================================================================================
$537,431,425
COPELCO CAPITAL FUNDING LLC 99-B, ISSUER
COPELCO CAPITAL, INC., SERVICER
SERIES 1999-B
LEASE-BACKED NOTES
THE ISSUER WILL ISSUE --
YOU SHOULD READ THE SECTION o Seven Classes of notes which
ENTITLED "RISK FACTORS" are to be offered by this
STARTING ON PAGE 6 OF THIS prospectus; and
PROSPECTUS AND CONSIDER THESE
FACTORS BEFORE MAKING A o Class E Lease-Backed Notes,
DECISION TO INVEST IN THE NOTES. which are not offered by this
prospectus but serve as credit
The notes are only secured by support to the notes offered by
the assets of the issuer. The this prospectus;
notes are not debt obligations of
any other person. THE NOTES --
The notes will not be insured or
guaranteed by any governmen- o Are backed by a pledge of
tal agency or instrumentality. assets of the issuer. The
assets of the issuer securing
the notes will include a pool
of copier, computer, healthcare
and commercial and industrial
equipment leases, and all of
its interest in the equipment
underlying the leases;
o Receive distributions beginning
on November 18, 1999;
o Represent debt obligations of
Copelco Capital Funding LLC
99-B; and
o Currently have no trading
market.
<TABLE>
<CAPTION>
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INITIAL RATINGS
ISSUANCE UNDERWRITING INTEREST INITIAL PUBLIC ----------------------------------
AMOUNT DISCOUNT RATE OFFERING PRICE MOODY'S DCR S&P
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-1 Notes $117,952,055 0.1000% 5.93709% 100.00000% P-1 D-1+ A-1+
- ----------------------------------------------------------------------------------------------------------------
Class A-2 Notes $ 38,185,917 0.1500% 6.25% 99.98951% Aaa AAA AAA
- ----------------------------------------------------------------------------------------------------------------
Class A-3 Notes $186,686,705 0.1750% 6.61% 99.99521% Aaa AAA AAA
- ----------------------------------------------------------------------------------------------------------------
Class A-4 Notes $155,006,537 0.2400% 6.90% 99.98487% Aaa AAA AAA
- ----------------------------------------------------------------------------------------------------------------
Class B Notes $ 11,314,346 0.2500% 6.95% 99.98023% Aa2 AA AA
- ----------------------------------------------------------------------------------------------------------------
Class C Notes $ 11,314,346 0.3000% 7.10% 99.99014% A2 A A
- ----------------------------------------------------------------------------------------------------------------
Class D Notes $ 16,971,519 0.4000% 7.78% 99.99264% 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.
FIRST UNION CAPITAL MARKETS CORP. BANC ONE CAPITAL MARKETS, INC.
The date of this Prospectus is September 17, 1999
<PAGE>
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.............................................................. 4
Determination Date........................................................ 4
Record Date............................................................... 4
Issuance Date............................................................. 4
Denominations............................................................. 4
Priority of Distributions................................................. 4
Reserve Account........................................................... 5
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.................... 22
The Issuer................................................................ 28
Management's Discussion and Analysis of Financial Condition............... 28
Directors and Executive Officers of the Manager of the Issuer............. 28
Description of the Notes.................................................. 29
Prepayment and Yield Considerations....................................... 44
Security for the Notes.................................................... 50
The Indenture Trustee..................................................... 50
Certain Legal Matters Affecting a Lessee's Rights and Obligations........ 50
Material Federal Income Tax Consequences.................................. 51
ERISA Considerations...................................................... 55
Underwriting.............................................................. 56
Experts................................................................... 57
Legal Matters............................................................. 58
Rating of the Notes....................................................... 58
Index of Terms............................................................ 63
2
<PAGE>
PROSPECTUS SUMMARY
o 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.
o 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-B
The issuer will issue the notes offered by this prospectus in book-entry
form through the facilities of The Depository Trust Company.
ISSUER
o Copelco Capital Funding LLC 99-B. The address of the issuer is 700 East Gate
Drive, Mt. Laurel, NJ 08054.
o 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
o On or about September 22, 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.
o The leases will include copier, computer, healthcare and commercial and
industrial equipment leases. As of August 31, 1999, copiers make up
approximately 44.56% of the total original equipment cost of the leased
equipment in this pool.
o The lessees under the leases are primarily hospitals, non-hospital medical
facilities, physicians, and businesses.
o 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.
o 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 7.619%.
o 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 close of business on August 31, 1999.
3
<PAGE>
PAYMENT DATE
The 18th day of each month if the 18th is a business day. If the eighteenth is
not a business day, the payment date will be the following day that is a
business day. The first payment date will be November 18, 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.
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 September 22, 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:
o to the Class A-1 noteholders only, until the principal amount on the Class
A-1 Notes has been reduced to zero, the full amount in the decrease in the
principal value of the leases;
o when the Class A-1 Notes have been paid in full:
o to the Class A-2 noteholders, until the principal amount on the
Class A-2 Notes has been reduced to zero, an amount
approximately equal to 84.8389% of the decrease in the principal
value of the leases;
o 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 approximately equal to
84.8389% of the decrease in the principal value of the leases;
o 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 approximately equal to
84.8389% of the decrease in the principal value of the leases;
o to the Class B noteholders, an amount approximately equal to
2.5268% of the decrease in the principal value of the leases;
o to the Class C noteholders, an amount approximately equal to
2.5268% of the decrease in the principal value of the leases;
o to the Class D noteholders, an amount approximately equal to
3.7903% of the decrease in the principal value of the leases;
o to the Class E noteholders, an amount approximately equal to
3.4744% of the decrease in the principal value of the leases.
4
<PAGE>
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 the cut-off date and
the outstanding principal amount of the notes. The issuer will use funds 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 10% of the
total principal value of the leases as of the cut-off date. If a redemption
occurs, the issuer 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, the issuer will pay the
outstanding principal amount of the notes in full on the following payment
dates:
Class A-1 October 2000
Class A-2 June 2001
Class A-3 December 2002
Class A-4 December 2004
Class B July 2005
Class C August 2005
Class D September 2005
Class E August 2007
Final payment on the notes will probably be earlier than the final scheduled
payment date set forth above for the related class of notes.
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes:
o 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 not be treated as an association (or a publicly traded partnership)
taxable as a corporation. By your acceptance of a note, you agree to treat the
notes as debt.
o 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.
o 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.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money market
funds under rule 2a-7 under the Investment Company Act of 1940, as amended.
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
o The issuer will not issue the notes offered by this prospectus unless they
have been assigned the ratings set forth on the cover page of this prospectus.
The Class E Notes will be rated "BB+" by Duff and Phelps Credit Rating Co.
o You must not assume that the ratings will not be lowered, qualified or
withdrawn by the rating agencies.
5
<PAGE>
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 YOUR If no public market develops, as a
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. The issuer
offers 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 REDUCE discount, you should consider the risk
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:
o prepayments permitted by the servicer;
o payments as a result of leases which are
defaulted;
o payments as a result of leases
accelerated by the servicer;
o payments due to loss, theft, destruction
or other casualty; and
o 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 ARE NOT In the event the issuer has insufficient
PERFECTED AND OTHER CREDITORS assets available to pay the notes, the
MAY HAVE RIGHTS issuer may sell the equipment upon a lease
TO THE EQUIPMENT 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>
Prior to September 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 64.83% of the statistical
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 35.17% of the
statistical 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 MAY The application of state law requirements
IMPEDE RECOVERY EFFORTS AND may limit recoveries on equipment. State
AFFECT THE laws impose requirements and restrictions
ABILITY OF ISSUER TO relating to foreclosure sales and
RECOUP THE FULL AMOUNT DUE ON obtaining deficiency judgments following
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:
o the failure to file financing
statements to perfect the issuer's
security interest in the equipment
against a lessee;
o depreciation;
o obsolescence;
o damage or loss of any item of equipment;
and
o 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, INC. In some circumstances, a bankruptcy of
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>
o recharacterize the contribution of the
related leases by Copelco Capital, Inc.
to the issuer as a loan to Copelco
Capital, Inc from the issuer, secured by
a pledge of such leases; or
o consolidate the assets of the issuer
with those of Copelco Capital, Inc.
since Copelco Capital, Inc. will 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
purposes the leases will be treated as
assets of Copelco Capital, Inc. 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 AFFILIATES There is no recourse against any
OF COPELCO CAPITAL LLC 99-B affiliates of the issuer. The notes
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 LEASES Adverse economic conditions or other
MAY ADVERSELY AFFECT THE LEASES factors particularly affecting any state
or region where a high concentration of
leases is located could adversely affect
the performance on the leases. As of the
cut-off date, approximately 18.30%, 6.27%,
13.95%, 7.83% and 5.71% of the leases
(based on the statistical discounted
present value of the leases) were located
in California, Florida, New York, Texas
and New Jersey, 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 COPELCO Should bankruptcy or reorganization
CAPITAL, INC. MAY RESULT IN proceedings be commenced with respect to
REDUCED OR DELAYED PAYMENTS TO the servicer, any funds held by the
NOTEHOLDERS servicer and not transferred to the
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 the cut-off
date 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.
8
<PAGE>
DEFAULT OR INSOLVENCY OF To the extent lessees default on the
LESSEES MAY REDUCE PAYMENTS leases, including through insolvency,
TO NOTEHOLDERS lease payments will decrease and,
accordingly, funds available for payment
to you, as a noteholder, will be reduced.
RISKS ASSOCIATED WITH YEAR 2000 The servicer is faced with the task of
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 If technological advances relating to
COPIERS MAY REDUCE VALUE OF copiers causes the leased copiers to
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
44.04% by statistical discounted present
value of the total pool of leases as of
the cut-off date. 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 OF If a significant number of leases are
LEASES MAY ADVERSELY AFFECT added or replaced, this could affect the
CASHFLOW AND MAY DECREASE THE rate at which funds are distributed on the
YIELD ON YIELD ON THE NOTES notes and decrease the yield to
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 the cut-off date. 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>
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
(856) 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 62 in this
prospectus.
10
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be distributed to the
owner of Copelco Capital Funding LLC 99-B (the "Issuer"). The distribution will
occur after the contribution from Copelco Capital, Inc. ("Copelco Capital" or
the "Servicer") of the pool of copier, computer, healthcare and commercial and
industrial 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 close of business on September 22, 1999 (the
"Issuance 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. Copelco Capital
will not contribute to the Issuer and will retain payments on the Leases due
during September 1999. On the Issuance Date, an amount equal to interest which
will accrue on the Notes from the Issuance Date to October 18, 1999 will be
deposited in the Collection Account. The actual principal value of the Leases on
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-B.
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. As
of August 31, 1999 (the "Cut-Off Date"), using the Statistical Discount Rate,
the weighted average original term of the Series Pool is 52.70 months and the
weighted average remaining term of the Series Pool is 47.69 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 as of the initial Determination Date
(as defined herein).
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.
11
<PAGE>
"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 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 85 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. In the tables below, the
sum of any column may not equal the total due to rounding.
THE PLEDGED ASSETS. The assets pledged to secure the Notes (the "Pledged
Assets") will consist of a pool of copier, computer, healthcare and commercial
and industrial 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>
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
PERCENTAGE
OF
STATISTICAL PERCENTAGE OF
STATISTICAL DISCOUNTED AGGREGATE AGGREGATE
PERCENTAGE OF DISCOUNTED PRESENT ORIGINAL ORIGINAL
NUMBER OF NUMBER OF PRESENT VALUE VALUE EQUIPMENT EQUIPMENT
STATE LEASES LEASES OF LEASES OF LEASES COST COST
----- --------- ------------- ------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Alabama 182 0.62% $ 6,679,912 1.18% $ 7,655,214 1.25%
Alaska 23 0.08 415,801 0.07 471,096 0.08
Arizona 428 1.46 8,927,425 1.58 9,767,948 1.59
Arkansas 71 0.24 2,673,955 0.47 3,050,874 0.50
California 5,715 19.47 103,396,108 18.30 110,522,221 17.99
Colorado 753 2.57 10,577,078 1.87 11,390,550 1.85
Connecticut 575 1.96 7,903,588 1.40 9,054,562 1.47
Delaware 49 0.17 574,170 0.10 613,545 0.10
District of Columbia 150 0.51 3,240,667 0.57 3,507,276 0.57
Florida 1,713 5.84 35,438,004 6.27 37,603,039 6.12
Georgia 899 3.06 19,383,381 3.43 20,657,232 3.36
Hawaii 33 0.11 378,384 0.07 383,636 0.06
Idaho 63 0.21 948,169 0.17 1,012,856 0.16
Illinois 1,484 5.06 22,819,669 4.04 24,777,951 4.03
Indiana 406 1.38 7,003,995 1.24 7,920,492 1.29
Iowa 73 0.25 1,590,149 0.28 1,846,164 0.30
Kansas 94 0.32 2,289,889 0.41 2,418,952 0.39
Kentucky 127 0.43 3,370,187 0.60 3,703,913 0.60
Louisiana 279 0.95 5,359,135 0.95 5,388,380 0.88
Maine 288 0.98 4,146,383 0.73 4,502,324 0.73
Maryland 342 1.17 6,972,374 1.23 7,372,191 1.20
Massachusetts 863 2.94 14,694,779 2.60 16,348,598 2.66
Michigan 285 0.97 7,009,683 1.24 7,914,139 1.29
Minnesota 121 0.41 4,871,551 0.86 6,011,373 0.98
Mississippi 71 0.24 2,873,044 0.51 3,380,365 0.55
Missouri 258 0.88 4,738,412 0.84 4,974,411 0.81
Montana 40 0.14 695,284 0.12 740,541 0.12
Nebraska 98 0.33 1,599,996 0.28 1,722,545 0.28
Nevada 295 1.01 5,475,376 0.97 5,722,477 0.93
New Hampshire 234 0.80 2,418,193 0.43 2,650,525 0.43
New Jersey 1,519 5.18 32,283,075 5.71 35,968,029 5.86
New Mexico 90 0.31 2,184,792 0.39 2,420,926 0.39
New York 4,577 15.60 78,837,191 13.95 87,195,725 14.20
North Carolina 451 1.54 10,046,924 1.78 10,912,155 1.78
North Dakota 5 0.02 29,050 0.01 37,322 0.01
Ohio 745 2.54 17,755,067 3.14 19,321,000 3.15
Oklahoma 141 0.48 5,133,159 0.91 5,547,873 0.90
Oregon 380 1.29 7,467,469 1.32 8,311,855 1.35
Pennsylvania 969 3.30 26,364,581 4.67 28,148,160 4.58
Puerto Rico 17 0.06 547,190 0.10 607,201 0.10
Rhode Island 193 0.66 3,595,569 0.64 3,874,095 0.63
South Carolina 225 0.77 4,032,836 0.71 4,169,825 0.68
South Dakota 10 0.03 116,342 0.02 115,870 0.02
Tennessee 172 0.59 4,375,130 0.77 4,689,729 0.76
Texas 2,310 7.87 44,271,827 7.83 47,497,685 7.73
Utah 180 0.61 3,538,371 0.63 3,683,853 0.60
Vermont 21 0.07 303,073 0.05 301,491 0.05
Virginia 435 1.48 7,017,357 1.24 7,469,662 1.22
Washington 627 2.14 12,275,368 2.17 13,694,595 2.23
West Virginia 81 0.28 2,184,413 0.39 2,302,040 0.37
Wisconsin 173 0.59 4,003,431 0.71 4,611,748 0.75
Wyoming 14 0.05 236,211 0.04 247,498 0.04
=======================================================================================================================
Total 29,347 100.00% $ 565,063,169 100.00% $ 614,213,726 100.00%
=======================================================================================================================
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY LEASE BALANCE
PERCENTAGE OF PERCENTAGE OF
STATISTICAL STATISTICAL AGGREGATE AGGREGATE
PERCENTAGE DISCOUNTED DISCOUNTED ORIGINAL ORIGINAL
STATISTICAL DISCOUNTED NUMBER OF OF NUMBER OF PRESENT VALUE PRESENT VALUE EQUIPMENT EQUIPMENT
PRESENT VALUE OF THE LEASES LEASES LEASES OF LEASES OF LEASES COST COST
- ---------------------------- --------- ------------ ------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0.01 - 5,000.00 9,031 30.77% $ 26,941,273 4.77% $ 30,435,587 4.96%
5,000.01 - 10,000.00 7,088 24.15 51,526,484 9.12 56,905,950 9.26
10,000.01 - 15,000.00 4,052 13.81 49,837,323 8.82 54,823,501 8.93
15,000.01 - 20,000.00 2,629 8.96 45,585,661 8.07 49,545,829 8.07
20,000.01 - 25,000.00 1,601 5.46 35,723,543 6.32 38,548,619 6.28
25,000.01 - 30,000.00 1,076 3.67 29,386,687 5.20 31,323,508 5.10
30,000.01 - 35,000.00 702 2.39 22,680,553 4.01 24,182,191 3.94
35,000.01 - 40,000.00 553 1.88 20,679,595 3.66 22,140,037 3.60
40,000.01 - 45,000.00 388 1.32 16,450,623 2.91 17,586,258 2.86
45,000.01 - 50,000.00 277 0.94 13,149,195 2.33 13,979,079 2.28
50,000.01 - 60,000.00 464 1.58 25,294,404 4.48 26,520,857 4.32
60,000.01 - 70,000.00 307 1.05 19,930,602 3.53 21,137,697 3.44
70,000.01 - 80,000.00 233 0.79 17,390,873 3.08 18,166,937 2.96
80,000.01 - 90,000.00 172 0.59 14,530,149 2.57 14,788,686 2.41
90,000.01 - 100,000.00 125 0.43 11,884,762 2.10 12,796,857 2.08
100,000.01 - 125,000.00 182 0.62 20,247,287 3.58 21,981,156 3.58
125,000.01 - 150,000.00 105 0.36 14,333,852 2.54 15,381,414 2.50
150,000.01 - 175,000.00 88 0.30 14,360,617 2.54 15,890,851 2.59
175,000.01 - 200,000.00 46 0.16 8,633,416 1.53 9,472,002 1.54
200,000.01 - 300,000.00 95 0.32 23,068,526 4.08 25,402,840 4.14
300,000.01 - 400,000.00 53 0.18 18,174,664 3.22 20,172,207 3.28
400,000.01 - 500,000.00 25 0.09 11,193,339 1.98 12,582,652 2.05
500,000.01 - 600,000.00 10 0.03 5,219,486 0.92 5,924,298 0.96
600,000.01 - 700,000.00 9 0.03 5,817,914 1.03 6,232,574 1.01
700,000.01 - 800,000.00 1 0.00 739,523 0.13 846,685 0.14
800,000.01 - 900,000.00 7 0.02 6,029,240 1.07 6,956,762 1.13
900,000.01 - 1,000,000.00 8 0.03 7,477,275 1.32 8,426,461 1.37
1,000,000.01 - 1,500,000.00 16 0.05 20,505,206 3.63 22,163,499 3.61
1,500,000.01 - 2,000,000.00 2 0.01 3,388,054 0.60 4,442,035 0.72
greater than 2,000,000.00 2 0.01 4,883,043 0.86 5,456,697 0.89
==============================================================================================================================
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY REMAINING TERM TO MATURITY
PERCENTAGE
OF
STATISTICAL PERCENTAGE
STATISTICAL DISCOUNTED OF AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER PRESENT VALUE OF VALUE OF ORIGINAL EQUIPMENT
REMAINING TERM (MONTHS) LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST
- -------------------------- ---------- ----------- ----------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 457 1.56% $ 3,652,736 0.65% $ 4,623,633 0.75%
13 - 24 1,096 3.73 12,847,843 2.27 15,833,722 2.58
25 - 36 13,198 44.97 147,834,081 26.16 169,157,015 27.54
37 - 48 4,200 14.31 77,765,971 13.76 85,005,274 13.84
49 - 60 10,002 34.08 288,060,417 50.98 304,288,567 49.54
61 - 72 255 0.87 18,104,507 3.20 18,402,993 3.00
73 - 84 137 0.47 16,421,757 2.91 16,538,150 2.69
85 - 96 2 0.01 375,856 0.07 364,373 0.06
===================================================================================================================
Total 29,347 100.00% $ 565,063,169 100.00% $ 614,213,726 100.00%
===================================================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY ORIGINAL TERM TO MATURITY
PERCENTAGE
OF PERCENTAGE
STATISTICAL OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT
ORIGINAL TERM (MONTHS) LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST
----------------------- --------- ---------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 - 12 157 0.53% $ 1,395,574 0.25% $ 1,788,543 0.29%
13 - 24 653 2.23 8,031,734 1.42 9,779,564 1.59
25 - 36 2,929 9.98 47,128,745 8.34 52,942,043 8.62
37 - 48 12,256 41.76 133,807,666 23.68 153,386,570 24.97
49 - 60 5,901 20.11 166,826,479 29.52 177,936,595 28.97
61 - 72 7,286 24.83 187,208,566 33.13 197,668,965 32.18
73 - 84 146 0.50 16,538,281 2.93 16,703,776 2.72
85 - 96 19 0.06 4,126,124 0.73 4,007,669 0.65
==================================================================================================================
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
==================================================================================================================
<CAPTION>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
PERCENTAGE
OF PERCENTAGE
STATISTICAL OF
STATISTICAL DISCOUNTED AGGREGATE
PERCENTAGE DISCOUNTED PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER PRESENT VALUE VALUE OF ORIGINAL EQUIPMENT
LEASE TYPE LEASES OF LEASES OF LEASES LEASES EQUIPMENT COST COST
- --------------------------- --------- ---------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Finance Lease 28,877 98.40% $541,947,849 95.91% $582,572,403 94.85%
Operating Lease 470 1.60 23,115,321 4.09 31,641,323 5.15
=====================================================================================================================
Total 29,347 100.00% $565,063,169 00.00% $614,213,726 100.00%
=====================================================================================================================
<CAPTION>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
PERCENTAGE
OF PERCENTAGE
STATISTICAL STATISTICAL OF
DISCOUNTED DISCOUNTED AGGREGATE
PERCENTAGE PRESENT PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER VALUE OF VALUE OF ORIGINAL EQUIPMENT
PURCHASE OPTION LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST
- ------------------------------ --------- ---------- ----------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Fair Market Value 19,027 65.89% $ 258,960,419 47.78% $ 288,775,010 49.57%
Fixed Purchase Option 2,729 9.45 74,882,031 13.82 80,762,248 13.86
Nominal Buyout 7,121 24.66 208,105,399 38.40 213,035,146 36.57
===================================================================================================================
Total 28,877 100.00% $ 541,947,849 100.00% $ 582,572,403 100.00%
====================================================================================================================
<CAPTION>
DISTRIBUTION OF LEASES BY DELINQUENCIES
PERCENTAGE
OF PERCENTAGE
STATISTICAL STATISTICAL OF
DISCOUNTED DISCOUNTED AGGREGATE
PERCENTAGE PRESENT PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER VALUE OF VALUE OF ORIGINAL EQUIPMENT
DAYS DELINQUENT LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST
- ------------------------------ --------- ---------- ----------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
0 - 29 28,655 97.64% $556,133,690 98.42% $604,435,295 98.41%
30 - 59 692 2.36 8,929,479 1.58 9,778,432 1.59
===================================================================================================================
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
===================================================================================================================
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY ORIGINATING GROUPS
PERCENTAGE
OF PERCENTAGE
STATISTICAL STATISTICAL OF
DISCOUNTED DISCOUNTED AGGREGATE
PERCENTAGE PRESENT PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER VALUE OF VALUE OF ORIGINAL EQUIPMENT
ORIGINATING GROUPS LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST
- ------------------------------ --------- ---------- ----------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Business Technology 24,385 83.09% $354,396,236 62.72% $380,840,878 62.00%
Healthcare 3,453 11.77 138,979,425 24.60 147,370,365 23.99
Commercial and Industrial 1,509 5.14 71,687,508 12.69 86,002,484 14.00
===================================================================================================================
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
===================================================================================================================
<CAPTION>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
PERCENTAGE
OF PERCENTAGE
STATISTICAL STATISTICAL OF
DISCOUNTED DISCOUNTED AGGREGATE
PERCENTAGE PRESENT PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER VALUE OF VALUE OF ORIGINAL EQUIPMENT
EQUIPMENT TYPE LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST
- ------------------------------ --------- --------- ------------ ---------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Anesthesia Equipment 4 0.01% $ 229,523 0.04% $ 238,084 0.04%
Automated Chemistry Systems 68 0.23 4,820,926 0.85 5,151,915 0.84
Automated Hematology Systems 106 0.36 2,398,572 0.42 2,551,222 0.42
Automated Test Equipment 3 0.01 108,530 0.02 100,792 0.02
Automobile Shop Equipment 12 0.04 196,208 0.03 179,979 0.03
Automobiles 1 0.00 175,155 0.03 191,558 0.03
Carts, Stretchers, Wheel Chairs 75 0.26 1,349,780 0.24 1,327,616 0.22
Cash Registers, Point of Sale 119 0.41 2,618,872 0.46 2,745,174 0.45
Cobalt and X-Ray Therapy Equipment 1 0.00 28,218 0.00 24,698 0.00
Communication Equipment 8 0.03 227,430 0.04 214,647 0.03
Computer 1,881 6.41 36,298,961 6.42 37,623,802 6.13
Computer Systems--Drs & Hosp 298 1.02 9,436,965 1.67 9,829,275 1.60
Construction Equipment 51 0.17 2,250,835 0.40 2,250,315 0.37
Copier 19,271 65.67 248,826,977 44.04 273,672,277 44.56
Dental Operatory Equipment 676 2.30 17,002,678 3.01 17,064,048 2.78
Digital Cameras 1 0.00 15,449 0.00 14,400 0.00
Document Imaging Equipment 234 0.80 4,195,140 0.74 4,614,187 0.75
ECG (EKG) and Defibrillators 25 0.09 262,640 0.05 279,692 0.05
EEG 1 0.00 13,375 0.00 12,817 0.00
Electrical Generators 1 0.00 41,545 0.01 33,475 0.01
Electronics Production Equipment 122 0.42 30,200,254 5.34 36,659,514 5.97
Environmental Control Equipment 1 0.00 68,581 0.01 60,750 0.01
Fabrication Equipment 9 0.03 333,697 0.06 326,570 0.05
Facsimile 1,304 4.44 4,556,552 0.81 5,153,791 0.84
Fire Protection Equipment 1 0.00 43,024 0.01 40,638 0.01
Food Processing Equipment 11 0.04 402,359 0.07 398,717 0.06
Food Refrigeration Equipment 3 0.01 105,256 0.02 95,989 0.02
Furniture and Fixtures 37 0.13 1,440,543 0.25 1,404,042 0.23
Gamma Cameras 28 0.10 8,474,398 1.50 9,605,647 1.56
Heating & Air Conditioning Equipment 2 0.01 30,308 0.01 28,735 0.00
Holter Monitors 8 0.03 75,690 0.01 79,175 0.01
Hosp Beds; Elec. Stryker FRMS, Burn Beds 13 0.04 142,683 0.03 139,933 0.02
Industrial Laboratory Equipment 1 0.00 36,212 0.01 34,141 0.01
Industrial Production Equipment 5 0.02 126,029 0.02 120,750 0.02
Laminating Devices 2 0.01 36,280 0.01 41,614 0.01
Lasers 23 0.08 1,677,021 0.30 1,816,471 0.30
Laundry Equipment 5 0.02 197,951 0.04 187,379 0.03
Lift Trucks 1 0.00 12,810 0.00 14,500 0.00
Lithotripters and Dialysis Equipment 2 0.01 663,876 0.12 727,900 0.12
Machine Tools 11 0.04 639,006 0.11 647,426 0.11
Mailing Equipment 29 0.10 276,755 0.05 278,071 0.05
Mammography 7 0.02 550,087 0.10 593,804 0.10
Materials Handling Equipment 1,348 4.59 35,234,824 6.24 42,664,105 6.95
MBL X-Ray Systems; C-arm; IMG I 1 0.00 104,204 0.02 107,000 0.02
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE
STATISTICAL STATISTICAL OF
DISCOUNTED DISCOUNTED AGGREGATE
PERCENTAGE PRESENT PRESENT AGGREGATE ORIGINAL
NUMBER OF OF NUMBER VALUE OF VALUE OF ORIGINAL EQUIPMENT
EQUIPMENT TYPE LEASES OF LEASES LEASES LEASES EQUIPMENT COST COST
- ------------------------------ --------- --------- ------------ ---------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Medical Equipment 5 0.02 161,250 0.03 151,567 0.02
Misc. Commercial & Industrial Equipment 320 1.09 13,280,828 2.35 12,446,948 2.03
Miscellaneous Hospital Equipment 235 0.80 27,660,123 4.90 28,782,390 4.69
Misc. Lab Eqp. (Pthlgy, Gas, Chrmts) 4 0.01 64,836 0.01 66,444 0.01
Misc. Vet Eqp. Cages, Scales, Tables 1 0.00 48,674 0.01 56,850 0.01
Misc. X-Ray Eqp. (Tnks, Driers,Tbl) 8 0.03 428,942 0.08 478,560 0.08
Miscellaneous 608 2.07 25,674,575 4.54 25,870,934 4.21
MRI Systems 4 0.01 2,435,006 0.43 2,742,031 0.45
Misc. Eqp.-Golf Carts, Lawn Care 2 0.01 47,507 0.01 46,166 0.01
Office Furniture 30 0.10 953,238 0.17 932,997 0.15
Operating Microscopes 2 0.01 312,123 0.06 488,184 0.08
Opthlmc Diag Eqp (Slit Lamps,Tonometers) 96 0.33 2,177,268 0.39 2,395,023 0.39
Opt Eqp; Lens Grinding, Resurfacing 40 0.14 1,260,109 0.22 1,348,284 0.22
Packaging Equipment 135 0.46 5,458,976 0.97 6,216,777 1.01
Patient Monitoring Systems 89 0.30 2,148,090 0.38 2,237,242 0.36
Phone, TV, Comm Equipment 26 0.09 499,825 0.09 512,348 0.08
Photo Equipment 3 0.01 61,222 0.01 49,127 0.01
Phys Misc Medical Eqp & Exam Tables 747 2.55 18,994,292 3.36 20,203,403 3.29
Phys Office Furn, Fixtures & Phones 10 0.03 167,167 0.03 163,195 0.03
Pollution Control Equipment 1 0.00 39,648 0.01 35,896 0.01
Printing Equipment 298 1.02 17,008,375 3.01 17,836,610 2.90
Processing Equipment 6 0.02 347,867 0.06 337,779 0.05
Pulse Oximetry Equipment 1 0.00 37,788 0.01 36,585 0.01
Radiographic Flouroscopic Systems 1 0.00 925,800 0.16 1,005,000 0.16
Respiratory Therapy Equipment 507 1.73 13,387,390 2.37 13,953,993 2.27
Restaurant, Hotel & Motel Equipment 42 0.14 1,445,669 0.26 1,306,683 0.21
Scanners 3 0.01 125,789 0.02 132,527 0.02
Security Systems 15 0.05 286,608 0.05 286,026 0.05
Standard Printers 10 0.03 258,683 0.05 300,352 0.05
Standard X-Ray Systems 21 0.07 838,605 0.15 871,106 0.14
Surgical Eqp; Scopes, Electrosurgical 4 0.01 76,032 0.01 78,353 0.01
Telephone 87 0.30 3,133,399 0.55 3,233,493 0.53
Telex 2 0.01 5,249 0.00 5,633 0.00
Textile Equipment 3 0.01 189,493 0.03 171,035 0.03
Trash Compactors and Bailers 2 0.01 22,978 0.00 22,270 0.00
Typewriters 1 0.00 1,563 0.00 1,730 0.00
Ultrasounds 77 0.26 6,338,724 1.12 7,249,970 1.18
Vending Machines 1 0.00 10,404 0.00 10,000 0.00
Word Processors 1 0.00 24,371 0.00 21,085 0.00
Working Capital 88 0.30 2,784,523 0.49 2,766,832 0.45
X-Ray Spec Systems; Angiography 1 0.00 13,979 0.00 15,670 0.00
======================================================================================================================
Total 29,347 100.00% $565,063,169 100.00% $614,213,726 100.00%
======================================================================================================================
</TABLE>
1 The following abbreviations used in this table have the following meanings:
"Eqp." -- Equipment
"Misc." -- Miscellaneous
17
<PAGE>
CASH FLOW OF THE RECEIVABLES. The following shows the scheduled cashflows from
the lease contracts.
COLLECTION PERIOD SCHEDULED CASHFLOW
----------------- ------------------
October 1999........................... $14,790,929.11
November 1999.......................... 15,025,822.92
December 1999.......................... 14,971,956.17
January 2000........................... 15,051,039.06
February 2000.......................... 15,288,560.66
March 2000............................. 15,247,838.89
April 2000............................. 15,244,860.92
May 2000............................... 15,279,086.65
June 2000.............................. 15,066,019.57
July 2000.............................. 15,088,955.96
August 2000............................ 15,015,982.19
September 2000......................... 14,859,653.86
October 2000........................... 14,815,721.58
November 2000.......................... 14,871,000.11
December 2000.......................... 14,721,157.14
January 2001........................... 14,697,163.86
February 2001.......................... 14,782,158.55
March 2001............................. 14,663,809.73
April 2001............................. 14,562,836.71
May 2001............................... 14,649,551.98
June 2001.............................. 14,375,308.93
July 2001.............................. 14,469,361.84
August 2001............................ 14,351,575.56
September 2001......................... 14,101,243.83
October 2001........................... 14,120,770.91
November 2001.......................... 14,164,300.16
December 2001.......................... 13,947,556.39
January 2002........................... 13,774,356.86
February 2002.......................... 13,647,171.64
March 2002............................. 12,955,925.94
April 2002............................. 12,207,305.56
May 2002............................... 11,670,682.44
June 2002.............................. 10,801,415.50
July 2002.............................. 10,235,915.03
August 2002............................ 9,693,862.24
September 2002......................... 8,919,727.30
October 2002........................... 8,885,606.36
November 2002.......................... 8,911,607.80
December 2002.......................... 8,734,739.31
January 2003........................... 9,314,969.60
February 2003.......................... 8,467,411.35
March 2003............................. 8,243,668.29
April 2003............................. 8,012,217.27
May 2003............................... 7,795,676.95
June 2003.............................. 7,493,620.66
July 2003.............................. 7,260,587.36
August 2003............................ 7,051,006.19
September 2003......................... 6,856,506.33
October 2003........................... 6,853,063.93
November 2003.......................... 6,826,738.67
December 2003.......................... 6,608,596.79
January 2004........................... 6,308,610.41
February 2004.......................... 5,722,088.39
18
<PAGE>
COLLECTION PERIOD SCHEDULED CASHFLOW
----------------- ------------------
March 2004............................. 5,052,948.14
April 2004............................. 4,203,515.93
May 2004............................... 3,421,624.72
June 2004.............................. 2,557,398.92
July 2004.............................. 1,772,806.34
August 2004............................ 1,106,641.89
September 2004......................... 662,612.34
October 2004........................... 586,698.07
November 2004.......................... 549,404.96
December 2004.......................... 494,579.79
January 2005........................... 466,437.36
February 2005.......................... 455,009.71
March 2005............................. 394,943.03
April 2005............................. 358,402.72
May 2005............................... 367,374.26
June 2005.............................. 332,560.88
July 2005.............................. 314,679.06
August 2005............................ 357,652.11
September 2005......................... 278,144.62
October 2005........................... 278,144.62
November 2005.......................... 277,200.89
December 2005.......................... 256,661.28
January 2006........................... 215,712.63
February 2006.......................... 207,814.73
March 2006............................. 179,785.89
April 2006............................. 207,448.74
May 2006............................... 100,011.60
June 2006.............................. 84,499.82
July 2006.............................. 43,568.85
August 2006............................ 8,825.43
September 2006......................... 5,487.90
October 2006........................... 5,487.90
November 2006.......................... 4,512.90
December 2006.......................... 4,512.90
January 2007........................... 4,512.90
February 2007.......................... 4,512.90
March 2007............................. 4,512.90
April 2007............................. 4,512.90
May 2007............................... 4,512.90
June 2007.............................. 0.00
19
<PAGE>
<TABLE>
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.
<CAPTION>
HISTORICAL DELINQUENCY EXPERIENCE
COPELCO CAPITAL COMBINED PORTFOLIO
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance (1) $2,390,956,121 $2,110,428,632 $1,732,009,721
- -------------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 48,341,807 2.02% 47,444,381 2.25% 38,610,259 2.23%
60-89 days 14,057,263 0.59% 13,152,258 0.62% 11,999,057 0.69%
90 days+ 12,430,557 0.52% 5,244,005 0.25% 10,437,965 0.60%
- -------------------------------------------------------------------------------------
Total
Delinquencies $ 74,829,627 3.13% $ 65,840,644 3.12% $ 61,047,281 3.52%
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance (1) $1,503,055,810 $1,238,424,241 $1,000,488,313
- ----------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 34,481,668 2.29% 26,255,335 2.12% 14,846,559 1.48%
60-89 days 8,136,578 0.54% 4 ,976,920 0.40% 3,971,389 0.40%
90 days+ 7,587,972 0.50% 6,703,063 0.54% 6,748,827 0.67%
- ----------------------------------------------------------------------------------
Total
Delinquencies $ 50,206,218 3.34% $ 37,935,318 3.06% $ 25,566,775 2.56%
(1) The Total Receivables Balance is equal to the aggregate future rent owing on the
leases.
</TABLE>
<TABLE>
BUSINESS TECHNOLOGY GROUP
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance (1) $1,434,334,308 $1,213,803,856 $964,765,984
- -------------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 30,920,358 2.16% 25,605,251 2.11% 21,036,692 2.18%
60-89 days 9,942,586 0.69% 8,054,059 0.66% 5,451,379 0.57%
90 days+ 8,432,821 0.59% 4,157,517 0.34% 6,432,173 0.67%
- -------------------------------------------------------------------------------------
Total
Delinquencies $ 49,295,765 3.44% $ 37,816,827 3.12% $ 32,920,244 3.41%
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance (1) $812,719,952 $669,800,055 $543,197,213
- -----------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 24,072,598 2.96% 18,298,832 2.73% 8,636,836 1.59%
60-89 days 5,249,429 0.65% 3,492,843 0.52% 2,281,428 0.42%
90 days+ 4,940,285 0.61% 4,867,482 0.73% 3,096,224 0.57%
- -----------------------------------------------------------------------------------
Total
Delinquencies $ 34,262,311 4.22% $ 26,659,157 3.98% $ 14,014,488 2.58%
(1) The Total Receivables Balance is equal to the aggregate future rent owing on the
leases.
</TABLE>
<TABLE>
HEALTHCARE AND COMMERCIAL & INDUSTRIAL GROUP
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance (1) $956,621,813 $896,624,776 $767,243,737
- -------------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 17,421,449 1.82% 21,839,130 2.44% 17,573,567 2.29%
60-89 days 4,114,677 0.43% 5,098,199 0.57% 6,547,678 0.85%
90 days+ 3,997,736 0.42% 1,086,488 0.12% 4,005,792 0.52%
- -------------------------------------------------------------------------------------
Total
Delinquencies $ 25,533,862 2.67% $ 28,023,817 3.13% $ 28,127,037 3.67%
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Total
Receivables
Balance (1) $690,335,858 $568,624,186 $457,291,099
- -----------------------------------------------------------------------------------
No. of
Delinquent
Days
30-59 days 10,409,069 1.51% 7,956,503 1.40% 6,209,732 1.36%
60-89 days 2,887,149 0.42% 1,484,077 0.26% 1,689,961 0.37%
90 days+ 2,647,688 0.38% 1,835,581 0.32% 3,652,603 0.80%
- -----------------------------------------------------------------------------------
Total
Delinquencies $ 15,943,906 2.31% $ 11,276,161 1.98% $ 11,552,287 2.53%
(1) The Total Receivables Balance is equal to the aggregate future rent owing on the
leases.
</TABLE>
20
<PAGE>
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, 1994 to June
30, 1999 is set forth below.
HISTORICAL CHARGE-OFF EXPERIENCE
(DOLLARS IN THOUSANDS)
COPELCO CAPITAL COMBINED PORTFOLIO
<TABLE>
<CAPTION>
JUNE 30, DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $2,250,692 $1,921,219 $1,617,532 $1,370,740 $1,119,456 $868,431
- ----------------------------------------------------------------------------------------------------------
Net Losses $ 15,976 $ 32,477 $ 22,138 $ 15,713 $ 11,457 $ 10,328
Net Losses as a % of Avg.
Receivables 1.42%(2) 1.69% 1.37% 1.15% 1.02% 1.19%
</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 GROUP
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $1,324,069 $1,089,285 $888,742 $741,260 $606,499 $464,518
- ----------------------------------------------------------------------------------------------------------
Net Losses $ 11,854 $ 22,789 $ 16,295 $ 13,386 $ 9,969 $ 7,415
Net Losses as a % of Avg.
Receivables 1.79%(2) 2.09% 1.83% 1.81% 1.64% 1.60%
</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 AND COMMERCIAL & INDUSTRIAL GROUP
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
1999 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (1) $926,623 $831,934 $728,790 $629,480 $512,958 $403,913
- ----------------------------------------------------------------------------------------------------------
Net Losses $ 4,122 $ 9,688 $ 5,843 $ 2,327 $ 1,488 $ 2,913
Net Losses as a % of Avg.
Receivables 0.89%(2) 1.16% 0.80% 0.37% 0.29% 0.72%
</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.
21
<PAGE>
COPELCO CAPITAL'S UNDERWRITING AND SERVICING PRACTICES
GENERAL. Copelco Capital, a Delaware corporation, was incorporated in
October 1986. Copelco Capital is a wholly-owned subsidiary of Copelco Financial
Services Group, Inc. ("Copelco Financial"). Copelco Capital's primary business
consists of originating and servicing leases to healthcare providers,
businesses, business owners and individuals in the United States and Canada.
Copelco Capital has multiple locations and is headquartered at One International
Boulevard, Mahwah, New Jersey 07430 and its phone number is (856) 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 62.72%, 24.60% and
12.69%, 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 two distinct business
units: the Manufacturing Technology 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 Material Handling Group,
established in 1998, provides retail equipment leasing and financing
specifically for vendors and manufacturers in the material handling industry.
The Material Handling Group, established in 1998, provides equipment leasing and
financing tailored to meet the specific needs of the material handling industry.
Headquartered in Portland, Oregon, the group has strategically located material
handling finance experts throughout the United States who understand the needs
of both distributors and end-users. These experts work closely with customers to
provided tailored leasing and financing programs for forklifts, aerial work
platforms, cranes and allied equipment.
As of June 30, 1999, Copelco Capital had total assets of $3,222,972,000,
total liabilities of $3,015,293,000, shareholder's equity of $207, 679,000, and,
for the six months ended June 30, 1999, total revenues and net income of
$172,385,000 and $16,212,000, respectively. As of December 31, 1998, Copelco
Capital had total assets of $2,856,553,000 compared with $2,083,256,000 as of
December 31, 1997, total liabilities of $2,664,553,000 compared with
$1,927,558,000 as of December 31, 1997, shareholder's equity of $191,970,000
compared with $155,698,000 as of December 31, 1997 and total revenues and net
income of $312,040,000 and $35,658,000, respectively, for the year ended
December 31, 1998, compared with $253,787,000 and $32,137,000, respectively, for
the year ended December 31, 1997.
22
<PAGE>
Since 1986, Copelco Capital and its predecessors have participated in 37
equipment lease securitizations involving the issuance of in excess of $4.3
billion in securities. Copelco Capital and its predecessors performed all
servicing functions in each of these prior transactions, 13 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 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
23
<PAGE>
or equal to $50,000. Copelco Capital requires individual physicians to meet the
same 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 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
provides 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
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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 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, 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.
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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 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.
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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 May 31, 2007, or, to the extent the final payment on such Lease is due
subsequent to May 31, 2007, 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, as Transferor (in such
capacity, the "Transferor") will enter into an agreement (the "Assignment and
Servicing Agreement") with Copelco Capital Funding LLC 99-B and Manufacturers
and Traders Trust Company, a New York banking corporation, as indenture trustee
(the " Trustee"), pursuant to which Copelco Capital will, among other things,
service the Leases, make Servicer Advances and forward Excess Copy Charges,
Maintenance Charges and Fee Per Scan Charges to Vendors. In the Assignment and
Servicing Agreement, Copelco Capital will make certain representations and
warranties regarding the Leases and the Equipment. In the event that (a) any of
such representations and warranties made by Copelco Capital proves at any time
to have been inaccurate in any material respect as of the Issuance Date or (b)
any Lease shall be terminated in whole or in part by a Lessee, or any amounts
due with respect to any Lease shall be reduced or impaired, as a result of any
action or inaction by Copelco Capital (other than any such action or inaction of
Copelco Capital, when acting as Servicer, in connection with the enforcement of
any Lease (other than those leases Copelco Capital permitted to be terminated
early 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-B 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 18th day of the month day ("Payment Date") if the 18th is a
business day, or the next business day if the 18th is not a business day, 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.
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THE ISSUER
GENERAL. Copelco Capital Funding LLC 99-B 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 the Residual Notes (as defined below) 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 owner 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 September 1, 1999. Because the Issuer is organized as a special
purpose company and will be largely passive, it is expected that the officers
and directors of the Manager will participate in the management of the Issuer to
a limited extent. Most of the actions related to maintaining and servicing the
assets will be performed by the Servicer.
- --------------------------------------------------------------------------------
Name Age Position
- --------------------------------------------------------------------------------
Robert J. Lemenze, Jr. 39 President, Chief Operating Officer, Director
John Hakemian 58 Director
Nicholas Antonaccio 50 Vice President - Finance
Takeshi Okumura 49 Director
Stephen W. Shippie 47 Vice President
Spencer Lempert 52 Secretary
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.
Takeshi Okumura has served as Director since being elected on May 5, 1999.
For the last six months, Mr. Okumura has served as the Vice President and
General Manager of the Finance Division and Treasurer
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of Itochu International and, prior to that, as General Manager of the Project
Finance Department of Itochu International.
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 5.93709% Class A-1 Lease-Backed Notes (the "Class A-1 Notes"), 6.25%
Class A-2 Lease-Backed Notes (the "Class A-2 Notes"), 6.61% Class A-3
Lease-Backed Notes (the "Class A-3 Notes"), and 6.90% Class A-4 Lease-Backed
Notes (the "Class A-4 Notes," together with the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes, the "Class A Notes"), 6.95% Class B Lease-Backed Notes (the
"Class B Notes"), 7.10% Class C Lease-Backed Notes (the "Class C Notes") and
7.78% 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
9.76% 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. In addition, the Issuer will issue the
Residual Notes (as defined below) contemporaneously with the Notes. The
following statements with respect to the Notes is a summary of all material
terms relating to a description of the Offered Notes. However, investors in the
Offered Notes should review the Indenture, the form of which is filed as an
exhibit to the registration statement of which this Prospectus forms a part.
Whenever any particular section of the Indenture or any term used therein is
referred to, the section in the Indenture or the term used therein should be
reviewed by you in order to fully understand this offering.
The Offered Notes represent secured debt obligations of the Issuer secured
by the Pledged Assets and the privately placed Class E Notes represent
subordinated debt obligations of the Issuer secured by certain assets in the
Pledged Assets as provided in the related Indenture. The Class E Notes are
subordinated to the Offered Notes for the purpose of, among other things,
offsetting losses and other shortfalls. Neither represents an interest in or
recourse obligation of Copelco Capital or any of its other affiliates other than
the Issuer. The Issuer is a Delaware limited liability company with limited
assets. Consequently, Noteholders must rely solely upon the Leases, the
interests in the Equipment, funds on deposit in the Collection Account and the
Reserve Account, for payment of principal of and interest on the Offered Notes.
The combined aggregate principal amount of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes will comprise
the initial principal amount (the "Initial Principal Amount") of the Notes. The
Discounted Present Value of the Leases, at any given time, shall equal the
future remaining scheduled payments from the related Leases (including
Non-Performing Leases), discounted at the Discount Rate, as set forth in the
Indenture.
The Notes will bear interest from the Issuance Date at the applicable
interest rate for the respective class as set forth below. The Interest Rate is
calculated on the basis of a year of 360 days comprised of twelve 30-day months,
except in the case of the Class A-1 Notes, for which interest will be calculated
on the basis of a year of 360 days and the actual number of days in such
interest accrual period, payable on the eighteenth 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:
5.93709% per annum on the Class A-1 Notes (the "Class A-1 Interest Rate"), 6.25%
per annum on the Class A-2 Notes (the "Class A-2 Interest Rate"), 6.61% per
annum on the Class A-3 Notes (the "Class A-3 Interest Rate"), 6.90% per annum on
the Class A-4 Notes (the "Class A-4 Interest Rate"), 6.95% per annum on the
Class B Notes (the "Class B Interest Rate"), 7.10% per annum on the Class C
Notes (the "Class C Interest Rate"), 7.78% per annum on the Class D Notes (the
"Class D Interest Rate") and 9.76% per annum on the Class E Notes (the "Class E
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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," together with the Class A-1
Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, and the Class
A-4 Noteholders, the "Class A Noteholders"), the holders of the Class B Notes
(the "Class B Noteholders"), the holders of the Class C Notes (the "Class C
Noteholders") and the holders of the Class D Notes the ("Class D Noteholders,"
together with the Class A Noteholders, the Class B Noteholders and the Class C
Noteholders, the "Offered Noteholders") may hold their notes through The
Depository Trust Company ("DTC") (in the United States) or Cedel Bank ("CEDEL")
and the Euroclear System ("Euroclear") (in Europe) if they are participants of
such systems, or indirectly through organizations which are participants in such
systems.
Cede & Co. ("Cede"), as nominee for DTC, will hold the global Class A Note
or Notes, global Class B Note or Notes, global Class C Note or Notes and the
global Class D Note or Notes. CEDEL and Euroclear will hold omnibus positions on
behalf of their participants through customers' securities accounts in CEDEL's
and Euroclear's names on the books of their respective Depositaries (as defined
herein) which in turn will hold such positions in customers' securities accounts
in the Depositaries' names on the books of DTC. Citibank will act as depositary
for CEDEL, and Morgan Guaranty Trust will act as depositary for Euroclear (in
such capacities, the "Depositaries").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("Participants") and
facilitate the settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of notes. Participants include the
Underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants (as defined herein) and Euroclear
Participants (as defined herein) will occur in accordance with their respective
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected through
DTC in accordance with DTC rules on behalf of the relevant European
international clearing systems by its Depositary. Cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its 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
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Participant to a Participant will be received with value on the DTC settlement
date but will be available in the relevant CEDEL or Euroclear cash account only
as of the business day following settlement in DTC. For information with respect
to tax documentation procedures relating to the Offered Notes, see "Material
Federal Income Tax Considerations."
Offered Noteholders that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Offered Notes may do so only through Participants and Indirect Participants.
In addition, Offered Noteholders will receive all distributions of principal and
interest on the Offered Notes from the Trustee through DTC and its Participants.
Under a book-entry format, Offered Noteholders will receive payments after the
related Distribution Date, as the case may be, because, while payments are
required to be forwarded to Cede, as nominee for DTC, on each such date, DTC
will forward such payments to its Participants which thereafter will be required
to forward them to Indirect Participants or holders of beneficial interests in
the Offered Notes. It is anticipated that the only Noteholder of the Offered
Notes will be Cede, as nominee of DTC, and that holders of beneficial interests
in the Offered Notes, under the Indenture will only be permitted to exercise
rights under the Indenture indirectly through DTC and its Participants who in
turn will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Offered Notes and is required to
receive and transmit distributions of principal of and interest on the Offered
Notes. Participants and Indirect Participants with which holders of beneficial
interests in the Offered Notes have accounts similarly are required to make
book-entry transfers and receive and transmit such payments on behalf of these
respective holders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of holders of
beneficial interests in the Offered Notes to pledge Offered Notes to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such Offered Notes, may be limited due to the lack of a Definitive
Note for such Offered Notes.
DTC has advised the Issuer that it will take any action permitted to be
taken by a Class A Noteholder, Class B Noteholder, Class C Noteholder or Class D
Noteholder under the Indenture only at the direction of one or more Participants
to whose account with DTC the Class A Notes, Class B Notes, Class C Notes or
Class D Notes are credited. Additionally, DTC has advised the Issuer that it may
take actions with respect to the applicable Offered Notes that conflict with
other of its actions with respect thereto.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 38
currencies, including United States dollars. CEDEL provides to CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the Underwriters. Indirect access to CEDEL is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a CEDEL Participant,
either directly or indirectly.
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
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Operator and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Offered Notes held through CEDEL or Euroclear
will be credited to the cash accounts of CEDEL Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Material Federal Income Tax Considerations." CEDEL or the Euroclear
Operator, as the case may be, will take any other action permitted to be taken
by an Offered Noteholder under the Indenture on behalf of a CEDEL Participant or
Euroclear Participant only in accordance with its relevant rules and procedures
and subject to its Depositary's ability to effect such actions on its behalf
through DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Offered Notes among participants of DTC,
CEDEL and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DTC management is aware that some computer applications, systems, and the
like for processing data ("SYSTEMS") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and interest payments) to security holders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to properly perform its services is also dependent
upon other parties, including, but not limited to, issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information and the provision of
services, including telecommunications and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to: (i)
impress upon them the importance of such services being Year 2000 compliant; and
(ii) determine the extent of their 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
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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. $117,952,055 for the Class A-1 Notes (the "Class
A-1 Initial Principal Amount"), $38,185,917 for the Class A-2 Notes (the "Class
A-2 Initial Principal Amount"), $186,686,705 for the Class A-3 Notes (the "Class
A-3 Initial Principal Amount"), $155,006,537 for the Class A-4 Notes (the "Class
A-4 Initial Principal Amount," together with the Class A-1 Initial Principal
Amount, the Class A-2 Initial Principal Amount and the Class A-3 Initial
Principal Amount, the "Class A Initial Principal Amount"), $11,314,346 for the
Class B Notes (the "Class B Initial Principal Amount"), $11,314,346 for the
Class C Notes (the "Class C Initial Principal Amount"), $16,971,519 for the
Class D Notes (the "Class D Initial Principal Amount") and $15,557,225 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 7.619%,
(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 B Notes, the Class C Notes, the Class D Notes and
the Class E Notes, each weighted by (i) the initial principal amount of the
Class A-1 Notes, the initial principal amount of the Class A-2 Notes, the
initial principal amount of the Class A-3 Notes, the initial principal amount of
the Class A-4 Notes, the initial principal amount of the Class 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
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rate equal to 7.68% (the "Statistical Discount Rate"), provided that, it is
assumed (since such payments will be retained by Copelco Capital) that payments
due on the Leases in September 1999 will be zero. The Statistical Discounted
Present Value of the Leases as of the Cut-Off Date is $565,063,169 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 $565,717,289.10.
EXPECTED MATURITY; STATED MATURITY. The expected maturity dates with
respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes are the Payment Dates in August 2000, December 2000, June 2002 and October
2003, respectively. The expected maturity dates with respect to the Class B
Notes, Class C Notes and Class D Notes is the Payment Date in October 2003. The
stated maturity date with respect to the Class A-1 Notes is the Payment Date in
October 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 June 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 December 2002 (the "Class A-3 Stated Maturity
Date"), the stated maturity date with respect to the Class A-4 Notes is the
Payment Date in December 2004 (the "Class A-4 Stated Maturity Date"), the stated
maturity date with respect to the Class B Notes is the Payment Date in July 2005
(the "Class B Stated Maturity Date"), the stated maturity date with respect to
the Class C Notes is the Payment Date in August 2005 (the "Class C Stated
Maturity Date") and the stated maturity date with respect to the Class D Notes
is the Payment Date in September 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. The expected maturity
and stated maturity with respect to the Class E Notes are October 2003 and
August 2007, respectively. If the Class A-1 Notes have not been paid in full on
or before the September 2000 Payment Date, the Payment Date for the Class A-1
Notes in October 2000 will be October 10, 2000.
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 eighteenth day of
each month (or if such day is not a business day, the next succeeding business
day), commencing on November 18, 1999, to holders of record on the last business
day preceding a payment date, or, if the notes are definitive notes, the last
business day of the month preceding a payment date (each, a "Record Date"). See
"Description of the Notes--Distributions on Notes."
INTEREST PAYMENTS. On each Payment Date, the interest due (the "Interest
Payments") with respect to the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class
D Notes and the Class E Notes since the last Payment Date will be the interest
that has accrued on such Notes since the last Payment Date (or in the case of
the first Payment Date, since the Issuance Date) (the "Interest Accrual Period")
at the applicable Interest Rate applied to the then unpaid principal amounts
(the "Outstanding Principal Amounts") of the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes, respectively, after giving
effect to payments of principal to the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the Class A-4 Noteholders, the Class B
Noteholders, the Class C Noteholders, the Class D Noteholders and the Class E
Noteholders, respectively, on the preceding Payment Date. See "Description of
the Notes--General" and "Distributions on Notes."
PRINCIPAL PAYMENTS. For each Payment Date, each of the Class A Noteholders,
the Class B Noteholders, the Class C Noteholders, the Class D Noteholders and
the Class E Noteholders will be entitled to receive payments of principal
("Principal Payments"), to the extent funds are available therefor, in the
priorities set forth in the Indenture and described herein below and under
"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
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the Class A-3 Notes has been reduced to zero, the Class A Principal Payment and
(iv) to the Class A-4 Noteholders, until the Outstanding Principal Amount on the
Class A-4 Notes has been reduced to zero, the Class A Principal Payment, (b) to
the Class B Noteholders, the Class B Principal Payment, (c) to the Class C
Noteholders, the Class C Principal Payment, (d) to the Class D Noteholders, the
Class D Principal Payment, (e) to the Class E Noteholders, the Class E Principal
Payment and (f) to the extent that the Class B Floor exceeds the Class B Target
Investor Principal Amount, the Class C Floor exceeds the Class C Target Investor
Principal Amount, the Class D Floor exceeds the Class D Target Investor
Principal Amount and/or the Class E Floor exceeds the Class E Target Investor
Principal Amount, Additional Principal (defined below) shall be distributed,
sequentially, as an additional principal payment on the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes 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) Monthly Principal Amount 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) with respect to any Payment
Date on which all or a portion of the Class A-1 Notes remain outstanding after
giving effect to payments on such Payment Date, the Monthly Principal Amount; or
b) on the Payment Date on which the Outstanding Principal Amount of the Class
A-1 Notes is reduced to zero, the sum of (1) the amount necessary to reduce the
Outstanding Principal Amount of the Class A-1 Notes to zero and (2) the amount
necessary to reduce the sum of the Outstanding Principal Amount of the Class A-2
Notes, Class A-3 Notes, and Class A-4 Notes to the Class A Target Investor
Principal Amount; or c) on any subsequent Payment Date, the amount necessary to
reduce the sum of the Outstanding Principal Amount of the Class A-2 Notes, Class
A-3 Notes, and Class A-4 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.
The "Class E Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount on the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class E Notes to the greater of the Class E
Target Investor Principal Amount and the Class E Floor.
The "Class A Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class A Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class B Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class B Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date.
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The "Class C Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class C Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class D Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class D Percentage and (b) the
Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class E Target Investor Principal Amount 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 84.8389%. The
"Class B Percentage" will be equal approximately to 2.5268%. The "Class C
Percentage" will be equal approximately to 2.5268%. The "Class D Percentage"
will be equal approximately to 3.7903%. The "Class E Percentage" will be equal
approximately to 3.4744%.
The "Class B Floor" with respect to each Payment Date means (a) 3.25% 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) 2.20% 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) 1.80% of
the initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to such Payment Date, minus (c) the
sum of the Outstanding Principal Amount of the Class E Notes, and the
Overcollateralization Balance as of the immediately preceding Payment Date after
giving effect to all principal payments made on that day, minus (d) the amount
on deposit in the Reserve Account after giving effect to withdrawals to be made
on such Payment Date; provided, however, that if the Outstanding Principal
Amount of the Class C Notes is less than or equal to the Class C Floor on such
Payment Date, the Class D Floor will equal the Outstanding Principal Amount of
the Class D Notes utilized in the calculation of the Class C Floor for such
Payment Date.
The "Class E Floor" with respect to each Payment Date means (a) 1.20% 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
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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 "Monthly Principal Amount" is an amount equal to the difference between
(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 and (b) the Discounted Present
Value of the Performing Leases as of the related Determination 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 Monthly Principal Amount 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"):
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(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").
The Residual Notes will have no rights with respect to Available Funds. On
any Payment Date, Residual Realizations shall be directed by the Trustee to the
holders of the Residual Notes in accordance with the Indenture. Except in the
case of an Event of Default, the Noteholders will not have any right to any
Residual Realizations under any circumstance and neither the Residual Notes nor
the Residual Realizations will provide credit enhancement for the Notes.
"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
38
<PAGE>
"Available Reserve Amount") and such deficiency; provided that in the event
payments on the Leases may not be used to make payments on the Notes due to the
bankruptcy of Copelco Capital, amounts in the Reserve Account may only be used
to make interest payments on the Notes and principal payments at Stated Maturity
of the Notes. 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)).
If on any Payment Date, the aggregate amounts on deposit in the Collection
Account and the Reserve Account are greater than or equal to the sum of (i) the
aggregate outstanding principal balance of the Class A Notes, Class B Notes,
Class C Notes, Class D Notes and Class E Notes, (ii) the accrued and unpaid
Interest Payments, (iii) the accrued and unpaid Servicing Fee and (iv) the
unreimbursed Servicer Advances, the amount on deposit in the Reserve Account
will be deposited in the Collection Account and applied to pay in full the Class
A Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes. (Section
3.05(b))
DISTRIBUTIONS ON NOTES. Payments on the Notes will commence on November 18,
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
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)):
(i) to pay the Servicing Fee;
(ii) to reimburse unreimbursed Servicer Advances (as defined herein)
in respect of a prior Payment Date;
(iii) to make Interest Payments, owing on the Class A Notes
concurrently to the Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and Class A-4 Noteholders;
(iv) to make Interest Payments on the Class B Notes;
(v) to make Interest Payments on the Class C Notes;
(vi) to make Interest Payments on the Class D Notes;
39
<PAGE>
(vii) to make Interest Payments on the Class E Notes;
(viii) to make the Class A Principal Payment to (i) the Class A-1
Noteholders only, until the Outstanding Principal Amount on the Class A-1
Notes is reduced to zero, then (ii) to the Class A-2 Noteholders only,
until the Outstanding Principal Amount on the Class A-2 Notes is reduced to
zero, then (iii) to the Class A-3 Noteholders only, until the Outstanding
Principal Amount on the Class A-3 Notes is reduced to zero, and (iv) to the
Class A-4 Noteholders, until the Outstanding Principal Amount on the Class
A-4 Notes is reduced to zero;
(ix) to make the Class B Principal Payment to the Class B Noteholders;
(x) to make the Class C Principal Payment to the Class C Noteholders;
(xi) to make the Class D Principal Payment to the Class D Noteholders;
(xii) to make the Class E Principal Payment to the Class E
Noteholders;
(xiii) to pay the Additional Principal, if any, as an additional
reduction of principal to the Class A Noteholders, as provided in Clause
(h) above, until the Outstanding Principal Amount on all of the Class A
Notes has been reduced to zero, then to Class B Noteholders until the
Outstanding Principal Amount on the Class B Notes has been reduced to zero,
then to the Class C Noteholders until the Outstanding Principal Amount on
the Class C Notes has been reduced to zero, then to the Class D Noteholders
until the Outstanding Principal Amount on the Class D Notes has been
reduced to zero, and finally to the Class E Noteholders, until the
Outstanding Principal Amounts on the Class E Notes has been reduced to
zero;
(xiv) to make a deposit to the Reserve Account in an amount equal to
the excess of the Required Reserve Amount over the Available Reserve
Amount; and
(xv) to the Issuer, the balance, if any.
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 10% 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).
40
<PAGE>
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, and Class A-4 Notes pro rata to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to
the Class A-1 Interest Rate, Class A-2 Interest Rate, Class A-3 Interest
Rate, and Class A-4 Interest Rate respectively, second to the payment of
all accrued and unpaid interest on the Outstanding Principal Amount of the
Class B Notes to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the date of
payment thereof at the rate per annum equal to the Class B Interest Rate,
third, to the payment of all accrued and unpaid interest on the Outstanding
Principal Amount of the Class C Notes to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal to
the Class C Interest Rate, fourth, to the payment of all accrued and unpaid
interest on the Outstanding Principal Amount of the Class D Notes to the
date of payment thereof, including (to the extent permitted by applicable
law) interest on any overdue installment of interest and principal from the
maturity of such installment to the date of payment thereof at the rate per
annum equal to the Class D Interest Rate, fifth to the payment of all
accrued and unpaid interest on the Outstanding Principal Amount of the
Class E Notes to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the date of
payment thereof at the rate per annum equal to the Class E Interest Rate,
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, and Class A-4 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
41
<PAGE>
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 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;
42
<PAGE>
(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.
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 Warranty Lease or an
Adjusted Lease, Copelco Capital will have the option to substitute for the
terminated lease 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. 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
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<PAGE>
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 Statistical
Principal Amount (as defined below) of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes
and Class E Notes which would be outstanding on the Payment Dates set forth
below assuming a Conditional Prepayment Rate ("CPR") of 0%, 6%, 12% and 18%,
respectively, and were calculated using the Statistical Discount Rate. The
"Initial Statistical Principal Amount" of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D Notes
and Class E Notes is $117,815,671, $38,141,764, $186,470,846, $154,827,308,
$11,301,263, $11,301,263, $16,951,895 and $15,539,237, respectively. The
"Statistical Class Percentage" for the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes is equal to 84.8389%, 2.5268%, 2.5268%,
3.7903% and 3.4744%, respectively. The "Statistical Interest Rate" of the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes,
Class C Notes, Class D Notes and Class E Notes is 5.98435%, 6.29%, 6.69%, 6.92%,
7.02%, 7.12%, 7.84% and 10.73%, respectively. 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 September 21, 1999
and the first Payment Date is November 18, 1999. The following charts were
created using the Statistical Class Percentage related to the Statistical
Initial Principal Amounts of the respective class.
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<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
0% CPR
- -------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ --------- ------------------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 90.52 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 80.77 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 71.01 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 61.12 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 50.96 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 40.78 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 30.53 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 18, 2000 20.18 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 18, 2000 9.95 100.00 100.00 100.00 100.00 100.00 100.00 100.00
August 18, 2000 0.00 99.06 100.00 100.00 99.91 99.91 99.91 99.91
September 18, 2000 0.00 72.02 100.00 100.00 97.19 97.19 97.19 97.19
October 18, 2000 0.00 45.15 100.00 100.00 94.49 94.49 94.49 94.49
November 18, 2000 0.00 18.21 100.00 100.00 91.78 91.78 91.78 91.78
December 18, 2000 0.00 0.00 98.15 100.00 89.04 89.04 89.04 89.04
January 18, 2001 0.00 0.00 92.62 100.00 86.32 86.32 86.32 86.32
February 18, 2001 0.00 0.00 87.05 100.00 83.59 83.59 83.59 83.59
March 18, 2001 0.00 0.00 81.42 100.00 80.82 80.82 80.82 80.82
April 18, 2001 0.00 0.00 75.80 100.00 78.05 78.05 78.05 78.05
May 18, 2001 0.00 0.00 70.19 100.00 75.30 75.30 75.30 75.30
June 18, 2001 0.00 0.00 64.50 100.00 72.50 72.50 72.50 72.50
July 18, 2001 0.00 0.00 58.91 100.00 69.75 69.75 69.75 69.75
August 18, 2001 0.00 0.00 53.23 100.00 66.96 66.96 66.96 66.96
September 18, 2001 0.00 0.00 47.58 100.00 64.18 64.18 64.18 64.18
October 18, 2001 0.00 0.00 42.00 100.00 61.44 61.44 61.44 61.44
November 18, 2001 0.00 0.00 36.37 100.00 58.68 58.68 58.68 58.68
December 18, 2001 0.00 0.00 30.69 100.00 55.89 55.89 55.89 55.89
January 18, 2002 0.00 0.00 25.07 100.00 53.13 53.13 53.13 53.13
February 18, 2002 0.00 0.00 19.50 100.00 50.39 50.39 50.39 50.39
March 18, 2002 0.00 0.00 13.95 100.00 47.66 47.66 47.66 47.66
April 18, 2002 0.00 0.00 8.67 100.00 45.07 45.07 45.07 45.07
May 18, 2002 0.00 0.00 3.70 100.00 42.62 42.62 42.62 42.62
June 18, 2002 0.00 0.00 0.00 98.74 40.29 40.29 40.29 40.29
July 18, 2002 0.00 0.00 0.00 93.45 38.13 38.13 38.13 38.13
August 18, 2002 0.00 0.00 0.00 88.44 36.09 36.09 36.09 36.09
September 18, 2002 0.00 0.00 0.00 83.69 34.15 34.15 34.15 34.15
October 18, 2002 0.00 0.00 0.00 79.34 32.37 32.37 32.37 32.37
November 18, 2002 0.00 0.00 0.00 74.98 30.59 30.59 30.59 30.59
December 18, 2002 0.00 0.00 0.00 70.58 28.80 28.80 28.80 28.80
January 18, 2003 0.00 0.00 0.00 66.24 27.03 27.03 27.03 27.03
February 18, 2003 0.00 0.00 0.00 61.56 25.12 25.12 25.12 25.12
March 18, 2003 0.00 0.00 0.00 57.31 23.39 23.39 23.39 23.39
April 18, 2003 0.00 0.00 0.00 53.16 21.69 21.69 21.69 21.69
May 18, 2003 0.00 0.00 0.00 49.11 20.04 20.04 20.04 20.04
June 18, 2003 0.00 0.00 0.00 45.16 18.43 18.43 18.43 18.43
July 18, 2003 0.00 0.00 0.00 40.66 18.43 18.43 18.43 18.43
August 18, 2003 0.00 0.00 0.00 36.28 18.43 18.43 18.43 18.43
September 18, 2003 0.00 0.00 0.00 32.01 18.43 18.43 18.43 18.43
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.54 1.10 2.00 3.60 2.57 2.57 2.57 2.57
To Maturity: 0.54 1.10 2.00 3.69 2.71 2.72 2.74 2.74
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 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.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
6% CPR
- --------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 88.10 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 76.05 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 64.09 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 52.12 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 40.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 27.97 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 15.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 18, 2000 4.03 100.00 100.00 100.00 100.00 100.00 100.00 100.00
July 18, 2000 0.00 79.79 100.00 100.00 97.97 97.97 97.97 97.97
August 18, 2000 0.00 49.11 100.00 100.00 94.88 94.88 94.88 94.88
September 18, 2000 0.00 18.70 100.00 100.00 91.83 91.83 91.83 91.83
October 18, 2000 0.00 0.00 97.70 100.00 88.82 88.82 88.82 88.82
November 18, 2000 0.00 0.00 91.62 100.00 85.83 85.83 85.83 85.83
December 18, 2000 0.00 0.00 85.54 100.00 82.84 82.84 82.84 82.84
January 18, 2001 0.00 0.00 79.54 100.00 79.89 79.89 79.89 79.89
February 18, 2001 0.00 0.00 73.59 100.00 76.97 76.97 76.97 76.97
March 18, 2001 0.00 0.00 67.62 100.00 74.03 74.03 74.03 74.03
April 18, 2001 0.00 0.00 61.72 100.00 71.14 71.14 71.14 71.14
May 18, 2001 0.00 0.00 55.89 100.00 68.27 68.27 68.27 68.27
June 18, 2001 0.00 0.00 50.05 100.00 65.40 65.40 65.40 65.40
July 18, 2001 0.00 0.00 44.34 100.00 62.60 62.60 62.60 62.60
August 18, 2001 0.00 0.00 38.62 100.00 59.78 59.78 59.78 59.78
September 18, 2001 0.00 0.00 32.97 100.00 57.01 57.01 57.01 57.01
October 18, 2001 0.00 0.00 27.44 100.00 54.29 54.29 54.29 54.29
November 18, 2001 0.00 0.00 21.93 100.00 51.58 51.58 51.58 51.58
December 18, 2001 0.00 0.00 16.42 100.00 48.88 48.88 48.88 48.88
January 18, 2002 0.00 0.00 11.02 100.00 46.22 46.22 46.22 46.22
February 18, 2002 0.00 0.00 5.71 100.00 43.61 43.61 43.61 43.61
March 18, 2002 0.00 0.00 0.48 100.00 41.04 41.04 41.04 41.04
April 18, 2002 0.00 0.00 0.00 94.62 38.61 38.61 38.61 38.61
May 18, 2002 0.00 0.00 0.00 89.03 36.33 36.33 36.33 36.33
June 18, 2002 0.00 0.00 0.00 83.72 34.16 34.16 34.16 34.16
July 18, 2002 0.00 0.00 0.00 78.83 32.16 32.16 32.16 32.16
August 18, 2002 0.00 0.00 0.00 74.22 30.28 30.28 30.28 30.28
September 18, 2002 0.00 0.00 0.00 69.87 28.51 28.51 28.51 28.51
October 18, 2002 0.00 0.00 0.00 65.90 26.89 26.89 26.89 26.89
November 18, 2002 0.00 0.00 0.00 61.96 25.28 25.28 25.28 25.28
December 18, 2002 0.00 0.00 0.00 58.02 23.67 23.67 23.67 23.67
January 18, 2003 0.00 0.00 0.00 54.17 22.11 22.11 22.11 22.11
February 18, 2003 0.00 0.00 0.00 50.09 20.44 20.44 20.44 20.44
March 18, 2003 0.00 0.00 0.00 46.39 18.93 18.93 18.93 18.93
April 18, 2003 0.00 0.00 0.00 42.25 17.85 18.93 18.93 18.93
May 18, 2003 0.00 0.00 0.00 38.17 17.85 18.93 18.93 18.93
June 18, 2003 0.00 0.00 0.00 34.21 17.85 18.93 18.93 18.93
July 18, 2003 0.00 0.00 0.00 30.42 17.85 18.93 18.93 18.93
August 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
September 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.47 0.95 1.79 3.38 2.37 2.37 2.37 2.37
To Maturity: 0.47 0.95 1.79 3.49 2.51 2.53 2.55 2.55
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 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.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
12% CPR
- --------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ --------- --------- --------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 85.53 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 71.07 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 56.84 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 42.73 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 28.63 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 14.75 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 1.05 100.00 100.00 100.00 100.00 100.00 100.00 100.00
June 18, 2000 0.00 67.30 100.00 100.00 96.71 96.71 96.71 96.71
July 18, 2000 0.00 32.75 100.00 100.00 93.24 93.24 93.24 93.24
August 18, 2000 0.00 0.00 99.72 100.00 89.81 89.81 89.81 89.81
September 18, 2000 0.00 0.00 92.86 100.00 86.44 86.44 86.44 86.44
October 18, 2000 0.00 0.00 86.16 100.00 83.15 83.15 83.15 83.15
November 18, 2000 0.00 0.00 79.57 100.00 79.91 79.91 79.91 79.91
December 18, 2000 0.00 0.00 73.05 100.00 76.70 76.70 76.70 76.70
January 18, 2001 0.00 0.00 66.68 100.00 73.57 73.57 73.57 73.57
February 18, 2001 0.00 0.00 60.40 100.00 70.49 70.49 70.49 70.49
March 18, 2001 0.00 0.00 54.18 100.00 67.43 67.43 67.43 67.43
April 18, 2001 0.00 0.00 48.08 100.00 64.43 64.43 64.43 64.43
May 18, 2001 0.00 0.00 42.11 100.00 61.50 61.50 61.50 61.50
June 18, 2001 0.00 0.00 36.19 100.00 58.59 58.59 58.59 58.59
July 18, 2001 0.00 0.00 30.46 100.00 55.77 55.77 55.77 55.77
August 18, 2001 0.00 0.00 24.76 100.00 52.97 52.97 52.97 52.97
September 18, 2001 0.00 0.00 19.19 100.00 50.24 50.24 50.24 50.24
October 18, 2001 0.00 0.00 13.79 100.00 47.58 47.58 47.58 47.58
November 18, 2001 0.00 0.00 8.45 100.00 44.96 44.96 44.96 44.96
December 18, 2001 0.00 0.00 3.18 100.00 42.37 42.37 42.37 42.37
January 18, 2002 0.00 0.00 0.00 97.65 39.85 39.85 39.85 39.85
February 18, 2002 0.00 0.00 0.00 91.64 37.39 37.39 37.39 37.39
March 18, 2002 0.00 0.00 0.00 85.76 34.99 34.99 34.99 34.99
April 18, 2002 0.00 0.00 0.00 80.23 32.74 32.74 32.74 32.74
May 18, 2002 0.00 0.00 0.00 75.08 30.64 30.64 30.64 30.64
June 18, 2002 0.00 0.00 0.00 70.21 28.65 28.65 28.65 28.65
July 18, 2002 0.00 0.00 0.00 65.75 26.83 26.83 26.83 26.83
August 18, 2002 0.00 0.00 0.00 61.57 25.12 25.12 25.12 25.12
September 18, 2002 0.00 0.00 0.00 57.64 23.52 23.52 23.52 23.52
October 18, 2002 0.00 0.00 0.00 54.07 22.06 22.06 22.06 22.06
November 18, 2002 0.00 0.00 0.00 50.55 20.63 20.63 20.63 20.63
December 18, 2002 0.00 0.00 0.00 47.08 19.21 19.21 19.21 19.21
January 18, 2003 0.00 0.00 0.00 43.72 17.84 17.84 17.84 17.84
February 18, 2003 0.00 0.00 0.00 39.57 17.84 17.84 17.84 17.84
arch 18, 2003 0.00 0.00 0.00 35.84 17.84 17.84 17.84 17.84
April 18, 2003 0.00 0.00 0.00 32.25 17.84 17.84 17.84 17.84
May 18, 2003 0.00 0.00 0.00 28.80 17.84 17.84 17.84 17.84
June 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
August 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
September 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 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 0.83 1.61 3.17 2.18 2.18 2.18 2.18
To Maturity: 0.41 0.83 1.61 3.28 2.34 2.35 2.36 2.36
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 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.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF THE INITIAL PRINCIPAL AMOUNT AT THE RESPECTIVE CPR SET FORTH BELOW
18% CPR
- --------------------------------------------------------------------------------------------------------
PAYMENT DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS B CLASS C CLASS D CLASS E
------------ ------------------- --------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 18, 1999 82.80 100.00 100.00 100.00 100.00 100.00 100.00 100.00
December 18, 1999 65.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00
January 18, 2000 49.20 100.00 100.00 100.00 100.00 100.00 100.00 100.00
February 18, 2000 32.91 100.00 100.00 100.00 100.00 100.00 100.00 100.00
March 18, 2000 16.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00
April 18, 2000 1.06 100.00 100.00 100.00 100.00 100.00 100.00 100.00
May 18, 2000 0.00 62.51 100.00 100.00 96.23 96.23 96.23 96.23
June 18, 2000 0.00 23.06 100.00 100.00 92.27 92.27 92.27 92.27
July 18, 2000 0.00 0.00 96.91 100.00 88.43 88.43 88.43 88.43
August 18, 2000 0.00 0.00 89.27 100.00 84.68 84.68 84.68 84.68
September 18, 2000 0.00 0.00 81.84 100.00 81.02 81.02 81.02 81.02
October 18, 2000 0.00 0.00 74.63 100.00 77.48 77.48 77.48 77.48
November 18, 2000 0.00 0.00 67.60 100.00 74.02 74.02 74.02 74.02
December 18, 2000 0.00 0.00 60.71 100.00 70.64 70.64 70.64 70.64
January 18, 2001 0.00 0.00 54.03 100.00 67.36 67.36 67.36 67.36
February 18, 2001 0.00 0.00 47.51 100.00 64.15 64.15 64.15 64.15
March 18, 2001 0.00 0.00 41.11 100.00 61.01 61.01 61.01 61.01
April 18, 2001 0.00 0.00 34.91 100.00 57.96 57.96 57.96 57.96
May 18, 2001 0.00 0.00 28.88 100.00 54.99 54.99 54.99 54.99
June 18, 2001 0.00 0.00 22.96 100.00 52.09 52.09 52.09 52.09
July 18, 2001 0.00 0.00 17.26 100.00 49.29 49.29 49.29 49.29
August 18, 2001 0.00 0.00 11.67 100.00 46.54 46.54 46.54 46.54
September 18, 2001 0.00 0.00 6.25 100.00 43.88 43.88 43.88 43.88
October 18, 2001 0.00 0.00 1.04 100.00 41.31 41.31 41.31 41.31
November 18, 2001 0.00 0.00 0.00 95.11 38.81 38.81 38.81 38.81
December 18, 2001 0.00 0.00 0.00 89.10 36.36 36.36 36.36 36.36
January 18, 2002 0.00 0.00 0.00 83.31 33.99 33.99 33.99 33.99
February 18, 2002 0.00 0.00 0.00 77.72 31.71 31.71 31.71 31.71
March 18, 2002 0.00 0.00 0.00 72.30 29.50 29.50 29.50 29.50
April 18, 2002 0.00 0.00 0.00 67.25 27.44 27.44 27.44 27.44
May 18, 2002 0.00 0.00 0.00 62.56 25.53 25.53 25.53 25.53
June 18, 2002 0.00 0.00 0.00 58.16 23.73 23.73 23.73 23.73
July 18, 2002 0.00 0.00 0.00 54.15 22.09 22.09 22.09 22.09
August 18, 2002 0.00 0.00 0.00 50.40 20.57 20.57 20.57 20.57
September 18, 2002 0.00 0.00 0.00 46.91 19.14 19.14 19.14 19.14
October 18, 2002 0.00 0.00 0.00 43.75 17.85 17.85 17.85 17.85
November 18, 2002 0.00 0.00 0.00 40.11 17.85 17.85 17.85 17.85
December 18, 2002 0.00 0.00 0.00 36.56 17.85 17.85 17.85 17.85
January 18, 2003 0.00 0.00 0.00 33.15 17.85 17.85 17.85 17.85
February 18, 2003 0.00 0.00 0.00 29.63 17.85 17.85 17.85 17.85
March 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
April 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
May 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
August 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
September 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
October 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
November 18, 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WEIGHTED AVERAGE
LIFE(1)(YEARS)
To Call: 0.37 0.73 1.44 2.94 1.99 1.99 1.99 1.99
To Maturity: 0.37 0.73 1.44 3.07 2.17 2.19 2.20 2.20
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 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.
</TABLE>
48
<PAGE>
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 Leases which contain a nominal purchase
option upon expiration or other terms which may be deemed to effectively vest
ownership of the Equipment in the Lessee ("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
49
<PAGE>
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 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 ss.ss. 101-1330 (the "Bankruptcy Code"), and
related laws may interfere with, delay or eliminate the ability of Copelco
Capital or the Issuer to enforce its rights under the Leases.
In the case of operating leases, the Bankruptcy Code grants to the
bankruptcy trustee or the debtor-in-possession a right to elect to assume or
reject any executory contract or unexpired lease. Any rejection of such a lease
or contract constitutes a breach of such lease or contract, entitling the
nonbreaching party to a claim for damages for breach of contract. The net
proceeds from any resulting judgment would be deposited by the Servicer into the
Collection Account and allocated to the Noteholders as more fully described
herein. Upon the bankruptcy of a Lessee, if the bankruptcy trustee or
debtor-in-possession elected to reject a Lease, the flow of scheduled payments
to Noteholders would cease. In the event that, as a result of the bankruptcy of
a Lessee, the Servicer is prevented from collecting scheduled payments with
respect to Leases and such Leases become Non-Performing Leases, no recourse
would be available against Copelco Capital (except for misrepresentation or
breach of warranty) and the Noteholders could suffer a loss with respect to the
Notes. Similarly, upon the bankruptcy of the Issuer, if the bankruptcy trustee
or debtor-in-possession elected to reject a Lease, the flow of Lease payments to
the Issuer and the Noteholders would cease. As noted above, however, the Issuer
has been structured so that the filing of a bankruptcy petition with respect to
it is unlikely. See "The Issuer."
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.
NON-PETITION. Pursuant to the Indenture, the Trustee and the holders of the
Residual Notes will agree not to institute, cooperate with or encourage others
to institute against the Issuer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under the Bankruptcy
Code or any state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Residual Notes or the Indenture until the expiration
of one year and one day (or if a preference period of the applicable
jurisdiction is longer, the applicable preference period under that bankruptcy
or similar law) from the date on which all of the Notes are paid in full.
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.
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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.
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,
assuming compliance with the terms of the Limited Liability Company Agreement
and related documents, the Issuer will not be treated as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
If the Issuer were taxable as a corporation for federal income tax
purposes, the Issuer would be subject to corporate income tax on its taxable
income. Any such corporate income tax could materially reduce cash available to
make payments on the Notes.
TAXATION OF INTEREST INCOME OF NOTEHOLDERS. If characterized as
indebtedness, interest on the Offered Notes will be taxable as ordinary income
for federal income tax purposes when received by Noteholders using the cash
method of accounting and when accrued by Noteholders using the accrual method of
accounting. Noteholders using the accrual method of accounting may be required
to report income for tax purposes in advance of receiving a corresponding cash
distribution with which to pay the related tax. Interest received on the Offered
Notes also may constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense.
Original Issue Discount. It is not anticipated that the Offered Notes will
have any original issue discount ("OID") other than possibly OID within a de
minimis exception and that accordingly the provisions of sections 1271 through
1273 and 1275 of the Code generally will not apply to the Offered Notes. OID
will be considered de minimis if it is less than 0.25% of the principal amount
of Note multiplied by its expected weighted average life.
Market Discount. A subsequent purchaser who buys a Note for less than its
principal amount may be subject to the "market discount" rules of Sections 1276
through 1278 of the Code. If a subsequent purchaser of a Note disposes of such
Note (including certain nontaxable dispositions such as a gift), or receives a
principal payment, any gain upon such sale or other disposition will be
recognized, or the amount of such principal payment will be treated, as ordinary
income to the extent of any "market discount" accrued for the period that such
purchaser holds the Note. Such holder may instead elect to include market
discount in income as it accrues with respect to all debt instruments acquired
in the year of acquisition of the Offered Notes and thereafter. Market discount
generally
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<PAGE>
will equal the excess, if any, of the then-current unpaid principal balance of
the Note over the purchaser's basis in the Note immediately after such purchaser
acquired the Note. In general, market discount on a Note will be treated as
accruing over the term of such Note in the ratio of interest for the current
period over the sum of such current interest and the expected amount of all
remaining interest payments, or at the election of the holder, under a constant
yield method. At the request of a holder of a Note, information will be made
available that will allow the holder to compute the accrual of market discount
under the first method described in the preceding sentence.
The market discount rules also provide that a holder who incurs or
continues indebtedness to acquire a Note at a market discount may be required to
defer the deduction of all or a portion of the interest on such indebtedness
until the corresponding amount of market discount is included in income.
Notwithstanding the above rules, market discount on a Note will be
considered to be zero if it is less than a de minimis amount, which is 0.25% of
the remaining principal balance of the Note multiplied by its expected weighted
average remaining life. If OID or market discount is de minimis, the actual
amount of discount must be allocated to the remaining principal distributions on
the Note and, when each such distribution is received, capital gain equal to the
discount allocated to such distribution will be recognized.
Market Premium. A subsequent purchaser who buys a Note for more than its
principal amount generally will be considered to have purchased the Note at a
premium. Such holder may amortize such premium, using a constant yield method,
over the remaining term of the Note and, except as future regulations may
otherwise provide, may apply such amortized amounts to reduce the amount of
interest income reportable with respect to such Note over the period from the
purchase date to the date of maturity of the Note. Legislative history of the
Tax Reform Act of 1986 indicates that the amortization of such premium on an
obligation that provides for partial principal payments prior to maturity should
be governed by the methods for accrual of market discount on such an obligation
(described above). A holder that elects to amortize such premium must reduce tax
basis in the related obligation by the amount of the aggregate deductions (or
interest offsets) allowable for amortizable premium. If a debt instrument
purchased at a premium is redeemed in full prior to its maturity, a purchaser
who has elected to amortize premium should be entitled to a deduction for any
remaining unamortized premium in the taxable year of redemption.
SALE OR EXCHANGE OF OFFERED NOTES. If a Note is sold or exchanged, the
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 or 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 steps described below to obtain an exemption
or reduced tax rate.
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The IRS recently issued final withholding regulations (the "New
Regulations"), which make certain modifications to withholding, backup
withholding and information reporting rules. The New Regulations attempt to
unify certification requirements and modify certain reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000. Taxpayers should begin compliance with the New Regulations immediately,
although the old rules will remain in effect until the New Regulations take
effect. Prospective investors are urged to consult their own tax advisors
regarding the New Regulations.
Exemption for Non-U.S. Persons. Under the old rules, 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 (Certificate of
Foreign Status). Under the New Regulations, a non-U.S. Person may claim
beneficial owner status by filing Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding). The old Form W-8 is valid
until the earlier of (i) three years beginning on the date that the form is
signed, or (ii) December 31, 2000. The new Form W-8BEN is valid for a period of
three years beginning on the date that the form is signed. If the information
shown on Form W-8 or Form W-8BEN changes, a new Form W-8 or Form W-8BEN must be
filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income. Under the
old rules, 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). Under the New Regulations, a Non-U.S. Person may claim an
exemption from U.S. withholding on income effectively connected with the conduct
of a trade or business in the United States by filing Form W-8ECI (Certificate
of Foreign Person's Claim for Exemption From Withholding on Income Effectively
Connected With the Conduct of a Trade or Business in the United States). The old
Form 4224 is valid until the earlier of (i) one year beginning on the date that
the form is signed, or (ii) December 31, 2000. The new Form W-8ECI is valid for
a period of three years beginning on the date that the form is signed.
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries. Under the old rules, 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 Certificate). 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. Under the New Regulations, a Non-U.S. Person may claim treaty
benefits by filing Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding). The old Form 1001 is valid until the
earlier of (i) three years beginning on the date that the form is signed, or
(ii) December 31, 2000. The new Form W-8BEN is valid for a period of three years
beginning on the date that the form is signed.
Exemption for U.S. Persons. 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. Under the old rules, a
Noteholder or 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). The New Regulations revise the
procedures that withholding agents and payees must follow to comply with, or to
establish an exemption from, withholding for payments made after December 31,
2000. Each Non-U.S. Noteholder should consult its own tax advisor regarding
compliance with these procedures under the New Regulations.
The New Regulations also generally will require, in the case of notes or
exchange notes held by a foreign partnership, that (1) beneficial owner
certification be provided by the partners rather than the foreign partnership,
and (2) the partnership provide certain information, including a United States
taxpayer identification number. A look-through rule will apply in the case of
tiered partnerships. In addition, the New Regulations may require that a
Non-U.S. Noteholder, including, in the case of a foreign partnership, the
partners thereof, obtain a United States taxpayer identification number and make
certain certifications if the Non-U.S. Noteholder wishes to claim exemption
from, or a reduced rate of, withholding under an income tax treaty. Each
Non-U.S. Noteholder should consult its own tax advisor regarding the application
to such holder of the New Regulations.
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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 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. ss. 2510.3-101 (the
"Plan Asset Regulations"), the assets of the Issuer would be treated as plan
assets of a Benefit Plan for 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 were 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
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continued holding of the Offered Notes will be covered by one of the exemptions
listed above or another Department of Labor class exemption.
Insurance companies considering the purchase of the Offered Notes should
also consult their own counsel as to the application of the decision by the
United States Supreme Court in John Hancock Mutual Life Insurance Co. v. Harris
Trust and Savings Bank (510 U.S. 86) (1993) to such a purchase. Under that
decision, assets held in an insurance company's general account may be deemed
assets of Benefit 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 Benefit Plan consult with counsel regarding the
consequences under ERISA and the Code 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 First Union Capital Markets Corp. ("First Union")
and Banc One Capital Markets, Inc. ("Banc One," and together with First Union,
the "Underwriters") each severally has agreed to purchase the principal amount
of the Offered Notes set forth below:
FIRST UNION BANC ONE
PRINCIPAL AMOUNT PRINCIPAL AMOUNT TOTALS
---------------- ---------------- ------------
Class A-1 Notes $109,105,651 $ 8,846,404 $117,952,055
Class A-2 Notes 35,321,973 2,863,944 38,185,917
Class A-3 Notes 172,685,202 14,001,503 186,686,705
Class A-4 Notes 143,381,047 11,625,490 155,006,537
Class B Notes 11,314,346 -- 11,314,346
Class C Notes 11,314,346 -- 11,314,346
Class D Notes 16,971,519 -- 16,971,519
------------ ------------ ------------
Totals $500,094,084 $ 37,337,341 $537,431,425
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 0.060% per Class A-1 Note,
0.090% per Class A-2 Note, 0.105% per Class A-3 Note, 0.144% per Class A-4 Note,
0.150% per Class B Note, 0.180% per Class C Note and 0.240% per Class D Note.
The Underwriters may allow and such dealers may reallow to other dealers, a
discount not in excess of 0.0300% per Class A-1 Note, 0.0450% per Class A-2
Note, 0.0525% per Class A-3 Note, 0.0720% per Class A-4 Note, 0.0750% per Class
B Note, 0.0900% per Class C Note and 0.1200% per Class D Note. After the public
offering, the public offering price and such concessions may be changed.
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The Underwriters will each represent and agree that:
(a) it has not offered or sold, and, prior to the expiration of six months
from the Issuance Date, will not offer or sell, any Offered Notes to
persons in the United Kingdom, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for purposes of their business,
or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995;
(b) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the Offered Notes in, from or otherwise involving the
United Kingdom; and
(c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the
issue of the Offered Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or persons to whom such
document may otherwise lawfully be issued, distributed or passed on.
The Issuer and Copelco Capital, Inc. have agreed to jointly and severally
indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
The Issuer has been advised by the Underwriters that the Underwriters
presently intend to make a market in the Offered Notes, as permitted by
applicable laws and regulations. The Underwriters are not obligated, however, to
make a market in the Offered Notes and any such market making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Offered Notes.
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.
First Union 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-B as of September 8,
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.
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RATING OF THE 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 "A-1+", that the Class A-2, A-3, and
A-4 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 Rating Co. ("DCR")
and Standard and Poors Ratings Service, a division of The McGraw Hill Companies,
Inc. ("S&P"), respectively (each a "Rating Agency"). With respect to the Class
E Notes, they will rated at least "BB+" by DCR.
Such rating will reflect only the views of the Rating Agencies and will be
based primarily on the amount of subordination, the availability of funds on
deposit in the Reserve Account and the value of the Leases and Equipment. The
ratings are not a recommendation to purchase, hold or sell the related Offered
Notes, inasmuch as such ratings do not comment as to market price or suitability
for a particular investor. There is no assurance that any such rating will
continue for any period of time or that it will not be lowered or withdrawn
entirely by the Rating Agencies if, in its judgment, circumstances so warrant. A
revision or withdrawal of such rating may have an adverse affect on the market
price of the Offered Notes. The rating of the Offered Notes addresses the
likelihood of the timely payment of interest and the ultimate payment of
principal on the Offered Notes by the Stated Maturity Date. The rating does not
address the rate of Prepayments that may be experienced on the Leases and,
therefore, does not address the effect of the rate of Lease Prepayments on the
return of principal to the Offered Noteholders.
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INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report 59
Balance Sheet of the Issuer as of September 8, 1999 60
Notes to Balance Sheet 61
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
Copelco Capital Funding LLC 99-B:
We have audited the accompanying balance sheet of Copelco Capital Funding LLC
99-B (a wholly owned subsidiary of Copelco Capital, Inc.) as of September 8,
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-B as
of September 8, 1999, in conformity with generally accepted accounting
principles.
KPMG LLP
September 10, 1999
New York, New York
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COPELCO CAPITAL FUNDING LLC 99-B
(a wholly owned subsidiary of Copelco Capital, Inc.)
Balance Sheet
September 8, 1999
Assets
Cash $1,000
------
$1,000
======
Stockholder's Equity
Stockholder's Equity
Common Stock (authorized 1,000 $ 100
shares, $1 par value, issued and
outstanding 100 shares)
Additional paid-in capital 900
------
$1,000
======
See accompanying notes to balance sheet.
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COPELCO CAPITAL FUNDING LLC 99-B
(a wholly owned subsidiary of Copelco Capital, Inc.)
Notes to Balance Sheet
September 8, 1999
(1) Organization
Copelco Capital Funding LLC 99-B, a wholly owned subsidiary of Copelco
Capital, Inc. (Copelco Capital), was incorporated in the State of
Delaware.
Copelco Capital Funding LLC 99-B 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-B 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-B.
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INDEX OF TERMS
TERM PAGE(S)
Additional Lease..............................................................26
Additional Principal..........................................................35
Adjusted Lease................................................................26
Assignment and Servicing Agreement............................................27
Available Funds...............................................................38
Available Funds Shortfall.....................................................39
Available Reserve Amount......................................................39
Bankruptcy Code...............................................................51
Benefit Plan..................................................................55
Booked Residual Value.........................................................27
Casualty......................................................................38
Casualty Payment..............................................................38
Cede..........................................................................30
CEDEL.........................................................................30
CEDEL Participants............................................................31
Class A Initial Principal Amount..............................................33
Class A Noteholders...........................................................30
Class A Notes.................................................................29
Class A Percentage............................................................36
Class A Target Investor Principal Amount......................................36
Class A-1 Initial Principal Amount............................................33
Class A-1 Interest Rate.......................................................30
Class A-1 Noteholders.........................................................30
Class A-1 Notes...............................................................29
Class A-1 Stated Maturity Date................................................34
Class A-2 Initial Principal Amount............................................33
Class A-2 Interest Rate.......................................................30
Class A-2 Noteholders.........................................................30
Class A-2 Notes...............................................................29
Class A-2 Stated Maturity Date................................................34
Class A-3 Initial Principal Amount............................................33
Class A-3 Interest Rate.......................................................30
Class A-3 Noteholders.........................................................30
Class A-3 Notes...............................................................29
Class A-3 Stated Maturity Date................................................34
Class A-4 Initial Principal Amount............................................33
Class A-4 Interest Rate.......................................................30
Class A-4 Noteholders.........................................................30
Class A-4 Notes...............................................................29
Class A-4 Stated Maturity Date................................................34
Class B Floor.................................................................36
Class B Initial Principal Amount..............................................33
Class B Interest Rate.........................................................30
Class B Noteholders...........................................................30
Class B Notes.................................................................29
Class B Percentage............................................................36
Class B Principal Payment.....................................................36
Class B Stated Maturity Date..................................................34
Class B Target Investor Principal Amount......................................36
Class C Floor.................................................................37
62
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Class C Initial Principal Amount..............................................33
Class C Interest Rate.........................................................30
Class C Noteholders...........................................................30
Class C Notes.................................................................29
Class C Percentage............................................................36
Class C Principal Payment.....................................................36
Class C Stated Maturity Date..................................................34
Class C Target Investor Principal Amount......................................36
Class D Floor.................................................................37
Class D Initial Principal Amount..............................................33
Class D Interest Rate.........................................................30
Class D Noteholders...........................................................30
Class D Notes.................................................................29
Class D Percentage............................................................36
Class D Principal Payment.....................................................36
Class D Stated Maturity Date..................................................34
Class D Target Investor Principal Amount......................................36
Class E Floor.................................................................37
Class E Initial Principal Amount..............................................33
Class E Interest Rate.........................................................30
Class E Notes.................................................................29
Class E Percentage............................................................36
Class E Principal Payment.....................................................36
Class Floors..................................................................36
Class R-1 Notes...............................................................42
Class R-2 Notes...............................................................42
clearing agency...............................................................30
clearing corporation..........................................................30
Code..........................................................................52
Collection Account............................................................37
Cooperative...................................................................32
Copelco Capital...............................................................11
Copelco Credit................................................................22
Copelco Financial.............................................................22
Copelco Leasing...............................................................22
Cost per Copy.................................................................23
CPR...........................................................................44
Cumulative Loss Amount........................................................37
Cut-Off Date..................................................................11
DCR...........................................................................58
Definitive Notes..............................................................33
Depositaries..................................................................30
Determination Date............................................................34
Discount Rate.................................................................34
Discounted Present Value of the Leases........................................34
Discounted Present Value of the Performing Leases.............................34
DTC...........................................................................30
DTC Services..................................................................32
Due Period....................................................................34
Dun & Bradstreet..............................................................25
Early Lease Termination.......................................................26
Eligible Account..............................................................38
Equipment.....................................................................11
Equipment Financing Portion...................................................23
ERISA.........................................................................55
Euroclear.....................................................................30
63
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Euroclear Operator............................................................32
Euroclear Participants........................................................32
Events of Default.............................................................41
Excess Copy Charge............................................................23
Fee Per Scan Charges..........................................................24
First Union...................................................................56
Fixed Payment.................................................................23
Group.........................................................................22
HILL..........................................................................23
Holders.......................................................................33
Indenture.....................................................................29
Indirect Participants.........................................................30
Industry......................................................................32
Initial Principal Amount......................................................29
Initial Statistical Principal Amount..........................................44
Interest Accrual Period.......................................................35
Interest Payments.............................................................35
Interest Rate.................................................................30
IRS...........................................................................52
Issuance Date.................................................................11
Issuer........................................................................11
Lease Contracts...............................................................11
Lease Payment.................................................................38
Lease Receivables.............................................................11
Leases........................................................................11
Lessee........................................................................11
Lessees.......................................................................11
Maintenance Charge............................................................23
Manager.......................................................................28
Monthly Principal Amount......................................................37
Moody's.......................................................................58
Nominal Buy-Out Leases........................................................50
Non-Performing Leases.........................................................34
Non-U.S. Person...............................................................55
Notes.........................................................................29
Offered Noteholders...........................................................30
Offered Notes.................................................................29
OID...........................................................................52
Origination Groups............................................................11
Outstanding Principal Amount..................................................39
Outstanding Principal Amounts.................................................35
Overcollateralization Balance.................................................37
Participants..................................................................30
Payment Date..................................................................27
PILL..........................................................................24
Plan Asset Regulations........................................................55
Pledged Assets................................................................12
Principal Payments............................................................35
PTCE..........................................................................55
Rating Agency.................................................................58
Record Date...................................................................35
Required Payments.............................................................39
Required Reserve Amount.......................................................39
Reserve Account...............................................................39
Residual Casualty Payments....................................................38
Residual Notes................................................................42
64
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Residual Prepayments..........................................................39
Residual Realizations.........................................................39
Residual Warranty Payments....................................................38
S&P...........................................................................58
SBU...........................................................................22
Series Pool...................................................................11
Servicer......................................................................11
Servicer Advance..............................................................41
Servicer Events of Default....................................................43
Servicing Fee.................................................................28
Statistical Class Percentage..................................................44
Statistical Discount Rate.....................................................34
Statistical Discounted Present Value of the Leases............................34
Statistical Interest Rate.....................................................44
Substitute Lease..............................................................26
SYSTEMS.......................................................................32
Tax Counsel...................................................................52
Termination Payment...........................................................38
Terms and Conditions..........................................................32
Trustee.......................................................................27
U.S. Person...................................................................55
Underwriters..................................................................56
Underwriting Agreement........................................................56
Vendor........................................................................23
Warranty Lease............................................................26, 27
65
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$537,431,425
Copelco Capital
Funding LLC 99-B
-----------
P R O S P E C T U S
-----------
FIRST UNION CAPITAL MARKETS CORP.
BANC ONE CAPITAL MARKETS, INC.
Dated September 17, 1999
Until 90 days after the date of this prospectus, all dealers that effect
transactions in the notes offered by this Prospectus, 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.
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$117,952,055 5.93709% Class A-1
Lease-Backed Notes
$38,185,917 6.25% Class A-2
Lease-Backed Notes
$186,686,705 6.61% Class A-3
Lease-Backed Notes
$155,006,537 6.90% Class A-4
Lease-Backed Notes
$11,314,346 6.95% Class B
Lease-Backed Notes
$11,314,346 7.10% Class C
Lease-Backed Notes
$16,971,519 7.78% Class D
Lease-Backed Notes
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