 Interest Rate, Class A-3 Interest Rate, Class A-4
Interest Rate and Class A-5 Interest Rate respectively, second to the
payment of all accrued and unpaid interest on the Outstanding Principal
Amount of the Class B Notes to the date of payment thereof, including (to
the extent permitted by applicable law) interest on any overdue
installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to
the Class B Interest Rate, third, to the payment of all accrued and
unpaid interest on the Outstanding Principal Amount of the Class C Notes
to the date of payment thereof, including (to the extent permitted by
applicable law) interest on any overdue installment of interest and
principal from the maturity of such installment to the date of payment
thereof at the rate per annum equal to the Class C Interest Rate, fourth,
to the payment of all accrued and unpaid interest on the Outstanding
Principal Amount of the Class D Notes to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to
the Class D Interest Rate, fifth to the payment of all accrued and unpaid
interest on the Outstanding Principal Amount of the Class E Notes to the
date of payment thereof, including (to the extent permitted by applicable
law) interest on any overdue installment of interest and principal from
the maturity of such installment to the date of payment thereof at the
rate per annum equal to the Class E Interest Rate, sixth to the payment
of the Outstanding Principal Amount of the Class A-1 Notes, seventh, to
the payment of the Outstanding Principal Amount of the Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes and Class A-5 Notes pro rata to the date
of payment thereof, eighth, to the payment of the Outstanding Principal
Amount of the Class B Notes to the date of payment thereof, ninth, to the
payment of the Outstanding Principal Amount of the Class C Notes, tenth,
to the payment of the Outstanding Principal Amount of the Class D Notes,
eleventh, to the payment of the Outstanding Principal Amount of the Class
E Notes; provided, that the Noteholders may allocate such payments for
interest, principal and premium at their own discretion, except that no
such allocation shall affect the allocation of such amounts or future
payments received by any other Noteholder;
Fourth to the payment of amounts due under the Class R-1
Lease-Residual Backed Notes (the "Class R-1 Notes") and the Class R-2
Lease-Residual Backed Notes (the "Class R-2 Notes" together with the
Class R-1 Notes, the "Residual Notes");
Fifth to the payment of amounts then due the Trustee under the
Indenture; Sixth if the person then acting as servicer is Copelco Capital
or an affiliate of Copelco Capital, to the payment of all Servicer's Fees
then due to such Person; and
Seventh to the payment of the remainder, if any, to the Issuer or
any other person legally entitled thereto (Section 6.06).
The Issuer will be required to furnish annually to the Trustee, a
statement of certain officers of the Issuer to the effect that to the best of
their knowledge the Issuer is not in default in the performance and observance
of the terms of the Indenture or, if the Issuer is in default, specifying such
default (Section 8.09).
The Indenture will provide that the holders of 66-2/3% in
aggregate principal amount of the Notes then outstanding will have the right to
waive certain defaults and, subject to certain limitations, to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust power conferred on the Trustee (Sections 6.12).
The Indenture will provide that in case an Event of Default shall occur (which
shall not have been cured or waived), the Trustee will be required to exercise
such of its rights and powers under such Indenture and to use the degree of care
and skill in their exercise that a prudent man would exercise or use in the
conduct of his own affairs (Section 7.01(b)). Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under such Indenture at the request of any of the Noteholders unless they shall
have offered to the Trustee reasonable security or indemnity (Section 6.12).
Upon request of a Noteholder, the Trustee will provide information as to the
outstanding principal amount of each Class of Notes.
MODIFICATION OF THE INDENTURE. With certain exceptions, under
the Indenture, the rights and obligations of the Issuer and the rights of the
Noteholders may be modified by the Issuer with the consent of the holders of not
less than 66-2/3% in aggregate principal amount of the Notes then outstanding
under the Indenture; but no such modification may be made if it would result in
the reduction or withdrawal of the then current ratings of the outstanding notes
and no such modification may be made without the consent of the holder of
38
<PAGE> 41
each outstanding note affected thereby if it would (a) change the fixed maturity
of any Note, or the principal amount or interest amount payable thereof, or
change the priority of payment thereof or reduce the interest rate or the
principal thereon or change the place of payment where, or the coin or currency
in which, any Note or the interest thereon is payable, or impair the right to
institute the suit for the enforcement of any such payment on or after the
maturity thereof; or (b) reduce the above-stated percentage of notes, without
the consent of the holders of all notes then outstanding under such Indenture or
(c) modify any of Section 9.02 of the Indenture except to increase any
percentage or fraction set forth therein or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each outstanding note affected thereby; or (d) modify or alter the
provisions of the proviso to the definition of the term "Outstanding" in the
Indenture; or (e) permit the creation of any lien ranking prior to or on a
parity with the lien of the Indenture with respect to any part of the pledged
assets or, except as provided in the Indenture, terminate the lien of the
Indenture on any property at any time subject to the Indenture or deprive any
noteholder of the security afforded by the lien of the Indenture. (section
9.02).
SERVICER EVENTS OF DEFAULT. The following events and conditions
shall be defined in the Assignment and Servicing Agreement as "Servicer Events
of Default":
(a) failure on the part of the Servicer to remit to the Trustee
within three Business Days following the receipt thereof
any monies received by the Servicer required to be remitted
to the Trustee under the Assignment and Servicing
Agreement;
(b) so long as Copelco Capital is the Servicer, failure on the
part of Copelco Capital to pay to the Trustee on the date
when due, any payment required to be made by Copelco
Capital pursuant to the Assignment and Servicing Agreement;
(c) default on the part of either the Servicer or (so long as
Copelco Capital is the Servicer) Copelco Capital in its
observance or performance in any material respect of
certain covenants or agreements in the Assignment and
Servicing Agreement which failure continues unremedied for
a period of 30 days after the earlier of (i) the date it
first becomes known to any officer of Copelco Capital or
the Servicer, as the case may be, and (ii) the date on
which written notice thereof requiring the same to be
remedied shall have been given to the Servicer or Copelco
Capital, as the case may be, by the Trustee, or to the
Servicer or Copelco Capital, as the case may be, and the
Trustee by any holder of the Notes;
(d) if any representation or warranty of Copelco Capital made
in the Assignment and Servicing Agreement shall prove to be
incorrect in any material respect as of the time made;
provided, however, that the breach of any representation or
warranty made by Copelco Capital in such Assignment and
Servicing Agreement will be deemed to be "material" only if
it affects the Noteholders, the enforceability of the
Indenture or of the Notes; and provided, further, that such
material breach of any representation or warranty made by
Copelco Capital in such Assignment and Servicing Agreement
with respect to any of the Leases or the Equipment subject
thereto will not constitute a Servicer Event of Default if
Copelco Capital repurchases such Lease and Equipment in
accordance with the Assignment and Servicing Agreement to
the extent provided therein;
(e) certain insolvency or bankruptcy events relating to the
Servicer;
(f) the failure of the Servicer to make one or more payments
due with respect to aggregate recourse debt or other
obligations exceeding $5,000,000, or the occurrence of any
event or the existence of any condition, the effect of
which event or condition is to cause (or permit one or more
persons to cause) more than $5,000,000 of aggregate
recourse debt or other obligations of the Servicer to
become due before its (or their) stated maturity or before
its (or their) regularly scheduled dates of payment so long
as such failure, event or condition shall be continuing and
shall not have been waived by the person or persons
entitled to performance;
(g) a final judgment or judgments (or decrees or orders) for
the payment of money aggregating in excess of $5,000,000
and any one of such judgments (or decrees or orders) has
remained unsatisfied and in effect for any period of 60
consecutive days without a stay of execution.
39
<PAGE> 42
SERVICER TERMINATION. So long as a Servicer Event of Default under
the Assignment and Servicing Agreement is continuing, the Trustee shall, upon
the instructions of the holders of 66 2/3% in principal amount of the Notes, by
notice in writing to the Servicer terminate all of the rights and obligations of
the Servicer (but not Copelco Capital's obligations which shall survive any such
termination) under the Assignment and Servicing Agreement (Section 5.01). Upon
the receipt by the Servicer of such written notice, all authority and power of
the Servicer under the Assignment and Servicing Agreement to take any action
with respect to any Lease or Equipment will cease and the same will pass to and
be vested in the Trustee pursuant to and under the Assignment and Servicing
Agreement and the Indenture.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes, the aggregate amount
of each interest payment on such Notes and the yield to maturity of such Notes
are directly related to the rate of payments on the underlying Leases. The
payments on such Leases may be in the form of scheduled payments, prepayments or
liquidations due to default, casualty and other events, which cannot be
specified at present. Any such payments may result in distributions to
Noteholders of amounts which would otherwise have been distributed over the
remaining term of the Leases. In general, the rate of such payments may be
influenced by a number of other factors, including general economic conditions.
The rate of Principal Payments with respect to any Class may also be affected by
any repurchase of the underlying Leases by Copelco Capital pursuant to the
Assignment and Servicing Agreement. In such event, the repurchase price will
decrease the Discounted Present Value of the Performing Leases, causing the
corresponding weighted average life of the Notes to decrease. See "Risk
Factors--Prepayments."
In the event a Lease becomes a Non-Performing Lease, a lease
subject to repurchase as a result of a breach of representation and warranty (a
"Warranty Lease") or a lease following a modification or adjustment to the terms
of such Lease (an "Adjusted Lease"), Copelco Capital will have the option to
substitute for the terminated lease another lease of similar characteristics (a
"Substitute Lease") in an aggregate amount not to exceed 10% of the Discounted
Present Value of the Leases as of the Cut-Off Date with respect to
Non-Performing Leases and in an aggregate amount not to exceed 10% of the
Discounted Present Value of the Leases as of the Cut-Off Date with respect to
Adjusted Leases and Warranty Leases. In addition, in the event of an Early Lease
Termination which has been prepaid in full, Copelco Capital will have the option
to transfer an additional lease of similar characteristics (an "Additional
Lease"). The Substitute Leases and Additional Leases will have a Discounted
Present Value of the Leases equal to or greater than that of the Leases being
modified and replaced and the monthly payments on the Substitute Leases or
Additional Leases will be at least equal to those of the terminated Leases
through the term of such terminated Leases. In the event that an Early Lease
Termination is allowed by Copelco Capital and a Substitute Lease is not
provided, the amount prepaid will be equal to at least the Discounted Present
Value of the terminated Lease, plus any delinquent payments.
The effective yield to holders of the Notes will depend upon,
among other things, the amount of and rate at which principal is paid to such
Noteholders. The after-tax yield to Noteholders may be affected by lags between
the time interest income accrues to Noteholders and the time the related
interest income is received by the Noteholders.
The following chart sets forth the percentage of the Initial
Principal Amount of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class B, Class C, Class D, and Class E Notes which would be outstanding on the
Payment Dates set forth below assuming a Conditional Prepayment Rate ("CPR") of
0% and 12%, respectively, and were calculated using the Statistical Discount
Rate. Such information is hypothetical and is set forth for illustrative
purposes only. The CPR assumes that a fraction of the outstanding Series Pool is
prepaid on each Distribution Date, which implies that each Lease in the Series
Pool is equally likely to prepay. This fraction, expressed as a percentage, is
annualized to arrive at the Conditional Payment Rate for the Series Pool. The
CPR measures prepayments based on the outstanding Statistical Discounted Present
Value of the Leases, after the payment of all Scheduled Payments on the Leases
during such Due Period. The CPR further assumes that all Leases are the same
size and amortize at the same rate and that each Lease will be either paid as
scheduled or prepaid in full. The amounts set forth below are based upon the
timely receipt of scheduled monthly Lease payments as of the Cut-Off Date,
assume that the Issuer exercises its option to redeem the Notes and assume the
Issuance Date is March 19, 1999 and the first Payment Date is April 15, 1999.
40
<PAGE> 43
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE RESPECTIVE CPR SET FORTH BELOW
=====================================================================================================================
0% CPR
--------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- --------- ------- ------- ------- -------
ISSUANCE DATE
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 19, 1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April 15, 1999 82.14 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 15, 1999 73.07 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 15, 1999 63.89 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 15, 1999 54.66 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
August 15, 1999 45.34 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 1999 35.97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
October 15, 1999 26.67 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
November 15, 1999 17.45 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 15, 1999 8.26 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 15, 2000 0.00 99.05 100.00 100.00 100.00 99.76 99.76 99.76 99.76
February 15, 2000 0.00 87.81 100.00 100.00 100.00 96.88 96.88 96.88 96.88
March 15, 2000 0.00 76.68 100.00 100.00 100.00 94.02 94.02 94.02 94.02
April 15, 2000 0.00 65.54 100.00 100.00 100.00 91.17 91.17 91.17 91.17
May 15, 2000 0.00 54.34 100.00 100.00 100.00 88.30 88.30 88.30 88.30
June 15, 2000 0.00 43.12 100.00 100.00 100.00 85.42 85.42 85.42 85.42
July 15, 2000 0.00 31.96 100.00 100.00 100.00 82.56 82.56 82.56 82.56
August 15, 2000 0.00 20.80 100.00 100.00 100.00 79.70 79.70 79.70 79.70
September 15, 2000 0.00 9.70 100.00 100.00 100.00 76.85 76.85 76.85 76.85
October 15, 2000 0.00 0.00 98.79 100.00 100.00 74.01 74.01 74.01 74.01
November 15, 2000 0.00 0.00 89.25 100.00 100.00 71.18 71.18 71.18 71.18
December 15, 2000 0.00 0.00 79.74 100.00 100.00 68.35 68.35 68.35 68.35
January 15, 2001 0.00 0.00 70.27 100.00 100.00 65.54 65.54 65.54 65.54
February 15, 2001 0.00 0.00 60.74 100.00 100.00 62.71 62.71 62.71 62.71
March 15, 2001 0.00 0.00 51.29 100.00 100.00 59.91 59.91 59.91 59.91
April 15, 2001 0.00 0.00 41.81 100.00 100.00 57.10 57.10 57.10 57.10
May 15, 2001 0.00 0.00 32.32 100.00 100.00 54.28 54.28 54.28 54.28
June 15, 2001 0.00 0.00 22.82 100.00 100.00 51.46 51.46 51.46 51.46
July 15, 2001 0.00 0.00 13.48 100.00 100.00 48.69 48.69 48.69 48.69
August 15, 2001 0.00 0.00 4.49 100.00 100.00 46.02 46.02 46.02 46.02
September 15, 2001 0.00 0.00 0.00 95.05 100.00 43.48 43.48 43.48 43.48
October 15, 2001 0.00 0.00 0.00 85.17 100.00 41.08 41.08 41.08 41.08
November 15, 2001 0.00 0.00 0.00 75.87 100.00 38.83 38.83 38.83 38.83
December 15, 2001 0.00 0.00 0.00 67.17 100.00 36.71 36.71 36.71 36.71
January 15, 2002 0.00 0.00 0.00 59.11 100.00 34.76 34.76 34.76 34.76
February 15, 2002 0.00 0.00 0.00 51.47 100.00 32.90 32.90 32.90 32.90
March 15, 2002 0.00 0.00 0.00 44.12 100.00 31.12 31.12 31.12 31.12
April 15, 2002 0.00 0.00 0.00 36.85 100.00 29.35 29.35 29.35 29.35
May 15, 2002 0.00 0.00 0.00 29.61 100.00 27.59 27.59 27.59 27.59
June 15, 2002 0.00 0.00 0.00 22.42 100.00 25.85 25.85 25.85 25.85
July 15, 2002 0.00 0.00 0.00 15.30 100.00 24.12 24.12 24.12 24.12
August 15, 2002 0.00 0.00 0.00 8.35 100.00 22.43 22.43 22.43 22.43
September 15, 2002 0.00 0.00 0.00 1.58 100.00 20.79 20.79 20.79 20.79
October 15, 2002 0.00 0.00 0.00 0.00 94.01 19.18 19.18 19.18 19.18
November 15, 2002 0.00 0.00 0.00 0.00 86.36 17.62 17.62 17.62 17.62
December 15, 2002 0.00 0.00 0.00 0.00 78.92 16.10 16.10 16.10 16.10
January 15, 2003 0.00 0.00 0.00 0.00 71.82 14.65 14.65 14.65 14.65
February 15, 2003 0.00 0.00 0.00 0.00 64.05 13.24 13.24 14.58 14.65
March 15, 2003 0.00 0.00 0.00 0.00 55.88 13.24 13.24 14.58 14.65
April 15, 2003 0.00 0.00 0.00 0.00 46.49 13.24 13.24 14.58 14.65
May 15, 2003 0.00 0.00 0.00 0.00 38.45 13.24 13.24 14.58 14.65
June 15, 2003 0.00 0.00 0.00 0.00 30.52 13.24 13.24 14.58 14.65
July 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.41 1.23 2.04 2.98 4.04 2.49 2.49 2.49 2.49
To Maturity 0.41 1.23 2.04 2.98 4.09 2.54 2.56 2.60 2.66
</TABLE>
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3
Note, Class A-4 Note, Class A-5 Note, Class B Note, Class C Note, Class D
Note, and Class E Note is determined by (a) multiplying the amount of cash
distributions in reduction of the Outstanding Principal Amount of the
respective Offered Note by the number of years from the Issuance Date to
such Payment Date, (b) adding the results, and (c) dividing the sum by the
respective Initial Principal Amount.
41
<PAGE> 44
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNTS AT THE RESPECTIVE CPR SET FORTH BELOW
==================================================================================================================
12% CPR
-----------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- --------- ------- ------- ------- -------
ISSUANCE DATE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 19, 1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April 15, 1999 77.91 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 15, 1999 64.85 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 15, 1999 51.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 15, 1999 39.17 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
August 15, 1999 26.56 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 1999 14.14 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
October 15, 1999 2.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
November 15, 1999 0.00 87.88 100.00 100.00 100.00 96.89 96.89 96.89 96.89
December 15, 1999 0.00 73.58 100.00 100.00 100.00 93.23 93.23 93.23 93.23
January 15, 2000 0.00 59.72 100.00 100.00 100.00 89.68 89.68 89.68 89.68
February 15, 2000 0.00 46.02 100.00 100.00 100.00 86.16 86.16 86.16 86.16
March 15, 2000 0.00 32.67 100.00 100.00 100.00 82.74 82.74 82.74 82.74
April 15, 2000 0.00 19.54 100.00 100.00 100.00 79.38 79.38 79.38 79.38
May 15, 2000 0.00 6.62 100.00 100.00 100.00 76.06 76.06 76.06 76.06
June 15, 2000 0.00 0.00 94.73 100.00 100.00 72.80 72.80 72.80 72.80
July 15, 2000 0.00 0.00 84.01 100.00 100.00 69.62 69.62 69.62 69.62
August 15, 2000 0.00 0.00 73.48 100.00 100.00 66.50 66.50 66.50 66.50
September 15, 2000 0.00 0.00 63.19 100.00 100.00 63.44 63.44 63.44 63.44
October 15, 2000 0.00 0.00 53.10 100.00 100.00 60.45 60.45 60.45 60.45
November 15, 2000 0.00 0.00 43.24 100.00 100.00 57.52 57.52 57.52 57.52
December 15, 2000 0.00 0.00 33.57 100.00 100.00 54.65 54.65 54.65 54.65
January 15, 2001 0.00 0.00 24.14 100.00 100.00 51.85 51.85 51.85 51.85
February 15, 2001 0.00 0.00 14.83 100.00 100.00 49.09 49.09 49.09 49.09
March 15, 2001 0.00 0.00 5.75 100.00 100.00 46.39 46.39 46.39 46.39
April 15, 2001 0.00 0.00 0.00 96.13 100.00 43.75 43.75 43.75 43.75
May 15, 2001 0.00 0.00 0.00 85.43 100.00 41.15 41.15 41.15 41.15
June 15, 2001 0.00 0.00 0.00 74.93 100.00 38.60 38.60 38.60 38.60
July 15, 2001 0.00 0.00 0.00 64.77 100.00 36.13 36.13 36.13 36.13
August 15, 2001 0.00 0.00 0.00 55.12 100.00 33.79 33.79 33.79 33.79
September 15, 2001 0.00 0.00 0.00 46.07 100.00 31.59 31.59 31.59 31.59
October 15, 2001 0.00 0.00 0.00 37.59 100.00 29.53 29.53 29.53 29.53
November 15, 2001 0.00 0.00 0.00 29.69 100.00 27.61 27.61 27.61 27.61
December 15, 2001 0.00 0.00 0.00 22.36 100.00 25.83 25.83 25.83 25.83
January 15, 2002 0.00 0.00 0.00 15.62 100.00 24.20 24.20 24.20 24.20
February 15, 2002 0.00 0.00 0.00 9.30 100.00 22.66 22.66 22.66 22.66
March 15, 2002 0.00 0.00 0.00 3.31 100.00 21.21 21.21 21.21 21.21
April 15, 2002 0.00 0.00 0.00 0.00 97.00 19.79 19.79 19.79 19.79
May 15, 2002 0.00 0.00 0.00 0.00 90.22 18.41 18.41 18.41 18.41
June 15, 2002 0.00 0.00 0.00 0.00 83.62 17.06 17.06 17.06 17.06
July 15, 2002 0.00 0.00 0.00 0.00 77.20 15.75 15.75 15.75 15.75
August 15, 2002 0.00 0.00 0.00 0.00 71.03 14.49 14.49 14.49 14.49
September 15, 2002 0.00 0.00 0.00 0.00 64.32 13.29 13.81 14.49 14.49
October 15, 2002 0.00 0.00 0.00 0.00 57.59 13.29 13.81 14.49 14.49
November 15, 2002 0.00 0.00 0.00 0.00 51.16 13.29 13.81 14.49 14.49
December 15, 2002 0.00 0.00 0.00 0.00 45.01 13.29 13.81 14.49 14.49
January 15, 2003 0.00 0.00 0.00 0.00 39.23 13.29 13.81 14.49 14.49
February 15, 2003 0.00 0.00 0.00 0.00 33.69 13.29 13.81 14.49 14.49
March 15, 2003 0.00 0.00 0.00 0.00 28.30 13.29 13.81 14.49 14.49
April 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
May 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 15, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.30 0.93 1.65 2.52 3.69 2.11 2.12 2.12 2.12
To Maturity 0.30 0.93 1.65 2.52 3.74 2.18 2.19 2.21 2.26
</TABLE>
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3
Note, Class A-4 Note, Class A-5 Note, Class B Note, Class C Note, Class D
Note, and Class E Note is determined by (a) multiplying the amount of cash
distributions in reduction of the Outstanding Principal Amount of the
respective Offered Note by the number of years from the Issuance Date to
such Payment Date, (b) adding the results, and (c) dividing the sum by the
respective Initial Principal Amount.
42
<PAGE> 45
SECURITY FOR THE NOTES
General. Repayment of the Notes will be secured by (a) a first
priority security interest in the underlying Leases perfected both by filing UCC
financing statements against the Issuer and Copelco Capital and by taking
possession of the respective Lease documents, (b) a security interest in the
related Equipment owned by the Issuer and an assignment of the Issuer's security
interest in such Equipment subject to Nominal Buy-Out Leases, which security
interest was originally perfected by Copelco Capital (for Equipment with an
original cost in excess of $25,000 which assignment will be recorded in the
manner described below) and (c) all funds in the Collection Account and the
Reserve Account.
THE INDENTURE TRUSTEE
Manufacturers and Traders Trust Company will be the Trustee
under the Indenture. Copelco Capital, as Transferor or Servicer, and its
affiliates may from time to time enter into normal banking and Trustee
relationships with the Trustee and its affiliates. The Trustee, the Servicer and
any of their respective affiliates may hold Notes in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee shall have the power to appoint a co-Trustee or a
separate Trustee under the Indenture. In the event of such appointment, all
rights, powers, duties and obligations conferred or imposed upon the Trustee by
the Indenture will be conferred or imposed upon the Trustee and such separate
Trustee or co-Trustee jointly, or in any jurisdiction in which the Trustee shall
be incompetent or unqualified to perform certain acts, singly upon such separate
Trustee or co-Trustee, who shall exercise and perform such rights, powers,
duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Issuer
will be obligated to appoint a successor Trustee. The Issuer may also remove
each Trustee if such Trustee ceases to be eligible to continue as such under the
Indenture, fails to perform in any material respect its obligations under such
Indenture, or becomes insolvent. In such circumstances, the Issuer will be
obligated to appoint a successor Trustee. Any resignation or removal of a
Trustee and appointment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
CERTAIN LEGAL MATTERS AFFECTING A LESSEE'S
RIGHTS AND OBLIGATIONS
General. The Leases are triple-net leases, requiring the
Lessees to pay all taxes, maintenance and insurance associated with the
Equipment, and are primarily non-cancelable by the Lessees.
The Leases are "hell or high water" leases, under which the
obligations of the Lessee is absolute and unconditional, regardless of any
defense, setoff or abatement which the Lessee may have against Copelco Capital,
as Transferor or Servicer, the Issuer, or any other person or entity whatsoever.
Defaults under the Leases are generally the result of failure
to pay amounts when due, failure to observe other covenants in the Lease,
misrepresentations by, or the insolvency, bankruptcy or appointment of a trustee
or receiver for the Lessee under a Lease. The remedies of the lessor (and the
Issuer as assignee) following a notice and cure period are generally to seek to
enforce the performance by the Lessee of the terms and covenants of the Lease
(including the Lessee's obligation to make scheduled payments) or recover
damages for the breach thereof, to accelerate the balance of the remaining
scheduled payments paid to terminate the rights of the Lessee under such Lease.
Although the Leases permit the lessor to repossess and dispose of the related
Equipment in the event of a lease default, and to credit such proceeds against
the Lessee's liabilities thereunder, such remedies may be limited where the
Lessee thereunder is subject to bankruptcy, or other insolvency proceedings.
UCC and Bankruptcy Considerations. Pursuant to the Assignment
and Servicing Agreement, Copelco Capital will make a capital contribution to the
Issuer of the Leases and Equipment owned by Copelco Capital and subject to the
Leases, and assign its security interests in the Equipment subject to Nominal
Buy-Out Leases. Copelco Capital will warrant that each of the contribution of
the Leases from Copelco Capital to the Issuer is an absolute assignment, that
the contributions of its rights in the Equipment is a valid transfer of Copelco
Capital's title to the Equipment and that Copelco Capital is either the owner of
the Equipment or has a valid perfected first priority security interest in the
Equipment (for Leases with leased Equipment having an original equipment cost in
excess of $25,000), including Equipment subject to Nominal Buy-Out Leases, and
accordingly, Copelco Capital has
43
<PAGE> 46
filed UCC financing statements in its favor against Lessees in respect of all
Equipment in the Series Pool with an original Equipment cost in excess of
$25,000. No action will be taken to perfect the interest of Copelco Capital in
any Equipment in the Series Pool with an original Equipment cost of less than
$25,000. In addition, UCC financing statements identifying security interests in
the Equipment as transferred to, or obtained by, the Issuer or the Trustee and
UCC financing statements identifying equipment owned by Copelco Capital,
transferred to the Issuer and pledged to the Trustee will be filed in favor of
the Issuer or the Trustee in the central filing location for any given state. In
the event of the repossession and resale of Equipment subject to a superior
lien, the senior lienholder would be entitled to be paid the full amount of the
indebtedness owed to it out of the sale proceeds before such proceeds could be
applied to the payment of claims by the Servicer on behalf of the Issuer.
Certain statutory provisions, including federal and state bankruptcy and
insolvency laws, may limit the ability of the Servicer to repossess and resell
collateral or obtain a deficiency judgment in the event of a Lessee default. In
the event of the bankruptcy or reorganization of a Lessee, or Copelco Capital,
as Transferor or Servicer, various provisions of the Bankruptcy Code of 1978, 11
U.S.C Sections 101-1330 (the "Bankruptcy Code"), and related laws may interfere
with, delay or eliminate the ability of Copelco Capital or the Issuer to enforce
its rights under the Leases.
In the case of operating leases, the Bankruptcy Code grants to
the bankruptcy trustee or the debtor-in-possession a right to elect to assume or
reject any executory contract or unexpired lease. Any rejection of such a lease
or contract constitutes a breach of such lease or contract, entitling the
nonbreaching party to a claim for damages for breach of contract. The net
proceeds from any resulting judgment would be deposited by the Servicer into the
Collection Account and allocated to the Noteholders as more fully described
herein. Upon the bankruptcy of a Lessee, if the bankruptcy trustee or
debtor-in-possession elected to reject a Lease, the flow of scheduled payments
to Noteholders would cease. In the event that, as a result of the bankruptcy of
a Lessee, the Servicer is prevented from collecting scheduled payments with
respect to Leases and such Leases become Non-Performing Leases, no recourse
would be available against Copelco Capital (except for misrepresentation or
breach of warranty) and the Noteholders could suffer a loss with respect to the
Notes. Similarly, upon the bankruptcy of the Issuer, if the bankruptcy trustee
or debtor-in-possession elected to reject a Lease, the flow of Lease payments to
the Issuer and the Noteholders would cease. As noted above, however, the Issuer
has been structured so that the filing of a bankruptcy petition with respect to
it is unlikely. See "The Issuer."
These UCC and bankruptcy provisions, in addition to the
possible decrease in value of a repossessed item of Equipment, may limit the
amount realized on the sale of Equipment to less than the amount due on the
related Lease.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion sets forth the material federal
income tax consequences to the original purchasers of the Offered Notes of the
purchase, ownership and disposition of the Offered Notes. Tax Counsel's opinion
does not purport to deal with all federal tax considerations applicable to all
categories of investors. Certain holders, including insurance companies,
tax-exempt organizations, financial institutions or broker dealers, taxpayers
subject to the alternative minimum tax, and holders that will hold the Offered
Notes as other than capital assets, may be subject to special rules that are not
discussed below. In particular, this discussion applies only to institutional
investors that purchase Offered Notes directly from the Issuer and hold the
Offered Notes as capital assets.
The discussion that follows, and the opinion set forth below
of Dewey Ballantine LLP, special tax counsel to the Issuer ("Tax Counsel"), are
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and treasury regulations promulgated thereunder as in effect on the date
hereof and on existing judicial and administrative interpretations thereof.
These authorities are subject to change and to differing interpretations, which
could apply retroactively. The opinion of Tax Counsel is not binding on the
courts or the Internal Revenue Service (the "IRS"). Potential investors should
consult their own tax advisors in determining the 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 Offered Notes will be
treated as indebtedness for federal income tax purposes.
44
<PAGE> 47
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 net income of the Issuer and all or a part of
distributions to the holders of the Offered Notes probably would be treated as
partnership income to those holders.
TAX CHARACTERIZATION OF THE ISSUER. Tax Counsel is of the
opinion that the Issuer will be characterized as a partnership, so long as it
has more then one owner, and not an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes.
TAXATION OF INTEREST INCOME OF NOTEHOLDERS. If characterized
as indebtedness, interest on the Offered Notes will be taxable as ordinary
income for federal income tax purposes when received by Noteholders using the
cash method of accounting and when accrued by Noteholders using the accrual
method of accounting. Noteholders using the accrual method of accounting may be
required to report income for tax purposes in advance of receiving a
corresponding cash distribution with which to pay the related tax. Interest
received on the Offered Notes also may constitute "investment income" for
purposes of certain limitations of the Code concerning the deductibility of
investment interest expense.
Original Issue Discount. It is not anticipated that the
Offered Notes will have any original issue discount ("OID") other than possibly
OID within a de minimis exception and that accordingly the provisions of
sections 1271 through 1273 and 1275 of the Code generally will not apply to the
Offered Notes. OID will be considered de minimis if it is less than 0.25% of the
principal amount of Note multiplied by its expected weighted average life.
Market Discount. A subsequent purchaser who buys a Note for
less than its principal amount may be subject to the "market discount" rules of
Sections 1276 through 1278 of the Code. If a subsequent purchaser of a Note
disposes of such Note (including certain nontaxable dispositions such as a
gift), or receives a principal payment, any gain upon such sale or other
disposition will be recognized, or the amount of such principal payment will be
treated, as ordinary income to the extent of any "market discount" accrued for
the period that such purchaser holds the Note. Such holder may instead elect to
include market discount in income as it accrues with respect to all debt
instruments acquired in the year of acquisition of the Offered Notes and
thereafter. Market discount generally will equal the excess, if any, of the
then-current unpaid principal balance of the Note over the purchaser's basis in
the Note immediately after such purchaser acquired the Note. In general, market
discount on a Note will be treated as accruing over the term of such Note in the
ratio of interest for the current period over the sum of such current interest
and the expected amount of all remaining interest payments, or at the election
of the holder, under a constant yield method. At the request of a holder of a
Note, information will be made available that will allow the holder to compute
the accrual of market discount under the first method described in the preceding
sentence.
The market discount rules also provide that a holder who
incurs or continues indebtedness to acquire a Note at a market discount may be
required to defer the deduction of all or a portion of the interest on such
indebtedness until the corresponding amount of market discount is included in
income.
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
45
<PAGE> 48
obligation by the amount of the aggregate deductions (or interest offsets)
allowable for amortizable premium. If a debt instrument purchased at a premium
is redeemed in full prior to its maturity, a purchaser who has elected to
amortize premium should be entitled to a deduction for any remaining unamortized
premium in the taxable year of redemption.
SALE OR EXCHANGE OF OFFERED NOTES. If a Note is sold or
exchanged, the Transferor of the Note will recognize gain or loss equal to the
difference between the amount realized on the sale or exchange and the adjusted
basis of the Note. The adjusted basis of a Note will generally equal its cost,
increased by any OID or market discount includible in income with respect to the
Note through the date of sale and reduced by any principal payments previously
received with respect to the Note, any payments allocable to previously accrued
OID or market discount and any amortized market premium. Subject to the market
discount rules, gain or loss will generally be capital gain or loss if the Note
was held as a capital asset. Capital losses generally may be used only to offset
capital gains.
BACKUP WITHHOLDING WITH RESPECT TO OFFERED NOTES. Payments of
interest and principal, together with payments of proceeds from the sale of
Offered Notes, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a payment to a recipient would be allowed as a credit against
such recipient's federal income tax. Furthermore, certain penalties may be
imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
FOREIGN INVESTORS IN OFFERED NOTES; CERTAIN U.S. FEDERAL
INCOME TAX DOCUMENTATION REQUIREMENTS. A beneficial owner of Offered Notes
holding securities through CEDEL of Euroclear (or through DTC if the holder has
an address outside the U.S.) will be subject to the 30% U.S. withholding tax
that generally applies to payments of interest (including original issue
discount) on registered debt issued by U.S. Persons (as defined below), unless
(i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners
of Offered Notes that are Non-U.S. Persons (as defined below) can obtain a
complete exemption from the withholding tax by filing a signed Form W-8
(Certificates of Foreign Status). If the information shown on Form W-8 changes,
a new Form W-8 must be filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected
income (Form 4224). A Non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax
on Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
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
46
<PAGE> 49
60 days after the proposed regulations are made final will continue to be valid
until they expire. Proposed regulations, however, are subject to change prior to
their adoption in final form.
The term "U.S. Person" means (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof, (iii)
an estate that is subject to U.S. federal income tax regardless of the source of
its income. The term "Non-U.S. Person" means any person who is not a U.S.
Person. This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of the Offered Notes.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Offered Notes.
STATE, LOCAL AND OTHER TAXES. Investors should consult their
own tax advisors regarding whether the purchase of the Offered Notes, either
alone or in conjunction with an investor's other activities, may subject an
investor to any state or local taxes based on an assertion that the investor is
either "doing business" in, or deriving income from a source located in, any
state or local jurisdiction. Additionally, potential investors should consider
the state, local and other tax consequences of purchasing, owning or disposing
of a Note. State and local tax laws may differ substantially from the
corresponding federal tax law, and the foregoing discussion does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Accordingly, potential investors should consult their own tax advisors with
regard to such matters.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE
ARE INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING
UPON A NOTEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE OFFERED NOTES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS OR IN THE INTERPRETATIONS
THEREOF.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), imposes certain requirements and restrictions on those
pension, profit-sharing and other employee benefits plans to which it applies
and on those persons who are fiduciaries with respect to such plans. In
accordance with ERISA's fiduciary standards, before purchasing the Offered
Notes, a fiduciary should determine whether such an investment is permitted
under the documents and instruments governing the plan and is appropriate for
the plan in view of its overall investment policy and the composition of its
portfolio.
Section 406 of ERISA and Section 4975 of the Code prohibit
certain transactions involving the assets of certain plans subject thereto
(each, a "Benefit Plan") and persons who are "parties in interest," within the
meaning of ERISA, or "disqualified persons," within the meaning of the Code.
Certain transactions involving the purchase, holding or transfer of the Offered
Notes might be deemed to constitute prohibited transactions under ERISA and the
Code if assets of the Issuer were deemed to be assets of a Benefit Plan. Under
regulations issued by the United States Department of Labor set forth in 29
C.F.R. Section 2510.3101 (the "Plan Asset Regulations"), the assets of the
Issuer would be treated as plan assets of a Benefit Plan for the purposes of
ERISA and the Code only if the Benefit Plan acquired an "equity interest" in the
Issuer and none of the exceptions contained in the Plan Asset Regulations is
applicable. An equity interest is defined under the Plan Asset Regulations as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. It is
anticipated that the Offered Notes should be treated as indebtedness without
substantial equity features for purposes of the Plan Asset Regulations. However,
even if the Offered Notes are treated as indebtedness for such purposes, the
acquisition or holding of Offered Notes by or on behalf of a Benefit Plan could
be considered to give rise to a prohibited transaction if the Issuer or any of
its affiliates is or becomes a party in interest or disqualified person with
respect to such Benefit Plan. In this event, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding investments by insurance company pooled separate
accounts; PTCE 91-38 regarding investments by bank collective investment funds;
PTCE 84-14, regarding transactions effected by "qualified professional asset
managers;" PTCE 95-60, regarding investments by insurance company general
accounts; and PTCE 96-23 regarding transactions effected by "in-house asset
managers". Each investor using assets of a Benefit Plan which acquires the
Offered Notes, or to whom the Offered Notes are transferred, will be deemed to
have represented that the acquisition and continued holding of the Offered Notes
will be covered by one of the exemptions listed above or another Department of
Labor class exemption.
47
<PAGE> 50
Insurance companies considering the purchase of the Offered
Notes should also consult their own counsel as to the application of the
decision by the United States Supreme Court in John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank (510 U.S. 86) to such a purchase.
Under that decision, assets held in an insurance company's general account may
be deemed assets of ERISA plans under certain circumstances.
Employee benefit plans that are governmental plans (as defined
in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements; however, governmental plans may
be subject to comparable federal, state or local law restrictions.
Due to the complexity of these rules and the penalties imposed
upon persons involved in prohibited transactions, it is particularly important
that a fiduciary investing assets of an ERISA plan consult with counsel
regarding the consequences under ERISA of the acquisition and holding of Offered
Notes, including the availability of any administrative exemptions from the
prohibited transaction rules.
The sale of Notes to a Benefit Plan is in no respect a
representation by the Issuer or the Underwriters that this investment meets all
relevant legal requirements with respect to investments by Benefit Plans
generally or by a particular Benefit Plan, or that this investment is
appropriate for Benefit Plans generally or any particular Benefit Plan.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement (the "Underwriting Agreement") for the sale of the
Offered Notes, the Issuer has agreed to sell and Prudential Securities
Incorporated ("Prudential Securities") and First Union Capital Markets Corp.
("First Union", and together with Prudential Securities, the "Underwriters")
each severally has agreed to purchase the principal amount of the Offered Notes
set forth below:
<TABLE>
<CAPTION>
Prudential Securities First Union
Underwriting Discount Principal Amount Principal Amount Totals
--------------------- --------------------- ---------------- ------
<S> <C> <C> <C> <C>
Class A-1 Notes
Class A-2 Notes
Class A-3 Notes
Class A-4 Notes
Class A-5 Notes
Class B Notes
Class C Notes
Class D Notes
</TABLE>
The Issuer has been advised by Underwriters that the several
Underwriters propose initially to offer the Notes to the public at the
respective prices set forth on the cover page of this Prospectus, and to certain
dealers at such price, less a selling concession not in excess of ___% per Class
A-1 Note, ___% per Class A-2 Note, ___% per Class A-3 Note, ___% per Class A-4
Note, ___% per Class A-5 Note, ___% per Class B Note, ___% per Class C Note and
___% per Class D Note. The Underwriters may, allow and such dealers may reallow
to other dealers, a discount not in excess of ___% per Class A-1 Note, ___% per
Class A-2 Note, ___% per Class A-3 Note, ___% per Class A-4 Note, ___% per Class
A-5 Note, ___% per Class B Note, ___% per Class C Note and ___% per Class D
Note. After the initial public offering, the public offering price and such
concessions may be changed.
The Underwriters will each represent and agree that:
(a) it has not offered or sold, and, prior to the expiration
of six months from the Issuance Date, will not offer or
sell, any Offered Notes to persons in the United
Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for
purposes of their business, or otherwise in
circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities
Regulations 1995
48
<PAGE> 51
(b) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the
Offered Notes in, from or otherwise involving the United
Kingdom; and
(c) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by
it in connection with the issue of the Offered Notes to
a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or persons to
whom such document may otherwise lawfully be issued,
distributed or passed on.
The Issuer and Copelco Capital, Inc. have agreed to jointly
and severally indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The Issuer has been advised by the Underwriters that the
Underwriters presently intend to make a market in the Offered Notes, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the Offered Notes and any such market
making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Offered Notes.
The Underwriters may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids with
respect to the Offered Notes in accordance with Regulation M under the
Securities Exchange Act of 1934 (the "Exchange Act"). Over-allotment
transactions involve syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the Offered Notes so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transaction involve purchase of the
Offered Notes in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the underwriters
to reclaim a selling concession from a syndicate member when the Offered Notes
originally sold by such syndicate member are purchased in a syndicate covering
transaction. Such over-allotment transactions, stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the
Offered Notes to be higher than they would otherwise be in the absence of such
transactions. The Seller and the Underwriters do not represent that the
Underwriters will engage in any such transactions. Such transactions, once
commenced, may be discontinued without notice at any time.
Prudential Securities is also serving as the placement agent
for the Class E Notes and the Residual Notes.
EXPERTS
The balance sheet of Copelco Capital Funding LLC 99-1 as of
February 24, 1999, has been included herein and in the Registration Statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
auditing and accounting.
LEGAL MATTERS
Certain legal matters relating to the Notes will be passed
upon for Copelco Capital, Inc., the Servicer and the Issuer by Spencer N.
Lempert, General Counsel of Copelco Financial Services Group, Inc., and for
Copelco Capital, the Issuer and the Underwriters by Dewey Ballantine LLP, New
York, New York.
RATING OF THE OFFERED NOTES
It is a condition to the issuance of the Offered Notes that
the Class A-1 Notes be rated at least "P-1", "D-1+" and "F1+/AAA" , that the
Class A-2, A-3, A-4 and A-5 Notes be rated at least "Aaa", "AAA" and "AAA", that
the Class B Notes be rated at least "Aa2", "AA+" and "AA", that the Class C
Notes be rated at least "A2", "A+" and "A" and that the Class D Notes be rated
at least "Baa2", "BBB+" and "BBB" by Moody's Investors Service ("Moody's"), Duff
& Phelps Credit Ratings Co. ("DCR") and Fitch IBCA, Inc. ("Fitch"), respectively
(each a "Rating Agency").
Such rating will reflect only the views of the Rating Agencies
and will be based primarily on the amount of subordination, the availability of
funds on deposit in the Reserve Account and the value of the Leases and
49
<PAGE> 52
Equipment. The ratings are not a recommendation to purchase, hold or sell the
related Offered Notes, inasmuch as such ratings do not comment as to market
price or suitability for a particular investor. There is no assurance that any
such rating will continue for any period of time or that it will not be lowered
or withdrawn entirely by the Rating Agencies if, in its judgment, circumstances
so warrant. A revision or withdrawal of such rating may have an adverse affect
on the market price of the Offered Notes. The rating of the Offered Notes
addresses the likelihood of the timely payment of interest and the ultimate
payment of principal on the Offered Notes by the Stated Maturity Date. The
rating does not address the rate of Prepayments that may be experienced on the
Leases and, therefore, does not address the effect of the rate of Lease
Prepayments on the return of principal to the Offered Noteholders.
50
<PAGE> 53
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditors' Report 54
Balance Sheet of the Issuer as of February 24, 1999 55
Notes to Balance Sheet 56
51
<PAGE> 54
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Copelco Capital Funding LLC 99-1:
We have audited the accompanying balance sheet of Copelco Capital Funding LLC
99-1 (an indirect wholly owned subsidiary of Copelco Capital, Inc.) as of
February 24, 1999. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit of a balance sheet includes examining, on a test basis, evidence
supporting the amounts and disclosures in that balance sheet. An audit of a
balance sheet also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit of the balance sheet
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Copelco Capital Funding LLC 99-1 as
of February 24, 1999, in conformity with generally accepted accounting
principles.
KPMG LLP
February 24, 1999
New York, New York
52
<PAGE> 55
COPELCO CAPITAL FUNDING LLC 99-1
(an indirect wholly owned subsidiary of Copelco Capital, Inc.)
Balance Sheet
February 24, 1999
<TABLE>
<S> <C> <C>
Assets
Cash $1,000
$1,000
Stockholders' Equity
Stockholders' Equity
Common Stock (authorized 1,000 $ 100
shares, $1 par value, issued and
outstanding 100 shares)
Additional paid-in capital 900
-----
$1,000
======
</TABLE>
See accompanying notes to balance sheet.
53
<PAGE> 56
COPELCO CAPITAL FUNDING LLC 99-1
(an indirect wholly owned subsidiary of Copelco Capital, Inc.)
Notes to Balance Sheet
February 24, 1999
(1) Organization
Copelco Capital Funding LLC 99-1, an indirect wholly owned subsidiary
of Copelco Capital, Inc. (Copelco Capital), was incorporated in the
State of Delaware.
Copelco Capital Funding LLC 99-1 was organized to engage exclusively in
the following business and financial activities: to acquire equipment
described in the related equipment lease contracts and to purchase
equipment leases and lease receivables from Copelco Capital and any of
its affiliates; to issue and sell notes collateralized by any or all of
its assets pursuant to one or more indentures between Copelco Capital
Funding LLC 99-1 and an indenture trustee; and to engage in any lawful
act or activity and to exercise any power that is incidental and is
necessary or convenient to the foregoing and permitted under Delaware
law.
(2) Capital Contribution
Copelco Capital has made an initial capital contribution of $1,000 to
Copelco Capital Funding LLC 99-1.
54
<PAGE> 57
INDEX OF TERMS
<TABLE>
<CAPTION>
TERM PAGE(S)
<S> <C>
Additional Lease ................................................ 24, 42
Additional Principal ............................................ 34
Adjusted Lease .................................................. 24, 42
Assignment and Servicing Agreement .............................. 25
Available Funds ................................................. 36
Available Funds Shortfall ....................................... 37
Available Reserve Amount ........................................ 37
Bankruptcy Code ................................................. 47
Benefit Plan .................................................... 50
Booked Residual Value ........................................... 25
Casualty ........................................................ 36
Casualty Payment ................................................ 36
Cede ............................................................ 28
CEDEL ........................................................... 28
CEDEL Participants .............................................. 30
Class A Initial Principal Amount ................................ 32
Class A Noteholders ............................................. 28
Class A Notes ................................................... 27
Class A Percentage .............................................. 35
Class A Principal Payment ....................................... 34
Class A Target Investor Principal Amount ........................ 34
Class A-1 Initial Principal Amount .............................. 31
Class A-1 Interest Rate ......................................... 28
Class A-1 Noteholders ........................................... 28
Class A-1 Notes ................................................. 27
Class A-1 Stated Maturity Date .................................. 32
Class A-2 Initial Principal Amount .............................. 31
Class A-2 Interest Rate ......................................... 28
Class A-2 Noteholders ........................................... 28
Class A-2 Notes ................................................. 27
Class A-2 Stated Maturity Date .................................. 32
Class A-3 Initial Principal Amount .............................. 31
Class A-3 Interest Rate ......................................... 28
Class A-3 Noteholders ........................................... 28
Class A-3 Notes ................................................. 27
Class A-3 Stated Maturity Date .................................. 32
Class A-4 Initial Principal Amount .............................. 32
Class A-4 Interest Rate ......................................... 28
Class A-4 Noteholders ........................................... 28
Class A-4 Notes ................................................. 27
Class A-4 Stated Maturity Date .................................. 33
Class A-5 Initial Principal Amount .............................. 32
Class A-5 Interest Rate ......................................... 28
Class A-5 Noteholders ........................................... 28
Class A-5 Notes ................................................. 27
Class A-5 Stated Maturity Date .................................. 33
Class B Floor ................................................... 35
Class B Initial Principal Amount ................................ 32
Class B Interest Rate ........................................... 28
Class B Noteholders ............................................. 28
Class B Notes ................................................... 27
Class B Percentage .............................................. 35
Class B Principal Payment ....................................... 34
Class B Stated Maturity Date .................................... 33
</TABLE>
55
<PAGE> 58
<TABLE>
<S> <C>
Class B Target Investor Principal Amount ........................ 34
Class C Floor ................................................... 35
Class C Initial Principal Amount ................................ 32
Class C Interest Rate ........................................... 28
Class C Noteholders ............................................. 28
Class C Notes ................................................... 27
Class C Percentage .............................................. 35
Class C Principal Payment ....................................... 34
Class C Stated Maturity Date .................................... 33
Class C Target Investor Principal Amount ........................ 34
Class D Floor ................................................... 35
Class D Initial Principal Amount ................................ 32
Class D Interest Rate ........................................... 28
Class D Noteholders ............................................. 28
Class D Notes ................................................... 27
Class D Percentage .............................................. 35
Class D Principal Payment ....................................... 34
Class D Stated Maturity Date .................................... 33
Class D Target Investor Principal Amount ........................ 34
Class E Floor ................................................... 35
Class E Initial Principal Amount ................................ 32
Class E Interest Rate ........................................... 28
Class E Noteholders ............................................. 33
Class E Notes ................................................... 27
Class E Percentage .............................................. 35
Class E Principal Payment ....................................... 34
Class Floors .................................................... 35
Class R-1 Notes.................................................. 40
Class R-2 Notes.................................................. 40
clearing agency.................................................. 28
clearing corporation............................................. 28
Closing Date..................................................... 11
Code............................................................. 47
Collection Account............................................... 36
Cooperative...................................................... 30
Copelco Capital.................................................. 11
Copelco Credit................................................... 20
Copelco Financial................................................ 20
Copelco Leasing.................................................. 20
Cost per Copy.................................................... 21
CPR.............................................................. 43
Cumulative Loss Amount........................................... 35
Cut-Off Date..................................................... 11
DCR.............................................................. 53
Definitive Notes................................................. 31
Depositaries..................................................... 28
Determination Date............................................... 33
Discount Rate.................................................... 32
Discounted Present Value of the Leases........................... 32
Discounted Present Value of the Performing Leases................ 32
DTC.............................................................. 28
Due Period....................................................... 33
Dun & Bradstreet................................................. 23
Early Lease Termination.......................................... 24,25
Eligible Account................................................. 36
Equipment........................................................ 11
Equipment Financing Portion...................................... 21
ERISA............................................................ 50
Euroclear........................................................ 28
Euroclear Operator............................................... 30
</TABLE>
56
<PAGE> 59
<TABLE>
<S> <C>
Euroclear Participants........................................... 30
Events of Default................................................ 39
Excess Copy Charge............................................... 21
Fee Per Scan Charges............................................. 22
First Union...................................................... 51
Fitch............................................................ 53
Fixed Payment.................................................... 21
Group............................................................ 20
HILL............................................................. 21
Holders.......................................................... 31
Indenture........................................................ 27
Indirect Participants............................................ 29
Industry......................................................... 31
Initial Principal Amount......................................... 27
Interest Accrual Period.......................................... 33
Interest Payments................................................ 33
Interest Rate.................................................... 28
IRS.............................................................. 47
Issuance Date.................................................... 11
Issuer........................................................... 11
Lease Contract................................................... 11
Lease Payment.................................................... 36
Lease Receivables................................................ 11
Leases........................................................... 11
Lessee........................................................... 11
Lessees.......................................................... 11
Maintenance Charge............................................... 21
Manager.......................................................... 26
Moody's.......................................................... 53
Non-Performing Leases............................................ 11,32
Non-U.S. Person.................................................. 50
Notes............................................................ 27
Offered Noteholders.............................................. 28
Offered Notes.................................................... 27
OID.............................................................. 48
Origination Divisions............................................ 11
Outstanding Principal Amount..................................... 37
Outstanding Principal Amounts.................................... 33
Overcollateralization Balance.................................... 35
Participants..................................................... 28
Payment Date..................................................... 25
PILL............................................................. 21
Plan Asset Regulations........................................... 51
Pledged Assets................................................... 12
Principal Payments............................................... 33
Prudential Securities............................................ 51
PTCE............................................................. 51
Rating Agency.................................................... 53
Record Date...................................................... 33
Required Payments................................................ 37
Required Reserve Amount.......................................... 37
Reserve Account.................................................. 37
Residual Casualty Payments....................................... 37
Residual Notes................................................... 40
Residual Prepayments............................................. 37
Residual Realizations............................................ 37
Residual Warranty Payments....................................... 37
SBU.............................................................. 20
Series Pool...................................................... 11
Servicer......................................................... 11
Servicer Advance................................................. 39
</TABLE>
57
<PAGE> 60
<TABLE>
<S> <C>
Servicer Events of Default....................................... 41
Servicing Fee.................................................... 25
Statistical Discount Rate........................................ 32
Statistical Discounted Present Value of the Leases............... 32
Substitute Lease................................................. 24,42
SYSTEMS.......................................................... 31
Tax Counsel...................................................... 47
Termination Payment.............................................. 36
Terms and Conditions............................................. 30
Transferor....................................................... 25
Trustee.......................................................... 25
U.S. Person...................................................... 50
Underwriters..................................................... 51
Underwriting Agreement........................................... 51
Vendor........................................................... 21
Warranty Lease................................................... 24,25,42
</TABLE>
58
<PAGE> 61
$548,701,000
Copelco Capital
Funding LLC 99-1
-------------------------------------------------
P R O S P E C T U S
-------------------------------------------------
Prudential Securities
First Union Capital Markets Corp.
Dated March ___, 1999
Until 90 days after the date of this prospectus, all dealers that effect
transactions in the Offered Notes, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
$139,000,000 ___% Class A-1
Lease-Backed Notes
$95,000,000 ___% Class A-2
Lease-Backed Notes
$110,000,000 ___% Class A-3
Lease-Backed Notes
$90,000,000 ___% Class A-4
Lease-Backed Notes
$75,613,000 ___% Class A-5
Lease-Backed Notes
$13,029,000 ___% Class B
Lease-Backed Notes
$10,134,000 ___% Class C
Lease-Backed Notes
$15,925,000 ___% Class D
Lease-Backed Notes
<PAGE> 62
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to
be incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee.................................................. $ 155,000.00
Printing and Engraving Expenses................................... 60,000.00
Trustee's Fees.................................................... 30,000.00
Legal Fees and Expenses........................................... 175,000.00
Blue Sky Fees and Expenses........................................ 15,000.00
Accountants' Fees and Expenses.................................... 35,000.00
Rating Agency Fees................................................ 230,000.00
Miscellaneous Fees................................................ 30,000.00
==================
Total. $ 730,000.00
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware Limited Liability Company Act (Section 18-108)
gives Delaware limited liability companies broad powers to indemnify and hold
harmless any member or manager or other person from and against any and all
claims and demands whatsoever. The Company shall, to the fullest extent
permitted by the Act, indemnify and hold harmless, and advance expenses to, each
member or manager against any losses, claims, damages or liabilities to which
the Indemnified party may become subject in connection with any matter arising
from, related to, or in connection with, the Company's business or affairs.
Copelco Financial Services Group, Inc. has also purchased
liability policies which indemnify the Registrant's [manager(s)] against loss
arising from claims by reason of their legal liability for acts as officers and
directors, subject to limitations and conditions as set forth in the policies.
Pursuant to agreements which the Registrant may enter into
with underwriters or agents (forms of which will be included as exhibits to this
Registration Statement), officers and directors of the Registrant, and
affiliates thereof, may be entitled to indemnification by such underwriters or
agents against certain liabilities, including liabilities under the Securities
Act of 1933, arising from information which has been or will be furnished to the
Registrant by such underwriters or agents that appears in the Registration
Statement or any Prospectus.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
<TABLE>
<S> <C> <C> <C> <C>
1.1 * -- Form of Underwriting Agreement for the Offered Notes.
3.1 * -- Certificate of Formation of the Issuer.
3.2 * -- Form of Limited Liability Company Agreement of the Issuer
4.1 * -- Form of Indenture, including forms of the Notes and certain
other related agreements as Exhibits thereto.
5.1 * -- Opinion of Dewey Ballantine LLP regarding the securities being registered.
8.1 -- Opinion of Dewey Ballantine LLP regarding the tax treatment of the Notes.
10.1 * -- Form of Assignment and Servicing Agreement.
10.2 * -- Form of Placement Agent Agreement.
</TABLE>
II-1
<PAGE> 63
<TABLE>
<S> <C> <C> <C> <C>
23.1 -- Consent of Dewey Ballantine LLP is included in the opinion filed as
Exhibit 5.1 hereto.
23.2 -- Consent of Independent Auditor.
24.1 * -- Power of Attorney (Included on Page II-4 hereof).
25.1 -- Statement of Eligibility and Qualification of Trustee (Form T-1).
99.1 * -- Computational Materials.
</TABLE>
*As Previously filed on March 1, 1999
(b) All financial statements, schedules and historical
financial information have been omitted as they are not
applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(a) That insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this Registration Statement as of the time it was declared effective.
(c) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Mount
Laurel, State of New Jersey, on March 1, 1999.
COPELCO CAPITAL FUNDING LLC 99-1,
Registrant
By: COPELCO MANAGER, INC.
as Manager of the Registrant
By /s/ Ian J. Berg
------------------------------
Name: Ian J. Berg
Title: Chief Executive Officer and Acting Chief Financial Officer
Each person whose signature appears below constitutes and
appoints Stephen W. Shippie as his/her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him/her in
his/her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Form S-1 and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he/she might or could do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent or his substitute may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form S-1 has been signed by the following persons
in the capacities indicated on the dates indicated below.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Ian J. Berg Chairman of the Board March 10, 1999
- --------------------------------
Ian J. Berg Director
/s/ John Hakemian Director March 10, 1999
- --------------------------------
John Hakemian
/s/ Tadayuki Seki Director March 10, 1999
- --------------------------------
Tadayuki Seki
</TABLE>
II-4
<PAGE> 1
Exhibit 8.1
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE (212) 259-8000 FACSIMILE (212) 259-6333
March 11, 1999
Copelco Capital Funding LLC 99-1
700 East Gate Drive
Mount Laurel, New Jersey 08054-5400
Re: Copelco Capital Funding LLC 99-1
Registration Statement on Form S-1
(File No. 333-69983)
Ladies and Gentlemen:
We have acted as special counsel for Copelco Capital Funding LLC 99-1,
a Delaware limited liability company (the "Issuer") in connection with the
preparation and filing of the above-referenced registration statement on Form
S-1 ( the "Registration Statement"), filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, in respect of the
Copelco Capital Funding 99-1 Class A-1 Lease-Backed Notes, Series 1999-A, Class
A-2 Lease-Backed Notes, Series 1999-A, Class A-3 Lease-Backed Notes, Series
1999-A, Class A-4 Lease-Backed Notes, Series 1999-A, Class A-5 Lease-Backed
Notes, Series 1999-A, Class B Lease-Backed Notes, Series 1999-A, Class C
Lease-Backed Notes, Series 1999-A, and Class D Lease-Backed Notes Series 1999-A
(collectively, the "Notes").
In addition, assuming (i) the Indenture dated as of March 1, 1999 among
Copelco Capital Funding LLC 99-1, Copelco Capital, Inc. and Manufacturers and
Traders Trust Company is fully executed, delivered and enforceable against the
parties thereto in accordance with its terms (ii) the transaction described in
the prospectus is completed on substantially the terms and conditions set forth
therein, and (iii) no election on IRS Form 8832 is made to the contrary, it is
our opinion that:
- the Issuer will be characterized as a partnership for federal income
tax purposes, so long as it has more than one owner;
- the Notes will be characterized as indebtedness for federal income tax
purposes; and
<PAGE> 2
- subject to the assumptions and limitations described therein, the
discussion under the heading "Material Federal Income Tax
Considerations" in the prospectus contained in the Registration
Statement sets forth all the material federal income tax consequences
to the original purchasers of the Notes and is accurate in all material
respects.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this opinion, we do not concede that we are
experts within the meaning of the Act or the rules and regulations therewith, or
that this consent is required by Section 7 of the Act.
Very truly yours,
DEWEY BALLANTINE LLP
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Copelco Capital Funding LLC 99-1:
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the Registration Statement.
KPMG LLP
New York, New York
March 11, 1999
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT
OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305(b)(2)
MANUFACTURERS AND TRADERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 16-0538020
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a national bank) identification No.)
One M&T Plaza
Buffalo, New York 14240-2399
(Address of principal executive offices) (Zip Code)
COPELCO CAPITAL FUNDING LLC 99-1
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
(Address of principal executive offices) (Zip Code)
CLASS A-1 LEASE-BACKED NOTES, SERIES 1999-A
CLASS A-2 LEASE-BACKED NOTES, SERIES 1999-A
CLASS A-3 LEASE-BACKED NOTES, SERIES 1999-A
CLASS A-4 LEASE-BACKED NOTES, SERIES 1999-A
CLASS A-5 LEASE-BACKED NOTES, SERIES 1999-A
CLASS B LEASE-BACKED NOTES, SERIES 1999-A
CLASS C LEASE-BACKED NOTES, SERIES 1999-A
CLASS D LEASE-BACKED NOTES, SERIES 1999-A
(Title of indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it is
subject.
Superintendent of Banks of the State of New York, 2 World
Trade Center, New York, NY 10047 and Albany, NY 12203.
Federal Reserve Bank of New York, 33 Liberty Street, New York,
NY 10045.
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
[Items 3 through 15 omitted pursuant to General Instruction B to Form T-1]
1
<PAGE> 3
ITEM 16. LIST OF EXHIBITS
Exhibit A. Organization Certificate of the Trustee as now in
effect (incorporated herein by reference to Exhibit
1, Form T-1, Registration Statement No. 33-7309).
Exhibit B. Certificate of Authority of the Trustee to commence
business (incorporated herein by reference to Exhibit
2, Form T-1, Registration Statement No. 33-7309).
Exhibit C. Authorization of the Trustee to exercise corporate
trust powers (incorporated herein by reference to
Exhibit 3, Form T-1, Registration Statement No.
33-7309).
Exhibit D. Existing By-Laws of the Trustee (incorporated herein
by reference to Exhibit 4, Form T-1, Registration
Statement No. 33-7309).
Exhibit E. Not Applicable.
Exhibit F. Consent of the Trustee (incorporated herein by
reference to Exhibit 6, Form T-1, Registration
Statement No. 33-7309).
Exhibit G. Report of Condition of the Trustee.*
Exhibit H. Not Applicable.
Exhibit I. Not Applicable
* Filed Herewith
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Manufacturers and Traders Trust Company, a banking corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility and qualification to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of Buffalo, and
State of New York, on the 5th day of March, 1999.
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ RUSSELL T. WHITLEY
Russell T. Whitley
Assistant Vice President
2
<PAGE> 4
EXHIBIT G
REPORT OF CONDITION OF THE TRUSTEE
MANUFACTURERS AND TRADERS TRUST COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31
Dollars in thousands 1998
----
<S> <C>
ASSETS Cash and due from banks $ 493,780
Money-market assets 537,686
Investment securities
Available for sale (cost: $2,461,331) 2,462,016
Held to maturity (market value: $87,365) 87,282
Other (market value: $113,226) 113,226
-----------
Total investment securities 2,662,524
-----------
Loan and leases, net of unearned discount 15,284,671
Allowance for possible credit losses (301,598)
-----------
Loan and leases, net 14,983,073
Other assets 1,396,646
-----------
Total assets $20,073,709
LIABILITIES Deposits
Noninterest-bearing $ 2,076,466
Interest-bearing 12,253,924
-----------
Total deposits 14,330,290
Short-term borrowings 2,229,977
Accrued interest and other liabilities 425,616
Long-term borrowings 1,248,414
-----------
Total liabilities 18,234,397
STOCKHOLDER'S EQUITY 1,839,312
-----------
Total liabilities and stockholder's equity $20,073,709
-----------
</TABLE>
G-1
