<PAGE>
As filed with the Securities and Exchange Commission on June 28, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COPELCO CAPITAL FUNDING CORP. II
(Exact name of registrant as specified in its charter)
-------------------
Delaware 6799 22-3261117
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)
Copelco Capital Funding Corp. II
East Gate Drive
Mount Laurel, New Jersey 08054-5400
(609) 231-9600
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------------
Spencer N. Lempert, Esq.
Copelco Capital Funding Corp. II
East Gate Drive
Mount Laurel, New Jersey 08054-5400
(609) 231-9600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Spencer N. Lempert, Esq. Peter Humphreys, Esq.
Copelco Capital Funding Corp. II Dewey Ballantine
East Gate Drive 1301 Avenue of the Americas
Mount Laurel, New Jersey 08054-5400. New York, New York 10019
(609) 231-9600 (212) 259-6730
Approximate Date of Commencement of Proposed Sale to the Public: As
soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. | |
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. | | ________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. | | ______
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. | |
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
Proposed maximum
Title of each class of Amount to be Proposed maximum offering aggregate offering Amount of
securities to be registered registered price per unit(1) price(1) registration fee(2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Lease-Backed Notes................ $1,000,000 100% $1,000,000 $344.80
==================================================================================================================================
Class B Lease-Backed Notes................ $1,000,000 100% $1,000,000 $344.80
==================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the commission, acting pursuant to said
section 8(a), may determine.
Pursuant to Rule 429 of the General Rules and Regulations Under the
Securities Act of 1933, as amended, this Registration Statement also serves as
Post-Effective Amendment No. 1 to Registration Statement No. 33-84148. The
Prospectus which is a part of this Registration is a combined Prospectus
relating also to Registration Statement No. 33-84148.
================================================================================
<PAGE>
COPELCO CAPITAL FUNDING CORP. II
CROSS REFERENCE SHEET
(Pursuant to Rule 404(a) and Item 501 of Regulation S-K)
<TABLE>
<CAPTION>
Item
No. Name and Caption in Form S-1 Caption in Prospectus
- ---- ---------------------------- ---------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Outside Front Forepart of the Registration Statement; Front Cover Page
Cover Page of Prospectus of Prospectus; Cross Reference Sheet
2. Inside Front and Outside Back Cover Pages of the Inside Front Cover and Outside Back Cover Pages of
Prospectus Prospectus; Terms of the Notes; Available Information;
Table of Contents
3. Summary Information; Risk Factors and Ratio of Prospectus Summary; Risk Factors; Certain Legal
Earnings to Fixed Charges Aspects; Prepayment and Yield Considerations
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Underwriting
9. Description of Securities to be Registered Prospectus Summary; Description of the Notes;
10. Interest of Named Experts and Counsel *
11. Material Changes *
12. Disclosure of Commission Position on Indemnification *
for Securities Act Liabilities
</TABLE>
* Not Applicable
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
PRELIMINARY PROSPECTUS
Subject to Completion, Dated June __, 1996
- --------------------------------------------------------------------------------
$________________ (approximate)
Copelco Capital Funding Corp. II, Issuer
Copelco Capital, Inc., Servicer
$______(approximate) Floating Rate Class A Lease-Backed Notes, Series 1996-A
$_______ (approximate) _____% Class B Lease-Backed Notes, Series 1996-A
- --------------------------------------------------------------------------------
Each of the Class A Lease-Backed Notes, Series 1996-A (the "Class A Notes")
and the Class B Notes, Series 1996-A (the "Class B Notes"; and together with the
Class A Notes, the "Offered Notes") will represent debt obligations of Copelco
Capital Funding Corp. II (the "Issuer"), a special-purpose bankruptcy remote
subsidiary of Copelco Capital, Inc. ("Copelco Capital"). The assets of the
Issuer securing the Notes will include a pool consisting of primarily copier
equipment leases and all of Copelco's interest in the equipment underlying the
leases. The leases and the related interests in the equipment were originated or
acquired by Copelco Capital as described herein and sold or contributed by
Copelco Capital to the Issuer under a sales and servicing agreement (the "Sales
and Servicing Agreement") by and between Copelco Capital and the Issuer.
Payments of principal and interest to the holders of the Class A Notes (the
"Class A Noteholders") will have the benefit of an interest-rate swap agreement,
limited credit support consisting of the Class B Notes an additional class of
subordinated notes (the "Class C Notes"; and together with Offered Notes, the
"Notes") and funds on deposit in the reserve account. The holders of the Class B
Notes (the "Class B Noteholders") will have the benefit of limited credit
support in the form of the Class C Notes and funds on deposit in the reserve
account. The Class C Notes are being offered in a private placement and
therefore are not being offered hereby. Capitalized terms used herein will have
the meanings ascribed to such terms herein. The pages on which terms are defined
are set forth on the Index of Terms contained herein.
Ironwood Capital Partners Ltd.
Co-Structuring Agent
(continued on next page)
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
See "Risk Factors" commencing on page 14 for a discussion of certain
factors that should be considered in connection with an investment in the
securities offered hereby.
THE OFFERED NOTES OFFERED HEREBY WILL NOT REPRESENT AN INTEREST IN OR AN
OBLIGATION OF COPELCO FINANCIAL SERVICES GROUP, INC., COPELCO CAPITAL,
INC. OR ANY OF THEIR AFFILIATES, OTHER THAN COPELCO CAPITAL FUNDING
CORP. II, NOR WILL THE CLASS A NOTES OR THE CLASS B NOTES
OFFERED HEREBY BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
SEE "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS.
================================================================================
Initial Public Underwriting Proceeds to
Offering Price(1) Discount(2) Issuer(3)
- --------------------------------------------------------------------------------
Per Class A Note... _____% _____% _____%
- --------------------------------------------------------------------------------
Per Class B Note... _____% _____% _____%
- --------------------------------------------------------------------------------
Total.............. $__________ $__________ $__________
================================================================================
(1) Plus accrued interest from ______, 1996
(2) The Company has agreed to indemnity the Underwriter against certain
liabilities, included under the Securities Act of 1933.
(3) Before deducting expenses estimated to be $_______.
Lehman Brothers
The date of this Prospectus is _____, 1996.
<PAGE>
(cover page continued)
Interest on the Notes will be payable monthly in arrears on the twentieth
day of the month beginning on ______, 1996 (each, a "Payment Date") with respect
to the period from and including the immediately preceding Payment Date (or with
respect to the initial Payment Date, ________, 1996) to the period to and
excluding such Payment Date. Principal payments with respect to the Offered
Notes will be payable on each Payment Date beginning on ______, 1996. The stated
maturity date with respect to the Notes is ___________. However, if all payments
on the Leases are made as scheduled, final payment with respect to the Notes
would occur prior to stated maturity. In addition, should an Event of Default,
an Early Lease Termination or a Casualty (each, as described herein) occur,
repayment of principal on the Offered Notes may be earlier than would otherwise
be the case.
The Offered Notes are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order in
whole or in part and to withdraw, cancel, or modify any order without notice. It
is expected that delivery of the Offered Notes will be made in book-entry form
through the facilities of The Depository Trust Company, Cedel Bank, S.A. or the
Euroclear System on or about _________, 1996.
The Offered Notes offered hereby are being offered pursuant to this
Prospectus. Sales of the Offered Notes may not be consummated unless the
purchaser has received this Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Issuer has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Offered Notes
offered pursuant to this Prospectus and described herein. For further
information, reference is made to the Registration Statement which may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of the
Registration Statement may be obtained from the Public Reference Branch of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Company will file with the Commission such periodic reports with
respect to the Trust as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the rules and regulations of the Commission
thereunder.
2
<PAGE>
REPORTS TO NOTEHOLDERS
During such time as the Offered Notes remain in book-entry form, quarterly
and annual unaudited reports, containing information concerning the Company and
the Offered Notes will be sent on behalf of the Trust to Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC") and registered holder of the
Offered Notes pursuant to the Indenture. Such reports will be made available by
DTC and its participants to holders of interests in the Offered Notes (the
"Offered Noteholders") in accordance with the rules, regulations and procedures
creating and affecting DTC. See "Description of the Notes-Book Entry
Registration Notes." Upon the issuance of fully registered, certificated Notes,
such reports will be sent to each Noteholder. Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles.
3
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. A listing of pages on which
some of such terms are defined can be found in the "Index of Terms" herein.
Issuer............................ Copelco Capital Funding Corp. II (the
"Issuer"), a Delaware corporation. The
Issuer's offices are located at East Gate
Center, 700 East Gate Drive, Mount Laurel,
New Jersey 08054-5400 and its phone number
is (609) 231-9600. The Issuer has been
established as a bankruptcy remote entity,
wholly-owned by Copelco Capital, Inc. and
is intended to be a limited-purpose
corporation. Accordingly, the Issuer's
operations have been restricted so that
(a) it does not engage in business with,
or incur liabilities to, any other entity
which may bring bankruptcy proceedings
against the Issuer; and (b) the risk that
it will be consolidated into the
bankruptcy proceedings of any other entity
is diminished. The Issuer will have no
significant assets other than the Trust
Fund (as described below) and the trust
funds securing other notes issued by the
Issuer in one or more rated transactions.
Securities Offered................ $__________ (approximate) aggregate
principal amount of the Floating Rate
Class A Lease-Backed Notes, Series 1996-A
(the "Class A Notes") and $ ____________
(approximate) aggregate principal amount
of the ___% Class B Lease-Backed Notes,
Series 1996-A (the "Class B Notes";
together with the Class A Notes, the
"Offered Notes"). In addition, the Issuer
will be issuing, through a private
placement, $__________ (approximate)
aggregate principal amount of the ____%
Class C Lease-Backed Notes, Series 1996-A
(the "Class C Notes"; together with the
Class A Notes and the Class B Notes, the
"Notes"). The Class B Notes will be
subordinated to the Class A Notes to the
extent provided in the Indenture as
described herein. The Class C Notes will
be subordinated to the Offered Notes to
the extent provided in the Indenture as
described herein. The Class C Notes are
not offered hereby. The combined aggregate
principal amount of the Class A Notes the
Class B Notes and the Class C Notes will
comprise the initial principal amount (the
"Initial Principal Amount") of the Notes.
The aggregate principal amounts of the
Class A Notes, the Class B Notes and the
Class C Notes set forth herein are based
upon the Discounted Present Value of the
Leases (as defined herein) as of ________,
1996 (the "Cut-Off Date") calculated at
the Statistical Discount Rate. The Initial
Principal Amount of the Notes will be
calculated using the actual Discount Rate.
3
<PAGE>
Denominations..................... The Notes will be issued in minimum
denominations of $100,000 and integral
multiples of $1,000 in excess thereof,
except that one Class A Note, Class B Note
and Class C Note may be issued in another
denomination.
Interest Rate..................... LIBOR (as defined herein) plus ___% on the
Class A Notes (the "Class A Interest
Rate"), calculated on the basis the actual
number of days elapsed in a year of 360
days; ___% per annum on the Class B Notes
(the "Class B Interest Rate") and ___% per
annum on the Class C Notes (the "Class C
Interest Rate"), calculated on the basis
of a year of 360 days comprised of twelve
30-day months.
Initial Principal
Amount............................ $__________ for the Class A Notes (the
"Class A Initial Principal Amount"), $
__________ for the Class B Notes (the
"Class B Initial Principal Amount") and
$__________ for the Class C Notes (the
"Class C Initial Principal Amount"). The
Class A Initial Principal Amount will be
equal to __% (the "Class A Percentage") of
the Discounted Present Value of the Leases
(as defined herein) as of the Cut-Off
Date, the Class B Initial Principal Amount
will be equal to __% (the "Class B
Percentage") of the Discounted Present
Value of the Leases as of the Cut-Off Date
and the Class C Initial Principal Amount
will be equal to ___% (the "Class C
Percentage") of the Discounted Present
Value of the Leases as of the Cut-Off
Date. 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) from
the Leases (including Non-Performing
Leases), discounted at a rate equal to
____% (the "Discount Rate") which rate is
equal to the sum of (a) the weighted
average Interest Rate of the Class A Notes
(calculated at the Swap Rate (as defined
herein)), the Class B Notes and the Class
C Notes on the Issuance Date and (b) the
Servicing Fee Rate of 0.75% per annum. The
"Discounted Present Value of the
Performing Leases", equals the Discounted
Present Value of the Leases, reduced by
all future remaining scheduled payments on
the Non-Performing Leases (not including
delinquent amounts), discounted at
Discount Rate. See "Description of the
Notes--General." "Statistical Discounted
Present Value of the Leases" means an
amount equal to the future remaining
scheduled payments from the Leases as of
the Cut-off Date, discounted at a rate
equal to ____%. The Statistical Discounted
Present Value of the Leases as of the
Cut-Off Date is $________
4
<PAGE>
and will not vary materially from the
Discounted Present Value of the Leases as
of the Cut-Off Date. See "The Series
Pool--The Equipment." The aggregate
Discounted Present Value of the Leases as
of the Cut-Off Date, calculated at the
Discount Rate is $______________.
"Non-Performing Leases" are (a) Leases
that have become more than 123 days
delinquent or (b) Leases that have been
accelerated by the Servicer or Leases that
the Servicer has determined to be
uncollectible in accordance with its
customary practices. See "The Series
Pool--The Leases."
Stated Maturity................... _____________. However, if all payments on
the Leases are made as scheduled, final
payment with respect to the Notes would
occur prior to stated maturity.
The Notes......................... The Notes will represent obligations
solely of the Issuer.
Seller and Servicer............... Copelco Capital, Inc., a Delaware
corporation ("Copelco Capital", the
"Seller," or in its capacity as servicer,
the "Servicer"). Copelco Capital will
enter into a sales and servicing agreement
(the "Sales and Servicing Agreement") with
the Issuer to sell and service the Leases
included in the Series Pool and make
Servicer Advances (as defined herein),
concurrently with the sale of the Leases
by Copelco Capital to the Issuer, Copelco
Capital's interest in the Equipment (which
is either an ownership interest or a
security interest) will be transferred to
the Issuer as a contribution of capital.
Contemporaneously with the sale, the
Issuer will transfer its interests in the
Leases and Equipment to the Trustee in
accordance with the provisions of the
Indenture (as defined herein).
Trust Fund........................ The Trust Fund will consist of a pool (the
"Series Pool") of equipment lease
contracts consisting of equipment lease
contracts of copiers, facsimile machines,
computers and other business equipment
(the "Lease Contracts") including all
payments due thereunder (the "Lease
Receivables"; together with the Lease
Contracts, the "Leases") and the interest
in the related leased equipment (the
"Equipment") transferred by Copelco
Capital to the Issuer. In addition, the
Trust Fund will include the Swap Agreement
and the funds on deposit in the Reserve
Account.
Trustee........................... Manufacturers and Traders Trust Company
(the "Trustee"). The Trustee's offices are
located at One M&T Plaza, 7th Floor,
Buffalo, New York 14203.
5
<PAGE>
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 since the preceding
Determination Date, or in the case of the
first Determination Date, the Cut-Off
Date, (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
twentieth day of each month (or if such
day is not a business day, the next
succeeding business day), commencing on
_______, 1996 (each, a "Payment Date"), to
holders of record on the last day of the
immediately preceding calendar month
(each, a "Record Date"). See "Description
of the Notes--Distributions on Notes."
Interest Payments................. On each Payment Date, the interest due
(the "Interest Payments") with respect to
the Class A Notes, the Class B Notes and
the Class C 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 ________, 1996 at the
applicable Interest Rate applied to the
then unpaid principal amounts (the
"Outstanding Principal Amounts") of the
Class A Notes, the Class B Notes and the
Class C Notes, respectively (the
"Outstanding Class A Principal Amount",
the "Outstanding Class B Principal Amount"
and the "Outstanding Class C Principal
Amount", respectively), after giving
effect to payments of principal to the
Class A Noteholders, the Class B
Noteholders and the Class C 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 and
the Class C 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 under "-Application of Payments"
and "Description of the
Notes-Distributions on Notes." On each
Payment Date, the Principal Payment
payable to the Noteholders is as follows:
(a) to the Class A Noteholders, the amount
necessary to reduce the Outstanding Class
A Principal Amount to the Class A Target
Investor Principal Amount (the "Class A
Principal Payment"), (b) to the Class B
Noteholders, the amount necessary to
reduce the Outstanding Class B Principal
Amount to the Class B Target Investor
Principal Amount (the "Class B Principal
6
<PAGE>
Payment"), and (c) to the Class C
Noteholders, the amount necessary to
reduce the Outstanding Class C Principal
Amount to the Class C Target Investor
Principal Amount (the "Class C Principal
Payment"); provided, however, that Class C
Principal Payment otherwise distributable
to the Class C Noteholders will instead be
distributed pro rata to the Class A
Noteholders and the Class B Noteholders to
the extent that the Subordinated Amount
(after giving effect to the disbursements
to be made on such date) is less than the
Required Subordinated Amount. In addition,
on each Payment Date on which the Investor
Percentage is greater than the Investor
Percentage Target, an amount equal to the
lesser of (i) remaining Available Funds up
to the Additional Principal Scheduled
Amount with respect to such Payment Date
and (ii) the amount necessary to reduce
the Investor Percentage (after giving
effect to all disbursements made on such
Payment Date) to the Investor Percentage
Target will be disbursed as an additional
reduction of principal to the Noteholders
pro rata based on the relative percentage
of the Outstanding Principal Amount of the
Notes represented by the Class A Notes,
the Class B Notes and the Class C Notes,
respectively (each, an "Additional
Principal Payment").
The "Additional Principal Scheduled
Amount" means the amount set forth
in Schedule A hereto.
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 Target
Investor Principal Amount for such Payment
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 Target
Investor Principal Amount for such Payment
Date.
The "Class C Target Investor Principal
Amount" with respect to each Payment Date
is an amount equal to the product of (a)
the Class C Percentage and (b) the Target
Investor Principal Amount for such Payment
Date.
The "Investor Percentage" with respect to
each Payment Date is the lesser of (a)
100% and (b) the percentage equivalent of
a fraction (i) the numerator of which is
the Outstanding Principal Amount of the
Notes as of the end of the immediately
preceding calendar month and (ii) the
denominator of which is the Discounted
Present Value of the Performing Leases as
of the related Determination Date.
7
<PAGE>
The "Investor Percentage Target" equal to
100% minus the Overcollateralization
Target Percentage.
The "Overcollateralization Target
Percentage" equals __%.
The "Required Subordinated Amount" is $
____________.
The "Subordinated Amount" with respect to
any Payment Date means the sum of (a) the
Outstanding Class C Principal Amount, (b)
the excess of the Discounted Present Value
of the Performing Leases over the
Outstanding Principal Amount of the Notes
and (c) the Available Reserve Amount.
The "Target Investor Principal Amount"
with respect to each Payment Date is an
amount equal to the product of (a) the
Discounted Present Value of the Performing
Leases determined as of the related
Determination Date and (b) the Investor
Percentage in respect of the immediately
preceding Payment Date.
The Series Pool................... The Series Pool will consist of the Leases
as of the Cut- Off Date, plus any
Substitute Leases and any Additional
Leases (as defined herein), excluding any
Leases which have been replaced by one or
more Additional Leases or Substitute
Leases, the interest of the Issuer in
the related Equipment, the funds on
deposit in the Reserve Account and the
Swap Agreement. See "The Series Pool"
and "Certain Legal Matters Affecting a
Lessee's Rights and Obligations."
Copelco Capital will represent and warrant
that, as of the Cut-Off Date, all Leases
were current or less than 63 days
delinquent and that the Lessees have made
at least one lease payment.
Equipment......................... As of the Cut-Off Date, _____% of the
Statistical Discounted Present Value of
the Leases consisted of leases of copier
equipment. The remaining Leases consisted
of Leases of facsimile machines, computers
and other business equipment.
Lessees........................... The Lessees consist of businesses and
business owners (each, a "Lessee"; and
collectively, the "Lessees"). As of the
Cut-Off Date, the Collateral included
_____ separate Leases and _____ Lessees.
As of the Cut-Off Date, Leases relating to
Lessees in any one state did not account
for more than _____% of the Statistical
Discounted Present Value of the Leases.
See "The Series Pool--The Leases."
8
<PAGE>
Certain Lease Terms............... The Leases are triple-net leases,
requiring the Lessee to pay all taxes,
maintenance and insurance associated with
the Equipment. The Leases are
non-cancelable by the Lessees. All
payments under the Leases are absolute,
unconditional obligations of the Lessees
without right of offset for any reason.
Each Lessee entered into its Lease for
specified Equipment designated in
schedules incorporated into the Lease. The
schedules, among other things, establish
the payments and the term of the Lease
with respect to such Equipment. The Leases
have remaining terms to maturity,
calculated as of the Cut-Off Date, of
between approximately _ and __ months and
a weighted average term to stated maturity
of ____ months. See "The Series Pool--The
Leases."
Additions and
Substitutions..................... 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, 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, 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 and (b) Leases subject to
repurchase as a result of a breach of
representation and warranty ("Warranty
Lease"). The aggregate Discounted Present
Value of the Leases that may be 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.
In no event will the aggregate scheduled
payments of the Substitute Lease(s) and
Additional Lease(s) when added to the
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 booked Residual Value
of the aggregate booked Residual
9
<PAGE>
Value of the Leases, including such
Substitute Leases and Additional Leases,
must not be less than __% of the
Discounted Present Value of
Performing Leases. Additionally,
either the final payment on such
Substitute Lease or Additional Lease must
be on or prior to ________, 200_ or, to
the extent the final payment on such Lease
is due subsequent to ___________, 200_,
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 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. See "The Series Pool--The
Leases."
In addition, following the transfer of any
Lease to the Series Pool, there may be
adjustments to such Lease which modify one
or more terms of such Lease, such as
payment amount or payment date. Such
administrative adjustments may result in a
re-booking of such Lease, but will not be
considered to be a substitution or
prepayment of such Lease. To the extent
that such administrative adjustments in
the aggregate result in a breach of the
representations and warranties of the
Seller with respect to the such Leases,
Copelco Capital will be required to
contribute additional Leases to the extent
necessary to remedy such breach.
Payments on Leases................ All payments on Leases will be made by the
Lessees to the order of the Issuer to the
address specified by Servicer. The
Servicer will deposit the proceeds of such
payments to the Collection Account (as
defined herein) within two Business Days
of the receipt thereof. See "Description
of the Notes--Collection Account."
Swap Agreement.................... The Issuer will enter into an agreement
(the "Swap Agreement") with ___________
(the "Swap Counterparty"). Under the terms
of the Swap Agreement, the Swap
Counterparty will make a floating payment
to the Issuer each month indexed to the
one-month London interbank offered rate
("LIBOR") in return for a fixed rate (the
"Swap Rate") calculated by reference to
the Notional Amount. The Notional Amount
will equal the product of (a) the Investor
Percentage, (b) the Class A Percentage and
(c) the Discounted Present Value of the
Performing Leases as of the end of the
immediately preceding month. Amounts
payable by the Issuer under the Swap
Agreement will be
10
<PAGE>
made from collections on the fixed-rate
Leases as set forth in the Indenture.
Advances by 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 Leases in the Trust Fund
with respect to the prior Due Period. The
Servicer will be reimbursed for Servicer
Advances not recovered from late payments
from Available Funds on the Payment Date
following the date on which the Servicer
determined such Lease to be a
Non-Performing Lease. See "Description of
the Notes--- Advances by Servicer."
Servicing Fee..................... A Servicing Fee (the "Servicing Fee"),
will be paid monthly to the Servicer on
each Payment Date from amounts in the
Collection Account and will be calculated
by multiplying one-twelfth of 0.75% times
the Outstanding Principal Amount of the
Notes at the Determination Date for such
Payment Date before application of
payments with respect thereto.
The Servicing Fee will be paid to the
Servicer for servicing the Series Pool and
to pay certain administrative expenses in
connection with the Notes, including
Trustee fees and expenses. See "Copelco
Capital Lease Underwriting and Servicing."
Use of Proceeds................... The net proceeds from the sale of the
Offered Notes will be used to purchase the
Leases from Copelco Capital. In addition,
the net proceeds from the private
placement of the Class C Notes will be
used for the same purpose. Copelco Capital
will use such amounts to repay bank
indebtedness and for general corporate
purposes.
The Indenture..................... The Notes are to be issued pursuant to,
and is to be in such form, bear interest
and be payable on such terms as are
prescribed in an indenture (the
"Indenture") to be executed between the
Issuer and the Trustee.
Available Funds................... After deducting amounts owing to the Swap
Counter-Party and the monthly Servicing
Fee, the projected cash flow from the
Leases and the proceeds from the Swap
Agreement will be sufficient to make all
scheduled payments of principal and
interest on the Notes, assuming no
defaults, prepayments of Leases or
casualty losses. See "Risk Factors-
Maturity and Prepayment Considerations."
On each Payment Date, the Trustee will use
such funds (after paying the monthly
Servicing Fee
11
<PAGE>
and amounts owing the Swap Counter-Party)
to make required payments of principal and
interest to Noteholders.
Funds received on or prior to the related
Determination Date ("Available Funds")
will be available for distribution by the
Trustee on a Payment Date and will
include:
a) Lease Payments due during the prior Due
Period;
b) Residual Values up to the Residual
Amount Cap;
c) recoveries from Non-Performing Leases
(except to the extent required to
reimburse unreimbursed Servicer
Advances);
d) proceeds from repurchases by Copelco
Capital of Leases as a result of
breaches of representations and
warranties by Copelco Capital;
e) proceeds from investment of funds in
the Collection Account and the Reserve
Account;
f) Casualty Payments (as defined herein);
g) Servicer Advances;
h) Termination Payments; and
i) amounts received under the Swap
Agreement.
Application of
Payments.......................... Monthly distributions will be made by the
Trustee from Available Funds in the
following priority:
a) to pay the Servicing Fee;
b) to reimburse unreimbursed Servicer
Advances in respect of a prior Payment
Date;
c) to pay amounts owing by the Issuer
under the Swap Agreement;
d) to make Interest Payments owing on the
Class A Notes;
e) to make Interest Payments owing on the
Class B Notes;
f) to make Interest Payments owing on the
Class C Notes;
12
<PAGE>
g) to make the Class A Principal Payment
until the Outstanding Principal Amount
of the Class A Notes has been reduced
to zero;
h) to make the Class B Principal Payment
until the Outstanding Principal Amount
of the Class B Notes has been reduced
to zero;
i) to make the Class C Principal Payments
until the Outstanding Principal Amount
of the Class C Notes has been reduced
to zero; provided, however, that if the
Subordinated Amount is less than the
Required Subordinated Amount, the
amount otherwise distributable to the
Class C Noteholders will be disbursed
pro rata as an additional reduction of
principal to the Class A Noteholders
and the Class B Noteholders;
j) to make the Additional Principal
Payment if the Investor Percentage
(after giving effect to the Principal
Payments made on such Payment Date)
exceeds the Investor Percentage Target,
such disbursement to be made to the
Noteholders pro rata based on the
relative percentage of the Outstanding
Principal Amount of the Notes
represented by the Class A Notes, the
Class B Notes and the Class C Notes,
respectively;
k) to the Reserve Account, an amount equal
to the excess of the Required Reserve
Amount over the Available Reserve
Amount;
l) to the Issuer, the balance, if any.
See "Description of the Notes-Distribution
on Notes."
Redemption........................ The Issuer will have the option, subject
to certain conditions, to redeem all, but
not less than all, of the Notes and
thereby cause early repayment of the Notes
as of any Payment Date on which the
Discounted Present Value of the Performing
Leases is less than or equal to 10% of the
Discounted Present Value of the Leases as
of the Cut-Off Date (after giving effect
to the payment of principal on such
Payment Date). See "Description of the
Notes--Redemption."
Residual Values................... Aggregate cash flows realized from
residual values on the Equipment (the
"Residual Values"), shall be deposited
into the Collection Account for
distribution up to $__________ (the
"Residual Amount Cap"), and will provide
additional
13
<PAGE>
credit support to the Notes. Actual
Residual Values may be more or less than
book value.
Subordination..................... The Class A Notes will be senior in right
of payment to the Class B Notes and the
Class B Notes will be senior in right to
the Class C Notes to the extent described
herein. See "Description of the
Notes--Distributions on the Notes."
Reserve Account................... The Noteholders will have the benefit of
funds on deposit in an account (the
"Reserve Account") to the extent that the
there is a shortfall in the amount
available to pay the Servicer Fee and to
make interest and principal payments on
the Notes, on any Payment Date. The
Reserve Account will be funded by an
initial deposit of $____________.
Thereafter, to the extent provided in the
Indenture, additional deposits will be
made to the Reserve Account to the extent
that the amount on deposit in the Reserve
Account (the "Available Reserve Amount")
is less than __________ (the "Required
Reserve Amount"). Additional credit
enhancement will be provided by
overcollateralization which will initially
be in an amount equal to __% of the
Discounted Present Value of the Leases on
the Cut-Off Date.
Federal Income Tax
Considerations.................... It is intended that the Notes will be
characterized as indebtedness of the
Issuer for federal income tax purposes. If
characterized as indebtedness, interest on
the Notes will be taxable as ordinary
income when received by a Noteholder on
the cash method of accounting and when
accrued by Noteholders on the accrual
method of accounting. See "Certain Federal
Income Tax Considerations."
ERISA
Considerations.................... The Employee Retirement Income Security
Act of 1974, as amended ("ERISA") places
certain restrictions on those pension and
other employee benefits plans to which it
applies. Before purchasing any of the
Notes, fiduciaries of such plans should
determine whether an investment in the
Notes is appropriate under ERISA. See
"ERISA Considerations."
Rating............................ It is a condition to the issuance of the
Offered Notes that the Offered Notes be
rated in one of the four highest
categories by at least one nationally
recognized statistical rating
organization. The ratings assess the
likelihood of timely payment of interest
and the ultimate payment of principal to
the Noteholders. There is no assurance
that any rating will not be lowered or
withdrawn if, in the
14
<PAGE>
judgement of any Rating Agency,
circumstances in the future so warrant.
See "Rating of the Notes."
15
<PAGE>
RISK FACTORS
Limited Liquidity. There is currently no public market for the Offered
Notes and there is no assurance that one will develop. The Underwriter expects,
but is not obligated, to make a market in the Offered Notes. There is no
assurance that any such market will be created or, if so created, will continue.
If no public market develops, the Offered Noteholders may not be able to
liquidate their investment in the Offered Notes prior to maturity.
Prepayments. Because the rate of payment of principal on the Notes will
depend, among other things, on the rate of payment on the Leases and the timing
and amounts of Residual Values, such rate of payment of principal on the Notes
cannot be predicted. Payments on the Leases will include scheduled payments as
well as prepayments permitted by Copelco Capital as the Servicer (to the extent
not replaced with Substitute Leases), payments as a result of Non-Performing
Leases, Casualty Payments (as defined herein), and payments upon repurchases by
Copelco Capital on account of a breach of certain representations and warranties
in the related Sales and Servicing Agreement (any such voluntary or involuntary
prepayment, a "Prepayment"). The rate of early terminations of Leases due to
Prepayments and defaults may be influenced by a variety of economic and other
factors which cannot be specified at this time. The risk of reinvesting
distributions of the principal of the Notes will be borne by the Noteholders.
See "Prepayment and Yield Considerations."
Additional Leases and Substitute Leases. As described herein, pursuant to
the Sales and Servicing Agreement, Copelco Capital may have the option, but not
the obligation, to designate one or more leases in its portfolio to be an
Additional Lease as a replacement for any prepaid in full lease, in which event
the scheduled payments from such Additional Lease will replace (in whole or in
part) the remaining scheduled payments on a prepaid in full Lease. In the event
(and only to the extent) that Copelco Capital makes such a designation, the
amount (or portion thereof) received by the Issuer with respect to a Prepayment
will be allocated directly to Copelco Capital and the payments with respect to
the related Notes will be dependent upon the scheduled payments received on such
Additional Leases. In addition, pursuant to the Sales and Servicing Agreement,
Copelco Capital may have the option, but not the obligation to substitute one or
more leases as Substitute Leases up to an aggregate Discounted Present Value of
10% of the Discounted Present Value of the Leases as of the Cut-Off Date in
exchange for Non-Performing Leases or Leases subject to repurchase as a result
of a breach of a representation and warranty ("Warranty Leases"). Accordingly,
payments of principal of and interest on the Notes may be dependent, in part,
upon payments received on such Additional Leases. In addition, to the extent
that Copelco Capital does not designate one or more leases as Additional Leases
in connection with the prepayment of a Lease or Substitute Leases in the case
of partial prepayments, Non-Performing Leases or Warranty Leases, the
Discounted Present Value of the Performing Leases will be decreased. See
"Prepayment and Yield Considerations."
Security Interests in the Equipment. The Leases will consist of either
finance Leases (where substantially all of the value of the Equipment is
financed by the lease payments) or operating leases (where substantially less
than all of the value of the Equipment is recovered through the lease payments).
See "The Leases" herein. Finance leases include Leases ("Nominal Buy-Out
Leases") which contain a nominal purchase option upon expiration or other terms
which may be deemed effectively to vest equitable ownership of the Equipment in
the Lessee. Prior to the Cut-Off Date, Copelco Capital will have filed Uniform
Commercial Code ("UCC") financing statements in its favor against Lessees in
respect of Equipment, including Equipment subject to Nominal-Buy-Out Leases,
with an original Equipment cost in
16
<PAGE>
excess of $25,000. No action will be taken to perfect the interest of Copelco
Capital in any Equipment to the extent the original Equipment cost of the
related Equipment is less than $25,000. In addition, the Indenture and the Sale
and Servicing Agreement will require 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 to be
filed in favor of the Issuer or the Trustee in states in which Equipment
relating to not less than 75% of the Discounted Present Value of the Leases as
of the Cut-Off Date is located (the "Filing Locations"). To the extent UCC
financing statements evidencing Copelco Capital's security interest in the
Equipment have not been filed against the Lessee and to the extent the Equipment
is located in the states other than the Filing Locations, any such security
interests in the Equipment will not be perfected in favor of the Issuer or the
Trustee and another party (such as other creditors of Copelco Capital) may
acquire rights in Copelco Capital's interest in the Equipment superior to those
of the Issuer or the Trustee. See "Certain Legal Matters Affecting a Lessee's
Rights and Obligations."
Restrictions on Recoveries. State laws impose requirements and restrictions
relating to foreclosure sales and obtaining deficiency judgments following such
sales. In the event that the Issuer must rely on repossession and disposition of
Equipment to cover losses on Non-Performing Leases, the Issuer may not realize
the full amount due because of the application of those requirements and
restrictions. Other factors that may affect the ability of the Issuer to realize
the full amount due on a Lease include the failure to file financing statements
to perfect the Issuer's security interest in the Equipment against a Lessee,
depreciation, obsolescence, damage or loss of any item of Equipment, and the
application of federal and state bankruptcy and insolvency laws. As a result,
the Noteholders may be subject to delays in receiving payments and losses. See
"Certain Legal Matters Affecting a Lessee's Rights and Obligations."
Insolvency of Copelco Capital. Copelco Capital believes that each transfer
of the Leases to the Issuer should be treated as an absolute and unconditional
sale. However, in the event of an insolvency of Copelco Capital, a court could
attempt to recharacterize the sale of the related Leases by Copelco Capital to
the Issuer as a loan by Copelco Capital from the Issuer, secured by a pledge of
such Leases or could allow the trustee in bankruptcy to repudiate the Leases
that are operating leases and all obligations thereunder. Such an attempt, even
if unsuccessful, could result in delays in payments of the related Notes. If
such an attempt were successful, such Notes would be accelerated, and the
Trustee's recovery on behalf of the Noteholders could be limited to the then
current value of the Leases or the underlying Equipment. Thus, the Noteholders
could lose the right to future payments and might incur reinvestment losses on
amounts recovered. See "Certain Legal Matters Affecting a Lessee's Rights and
Obligations."
Credit Enhancement. Credit enhancement with respect to the Offered Notes
will be provided by the subordination of Class C Notes, limited
overcollateralization and funds on deposit in the Reserve Account. In addition,
the Class A Notes have the benefit of the subordination of the Class B Notes.
However, on any Payment Date the amount available to Noteholders is limited to
the extent of funds on deposit in the Reserve Account and the Collection
Account. In addition, payment of principal and interest on the Offered Notes
will be supported by the Residual Values of the Equipment up to the Residual
Amount Cap. Therefore, if a Lease becomes a non-performing lease at a time when
total losses on the Leases is in excess of the outstanding principal amount of
any subordinated Class and, the amount, if any, available to be withdrawn from
the Reserve Account is reduced to zero, the holders of Notes of such Class may
be forced to rely solely on the proceeds from the realization of Residual Values
on the Equipment for ultimate payment of principal and interest
17
<PAGE>
on such Class of Notes. The aggregate amount of Residual Values available to
Noteholders will not exceed the Residual Amount Cap.
Swap Counter-Party Rating. The rating of Notes will depend on the
creditworthiness of the Swap Counter-Party. Any reduction in the rating assigned
to the ability of the Swap Counter-Party to honor the terms of the Swap
Agreement below the rating initially given to the Notes would likely result in a
reduction in the rating assigned to the Notes on the Issuance Date.
Non-Recourse Obligations. The Notes represent debt obligations of the
Issuer secured by the Trust Fund only and do not represent interests in or
recourse obligations of Copelco Capital or any of its affiliates other than the
Issuer. The Issuer is a special purpose corporation with limited assets.
Consequently, the Noteholders must rely solely upon the Leases, the Equipment
and funds in the Reserve Account, if any, and the Swap Agreement for payment of
principal of and interest on the Notes. If no funds are on deposit in the
Reserve Account and the payments made on the Leases and the disposition proceeds
of the Equipment are insufficient to make payments on the Notes, no other assets
will be available for the payment of the deficiency.
Book-Entry Registration. The Notes offered hereby initially will be
represented by one or more Notes registered in the name of the Depository Trust
Company ("DTC") and will not be registered in the names of the beneficial owners
or their nominees. As a result of this, unless and until Definitive Notes are
issued, beneficial owners will not be recognized by the Issuer or the Trustee as
Noteholders, as that term is used in each Indenture. Hence, until such time,
beneficial owners will only be able to exercise the rights of Noteholders
indirectly, through DTC and its participating organizations, and will receive
reports and other information provided for under the Indenture only if, when and
to the extent provided by DTC and its participating organizations. See
"Description of the Notes--Book-Entry Registration."
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to purchase the
Leases from Copelco Capital. Copelco Capital will utilize the proceeds from the
sale of the Leases to repay bank debt and for general corporate purposes.
THE SERIES POOL
The Leases. As of __________, 1996 (the "Cut-Off Date"), the Notes will be
secured by _____ Leases with _____ Lessees. The Lessees are businesses and
business owners throughout the United States. The Leases were originated by the
Document Image Division, the Computer Division and the Major Accounts Division
(or their predecessors) (the "Origination Divisions"). See "Risk Factors,"
"Security for the Notes" and "Certain Legal Matters Affecting a Lessee's Rights
and Obligations." The statistical information included herein was computed using
the Statistical Discounted Present Value of the Leases as of the Cut-Off Date.
The Statistical Discounted Present Value of the Leases will not vary materially
from the Discounted Present Value of the Leases as of the Cut-Off Date.
The Leases are triple-net leases which impose no affirmative obligations on
the Lessor, and are noncancelable by the Lessees. Under certain conditions,
however, Copelco Capital may consent to prepayment of the Leases. Generally
Copelco Capital will consent to a prepayment of a Lease where the Lessee is
upgrading the Equipment. All
18
<PAGE>
payments under the Leases are absolute, unconditional obligations of the Lessees
without right of offset for any reason. Such payments will be made by the
Lessees to the Servicer for the account of the Issuer.
Each Lessee entered into its Lease for specified Equipment which may be
designated in schedules incorporated into the Lease. To the extent not set forth
in the Lease Contract, the schedules, among other things, establish the monthly
payments and the term of the Lease with respect to such Equipment. The Leases
follow one of several different forms of lease agreement, with occasional
modifications which do not materially affect the basic terms of the Leases. The
weighted average remaining term of the Series Pool is _____ months. Copelco
Capital will represent and warrant that, as of Cut-Off Date, all Leases will be
current or less than 63 days delinquent and all Leases will have made at least
one payment.
Lessees covenant to maintain the Equipment and install it at a place of
business agreed upon with Copelco Capital. Delivery, transportation, repairs and
maintenance are the obligation of the Lessees, and all Lessees are required to
carry, at their respective expense, liability and replacement cost insurance
under terms acceptable to Copelco Capital. Such insurance proceeds will
constitute Casualty Payments (as defined herein). Subject to certain
exceptions, if the Lessee does not provide evidence of insurance coverage within
90 days of the commencement of the Lease, Copelco Capital obtains such insurance
and invoices the Lessee for the cost thereof. Any defaults under a Lease (as
such, a "Non-Performing Lease," as defined herein) permit a declaration as
immediately due and payable all remaining Lease payments under the Lease and the
immediate return of the Equipment. Generally, any payments received six days
after the scheduled payment date are subject to late charges.
"Non-Performing Leases" are (a) Leases that have become more than 123 days
delinquent or (b) Leases that have been accelerated by the Servicer or Leases
that the Servicer has determined to be uncollectible in accordance with its
customary practices.
At the end of the Lease term, the Lessee must return the Equipment with
certification from the manufacturer that the Equipment is in good working order,
normal wear and tear excepted, unless the Lease is renewed or the Equipment is
purchased by the Lessee.
Historically, approximately __% of Equipment leased by the Origination
Divisions is purchased or relet by the original lessee at the expiration of the
lease term. "Nominal Buy-Out" Leases comprise ______% of the Leases. Pursuant to
the terms of the Leases, the Lessee is required to advise Copelco Capital at
least 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
period ranging from four months to one year. 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
CutOff Date, ____% of the Statistical Discounted Present Value of the Leases
consisted of Leases of copier equipment. The remaining Leases consist of Leases
of facsimile machines, computers and other business equipment.
19
<PAGE>
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.
DISTRIBUTION OF LEASES BY STATE
<TABLE>
<CAPTION>
Percentage of
Percentage Statistical Aggregate
Number Percentage Number of Aggregate Statistical Discounted Original Percentage of
of of Number of Number of Discounted Present Present Value Equipment Original
State Leases of Leases Lessees(1) Lessees Value of the Leases of the Leases Cost Equipment Cost
----- ------ --------- ---------- ------- ------------------- ------------- ------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Total...
==============================================================================================================================
</TABLE>
(1) Total number of Lessees is greater than the total number of Lessees
appearing in the Distribution of Leases by Lessee Table because several
Lessees have Leases in more than one state.
20
<PAGE>
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
Percentage
of
Aggregate Statistical Percentage
Statistical Discounted Aggregate of
Statistical Discounted Number Percentage Discounted Present Original Original
Present Value of the of of Number Present Value of Value of Equipment Equipment
Leases Leases of Leases Leases Leases Cost Cost
-------- ------ --------- ------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
$0 - 5,000
5,001 - 10,000
10,001 - 15,000
15,001 - 20,000
20,001 - 25,000
25,001 - 30,000
30,001 - 35,000
35,001 - 40,000
40,001 - 45,000
45,001 - 50,000
50,001 - 55,000
55,001 - 60,000
60,001 - 65,000
65,001 - 70,000
70,001 - 75,000
75,001 - 80,000
80,001 - 85,000
85,001 - 90,000
90,001 - 95,000
95,001 - 100,000
greater than $100,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total...................
====================================================================================================================================
</TABLE>
21
<PAGE>
DISTRIBUTION OF LEASES BY LESSEE
<TABLE>
<CAPTION>
Percentage of
Aggregate Aggregate Percentage
Statistical Statistical Aggregate of
Statistical Percentage Discounted Discounted Original Original
Discounted Present Number of Number Present Value Present Value Equipment Equipment
Value of the Leases of Lessees of Lessees of Leases of Leases Cost Cost
-------------------- ---------- ---------- ----------- ----------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
$0 - 5,000
5,001 - 10,000
10,001 - 15,000
15,001 - 20,000
20,001 - 25,000
25,001 - 30,000
30,001 - 35,000
35,001 - 40,000
40,001 - 45,000
45,001 - 50,000
50,001 - 55,000
55,001 - 60,000
60,001 - 65,000
65,001 - 70,000
70,001 - 75,000
75,001 - 80,000
80,001 - 85,000
85,001 - 90,000
90,001 - 95,000
95,001 - 100,000
greater than $100,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total..................
====================================================================================================================================
</TABLE>
22
<PAGE>
DISTRIBUTION OF LEASES BY
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage
of Percentage
Aggregate Statistical Aggregate of
Number Percentage Statistical Discounted Original Original
Remaining of of Number Discounted Present Present Equipment Equipment
Term Leases of Leases Value of Leases Value Cost Cost
- ---- ------ --------- ----------------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
1 - 12
13 - 24
25 - 36
37 - 48
49 - 60
- ------------------------------------------------------------------------------------------------------------------------------------
Total..........
====================================================================================================================================
</TABLE>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
<TABLE>
<CAPTION>
Aggregate
Statistical Percentage of
Percentage Discounted Statistical Aggregate Percentage of
Number of Number Present Value of Discounted Original Original
Lease Type of Leases of Leases Leases Present Value Equipment Cost Equipment Cost
- ---------------- --------- --------- -------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Finance Lease
Operating Lease
- ------------------------------------------------------------------------------------------------------------------------------------
Total..................
====================================================================================================================================
</TABLE>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
<TABLE>
<CAPTION>
Percentage
Percentage Percentage of Percentage
of of Aggregate Aggregate Aggregate of
Number Number Number Number Discounted Discounted Original Original
of of of of Present Present Equipment Equipment
Lease Type Leases Leases Lessees(1) Lessees Value Value Cost Cost
---------- ------- -------- ---------- --------- ------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fair Market Value
Fixed Purchase Option
Nominal Buyout
- ------------------------------------------------------------------------------------------------------------------------------------
Total..................
====================================================================================================================================
</TABLE>
(1) Total number of Lessees is greater than the total number of Lessees
appearing in the Distribution of Leases by Lessee Table because several
Lessees have numerous Leases, only a portion of which are Nominal Buyout
Leases.
23
<PAGE>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percentage
Aggregate of
Statistical Statistical Percentage
Discounted Discounted Aggregate of
Number Percentage Present Present Original Original
of of Number Value of Value of Equipment Equipment
Equipment Type Leases of Leases Leases Leases Cost Cost
-------------- ------ --------- -------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Total.................
====================================================================================================================================
</TABLE>
Historical Delinquency Information. Problem accounts are reviewed by senior
management when an account becomes 45 days past due. Lease receivables in the
Origination Divisions are evaluated for write-down when they become over 92 days
delinquent. General delinquency information for equipment leases in the
Origination Divisions that are owned or serviced by Copelco Capital is set forth
below:
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
Total
Receivable
Balance
Date (000's) 31-60 Days 61-90 Days 91 Days+ Total Delinquency
---- ----------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
$ $ % $ % $ % $ %
- - - - - - - - -
December 31, 1995
December 31, 1994
December 31, 1993
December 31, 1992
December 31, 1991
</TABLE>
Historical Default Experience. All accounts assessed over 92 days past due
automatically become non-accruing accounts. Any subsequent recoveries offset net
losses. General charge-off information for leases in the Origination Divisions
that are owned and serviced by Copelco Capital for the period January 1, 1991 to
December 31, 1995 is set forth below:
24
<PAGE>
HISTORICAL CHARGE-OFF EXPERIENCE
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C>
Average Receivables
Outstanding(1)...................... $ $ $ $ $
Net Losses............................ $ $ $ $ $
Net Losses as a Percentage of
Average Receivables................. % % % % %
</TABLE>
- -----------------------------
(1) Equals the arithmetic average of the beginning of the period Receivable
Balance and the end of the period Receivable Balance.
(2) Includes current recoveries on receivables previously charged-off.
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.
25
<PAGE>
COPELCO CAPITAL'S UNDERWRITING AND SERVICING PRACTICES
General. Copelco Capital, Inc., 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 Capital's primary
business consists of originating and servicing leases to healthcare providers,
commercial and industrial companies, business owners and individuals. Copelco
Capital's address is East Gate Center, 700 East Gate Drive, Mount Laurel, New
Jersey 08054-5400 and its phone number is (609) 231-9600.
In May 1993, Copelco Financial (which was incorporated in July 1982)
reorganized its two primary operating subsidiaries, Copelco Credit Corporation
("Copelco Credit") and Copelco Leasing Corporation ("Copelco Leasing"), into six
strategic business units (each, an "SBU"). Then, effective July 1, 1994, Copelco
Leasing was merged into Copelco Credit with Copelco Credit as the surviving
legal entity; Copelco Credit then changed its name to Copelco Capital, Inc.
merging all of the Copelco Leasing and Copelco Capital leasing operations.
Copelco Capital currently consists of seven operating divisions (each, a
"Division"): the Document Image Division; the Ambulatory Care Division; the
Healthcare Vendor Division; the Manufacturing Technology Division; the Computer
Division; the Major Accounts Division and the Canadian Division.
As of December 31, 1995, Copelco Capital had total assets of $1,399,101,000
compared with $1,102,770,000 on December 31, 1994, total liabilities of
$1,295,269,000 compared with approximately $1,016,059,000 on December 31, 1994,
shareholder's equity of $103,832,000 compared with $86,711,000 on December 31,
1994 and operating revenues and net income of approximately $155,020,000 and
$17,304,000, respectively, compared with approximately $119,646,000 and
approximately $14,558,000, respectively, on December 31, 1994.
Since 1986, Copelco Capital and its predecessors have participated in 28
equipment lease securitization transactions involving the issuance of in excess
of $2 billion in securities. Copelco Capital and its predecessors performed all
servicing functions in each of these prior transactions, 15 of which remain
outstanding.
The Document Image Division. The Document Image Division of Copelco Capital
obtains substantially all of its leases through a marketing program which is
directed primarily at major manufacturers and various distributors of copier
equipment (each, a "Vendor"). The remainder is obtained through new leases with
existing lessees and referrals. The Document Image Division establishes both
formal and informal relationships with Vendors, some of which provide Copelco
Capital with a right of first refusal on all equipment leases with the Vendor's
customers. This arrangement provides the Document Image Division with a steady
flow of lease referrals from Vendors which frequently use lease financing as a
marketing tool. The Document Image Division provides some Vendors with private
label programs under which billing and collections are performed by Copelco
Capital in the name of the Vendor.
The Document Image Division also offers a private label 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 Vendor
on the basis of the Equipment Financing Portion of the Fixed Payment and remits
the Maintenance Charge to the Vendor as it is collected every month. Copelco
Capital calculates usage periodically using 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 (the "Excess Copy
Charge"). This excess copy charge is remitted to the Vendor upon collection by
Copelco Capital. Only the Equipment Financing Portion of the Fixed Payments is
included in the Discounted Present Value of the Leases.
26
<PAGE>
Vendors may choose to use a Copelco Capital lease form or they may use
their own lease agreement. In either case, the credit approval rests with
Copelco Capital. Lease documents for the 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. Typically, individual
transactions range from $5,000 to $100,000 with an average lease size of
approximately $11,000.
The Computer Division. Copelco Capital established the Computer Division as
an outgrowth of the Document Image Division in early 1994 to focus more effort
on the personal computer segment of the industry. The operations of the Computer
Division have been developed to be virtually identical to those of the Document
Image Division. Copelco Capital initiates business through distributors, direct
sellers, mail order sellers and resellers. Vendor relationships are established
subject to established computer vendor approval criteria. Until the recent
establishment of the Computer Division, computers were leased through Copelco
Capital in what is now the Document Image Division. Typically, individual
transactions range from $5,000 to $500,000 with an average lease size of
approximately $20,000.
The Major Accounts Division. The Major Accounts Division initiates business
through several major vendors. The operations of the Major Accounts Division
have been developed to be virtually identical to those of the Document Image
Division. Typically, individual transactions range from $5,000 to $500,000 with
an average lease size of approximately $15,000.
Credit Review. Prior to a lease approval by the Origination Divisions of
Copelco Capital, the Vendor's sales personnel are required to obtain from the
prospect 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 is submitted for credit review in Park Ridge, New Jersey and
Moberly, Missouri for the Document Image Division and Park Ridge, New Jersey and
Jacksonville, Florida for the Major Accounts Division and the Computer Division.
Credit review is performed and lease approvals are given at these locations
utilizing an interactive computer system designed to handle applications which
are telephoned or telecopied from Vendors.
Lessee evaluation includes an analysis of credit payment history, business
structure (partnership, sole proprietorship or corporation), 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
$25,000, the information collected includes the prospect's most recent financial
statements. If individual guarantors are involved, a consumer credit bureau
report is generally obtained for the guarantors.
The Origination Divisions have implemented an automated credit scoring
system. The system, designed by Dun & Bradstreet specifically for the Document
Image Division, was in development over a two year period and was formally
implemented on January 4, 1994. The system utilizes various filters which enable
the Origination Divisions to adapt "approve" and "decline" threshold scores
based upon criteria such as credit exposure, payment history, industry (by SIC
code), vendor and state. The model is consistent with the Origination Divisions'
traditional credit decision-making criteria (i.e., Dun & Bradstreet data,
consumer credit bureau information, and bank and trade references).
All credit requests not approved via automated credit scoring must be
underwritten by a credit officer. Each credit officer has a specific assigned
lending limit based upon experience and seniority. Transactions up to $50,000
may be approved individually by any SBU general manager. Transactions ranging
from $50,000 to $150,000 require the individual approval of a credit officer.
Transactions ranging from $150,000 to $250,000 require the approval of an
assistant credit manager.
27
<PAGE>
Transactions ranging from $250,000 to $500,000 require the approval of one of
the group credit officers, transactions ranging from $500,000 to $800,000
require the approval of the president of Copelco Credit. Transactions ranging
from $800,000 to $1,500,000 require the approval of the chief credit officer of
Copelco Capital. Any single transaction or transactions where the total original
equipment cost of equipment leased by a particular lessee exceeds $1,500,000
must be approved by the senior management of Copelco Financial.
All lessees are required by the terms of the leases 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. In approximately
[___]% to [___]% of leases originated by Copelco Capital, the equipment is
purchased outright by the lessee at the end of the initial lease term.
Residual Values. The Origination Divisions have realized residual values
which, on average, exceeded the booked residual values in respect of such
leases. For Leases in which there is a pre-determined buy-out price, the buy-out
price is the residual value recorded on Copelco Capital's books. Typically, for
accounting purposes, the booked residual values are recorded at no more than 15%
of the original equipment cost (net of security deposits).
To recover residuals on the equipment which is returned, the Origination
Divisions utilize the services of its Vendors and also participates in an active
secondary market for the sale of used equipment to equipment brokers.
Collections. A late charge is assessed to Lessees 6 days after payment due
date. Telephone contact is normally initiated when an account is 15 days past
due, but may be initiated more quickly. All collection activity is entered into
the computerized collection system. Activity notes are input directly into the
collection system in order to facilitate routine collection activity. Collectors
have available at their computer terminals the latest status and collection
history on each account.
On the day on which a Lease becomes 10 days delinquent, the Origination
Divisions' 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 sent out to the lessee and to
anyone providing personal guarantees on the Leases. An acceleration letter is
sent to all Lessees and guarantors when a Lease becomes 45 days past due.
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, each
lease is evaluated on the merits of the individual situation, with equipment
value being considered as well as the current financial strength of the lessee.
Sales and Servicing Agreement. Copelco Capital will enter into an
agreement (the "Sales and Servicing Agreement") with the Issuer, pursuant to
which Copelco Capital will, among other things, sell and service the Leases and
make Servicer Advances. In the Sales and Servicing Agreement, Copelco Capital
will make certain representations and warranties regarding the Leases and the
Equipment. In the event that (i) 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 (ii) any Lease shall be terminated
in whole or in part by a Lessee, or any amounts due with respect to any Lease
shall be reduced or impaired, as a result of any action or inaction by Copelco
Capital (other than any such action or inaction of Copelco Capital, when acting
as Servicer, in connection with the enforcement of any Lease (other than an
Early Lease termination) in a manner consistent with the provisions of the
Sales and Servicing Agreement) or any claim by any Lessee against
28
<PAGE>
Copelco Capital and, in any such case, the event or condition causing such
inaccuracy, termination, reduction, impairment or claim shall not have been
cured or corrected within 30 days after the earlier of the date on which
Copelco Capital is given notice thereof by the Issuer or the 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 equal to the Discounted Present Value of such
Lease plus any amounts previously due and unpaid thereon. In addition, Copelco
Capital will have the option to substitute one or more Substitute Leases for
such Warranty Lease. Any inaccuracy in any representation or warranty with
respect to (i) the priority of the lien of the Indenture with respect to any
Lease or (ii) the amount (if less than represented) of the Lease Payments,
Casualty, Payments or Termination Payments under any Lease shall be deemed to
be material.
Servicing Fee. The Servicing Fee will be paid monthly on the Payment Date
from amounts in the Collection Account and will be calculated by multiplying
one-twelfth of 0.75% times the then Outstanding Principal Amount of the Notes at
such Payment Date before application of payments with respect thereto.
The Servicing Fee will be paid to the Servicer for servicing the Series
Pool and for certain administrative expenses in connection with the Notes,
including Trustee Fees.
THE ISSUER
The Issuer is a wholly-owned bankruptcy-remote subsidiary of Copelco
Capital, formed solely for the purpose of acquiring from Copelco Capital Leases
and Equipment from time to time and issuing notes from time to time as provided
herein. As a bankruptcy-remote entity, the Issuer's operations will be
restricted so that (a) it does not engage in business with, or incur liabilities
to, any other entity (other than the Trustee on behalf of the Noteholders and
the trustee on behalf of the noteholders under indentures similar to the
Indenture) which may bring bankruptcy proceedings against the Issuer and (b) the
risk that it will be consolidated into the bankruptcy proceedings of any other
entity is diminished. The Issuer will have no other assets available to pay
amounts owing under the Indenture except the Trust Fund, including the Leases
and the interests in the Equipment, the proceeds thereof, the Swap Agreement and
the amounts on deposit in the Collection Account and the Reserve Account. The
Issuer's address is East Gate Center, 700 East Gate Drive, Mount Laurel, New
Jersey 08054-5400 and its phone number is (609) 231-9600.
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture (the "Indenture")
between the Issuer and Manufacturers and Traders Trust Company, as trustee
(each, a "Trustee"). The following statements with respect to the Notes are
subject to the detailed provisions of the Indenture, the form of which is filed
as an exhibit to the registration statement of which this Prospectus forms a
part. Whenever any particular section of the Indenture or any term used therein
is referred to, the statement in connection with which such reference is made is
qualified in its entirety by such reference.
General. The Offered Notes represent secured debt obligations of the Issuer
secured by the Trust Fund and the privately placed Class C Notes represent
subordinated debt obligations of the Issuer only secured by the related Trust
Fund as provided in the related Indenture; and 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 special purpose corporation 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 and the Swap Agreement for payment of principal of and interest
on the Notes.
The Initial Principal Amount of the Notes shall be equal to 99% of the
Discounted Present Value of the Leases as of the Cut-Off Date. Such Discounted
Present Value of the Leases, at any given
29
<PAGE>
time, shall equal the future remaining scheduled payments from the related
Leases (including Non-Performing Leases), discounted at the Discount Rate, as
set forth in the Indenture.
Each Class A Note will bear interest from the Issuance Date at a per annum
rate equal to LIBOR plus __% (the "Class A Interest Rate"), calculated on the
basis of the actual number of days elapsed during each interest period during a
year of 360 days. "LIBOR" in respect of any Payment Date means the per annum
rate for deposits in United States dollars for a period of one month, which
appears on the Telerate Page 3750, as of 11:00 a.m., London time, on the second
Business Day prior to the immediately preceding Payment Date. If such rate does
not appear on the Telerate Page 3750 on such day, the rate will be determined on
the basis of the rates at which deposits in United States dollars are offered by
the _______________ and ______________ or such other reference banks to which
the Swap CounterParty and the Servicer may agree at approximately 11:00 a.m.,
London time, on such day to prime banks in the London interbank market for a
period of one month commencing on that day. The Servicer will request the
principal London office of each of the reference banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic mean of the quotations; provided, however, if the
difference between the two quotes is greater than or equal to 0.25%, the
Servicer shall obtain a third quote and the Rate shall be computed as follows:
(a) if two of the three quotes are within .05% of each other, the rate shall
equal the arithmetic mean of such quotes and (b) if two of the three quotes are
not within .05% of each other, the rate shall equal the arithmetic mean of all
three quotes. If fewer than two quotations are provided as requested, the rate
for that day will be the arithmetic mean of the rates quoted by such reference
bank, in its sole discretion at approximately 11:00 a.m., New York City time, on
that day for loans in United States dollars to leading European banks for a
period of one month.
Each Class B Note and each Class C Note will bear interest from the
Issuance Date at the Class B Interest Rate and the Class C Interest Rate,
respectively, calculated on the basis of a year of 360 days comprised of twelve
30-day months, payable on the twentieth day of each month (or if such day is not
a business day the next succeeding business day), to the person in whose name
the Note was registered at the close of business on the preceding Record Date.
Principal will be payable as set forth under "Distributions on Notes." Notes may
be presented to the corporate trust office of the Trustee for registration of
transfer or exchange. (Section 2.03). Notes may be exchanged without a service
charge, but the Issuer may require payment to cover taxes or other governmental
charges. (Section 2.03).
Book-Entry Registration. Class A Noteholders and Class B Noteholders may
hold their Notes through DTC (in the United States) or Cedel or Euroclear (in
Europe) if they are participants of such systems, or indirectly through
organizations which are participants in such systems.
Cede, as nominee for DTC, will hold the global Class A Note or Notes and
the global Class B 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
30
<PAGE>
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants (as defined herein) and Euroclear
Participants (as defined herein) will occur in accordance with their respective
rules and operating procedures.
Cross-market transfers between persons holding or indirectly through DTC,
on the one hand, and directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing systems by
its Depositary. Cross-market transactions will require delivery of instructions
to the relevant European international clearing system by the counterparty in
such system in accordance with its rules and procedures and within its
established deadlines (European time). The relevant European international
clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its Depositary to take action to effect final settlement
on its behalf by delivering or receiving securities in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Cedel Participants and Euroclear Participants may
not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear as
a result of sales of securities by or through a Cedel Participant or a Euroclear
Participant to a Participant will be received with value on the DTC settlement
date but will be available in the relevant Cedel or Euroclear cash account only
as of the business day following settlement in DTC. For information with respect
to tax documentation procedures relating to the Offered Notes, see "Certain
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 "Class A Noteholder" and
"Class B Noteholder" will be Cede, as nominee of DTC, and that holders of
beneficial interests in the Class A Noteholders or Class B Noteholders,
respectively, under the Indenture will only be permitted to exercise the rights
of Class A Noteholders or Class B Noteholders, respectively, under the
Indenture indirectly through DTC and its Participants who in turn will exercise
their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Offered Notes and is required to
receive and transmit distributions of principal of and interest on the Offered
Notes. Participants and Indirect Participants with which holders of beneficial
interests in the Offered Notes have accounts similarly are required to make
book-entry transfers and receive and transmit such payments on behalf of these
respective holders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of holders of
beneficial interests in the Offered Notes to pledge Offered Notes to persons or
entities that do not participate in the DTC system, or otherwise take actions
31
<PAGE>
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 or Class B Noteholder under the Indenture only at
the direction of one or more Participants to whose account with DTC the Class A
Notes or Class B Notes are credited. Additionally, DTC has advised the Issuer
that it may take actions with respect to the Class A Interest or the Class B
Interest that conflict with other of its actions with respect thereto.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the Underwriters. Indirect access to Cedel is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedel Participant,
either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
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<PAGE>
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 "Certain Federal Income Tax Considerations." Cedel or the Euroclear
Operator, as the case may be, will take any other action permitted to be taken
by an Offered Noteholder under the Indenture on behalf of a Cedel Participant or
Euroclear Participant only in accordance with its relevant rules and procedures
and subject to its Depositary's ability to effect such actions on its behalf
through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Offered Notes among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
Definitive Notes. The Offered Notes will be issued in fully registered,
authenticated form to Beneficial Owners or their nominees (the "Definitive
Notes"), rather than to DTC or its nominee, only if (a) the Issuer advises the
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 2.06).
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 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(e)).
Collection Account. The Trustee will establish and maintain an Eligible
Account (the "Collection Account") into which the Servicer will deposit all
Lease Payments, Casualty Payments and Termination Payments (each as defined
herein) on or in respect of each Lease included in the Series Pool within two
Business Days of receipt thereof. All Lease Payments, Casualty Payments,
Termination Payments and other payments relating to a Lease received and so
deposited in the Collection Account shall constitute property of the Issuer,
securing payments on the related Notes. (Section 3.02(a)).
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An "Eligible Account" means either (a) an account maintained with a
depository institution or trust company whose long-term unsecured debt
obligations are rated at least A- by Standard & Poor's Ratings Group ("S&P")
(or, if the obligations of such depositary institution are not rated by S&P, an
equivalent rating from another nationally recognized statistical rating
organization), 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 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, or other specific charges, including, without
limitation, any Excess Copy 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
Company, and the Lessee.
The Trustee shall deposit the following funds into the Collection Account
(Section 3.03(a)), which funds received on or prior to the related Determination
Date ("Available Funds") shall be available for distribution, pursuant to the
Indenture, on the next succeeding Payment Date:
a) Lease Payments due during the prior Due Period;
b) Residual Values up to the Residual Amount Cap;
c) recoveries from Non-Performing Leases (except to the extent required
to reimburse unreimbursed Servicer Advances);
d) late charges received on delinquent Lease payments not advanced by the
Servicer;
e) proceeds from repurchases by Copelco Capital of Leases as a result of
breaches of representations and warranties by Copelco Capital;
f) proceeds from investment of funds in the Collection Account;
g) Casualty Payments;
h) Termination Payments;
i) proceeds from the Swap Agreement; and
j) Servicer Advances.
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Reserve Account. The Trustee will establish and maintain an Eligible
Account (the "Reserve Account"). On the Closing Date, the Issuer will make an
initial deposit in an amount equal to $________ into the Reserve Account. In the
event that Available Funds are insufficient to pay the Servicing Fee, Interest
Payments on the Notes and the Class A Principal Payment, the Class B Principal
Payment and the Class C Principal Payment (the "Required Payments"), the Trustee
will withdraw from the Reserve Account an amount equal to the lesser of the
funds on deposit in the Reserve Account (the "Available Reserve Amount") and
such deficiency. In addition, on each Payment Date, Available Funds remaining
after the payment of amounts owing the Swap Counterparty, the Servicer and the
Required Payments will be deposited into the Reserve Account to the extent that
the Required Reserve Amount exceeds the Required Reserve Amount. The "Required
Reserve Amount" equals ____________. Any amounts on deposit in the Reserve
Account in excess of the Required Reserve Amount will be released to the Issuer.
(Section 3.04(c)).
Distributions on Notes. Payments on the Notes will commence on
_________________, 1996. On or before the fifth day prior to each Payment Date
(or the preceding business day, if such day is not a business day) (each, a
"Determination Date"), the Servicer will determine the Available Funds and the
Required Payments. After deducting the monthly Servicing Fee, the projected cash
flow from the Leases will be sufficient to make all scheduled payments of
principal and interest on the Notes, assuming no defaults, prepayments of Leases
or casualty losses.
For each Payment Date, the interest due with respect to the Class A Notes,
the Class B Notes and the Class C 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 Interest Rates applied to the Outstanding
Principal Amount of such Class A Notes, Class B Notes and Class C Notes,
respectively, after giving effect to payments of principal to Noteholders on the
preceding Payment Date, plus all previously accrued and unpaid interest on the
Class A Notes and the Class B Notes (the "Interest Payments"). (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 and the Class C Notes will be the Class A Principal
Payment, the Class B Principal Payment and the Class C Principal Payment,
respectively. In addition, on each Payment Date on which the Investor
Percentage is greater than the Investor Percentage Target an amount equal to
the Class A Additional Principal Payment, the Class B Additional Principal
Payment and the Class C Additional Principal Payment (the "Additional Principal
Payment") shall be paid to the Noteholders as an additional reduction of
principal.
The "Additional Principal Payment" means, on any Payment Date, an amount
equal to the lesser of (a) a remaining Available Funds up to the
Overcollateralization Target Amount with respect to such Payment Date and (b)
the amount necessary to reduce the Investor Percentage (after giving effect to
all disbursements made on such Payment Date) to the Investor Percentage Target.
The "Additional Principal Scheduled Amount" means the amount set forth
in Schedule A hereto.
The "Class A Percentage" equals __%.
The "Class A Principal Payment" payable on each Payment Date will be an
amount equal to the lesser of (a) the amount necessary to reduce the Outstanding
Class A Principal Amount to the Class A Target Investor Principal Amount and (b)
funds available therefor.
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
Target Investor Principal Amount for such Payment Date.
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The "Class B Percentage" equals __%.
The "Class B Principal Payment" payable on each Payment Date will be an
amount equal to the lesser of (a) the amount necessary to reduce the Outstanding
Class B Principal Amount to the Class B Target Investor Principal Amount and (b)
funds available therefor.
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
Target Investor Principal Amount for such Payment Date.
The "Class C Percentage" equals __%.
The "Class C Principal Payment Amount" payable on each Payment Date will be
an amount equal to the lesser of (a) the amount necessary to reduce the
Outstanding Class C Principal Amount to the Class C Target Investor Principal
Amount and (b) funds available therefor.
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
Target Investor Principal Amount for such Payment Date.
The "Discounted Present Value of the Leases", with respect to the Trust
Fund at any given time, shall equal the future remaining scheduled payments (not
including delinquent amounts) from the related Leases (including Non-Performing
Leases (as defined herein)), discounted at the Discount Rate. The Discount Rate
will be equal to the sum of (a) the weighted average Interest Rate of the Class
A Notes (assuming the Swap Rate), the Class B Notes and the Class C Notes on the
Issuance Date and (b) the Servicing Fee Rate.
The "Discounted Present Value of the Performing Leases", with respect to
each Trust Fund equals the Discounted Present Value of the Leases, reduced by
all future remaining scheduled payments on the related Non-Performing Leases
(not including delinquent amounts), discounted at the Discount Rate. See
"Description of the Notes--General" (Section 1.01).
The "Investor Percentage" with respect to each Payment Date is the lesser
of (a) 100% and (b) the percentage equivalent of a fraction (i) the numerator of
which is the Outstanding Principal Amount of the Notes as of the end of the
immediately preceding Payment Date after giving effect to disbursements made on
such Payment Date and (b) the denominator of which is the Discounted Present
Value of the Performing Leases as of the related Determination Date.
The "Investor Percentage Target" is equal to 100% minus the
Overcollateralization Target Percentage.
"Non-Performing Leases" are (i) Leases that are more than 123 days
delinquent or (ii) Leases that have been accelerated by the Servicer. See "The
Series Pool--The Leases" (Section 1.01).
The "Overcollateralization Target Percentage" equals __%.
The "Required Subordinated Amount" means $____________.
The "Residual Amount Cap" is $________.
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The "Subordinated Amount" with respect to any Payment Date means the sum of
(a) the Outstanding Class C Principal Amount, (b) the excess of the Discounted
Present Value of the Performing Leases over the Outstanding Principal Amount of
the Notes and (c) the Available Reserve Amount.
The "Swap Rate" equals __%.
The "Target Investor Principal Amount" with respect to each Payment Date is
an amount equal to the product of (a) the Discounted Present Value of the
Performing Leases determined as of the related Determination Date and (b) the
Investor Percentage in respect of the immediately preceding Payment Date.
Unless an Event of Default and acceleration of the Notes has occurred, on
or before each Payment Date, the Servicer will instruct the Trustee to apply or
cause to be applied the Available Funds to make the following payments in the
following priority (Section 3.03(b)):
(a) to pay the Servicing Fee;
(b) to reimburse unreimbursed Servicer Advances in respect of a prior
Payment Date;
(c) to pay any amounts owing the Swap CounterParty under the Swap
Agreement;
(d) to make Interest Payments on the Class A Notes;
(e) to make Interest Payments on the Class B Notes;
(f) to make Interest Payments on the Class C Notes;
(g) to pay the Class A Principal Payment to the Class A Noteholders until
the entire Outstanding Principal Amount of the Class A Notes has been
paid in full;
(h) to pay the Class B Principal Payment to the Class B Noteholders until
the entire Outstanding Principal Amount of the Class B Notes has been
paid in full;
(i) to pay the Class C Principal Payment to the Class C Noteholders until
the entire Outstanding Principal Amount of the Class C Notes has been
paid in full; provided, however, if the Subordinated Percentage is
less than the Required Subordinated Percentage, the Class C Principal
Payment otherwise distributable to the Class C Noteholders will be
disbursed pro rata as an additional reduction of principal to the
Class A Noteholders and Class B Noteholders;
(j) to make the Additional Principal Payment to the extent the Investor
Percentage (after giving effect to the Principal Payments made on such
Payment Date) exceeds the Investor Percentage Target, such
disbursement to be made to the Noteholders pro rata based on the
relative percentage of the Outstanding Principal Amount represented by
the Class A Notes, the Class B Notes and the Class C Notes,
respectively.
(k) to make a deposit to the Reserve Account in amount equal to the excess
of the Required Reserve Amount over the Available Reserve Amount; and
(l) to the Issuer, the balance, if any.
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Amounts will be considered due and payable to the Noteholders only to the
extent funds are available therefor as described above.
The Interest Rate Swap Counterparty. The Interest Rate Swap Counterparty
(the "Swap Counterparty") will be provided by ___________________. (the "Swap
Counter Party). The Swap Counterparty was organized in ______________. [insert
description of business of Swap Counterparty].
[Swap Counterparty] has been assigned long-term debt ratings of ___ by
Standard & Poor's and ___ by Moody's.
As reflected in the Swap Counterparty's 1995 Annual Report, as of December
31, 1995, the Swap Counterparty had approximately $______ in total assets,
approximately $_______ in total liabilities and approximately $______ in
stockholders' equity.
Upon written request the Swap Counterparty will provide without charge to
any person to whom this Prospectus is delivered a copy of its most recent annual
report. Written requests should be directed to ___________.
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 all Leases with respect to the prior
Due Period. The Servicer will be reimbursed for Servicer Advances from Available
Funds on the second following Payment Date. See "Distribution on Notes" above.
Redemption. The Issuer may, at its option, redeem the Notes, as a whole, at
their principal amount, without premium, together with interest accrued to the
date fixed for redemption if on any payment date the Discounted Present Value of
the Performing Leases is less than or equal to 10% of the Discounted Present
Value of the Leases as of the Cut-Off Date. (Sections 2.01 and 1.06.)
Events or Default and Notice Thereof. The following events will be defined
in the related Indenture as "Events of Default":
(a) default in making Principal Payments or Interest Payments when
such become due and payable;
(b) default in the performance, or breach, by the Issuer of certain
negative covenants limiting its actions;
(c) default in the performance, or breach, of any other covenant of
the Issuer in the Indenture or the Sales and Servicing Agreement, and
continuance of such default or breach for a period of 30 days after the
earliest of (i) any officer of the Issuer first acquiring the knowledge
thereof, (ii) the Trustee's giving written notice thereof to the Issuer or
(iii) the holders of a majority of the then Outstanding Principal Amount of
the Notes giving written notice thereof to the Issuer and the Trustee;
(d) if any representation or warranty of the Issuer or Copelco Capital
made in the Indenture or the Sales and Servicing Agreement or any other
writing provided to the holders of the Notes proves to be incorrect in any
material respect as of the time when the same has been made; provided,
however, that the breach of any representation or warranty made by Copelco
Capital in the Sales and Servicing Agreement will be deemed to be
"material" only if it negatively affects the Noteholders, the
enforceability of the Indenture or of the Notes and provided, further, that
a material breach of any representation or warranty made by Copelco Capital
in the Sales and Servicing Agreement with respect to any of the Leases or
the Equipment subject thereto will not
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constitute an Event of Default if Copelco Capital repurchases or
substitutes for such Lease and Equipment in accordance with the Sales and
Servicing Agreement; or
(e) insolvency or bankruptcy events relating to the Issuer. (Section
6.01)
The Indenture will provide that the Trustee shall give the Noteholders
notice of all uncured defaults known to it (the term "default" to include the
events specified above without grace periods). (Sections 6.03 and 7.02).
If an Event of Default under an Indenture of the kind specified in clause
(e) above occurs, the unpaid principal amount of the related Notes shall
automatically become due and payable together with all accrued and unpaid
interest thereon. If any other Event of Default occurs and is continuing, then
the Trustee will, if so directed by the holders of 66 2/3% (33 1/3% in the case
of a payment default) of the then Outstanding Principal Amount of the Class A
Notes (or if the Class A Notes are no longer outstanding, the Class B Notes or
if the Class B Notes are no longer outstanding the Class C Notes), or the
holders of such percentages of the then Outstanding Principal Amount of such
Notes may declare the unpaid principal amount of all the Notes to be due and
payable immediately, together with all accrued and unpaid interest thereon.
(Section 6.02). The 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 plus any termination payments
owing to the Swap Counterparty unless directed to do so by the holders of 66
2/3% (33 1/3% in the case of a payment default) of the then Outstanding
Principal Amount of the Class A Notes (or if the Class A Notes are no longer
outstanding, the Class B Notes or if the Class B Notes are no longer outstanding
the Class C Notes). (Section 6.03).
Subsequent to an Event of Default and following any acceleration of the
Notes pursuant to the related 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:
(a) to the payment of any amounts owing the Swap Counterparty;
(b) 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);
(c) if the person then acting as Servicer under the Sales and
Servicing Agreement is not Copelco Capital or an Affiliate of Copelco
Capital, to the payment of all Servicer's Fees then due to such person;
(d) first to the payment of all accrued and unpaid interest on the
Outstanding Principal Amount of the Class A 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 A Interest Rate, and to the payment of the Outstanding Principal
Amount of the Class A Notes to the date of payment thereof, and then 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, and to the payment of the Outstanding Principal Amount of the Class B
Notes and then 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
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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, and to
the payment of the Outstanding Principal Amount of the Class C 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;
(e) to the payment of amounts then due the Trustee under the related
Indenture; and
(f) 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 each 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 related 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 all Notes then outstanding under such Indenture 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 or power conferred on the
Trustee. (Sections 6.12 and 6.13). The Indenture will provide that in case an
Event of Default shall occur (which shall not have been cured or waived), the
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).
Modification of the Indenture. With certain exceptions, under the
Indenture, the rights and obligations of the Issuer and the rights of the
Noteholders may be modified by the Issuer with the consent of the holders of not
less than 66 2/3% in aggregate principal amount of the Notes then outstanding
under the Indenture; but no such modification may be made which would (a) extend
the fixed maturity of any Note, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of principal or interest thereon,
without the consent of the holder of each Note so affected or (b) reduce the
above-stated percentage of Notes, without the consent of the holders of all
Notes then outstanding under such Indenture. (Section 9.02).
Servicer Events of Default. The following events and conditions shall be
defined in the Sales and Servicing Agreement as "Servicer Events of Default":
(a) failure on the part of the Servicer to remit to the Trustee within
two Business Days following the receipt thereof any monies received by the
Servicer required to be remitted to the Trustee under the Sales and
Servicing Agreement;
(b) so long as Copelco Capital is the Servicer, failure on the part of
Copelco Capital to pay to the Trustee on the date when due, any payment
required to be made by Copelco Capital pursuant to the Sales and Servicing
Agreement;
(c) default on the part of either the Servicer or (so long as Copelco
Capital is the Servicer) Copelco Capital in its observance or performance
in any material respect of certain covenants or agreements in the Sales and
Servicing Agreement;
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(d) if any representation or warranty of Copelco Capital made in the
Sales and Servicing Agreement shall prove to be incorrect in any material
respect as of the time made; provided, however, that the breach of any
representation or warranty made by Copelco Capital in such Sales and
Servicing Agreement will be deemed to be "material" only if it affects the
Noteholders, the enforceability of the Indenture or of the Notes and
provided, further, that such material breach of any representation or
warranty made by Copelco Capital in such Sales and Servicing Agreement with
respect to any of the Leases or the Equipment subject thereto will not
constitute a Servicer Event of Default if Copelco Capital repurchases such
Lease and Equipment in accordance with the Sales and Servicing Agreement to
the extent provided therein;
(e) certain insolvency or bankruptcy events relating to the Servicer;
(f) the failure of the Servicer to make one or more payments due with
respect to aggregate recourse debt or other obligations exceeding $500,000,
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 $500,000 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 $500,000 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
Sales 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 Sales and Servicing Agreement (Section 5.01). On the receipt
by the Servicer of such written notice, all authority and power of the Servicer
under the Sales and Servicing Agreement to take any action with respect to any
Lease or Equipment will cease and the same will pass to and be vested in the
Trustee pursuant to and under the Sales and Servicing Agreement and the
Indenture.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes, the aggregate amount of each
interest payment on such Notes and the yield to maturity of such Notes are
directly related to the rate of payments on the underlying Leases. The payments
on such Leases may be in the form of scheduled payments, Prepayments or
liquidations due to default, casualty and other events, which cannot be
specified at present. Any such payments will result in distributions to
Noteholders of amounts which would otherwise have been distributed over the
remaining term of the Leases. In general, the rate of such payments may be
influenced by a number of other factors, including general economic conditions.
The rate of Principal Payments with respect to any Class may also be affected by
any repurchase of the underlying Leases by Copelco Capital pursuant to the Sales
and Servicing Agreement. In such event, the repurchase price will decrease the
Discounted Present Value of the Performing Leases, causing the corresponding
weighted average life of the Notes to decrease. See "Risk Factors--Prepayments."
In the event a Lease becomes a Non-Performing Lease or a Warranty Lease,
Copelco Capital will have the option to substitute for the terminated lease
another of similar characteristics (a "Substitute Lease") in an aggregate
amount not to exceed 10% of the Discounted Present Value of the Leases as of
the Cut-Off Date. 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
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lease of similar characteristics (an "Additional Lease"). The Substitute Leases
and Additional Leases will have a Discounted Present Value of the Lease equal to
or greater than that of the terminated or Non-Performing Lease and the monthly
payments on the Substitute Leases or Additional Leases will be at least equal to
those of the terminated Lease through the term of such terminated Lease. 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. See "Risk Factors--Additional Leases."
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.
SECURITY FOR THE NOTES
General. Repayment of the Notes will be secured by (a) a first priority
security interest in the underlying Leases perfected both by filing UCC
financing statements against the Issuer and Copelco Capital and by taking
possession of the respective Lease documents, (b) an unperfected security
interest in the related Equipment owned by the Issuer and an assignment of the
Issuer's security interest in such Equipment subject to Nominal Buy-Out Leases,
which security interest was originally perfected by Copelco Capital (for
Equipment with an original cost in excess of $25,000 which assignment will be
recorded in the manner described below), (c) all funds in the Collection
Account and the Reserve Account and (d) the Swap Agreement.
Copelco Capital has filed UCC financing statements in its favor against
Lessees in respect of all Equipment in the Series Pool (for Equipment with an
original cost in excess of $25,000), will record assignments of such UCC filings
in favor of the Issuer or the Trustee, in the Filing Locations. See "Certain
Legal Matters Affecting a Lessee's Rights and Obligations."
Residual Values. Upon receipt of the final Lease Payment on a performing
Lease, the Equipment subject to that Lease shall be sold or re-let by the
Servicer, with any proceeds from such sale or lease constituting Residual Values
for deposit into the Collection Account for the benefit of the Noteholders up to
the Residual Amount Cap. Actual Residual Values may be more or less than the
book value of the related Equipment.
THE TRUSTEE
Manufacturers & Traders will be the Trustee under the Indenture. Copelco
Capital, as Seller 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 each 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 Copelco Capital will be
obligated to appoint a successor Trustee. Copelco Capital 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, Copelco Capital will be
obligated to
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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 are absolute and unconditional, regardless of any defense, setoff or
abatement which the Lessee may have against Copelco Capital, as Seller or
Servicer, the Issuer, or any other person or entity whatsoever.
Events of default under the Leases are generally failure to pay amounts
when due, failure to observe other covenants in the Lease, misrepresentations
by, or the insolvency, bankruptcy or appointment of a trustee or receiver for
the Lessee under a Lease. The remedies of the Lessor (and the Issuer as
assignee) following a notice and cure period are generally to seek to enforce
the performance by the Lessee of the terms and covenants of the Lease (including
the Lessee's obligation to make scheduled payments) or recover damages for the
breach thereof, to accelerate the balance of the remaining scheduled payments
paid to terminate the rights of the Lessee under such Lease. Although the Leases
permit the Lessor to repossess and dispose of the related Equipment in the event
of a lease default, and to credit such proceeds against the Lessee's liabilities
thereunder, such remedies may be limited where the Lessee thereunder is subject
to bankruptcy, or other insolvency proceedings.
UCC and Bankruptcy Considerations. Pursuant to the Sales and Servicing
Agreement, Copelco Capital will sell the Leases to the Issuer, make a capital
contribution to the Issuer of Equipment owned by Copelco Capital and subject to
the Leases, and assign its security interests in the Equipment subject to
Nominal Buy-Out Leases. Copelco Capital will warrant that the sale of the Leases
to the Issuer is a true sale, that the contributions of its rights in the
Equipment is a valid transfer of Copelco Capital's title to the Equipment and
that Copelco Capital is either the owner of the Equipment or has a valid
perfected first priority security interest in the Equipment (for Leases with
leased Equipment having an original equipment cost in excess of $25,000),
including Equipment, subject to Nominal Buy-Out Leases, and accordingly, Copelco
Capital has filed UCC financing statements in its favor against Lessees in
respect of all Equipment in the Series Pool with an original Equipment cost in
excess of $25,000. No action will be taken to perfect the interest of Copelco
Capital in any Equipment in the Series Pool with an original Equipment cost of
less than $25,000. In addition, UCC financing statements identifying security
interests in the Equipment as transferred to, or obtained by, the Issuer or the
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 Filing Locations. In the event of the
repossession and resale of Equipment subject to a superior lien, the senior
lienholder would be entitled to be paid the full amount of the indebtedness owed
to it out of the sale proceeds before such proceeds could be applied to the
payment of claims by the Servicer on behalf of the Issuer. Certain statutory
provisions, including federal and state bankruptcy and insolvency laws, may
limit the ability of the Servicer to repossess and resell collateral or obtain a
deficiency judgment in the event of a Lessee default. In the event of the
bankruptcy or reorganization of a Lessee, or Copelco Capital, as Seller or
Servicer, various provisions of the Bankruptcy Code of 1978, 11 U.S.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 non-
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breaching 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.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain federal income tax
consequences to the original purchasers of the Notes of the purchase, ownership
and disposition of the Notes. It does not purport to discuss all federal income
tax consequences that may be applicable to investment in the Notes or to
particular categories of investors, some of which may be subject to special
rules. In particular, this discussion applies only to institutional investors
that purchase Notes directly from the Issuer and hold the Notes as capital
assets.
The discussion that follows, and the opinion set forth below of Dewey
Ballantine, 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
Notes.
Characterization of the 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 Notes will be treated
as indebtedness for federal income tax purposes.
Although it is the opinion of Tax Counsel that the Notes will be
characterized as indebtedness for federal income tax purposes, no assurance can
be given that such characterization of the Notes will prevail. If the Notes were
treated as an ownership interest in the Leases, all income on such Leases would
be income to the holders of the 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 Notes.
If, alternatively, the Notes were treated as an equity interest in the
Issuer, distributions on the Notes probably would not be deductible in computing
the taxable income of the Issuer and all or a part of distributions to the
holders of the Notes probably would be treated as dividend income to those
holders.
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Such an Issuer-level tax could result in a reduced amount of cash available for
distributions to the holders of the Notes.
Taxation of Interest Income of Noteholders
If characterized as indebtedness, interest on the Notes will be taxable as
ordinary income for federal income tax purposes when received by Noteholders
using the cash method of accounting and when accrued by Noteholders using the
accrual method of accounting. Interest received on the 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 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 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 Notes and thereafter. Market discount
generally will equal the excess, if any, of the then-current unpaid principal
balance of the Note over the purchaser's basis in the Note immediately after
such purchaser acquired the Note. In general, market discount on a Note will be
treated as accruing over the term of such Note in the ratio of interest for the
current period over the sum of such current interest and the expected amount of
all remaining interest payments, or at the election of the holder, under a
constant yield method. At the request of a holder of a Note, information will be
made available that will allow the holder to compute the accrual of market
discount under the first method described in the preceding sentence.
The market discount rules also provide that a holder who incurs or
continues indebtedness to acquire a Note at a market discount may be required to
defer the deduction of all or a portion of the interest on such indebtedness
until the corresponding amount of market discount is included in income.
Notwithstanding the above rules, market discount on a Note will be
considered to be zero if it is less than a de minimis amount, which is 0.25% of
the remaining principal balance of the Note multiplied by its expected weighted
average remaining life. If OID or market discount is de minimis, the actual
amount of discount must be allocated to the remaining principal distributions on
the Note and, when each such distribution is received, capital gain equal to the
discount allocated to such distribution will be recognized.
Market Premium. A subsequent purchaser who buys a Note for more than its
principal amount generally will be considered to have purchased the Note at a
premium. Such holder may amortize such premium, using a constant yield method,
over the remaining term of the Note and, except as future regulations may
otherwise provide, may apply such amortized amounts to reduce the amount of
interest income reportable with respect to such Note over the period from the
purchase date to the date of maturity of the Note. Legislative history to 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
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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 Notes.
If a Note is sold or exchanged, the seller of the Note will recognize gain
or loss equal to the difference between the amount realized on the sale or
exchange and the adjusted basis of the Note. The adjusted basis of a Note will
generally equal its cost, increased by any OID or market discount includible in
income with respect to the Note through the date of sale and reduced by any
principal payments previously received with respect to the Note, any payments
allocable to previously accrued OID or market discount and any amortized market
premium. Subject to the market discount rules, gain or loss will generally be
capital gain or loss if the Note was held as a capital asset. Capital losses
generally may be used only to offset capital gains.
Backup Withholding with Respect to Notes
Payments of interest and principal, together with payments of proceeds from
the sale of 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 Notes
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Notes holding securities through CEDEL of Euroclear
(or through DTC if the holder has an address outside the U.S.) will be subject
to the 30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons
(as defined below), unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners of 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). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income (Form
4224). A Non-U.S. Person (as defined below), including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
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Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons residing in a country that has a tax treaty with
the United States can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
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. Form
1001 may be filed by Certificate Owners or their agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Owner of a Note or, in the
case of a Form 1001 or a Form 4224 filer, his agent, files by submitting the
appropriate form to the person through whom it holds (the clearing agency, in
the case of persons holding directly on the books of the clearing agency). Form
W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
On April 22, 1996 the IRS issued proposed regulations relating to
withholding, backup withholding and information reporting that, if adopted in
their current form would, among other things, unify current certification
procedures and forms and clarify certain reliance standards. The regulations are
proposed to be effective for payments made after December 31, 1997 but provide
that certificates issued on or before the date that is 60 days after the
proposed regulations are made final will continue to be valid until they expire.
Proposed regulations, however, are subject to change prior to their adoption in
final form.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust 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 Notes. Investors
are advised to consult their own tax advisors for specific tax advice concerning
their holding and disposing of the Notes.
State, Local and Other Taxes
Investors should consult their own tax advisors regarding whether the
purchase of the 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 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.
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ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements and restrictions on those pension and other
employee benefits plans to which it applies and on those persons who are
fiduciaries with respect to such plans. In accordance with ERISA's fiduciary
standards, before purchasing the Notes, a fiduciary should determine whether
such an investment is permitted under the documents and instruments governing
the plan and is appropriate for the plan in view of its overall investment
policy and the composition of its portfolio.
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of certain plans subject thereto (each
"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 Notes might be
deemed to constitute prohibited transactions under ERISA and the Code if assets
of the Issuer were deemed to be assets of a Benefit Plan. Under regulations
issued by the United States Department of Labor set forth in 29 C.F.R.
ss.2510.3101 (the "Plan Asset Regulations"), the assets of the Issuer were be
treated as plan assets of a Benefit Plan for the purposes of ERISA and the Code
only if the Benefit Plan acquires an "Equity Interest" in the Issuer and none of
the exceptions contained in the Plan Asset Regulations is applicable. An Equity
Interest is defined under the Plan Asset Regulations as an interest other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. It is anticipated that the Notes
should be treated as indebtedness without substantial equity features for
purposes of the Plan Asset Regulations. However, even if the Notes are treated
as indebtedness for such purposes, the acquisition or holding of Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
transaction if the Issuer, the Trustee, the Underwriter or any of their
respective affiliates is or becomes a party in interest or disqualified person
with respect to such Benefit Plan. In this event, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding investments by insurance company pooled separate
accounts; PTCE 91-38 regarding investments by bank collective investment funds;
PTCE 84-14, regarding transactions effected by "qualified professional asset
managers"; PTCE 95-60, regarding investments by insurance company general
accounts and PTCE 96-23 regarding transactions effected by In-House Asset
Managers. Each investor using assets of a Benefit Plan which acquires the Notes,
or to whom the Notes are transferred, will be deemed to have represented that
the acquisition and continued holding of the 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 Notes should also
consult their own counsel as to the application of the recent decision by the
United States Supreme Court in John Hancock Mutual Life Insurance Co. v. Harris
Trust and Savings Bank (114 S. Ct. 517 (1993)) to such a purchase. Under that
decision, assets held in an insurance company's general account may be deemed
assets of ERISA plans under certain circumstances.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is particularly important that a
fiduciary investing assets of an ERISA plan consult with counsel regarding the
consequences under ERISA of the acquisition and holding of Notes, including the
availability of any administrative exemptions from the prohibited transaction
rules.
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement (the "Underwriting Agreement") for the sale of the Offered Notes, the
Issuer has agreed to sell and Lehman Brothers (the "Underwriter") has agreed to
purchase the entire principal amount of the Offered Notes.
In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all the Offered Notes
offered hereby if any of the Offered Notes are purchased.
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The Issuer has been advised that the Underwriter proposes to initially
offer the Offered Notes directly to the public at the price set forth on the
cover page hereof. After the initial public offering, the public offering price
may be changed.
The Underwriter will represent and agree that:
(a) it has not offered or sold, and, prior to the expiry of six months
from the Closing Date, will not offer or sell, any Offered Notes to persons
in the United Kingdom, except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as
principal or agent) for purposes of their business, or otherwise in
circumstances which have not resulted and will not result in an offer to
the public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995;
(b) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to the Offered Notes in, from or otherwise involving the United
Kingdom; and
(c) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the Offered Notes to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or persons to whom such document may otherwise
lawfully be issued, distributed or passed on.
The Issuer has agreed to indemnity the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Issuer has been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Notes, as permitted by
applicable laws and regulations. The Underwriter is 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 Underwriter. Accordingly,
no assurance can be given as to the liquidity of, or trading markets for, the
Offered Notes.
The Underwriter and Ironwood Capital Partners Ltd. are serving as the
placement agents for the Class C Notes.
RATING OF THE NOTES
It is a condition to the issuance of the Offered Notes that they be rated
in one of the four highest rating categories by at least one nationally
recognized statistical ratings organization.
Such rating will reflect only the views of the Rating Agency and will be
based primarily on the amount of over-collateralization, the availability of
funds on deposit in the Reserve Account and the value of the Leases and
Equipment. The ratings are not a recommendation to purchase, hold or sell the
related Offered Notes, inasmuch as such ratings do not comment as to market
price or suitability for a particular investor. There is no assurance that any
such rating will continue for any period of time or that it will not be lowered
or withdrawn entirely by the Rating Agency if, in its judgment, circumstances so
warrant. A revision or withdrawal of such rating may have an adverse affect on
the market price of the Offered Notes. The rating of the Offered Notes addresses
the likelihood of the timely payment of interest and the ultimate payment of
principal on the Offered Notes. 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 OF TERMS
Term(s) Page(s)
- ------- -------
Additional Lease..........................................................9, 41
Additional Principal Schedule Amount.........................................15
Available Funds..........................................................11, 33
Available Reserve Amount.................................................13, 34
Bankruptcy Code..............................................................42
Benefit Plan.................................................................43
Casualty Payment.............................................................33
Cede..........................................................................2
Cedel Participants...........................................................31
Class A Initial Principal Amount..............................................4
Class A Interest Rate.....................................................4, 29
Class A Noteholders...........................................................1
Class A Notes..............................................................1, 3
Class A Percentage........................................................4, 34
Class A Principal Payment.................................................6, 34
Class A Target Investor Principal Amount..................................7, 34
Class B Initial Principal Amount..............................................4
Class B Interest Rate.........................................................4
Class B Noteholders...........................................................1
Class B Notes..............................................................1, 3
Class B Percentage........................................................4, 35
Class B Principal Payment.................................................6, 35
Class B Target Investor Principal Amount..................................7, 35
Class C Initial Principal Amount..............................................4
Class C Interest Rate.........................................................4
Class C Notes.................................................................1
Class C Percentage........................................................4, 34
Class C Principal Payment.....................................................7
Class C Principal Payment Amount.............................................35
Class C Target Investor Principal Amount..................................7, 35
Code.........................................................................43
Collection Account...........................................................32
Commission....................................................................2
Cooperative..................................................................31
Copelco Capital............................................................1, 5
Copelco Credit...............................................................25
Copelco Financial ...........................................................25
Copelco Leasing..............................................................25
Cost per Copy................................................................25
Cut-Off Date..............................................................3, 17
Default......................................................................37
Definitive Notes.............................................................32
Depositaries.................................................................29
Determination Date........................................................6, 34
Discount Rate.................................................................4
Discounted Present Value of the Leases........................................4
Discounted Present Value of the Performing Leases.........................4, 35
Division.....................................................................25
DTC.......................................................................2, 17
Due Period....................................................................6
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Term(s) Page(s)
Early Lease Termination.......................................................9
Eligible Account.............................................................33
Equipment.....................................................................5
Equipment Financing Portion..................................................25
ERISA....................................................................14, 43
Euroclear Operator...........................................................31
Euroclear Participants.......................................................31
Events of Default ...........................................................37
Excess Copy Charge...........................................................25
Exchange Act..................................................................2
Fixed Payment................................................................25
Holders......................................................................32
Indenture................................................................11, 28
Indirect Participants........................................................30
Initial Principal Amount......................................................3
Interest Payments ........................................................6, 34
Investor Percentage.......................................................7, 35
Investor Percentage Target................................................7, 35
IRS..........................................................................43
Issuer.....................................................................1, 3
Lease Contracts...............................................................5
Lease Payment................................................................33
Lease Receivables ............................................................5
Leases........................................................................5
Lessee........................................................................8
Lessees.......................................................................8
LIBOR....................................................................13, 29
Maintenance Charge...........................................................25
Nominal Buy-Out..............................................................18
Nominal Buy-Out Leases.......................................................15
Non-Performing Leases.....................................................5, 18
Notes......................................................................1, 3
Notional Amount..............................................................11
Offered Noteholders...........................................................2
Offered Notes..............................................................1, 3
OID..........................................................................43
Outstanding Class A Principal Amount......................................... 5
Outstanding Class B Principal Amount......................................... 5
Outstanding Class C Principal Amount......................................... 5
Outstanding Principal Amounts.................................................6
Additional Principal Scheduled Amount........................................35
Overcollateralization Target Percentage...................................8, 35
Participants.................................................................29
Payment Date...............................................................2, 6
Plan Asset Regulations.......................................................43
Prepayment...................................................................15
Principal Payments............................................................6
PTCE.........................................................................44
Record Date...................................................................6
Registration Statement........................................................2
Required Payments ...........................................................33
Required Reserve Amount..................................................13, 34
Required Subordinated Amount.................................................35
Reserve Account..........................................................13, 34
Residual Amount Cap..........................................................35
Residual Values..............................................................13
S&P..........................................................................32
51
<PAGE>
Term(s) Page(s)
Sales and Servicing Agreement..........................................1, 5, 27
SBU..........................................................................25
Securities Act................................................................2
Seller........................................................................5
Series Cut-Off Date..........................................................17
Series Pool...................................................................5
Series Pool Divisions........................................................17
Servicer......................................................................5
Servicer Advance.........................................................10, 37
Servicer Events of Default...................................................39
Servicing Fee................................................................10
Statistical Discounted Present Value of the Leases............................4
Subordinated Amount..........................................................36
Substitute Lease..........................................................9, 40
Swap Counterparty .......................................................13, 36
Swap Rate................................................................13, 36
Target Investor Principal Amount..........................................8, 36
Target Residual Values.......................................................35
Tax Counsel..................................................................43
Termination Payment..........................................................33
Terms and Conditions.........................................................31
Trustee...................................................................5, 28
Turbo Payment.................................................................7
UCC......................................................................15, 41
Underwriter..................................................................47
Underwriting Agreement.......................................................47
Vendor.......................................................................25
Warranty Lease........................................................9, 15, 28
52
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given or
made, such information or representations must not be relied upon. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the affairs
of the Seller or the Issuer or any affiliate thereof or the Leases since the
date hereof. This Prospectus does not constitute an offer or solicitation by
anyone in any state in which such offer or solicitation by anyone in any state
in which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so to anyone to whom it
is unlawful to make such offer or solicitation.
----------------------
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY........................................................ 3
RISK FACTORS.............................................................. 15
USE OF PROCEEDS........................................................... 17
COPELCO CAPITAL'S UNDERWRITING AND
SERVICING PRACTICES.................................................... 25
THE ISSUER................................................................ 28
DESCRIPTION OF THE NOTES.................................................. 28
PREPAYMENT AND YIELD CONSIDERATIONS....................................... 40
SECURITY FOR THE NOTES.................................................... 41
THE TRUSTEE............................................................... 41
CERTAIN LEGAL ............................................................ 41
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS......................................................... 43
ERISA CONSIDERATIONS...................................................... 43
RATING OF THE NOTES....................................................... 45
INDEX OF TERMS............................................................ 46
Until ________, 1996 (90 days after the date of this Prospectus), all dealers
effecting transactions in the Notes, whether or not participating in this
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
================================================================================
================================================================================
Copelco Capital
Funding Corp. II
Lease-Backed
Notes
-------------------
P R O S P E C T U S
-------------------
LEHMAN BROTHERS
Dated ___________, 1995
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
Registration Fee........................................... $10,572.95
Printing and Engraving Expenses............................ *
Trustee's Fees............................................. *
Legal Fees and Expenses.................................... *
Blue Sky Fees and Expenses................................. *
Accountants' Fees and Expenses............................. *
Rating Agency Fees......................................... *
Miscellaneous Fees......................................... *
==========
Total...................................................... $ *
* To be filed by Amendment
Item 14. Indemnification of Directors and Officers
The General Corporation Law of Delaware (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes said corporation to buy director's
and officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
Copelco Financial Services Group, Inc. has also purchased liability
policies which indemnify the Registrant's officers and directors against loss
arising from claims by reason of their legal liability for acts as officers and
directors, subject to limitations and conditions as set forth in the policies.
Pursuant to agreements which the Registrant may enter into with
underwriters or agents (forms of which will be included as exhibits to this
Registration Statement), officers and directors of the Registrant, and
affiliates thereof, may be entitled to indemnification by such underwriters or
agents against certain liabilities, including liabilities under the Securities
Act of 1933, arising from information which has been or will be furnished to the
Registrant by such underwriters or agents that appears in the Registration
Statement or any Prospectus.
Item 15. Recent Sales of Unregistered Securities
On November 9, 1994 the Issuer privately placed 21,415,148 aggregate
principal amount of Class B Notes, Series 1994-A and on April 19, 1995, the
Issuer privately placed $14,292,000 aggregate principal amount of Class B
Lease-Backed Notes, Series 1995-A.
II-1
<PAGE>
Item 16. Exhibits and Financial Statements
(a) Exhibits
1.1* --Form of Underwriting Agreement for the Offered Notes.
3.1** --Certificate of Incorporation of the Issuer.
3.2** --By-laws of the Issuer.
4.1* --Form of Indenture, including forms of the Notes and certain other
related agreements as Exhibits thereto.
5.1* --Opinion of Dewey Ballantine regarding the securities being
registered.
10.1* --Form of Sales and Servicing Agreement.
10.2* --Form of Placement Agent Agreement for the Class B Notes.
10.3* --Form of Swap Agreement.
23.1* --Consent of Dewey Ballantine is included in the opinion filed as
Exhibit 5.1 hereto.
24.1 --Power of Attorney (Included on Page II-5 hereof).
25.1* --Statement of Eligibility and Qualification of Trustee (Form T-1).
* To be filed by amendment.
** Incorporated by Reference from Registration Statement No. 33-84148
(b) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(a) To provide to the Underwriters at the closing specified in the
Underwriting Agreement Notes in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each purchaser.
(b) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the act and
will be governed by the final adjudication of such issue.
(c) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(d) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Mount Laurel, State of
New Jersey, on June , 1996.
COPELCO CAPITAL FUNDING CORP. II,
Registrant
By /s/ Stephen W. Shippie
--------------------------------
Name: Stephen W. Shippie
Title: Vice President
Each person whose signature appears below constitutes and appoints
Michael C. Ritter and Stephen W. Shippie and each or any of them (with
full power to act alone), as his/her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him/her in
his/her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Form S-1 and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he/she might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or their substitutes may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities indicated on the day of June, 1996.
Signature Title
--------- -----
/s/ Ian J. Berg Director
- ---------------------------------
Ian J. Berg
/s/ John Hakemian Director
- ---------------------------------
John Hakemian
/s/ Tadayuki Seki Director
- ---------------------------------
Tadayuki Seki
Director
- ---------------------------------
Jeraldine Lane
/s/ Michael C. Ritter Chief Financial Officer
- ---------------------------------
Michael C. Ritter
