AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 2002
REGISTRATION NO. 333-70892
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
GREATAMERICA LEASING RECEIVABLES 2002-1, L.L.C.
(ISSUER OF THE NOTES)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<Table>
DELAWARE 532420 42-1525285
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</Table>
------------------------
GREATAMERICA LEASING RECEIVABLES 2002-1, L.L.C.
625 FIRST STREET SE, SUITE 601
CEDAR RAPIDS, IA 52401
(319) 366-7577
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
COPIES TO:
<Table>
WALTER BEGLEY, ESQ. PAUL MURPHY, ESQ.
CHAPMAN AND CUTLER MOORE & VAN ALLEN, PLLC
111 WEST MONROE 100 NORTH TRYON STREET
CHICAGO, ILLINOIS 60603-4080 CHARLOTTE, NORTH CAROLINA 28202
(312) 845-3904 (704) 331-3510
</Table>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED TRANSFER 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,
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 the delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) REGISTRATION FEE(3)
- -----------------------------------------------------------------------------------------------------------------------------
Class A-1 Receivable-Backed
Notes............................ $ 65,419,401 100% $ 65,419,401 $ 6,019
Class A-2 Receivable-Backed
Notes............................ $ 12,827,334 100% $ 12,827,334 $ 1,181
Class A-3 Receivable-Backed
Notes............................ $107,749,602 100% $107,749,602 $ 9,913
Class A-4 Receivable-Backed
Notes............................ $ 27,450,494 100% $ 27,450,494 $ 2,526
Class B Receivable-Backed Notes.... $ 10,774,960 100% $ 10,774,960 $ 992
------------ ------------ -------
TOTAL.................... $224,221,791 100% $224,221,791 $20,631
============ ============ =======
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The amount of Notes being registered represents the maximum aggregate
principal amount of Notes currently expected to be offered for sale.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(a).
(3) $1,250 previously paid.
------------------------
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, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH , 2002
PRELIMINARY PROSPECTUS
GREATAMERICA LEASING RECEIVABLES 2002-1, L.L.C.
AS ISSUER
RECEIVABLE-BACKED NOTES, SERIES 2002-1
GREATAMERICA LEASING CORPORATION,
AS ORIGINATOR AND SERVICER
$224,221,791
(APPROXIMATE)
We are offering the following five classes of Receivable-Backed Notes,
Series 2002-1:
<Table>
<Caption>
INITIAL AGGREGATE FIRST STATED PRICE TO UNDERWRITING NET PROCEEDS
CLASS OF PRINCIPAL AMOUNT COUPON PAYMENT MATURITY PUBLIC COMMISSION TO THE ISSUER
NOTES (APPROXIMATE) RATE DATE DATE PER NOTE PER NOTE PER NOTE
- -------- ----------------- ------ -------- -------- -------- ------------ -------------
A-1 $ 65,419,401 % 4/15/02 4/15/03 % %
A-2 $ 12,827,334 % 2/15/03 11/15/03 % %
A-3 $107,749,602 % 5/15/03 11/15/05 % %
A-4 $ 27,450,494 % 4/15/05 11/15/06 % %
B $ 10,774,960 % 4/15/02 6/15/07 % %
</Table>
The total price to the public is $ . The total underwriting
discount is $ . The total proceeds to the issuer is $ .
The issuer intends to issue approximately $10,903,234 of % Class C
Receivable-Backed Notes and approximately $13,725,247 of % Class D
Receivable-Backed Notes from time to time in privately negotiated transactions.
This prospectus does not cover such Class C and Class D Notes and such notes are
not being offered hereby.
YOU SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE 12 OF THIS PROSPECTUS.
The notes are not obligations of and will not represent interests in, and
are not guaranteed or insured by, the indenture trustee, GreatAmerica Leasing
Corporation or any of their respective affiliates, or any governmental agency.
This offering is being underwritten by First Union Securities, Inc., acting
under the trade name "Wachovia Securities", on a firm commitment basis, which
means that it must purchase all of the notes if any are purchased. The
underwriter's purchase of the notes is subject to a number of conditions. The
notes will not be listed on any securities exchange, and there can be no
assurance that the notes will be sold or that there will be a secondary market
for the notes.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
WACHOVIA SECURITIES
The date of this prospectus is March , 2002.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS................................................ v
SUMMARY..................................................... 1
RISK FACTORS................................................ 12
The Absence of Existing Markets for the Notes May Limit
Your Ability to Resell the Notes....................... 12
Prepayments in Full on the Contracts May Cause an Earlier
Repayment of the Notes than You Expect and You May Not
Be Able To Find Investments with the Same Yield as the
Notes at the Time of the Repayment..................... 12
Past Performance of Originator's Contracts May Not Be
Indicative of the Performance of the Contracts Sold to
the Issuer............................................. 12
The Price at Which You Can Resell Your Notes May Decrease
If the Ratings of Your Notes Change.................... 12
The Subordination of the Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class B Notes, Class C Notes and Class
D Notes is a Limited Form of Credit Enhancement........ 13
Limited Assets Secure the Notes; Noteholders Will Have No
Recourse to the Originator, Servicer, the Indenture
Trustee or their Affiliates in the Event Delinquencies
and Losses Deplete the Pledged Assets.................. 13
Risks Relating to General Economic Conditions............. 13
Because Disproportionate Amounts of Contracts Relate to
Five States, Adverse Conditions in Those States and
Surrounding Regions May Cause Increased Defaults and
Delinquencies.......................................... 13
Because Disproportionate Amounts of Contracts Relate to
Equipment Used in Particular Industries, Adverse
Economic Conditions in Those Industries May Cause
Increased Defaults and Delinquencies................... 13
Nonappropriation Risk Associated with Governmental
Obligors May Cause Increased Defaults.................. 14
Technological Obsolescence of Copiers, Telephone Systems
and Fax Machines May Reduce Value of Contracts and
Result in Losses on Your Investment in the Notes if
Payments on the Notes Become Dependent upon the
Proceeds from the Sale of Such Equipment............... 14
Even If We Repossess and Sell the Equipment Relating to a
Contract After an Obligor Defaults, Shortfalls in
Amounts Available To Pay the Notes May Occur if the
Market Value of the Equipment Has Declined............. 14
Security Interests in Most Equipment Are Not Perfected and
Other Creditors May Have Rights to the Equipment....... 15
Servicer's Retention of Contract Files May Hinder Our
Ability to Realize the Value of Equipment Securing the
Contracts.............................................. 15
Repurchase Obligation of Issuer and Originator Provides
You Only Limited Protection Against Liens on the
Contracts.............................................. 15
If a Bankruptcy Court Rules That the Transfer of Contracts
from the Originator to the Issuer Was Not a True Sale
then Payments on the Contracts Could Be Reduced or
Delayed................................................ 16
Substantive Consolidation of GreatAmerica Leasing
Corporation and the Issuer May Result in Losses on Your
Investment............................................. 17
Limited Commingling of Pledged Assets by GreatAmerica
Leasing Corporation May Result in Reduced or Delayed
Payments to You........................................ 17
Insolvency of the Issuer Could Delay or Reduce Payments to
You.................................................... 17
Proceeds From Required Sale of the Contracts Following
Issuer Bankruptcy May Not Be Sufficient to Repay the
Notes in Full.......................................... 17
Risk Relating to Insolvency of a Vendor................... 17
Obligor Bankruptcy May Reduce or Delay Collections on the
Contracts.............................................. 18
</Table>
i
<Table>
<Caption>
PAGE
----
Transfer of Servicing May Delay Payments to Noteholders
Due to Contract Processing Delays...................... 18
Risks Relating to Substitute Contracts.................... 18
Risks Relating to Reliance on Residual Receipts........... 18
Article 2A of the Uniform Commercial Code May Diminish
Recoveries............................................. 19
Liquidity and Capital Resources........................... 19
Book-Entry Registration Will Result in Your Inability to
Exercise Directly Your Rights as a Noteholder.......... 19
AVAILABLE INFORMATION....................................... 20
USE OF PROCEEDS............................................. 20
CALCULATION OF DISCOUNTED CONTRACT BALANCE.................. 20
COMPOSITION OF THE CONTRACTS................................ 21
Distribution of the Contracts by Payment Frequency as of
March 1, 2002.......................................... 23
Distribution of the Contracts by Jurisdictions in Which
Obligors Are Located as of March 1, 2002............... 24
Distribution of the Contracts by Obligor Industry as of
March 1, 2002.......................................... 25
Distribution of the Contracts by Obligor Industry as of
March 1, 2002 based upon 76.15% of the Contracts for
which SIC Numbers are Available........................ 25
Distribution of the Contracts by Equipment Type as of
March 1, 2002.......................................... 26
Distribution of the Contracts by Current Discounted
Contract Balance as of March 1, 2002................... 26
Distribution of the Contracts by Original Contract Term as
of March 1, 2002....................................... 26
Distribution of the Contracts by Remaining Contract Term
as of March 1, 2002.................................... 27
Distribution of the Contracts by Purchase Option as of
March 1, 2002.......................................... 27
Distribution of Contracts by Documentation Type as of
March 1, 2002.......................................... 27
Distribution of Contracts by Lease Type as of March 1,
2002................................................... 27
DELINQUENCY AND LOSS INFORMATION............................ 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION................................................. 29
THE ISSUER.................................................. 29
EXECUTIVE OFFICERS OF THE ISSUER............................ 30
DEFINITION OF DELINQUENCY FOR THE CONTRACTS TRANSFERRED TO
THE ISSUER................................................ 31
THE CONTRACTS............................................... 31
Leases.................................................... 31
Secured Promissory Notes, Software Only Agreements and
Purchase Orders........................................ 32
Equipment................................................. 33
Contract Files............................................ 33
How Collections on the Contracts are Treated.............. 33
PREPAYMENT AND YIELD CONSIDERATIONS......................... 33
Statistical Modeling Assumptions.......................... 34
WEIGHTED AVERAGE LIFE....................................... 40
GREATAMERICA LEASING CORPORATION............................ 42
History of GreatAmerica Leasing Corporation............... 42
Management................................................ 42
Business Strategy......................................... 43
Sales and Marketing Strategy.............................. 43
Geographic Markets........................................ 44
</Table>
ii
<Table>
<Caption>
PAGE
----
Efficient Delivery System................................. 44
Credit Underwriting Policies and Procedures............... 44
Overview............................................... 44
Credit Analysts and Credit Authority................... 45
Transaction Evaluation................................. 45
Vendor Approval........................................ 46
Collection Procedures..................................... 47
Residual Values........................................... 47
Legal Proceedings......................................... 47
DESCRIPTION OF THE NOTES AND INDENTURE...................... 48
General................................................... 48
Interest and Principal.................................... 48
Amounts Available for Payments on the Notes............... 49
Allocations............................................... 50
Prior to an Event of Default........................... 50
Following an Event of Default.......................... 53
Reserve Fund.............................................. 57
Residual Account.......................................... 58
Collection Account, Payahead Account and Collection
Period................................................. 59
Eligible Depository Institution or Trust Company.......... 60
Eligible Investments...................................... 60
Events of Default......................................... 61
Remedies After Events of Default.......................... 62
The Indenture Trustee..................................... 63
Governing Law............................................. 63
Amendments................................................ 63
Servicing Compensation and Payment of Expenses............ 64
Optional Redemption....................................... 65
Mandatory Redemption...................................... 65
Reports................................................... 65
List of Noteholders....................................... 66
Book-Entry Registration................................... 67
Issuance of Certificated Notes at a Later Date............ 70
THE TRANSFER AND SERVICING AGREEMENT........................ 70
Conveyance of the Contracts............................... 70
Representations and Warranties; Definition of Eligible
Contracts.............................................. 71
Remedies for Breaches of Representations and Warranties... 75
Concentration Amounts; Definition of Excess Contract...... 76
Material Modifications to Contracts....................... 77
Substitute Contracts...................................... 77
Definition of Defaulted Contracts......................... 78
Indemnification........................................... 78
Servicing Standard and Servicer Advances.................. 78
Servicer Resignation...................................... 79
</Table>
iii
<Table>
<Caption>
PAGE
----
Servicer Default.......................................... 79
Evidence as to Compliance................................. 81
Amendments................................................ 81
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS.................. 82
General................................................... 82
Classification of the Notes and the Issuer................ 82
General Tax Treatment of Noteholders...................... 83
United States Holders.................................. 83
Payments of Interest................................... 83
Discount and Premium................................... 83
Sale and Retirement of the Notes....................... 84
Backup Withholding and Information Reporting........... 84
United States Alien Holders............................ 84
Backup Withholding and Information Reporting........... 85
STATE AND LOCAL TAX CONSIDERATIONS.......................... 86
Iowa Tax Considerations................................... 86
Other States.............................................. 86
LEGAL INVESTMENT............................................ 86
ERISA CONSIDERATIONS........................................ 86
Prohibited Transactions................................... 86
PLAN OF DISTRIBUTION........................................ 88
General................................................... 88
RATING OF THE NOTES......................................... 89
LEGAL MATTERS............................................... 90
EXPERTS..................................................... 90
INDEX OF TERMS.............................................. 91
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.................... F-1
BALANCE SHEET............................................... F-2
</Table>
iv
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
Within the period during which there is an obligation to deliver a
prospectus, the underwriter will promptly deliver to you, or cause to be
delivered to you, without charge, a copy of this prospectus.
No dealer, salesman or other person is authorized to give any information
or to make any representation not contained in this prospectus. If anyone makes
such a representation to you, you should not rely on it.
This prospectus does not constitute an offer to sell or a solicitation of
any offer to buy any security other than the notes offered by this prospectus,
nor does it constitute an offer to sell or a solicitation of any offer to buy
any of the notes to any person in any jurisdiction in which the person making
such offer or solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such an offer or solicitation to such person.
v
SUMMARY
The following is only a summary of the terms of the notes. It does not
contain all the information that may be important to you. You should read this
entire prospectus. In addition, you may wish to read the documents governing the
transfer of the contracts and the originator's interest in the equipment, the
formation of the issuer and the issuance of notes. Those documents have been
filed as exhibits to the registration statement of which this prospectus is a
part.
There are material risks associated with an investment in the notes. See
"Risk Factors" on page 12 for a discussion of factors you should consider before
making an investment in the notes.
OBJECTIVE..................... The issuer will issue notes to investors. The
notes will be secured by commercial finance
contracts acquired by the issuer from the
originator.
THE ORIGINATOR................ The contracts were originated by GreatAmerica
Leasing Corporation either directly from
end-users of financed equipment or indirectly
from vendors, that is manufacturers or dealers
in the financed equipment who assign their
contracts with end-users to GreatAmerica
Leasing Corporation. GreatAmerica Leasing
Corporation's principal executive offices are
located at 625 First Street SE, Suite 800,
Cedar Rapids, IA 52401, telephone (319)
365-8000.
THE ISSUER.................... GreatAmerica Leasing Receivables 2002-1,
L.L.C., a limited liability company organized
under the laws of the State of Delaware. The
activities of the issuer will be limited by
the terms of its limited liability company
agreement to acquiring, holding and managing
the contracts and the equipment, issuing and
making payments on the notes and other
activities related thereto. The issuer's
principal executive offices are located at 625
First Street SE, Suite 601, Cedar Rapids, IA
52401, telephone (319) 366-7577.
THE SERVICER.................. GreatAmerica Leasing Corporation
THE INDENTURE TRUSTEE......... JPMorgan Chase Bank, a New York state banking
corporation.
THE PLEDGED ASSETS
A. THE CONTRACTS............ The pledged assets will primarily consist of
the contracts and the issuer's interest in the
equipment. The contracts consist of primarily
true leases and finance leases. The contracts
financed equipment purchased for commercial
purposes. It is used in industries and
businesses such as the services industry,
manufacturing business, finance business and
the retail trade industry, among others.
In the case of true leases, the obligor
acquires the use of the equipment for a
portion of the useful life of the equipment
and the lessor retains the residual interest
in the equipment. The term of a true lease is
generally shorter than the expected useful
life of the equipment; therefore, the
scheduled payments are not structured to cover
the equipment cost for the lessor.
In the case of finance leases, the contracts
provide for a series of scheduled payment
installments calculated to amortize fully the
total amount the originator paid to acquire
the equipment. The remaining contract balance
of a contract is the sum of the total
1
scheduled remaining amounts payable to the
originator by an obligor under a contract.
On the closing date, GreatAmerica Leasing
Corporation will transfer the contracts and
the related equipment (to the extent it has
rights in the equipment), including security
interests in the related equipment, to the
issuer. The issuer will then pledge the
contracts and the related equipment (to the
extent it has rights in the equipment) to the
indenture trustee on the same date. A portion
of the contracts securing your notes were
originated by GreatAmerica Leasing Corporation
and were either (A) previously transferred by
GreatAmerica Leasing Corporation to
GreatAmerica Leasing Receivables 1998-A
Corporation for inclusion in a securitization
from May, 2000 through and including December,
2001 or (B) previously transferred by
GreatAmerica Leasing Corporation to
GreatAmerica Leasing Receivables 2001-A L.L.C.
for inclusion in a securitization from April,
2001 through and including December, 2001. All
of the contracts transferred to the issuer
that were held by GreatAmerica Leasing
Receivables 1998-A Corporation or GreatAmerica
Leasing Receivables 2001-A L.L.C. have been
transferred to GreatAmerica Leasing
Corporation pursuant to the terms of a
transfer agreement prior to that transfer to
the issuer. The remaining portion of the
contracts securing your notes were originated
by GreatAmerica Leasing Corporation and
selected on a random basis from GreatAmerica's
current portfolio of contracts. All of the
contracts transferred to the issuer meet the
eligibility criteria specified in the transfer
and servicing agreement. No adverse selection
procedure was used in selecting the contracts
for transfer to the issuer.
Frequently, information about the contracts is
expressed in terms of the discounted contract
balance. The discounted contract balance of a
contract is the present value of scheduled
payments to be paid on the contract calculated
at a discount rate of %. For a more
specific description of how the discounted
contract balance is calculated see
"Calculation of Discounted Contract Balance".
Where noted in this prospectus, we used a
statistical discount rate of 4.998% to
calculate the discounted contract balances of
the contracts. The statistical discount rate
is based on an average of estimated interest
rates of the notes weighted by the estimated
initial average life and initial principal
amounts of the notes.
As of March 1, 2002, contracts of any single
obligor or commonly controlled group of
obligors do not constitute more than
approximately 0.30% (calculated using the
statistical discount rate) of the aggregate
discounted contract balance of the contracts,
and no more than approximately 9.41%
(calculated using the statistical discount
rate) of the aggregate discounted contract
balance of the contracts relates to obligors
located in the same state.
As of March 1, 2002, approximately 3.10%
(calculated using the statistical discount
rate) by aggregate discounted contract balance
of the contracts had quarterly payments,
annual payments, skip payment schedules,
variable payment schedules or balloon
payments. Skip payment contracts are
obligations of obligors who
2
have seasonal downtimes typically arising from
weather conditions or industry
characteristics. During such downtimes, the
contract payment schedules may omit required
payments for generally up to three months per
year. The scheduled payments are at higher
amounts to assure that the contract does not
extend beyond a term appropriate for the
creditworthiness of the obligor and to meet
the originator's yield requirements. Variable
payment contracts provide for uneven monthly,
quarterly or annual payment amounts, but do
not include contracts for which payments which
are made after the first six payments are
either level or decreasing monthly, quarterly
or annual payments. Balloon contracts provide
for a series of scheduled payments over the
term of the contract and a larger amount,
generally up to 10% of the original equipment
cost, at the end of the contract. The monthly
payment includes the amount necessary to
amortize the non-balloon payment portion of
the contracts over the term of the contract
plus interest on the balloon portion of the
contract.
As of March 1, 2002, no contract has any
scheduled payments that are more than 60 days
delinquent. A contract is considered
delinquent if anything less than 90% of each
full payment is received by its contractual
due date.
See "The Transfer and Servicing
Agreement -- Representations and Warranties;
Definition of Eligible Contracts," "The
Contracts," and "Composition of the
Contracts".
As of March 1, 2002, the contracts had the
following characteristics (calculated using
the statistical discount rate):
<Table>
Number of Contracts................ 25,618
Aggregate Discounted Contract
Balance (Statistical Discount
Rate = 4.998%)................... $256,546,671.11
Average Discounted Contract
Balance.......................... $10,014.31
Discounted Contract Balance
Range............................ $361.60 - $479,930.17
Average Original Principal
Balance.......................... $14,676.31
Weighted Average Original Term..... 50.44 months
(Range) (in months)................ 7-85 months
Average Original Term.............. 44.46 months
Weighted Average Remaining Term.... 39.30 months
(Range) (in months)................ 3-70 months
Average Remaining Term............. 32.53 months
</Table>
Changes in characteristics of the contracts
between March 1, 2002 and the closing date
will not have an aggregate effect that will
change the aggregate discounted contract
balance of the contracts by greater than
5.00%.
For further information regarding the
contracts, see "Composition of the Contracts"
and "The Contracts", as well as "The Transfer
and Servicing Agreement -- Representations and
Warranties; Defi
3
nition of Eligible Contracts" and
" -- Concentration Amounts; Definition of
Excess Contract".
The issuer may replace a contract, subject to
certain limitations described in "The Transfer
and Servicing Agreement -- Substitute
Contracts," that is part of the pledged assets
with a substitute contract or contracts:
- if the issuer subsequently determines that a
contract was not eligible at the time of its
pledge to the indenture trustee;
- if the terms of such contract are to be
subsequently amended in a manner not
permitted by the transfer and servicing
agreement;
- if such contract is subject to a casualty
loss;
- if the issuer did not remove and replace
such contract, the obligor or equipment
concentrations of contracts at the time of
its pledge to the indenture trustee would
exceed the limits described in "The Transfer
and Servicing Agreement -- Concentration
Amounts; Definition of Excess Contract";
- if such contract is prepaid; or
- if such contract becomes a defaulted
contract.
See "The Transfer and Servicing
Agreement -- Substitute Contracts". The
substitute contracts will have been originated
under the same credit criteria and policies as
the contracts they replace.
B. COLLECTION ACCOUNT....... On the closing date, the issuer will establish
a collection account with a bank in the name
of the indenture trustee. Collections of
payments due on the contracts pledged to the
indenture trustee will be deposited into the
collection account for payment of the
principal and interest due on the notes. On
the closing date, the issuer will also
establish a sub-account of the collection
account, referred to as the "payahead
account." All early payments, other than
prepayments in full, by or on behalf of
obligors that do not constitute scheduled
payments due in the current collection period
will be deposited in the payahead account.
Such amounts will be released from the
payahead account for the payment of the
principal and interest due on the notes at the
time such payaheads fall due.
C. RESERVE FUND............. On the closing date, the issuer will establish
a reserve fund with a bank in the name of the
indenture trustee. This fund provides you with
limited protection in the event collections
from obligors on the contracts are
insufficient to make payments on the notes. We
cannot assure you, however, that this
protection will be adequate to prevent
shortfalls in amounts available to make
payment on the notes. The initial balance of
the reserve fund will be approximately
$2,565,467, which will equal 1.00% of the
initial aggregate discounted contract balance.
Additional deposits may be required to be made
in subsequent months out of available
collections on the contracts to this fund to
maintain the reserve fund at an amount equal
to the greater of 1.00% of the initial
aggregate discounted contract balance and
1.50% of the then outstanding aggregate
discounted contract balance. If, on any
payment date, the amounts
4
available for distribution exceed the amounts
needed to pay amounts owed to the servicer and
to the indenture trustee and to pay interest
and principal on the notes, the excess will be
deposited into this fund. However, the amount
deposited in the reserve fund shall not exceed
the amount required above. Investment earnings
on amounts held in the reserve fund will be
available for distribution to you on a monthly
basis as available collections.
If on any payment date, collections on the
contracts and amounts, if any, on deposit in
the residual account are less than the amount
needed to pay interest on or principal of the
notes then due, the indenture trustee will
withdraw funds from the reserve fund to pay
the interest and principal due.
The conditions under which the indenture
trustee will withdraw amounts from the reserve
fund are more specifically described in the
"Description of the Notes and
Indenture -- Allocations" and "-- Reserve
Fund".
D. RESIDUAL RECEIPTS AND
RESIDUAL ACCOUNT......... Proceeds may be realized from the sale of the
issuer's interest in the equipment following
the termination of a contract or from periodic
payments made for the continued use of the
equipment after the termination date of a
contract. These proceeds, known as residual
receipts, will be deposited into the
collection account and included as available
amounts.
If a residual event occurs and is continuing,
the residual receipts not paid to the servicer
or the indenture trustee or distributed to you
or used to fund the reserve fund will be
deposited into the residual account.
On the closing day, the issuer will establish
the residual account with a bank in the name
of the indenture trustee. Deposits to the
residual account will not be made unless a
residual event has occurred and is continuing.
If a residual event occurs and is continuing,
deposits to the residual account will be made
only after payments with a higher priority in
the flow of funds are made.
During the continuation of a residual event,
amounts that otherwise would be released to
the issuer will be retained in the residual
account for application on future payment
dates.
Once the residual event ends, amounts on
deposit in the residual account will be
deposited into the collection account. If
those amounts are not used on that payment
date, they will be released to the issuer.
The conditions under which a residual event
may occur are more specifically described in
"Description of the Notes and
Indenture -- Residual Account".
E. NOTE DISTRIBUTION
ACCOUNT.................. On the closing date, the issuer will establish
a note distribution account with a bank in the
name of the indenture trustee. On or before
each payment date, all amounts required to be
disbursed by the indenture trustee with
respect to the preceding collection period
will be transferred to the note distribution
account. Such
5
amounts will be disbursed by the indenture
trustee to pay the amounts due to the
noteholders.
TERMS OF THE NOTES............ The basic terms of the notes will be as
described below. See "Description of the Notes
and Indenture". In addition to the Class A
Notes and the Class B Notes offered by the
prospectus, the issuer is issuing Class C
Notes and Class D Notes that are not being
offered by this prospectus. Information
regarding the Class C Notes and Class D Notes
is included in this document to help you
better understand the terms of the Class A
Notes and the Class B Notes. We will pay
principal and interest due on the notes using:
- collections of payments due under the
contracts pledged to the indenture trustee;
- residual receipts;
- earnings on amounts held in the collection
account;
- earnings (if any) on amounts held in the
reserve fund, the residual account and the
payahead account;
- amounts received upon the prepayment in full
or purchase of contracts or liquidation of
the contracts;
- amounts received upon the disposition of the
related equipment upon defaults under
contracts, less liquidation expenses needed
to reimburse the servicer;
- amounts received from vendor recourse, if
any;
- amounts in the reserve fund more
specifically described in "Description of
the Notes and Indenture -- Reserve Fund";
- amounts in the residual account more
specifically described in "Description of
the Notes and Indenture -- Residual
Account"; and
- amounts in the payahead account more
specifically described in "Description of
the Notes and Indenture -- Collection
Account, Payahead Account and Collection
Period".
See "Description of the Notes and
Indenture -- Amounts Available for Payments on
the Notes".
You may purchase the notes in minimum
denominations of $1,000 and in integral
multiples of $1,000 in excess of the minimum
denominations; provided, however, that one
note of each class will be available for
purchase in an incremental denomination of
less than $1,000. We will offer the notes only
in book-entry form.
A. EVENTS OF DEFAULT........ Events of default with respect to the notes
include:
- failure to pay accrued interest on any
payment date;
- failure to pay outstanding principal on the
maturity date;
- breach of representations and warranties
with respect to the contracts that is
materially incorrect and that has a material
6
adverse effect on the noteholders and
continues unremedied for a period of sixty
days; and
- the occurrence of insolvency events with
respect to the issuer.
See "Description of the Notes and
Indenture -- Events of Default".
B. INTEREST................. On a payment date occurring before an event of
default, we will first repay any outstanding
servicer advances. Second, we will pay the
servicer's monthly servicing fee (which
includes therein fees due to the indenture
trustee). Third, we will pay expenses,
indemnity payments and other amounts payable
to the indenture trustee. Fourth, we will pay
interest on the notes at the rates specified
on the cover of this prospectus in the
following order:
<Table>
<Caption>
NOTES RECEIVING INTEREST PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
-------------- ----------------------------------
A-1, A-2, A-3, A-4...... None
B....................... Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes
C....................... Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes,
Class B Notes
D....................... Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes,
Class B Notes, Class C Notes
</Table>
See "Description of the Notes and
Indenture -- Allocations".
We will calculate interest on the Class A-1
Notes on the basis of actual days elapsed over
a year of 360 days. We will calculate interest
on all other notes on the basis of a year of
360 days consisting of twelve 30-day months.
C. PRINCIPAL................ On a payment date, after we pay interest on
the notes, we will pay principal on the notes
in the following order:
<Table>
<Caption>
NOTES RECEIVING PRINCIPAL PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
-------------- ----------------------------------
A-1..................... None
A-2..................... Class A-l Notes
Class B Notes, Class C Notes and
Class D Notes will receive
principal payments prior to Class
A-2 Notes on any payment date on
which the outstanding principal
amount of the Class A-1 Notes is
greater than $0.
A-3..................... Class A-1 Notes, Class A-2 Notes
Class B Notes, Class C Notes and
Class D Notes will receive
principal payments prior to Class
A-3 Notes on any payment date on
which the outstanding principal
amount of the Class A-2 Notes is
greater than $0.
</Table>
7
<Table>
<Caption>
NOTES RECEIVING PRINCIPAL PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
-------------- ----------------------------------
A-4..................... Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes
Class B Notes, Class C Notes and
Class D Notes will receive
principal payments prior to Class
A-4 Notes on any payment date on
which the outstanding principal
amount of the Class A-3 Notes is
greater than $0.
B....................... Class A-1 Notes
Class A-2 Notes will receive
principal payments prior to Class
B Notes only after the outstanding
principal amount of the Class A-1
Notes is reduced to $0.
Class A-3 Notes will receive
principal payments prior to Class
B Notes after the outstanding
principal amount of the Class A-1
Notes and Class A-2 Notes is
reduced to $0.
Class A-4 Notes will receive
principal payments prior to Class
B Notes only after the outstanding
principal amount of the Class A-1
Notes, Class A-2 Notes and Class
A-3 Notes is reduced to $0.
C....................... Class A-l Notes, Class B Notes
Class A-2 Notes will receive
principal payments prior to Class
C Notes only after the outstanding
principal amount of the Class A-1
Notes is reduced to $0.
Class A-3 Notes will receive
principal payments prior to Class
C Notes only after the outstanding
principal amount of the Class A-1
Notes and Class A-2 Notes is
reduced to $0.
Class A-4 Notes will receive
principal payments prior to Class
C Notes only after the outstanding
principal amount of the Class A-1
Notes, Class A-2 Notes and Class
A-3 Notes is reduced to $0.
D....................... Class A-l Notes, Class B Notes,
Class C Notes
</Table>
8
<Table>
<Caption>
NOTES RECEIVING PRINCIPAL PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
-------------- ----------------------------------
Class A-2 Notes will receive
principal payments prior to Class
D Notes only after the outstanding
principal amount of the Class A-1
Notes is reduced to $0.
Class A-3 Notes will receive
principal payments prior to Class
D Notes only after the outstanding
principal amount of the Class A-1
Notes and Class A-2 Notes is
reduced to $0.
Class A-4 Notes will receive
principal payments prior to Class
D Notes only after the outstanding
principal amount of the Class A-1
Notes, Class A-2 Notes and Class
A-3 Notes is reduced to $0.
</Table>
See "Description of the Notes and
Indenture -- Allocations".
Following an event of default, we will not
make principal payments in the order described
above. Instead, we will pay principal on the
notes in the following order:
- outstanding principal of Class A-1 Notes
- pro rata, to the outstanding principal of
Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes
- outstanding principal of Class B Notes
- outstanding principal of Class C Notes
- outstanding principal of Class D Notes
See "Description of the Notes and
Indenture -- Allocations" and "-- Events of
Default".
D. PAYMENT DATES............ You will receive distributions of interest and
principal on the 15th day of each month, or if
that day is not a business day, the next
business day. A business day means any day
which is neither a Saturday or a Sunday, nor
another day on which banking institutions in
the city of Cedar Rapids, Iowa or New York,
New York are authorized or obligated by law,
executive order, or governmental decree to be
closed.
E. DETERMINATION DATE....... The "determination date" with respect to each
payment date will be the third business day
preceding the payment date. The servicer will
calculate the amounts to be paid on the notes
on this date.
F. STATED MATURITY DATE..... The notes will mature on the date shown on the
cover of this prospectus, except that if the
day is not a business day, then the maturity
date will be the next business day.
G. OPTIONAL REDEMPTION...... If the aggregate discounted contract balance
of the contracts at any time is less than or
equal to 15% of the initial aggregate
discounted contract balance of the contracts
as of March 1,
9
2002, the issuer may redeem all, but not less
than all, of the outstanding notes at the
issuer's option. If the issuer does redeem all
of the outstanding notes, the redemption price
will be equal to the unpaid principal amount
of the notes plus accrued and unpaid interest
through the date of redemption and the amount
of any servicing advances made and not
reimbursed.
H. MANDATORY REDEMPTION..... If on any payment date, the aggregate amounts
on deposit in the collection account, the
reserve fund, the payahead account and the
residual account are greater than or equal to
the sum of (i) the entire outstanding note
principal balance, (ii) the interest accrued
thereon, (iii) any accrued and unpaid
servicing fee (including therein fees and
expenses owed to the indenture trustee) and
other amounts owed the indenture trustee and
(iv) unreimbursed servicer advances, the
amounts on deposit in the payahead account,
the reserve fund and the residual account will
be deposited in the collection account and
used to redeem the notes in full. The
redemption price will be equal to the unpaid
principal amount of the notes plus accrued and
unpaid interest through the date of
redemption.
SERVICING; SERVICING FEE...... The servicer will be responsible for
servicing, managing and administering the
contracts and related interests, and enforcing
and making collections on the contracts. See
"The Transfer and Servicing
Agreement -- Servicing Standard and Servicer
Advances".
The servicer will be entitled to receive a
monthly fee equal to the product of:
(1) one-twelfth of 0.75% and
(2) the aggregate discounted contract balance
of the contracts pledged to the indenture
trustee as of the first day of the related
collection period.
The fee is payable out of amounts we receive
on the contracts. Fees payable to the
indenture trustee are included in such fee.
See "Description of the Notes and
Indenture -- Servicing Compensation and
Payment of Expenses" and "The Transfer and
Servicing Agreement".
MATERIAL FEDERAL INCOME TAX
CONSIDERATIONS.............. In the opinion of Chapman and Cutler, federal
tax counsel to the issuer, for federal income
tax purposes, the notes will be characterized
as debt, and the issuer will not be
characterized as an association or a publicly
traded partnership taxable as a corporation.
You, by accepting a note, agree to treat the
note as indebtedness. See "Material Federal
Income Tax Considerations".
LEGAL INVESTMENT.............. The Class A-1 notes will be eligible
securities for purchase by money market funds
under Rule 2a-7 of the Investment Company Act
of 1940, as amended.
ERISA CONSIDERATIONS.......... Subject to the considerations discussed under
"ERISA Considerations", the notes will be
eligible for purchase by some employee benefit
plans. Any employee benefit plan fiduciary
considering purchase of the notes should,
however, consult with its counsel
10
regarding the consequences of such purchase
under ERISA and the Internal Revenue Code. See
"ERISA Considerations".
RATING........................ We will not issue the notes unless they
receive ratings from the following rating
agencies as set forth below:
<Table>
<Caption>
STANDARD & MOODY'S
POOR'S INVESTORS FITCH
CLASS OF NOTE RATINGS GROUP SERVICE, INC. RATINGS
------------- ------------- ------------- -------
A-1................... A-1+ P-1 F1+/AAA
A-2................... AAA Aaa AAA
A-3................... AAA Aaa AAA
A-4................... AAA Aaa AAA
B..................... AA Aa2 AA
</Table>
In addition, Standard & Poor's Ratings Group
and Fitch Ratings will rate the Class C Notes
and the Class D Notes that are not offered by
this prospectus. The Class C Notes will be
rated "A" by both Standard & Poor's Ratings
Group and Fitch Ratings. The Class D Notes
will be rated "BBB" by both Standard & Poor's
Ratings Group and Fitch Ratings. Moody's
Investors Service, Inc. will rate the Class C
Notes "A2". Moody's Investors Service, Inc.
will not rate the Class D Notes.
A rating is not a recommendation to purchase,
hold or sell notes because a rating does not
address market price or suitability for a
particular investor. A rating may be subject
to revision or withdrawal at any time by the
assigning rating agency. See "Rating of the
Notes".
11
RISK FACTORS
You should carefully consider the following risk factors before you invest
in the notes.
THE ABSENCE OF EXISTING MARKETS FOR THE NOTES MAY LIMIT YOUR ABILITY TO RESELL
THE NOTES
There is currently no public market for the notes and we cannot assure you
that one will develop. Thus, you may not be able to resell your notes at all, or
may be able to do so only at a substantial discount. The underwriter may assist
in resales of the notes but it is not obligated to do so. We do not intend to
apply for listing of the notes on any securities exchange or for the inclusion
of the notes on any automated quotation system. Even if a secondary market does
develop, it may not continue. We are not providing any assurances or predictions
as to whether a secondary market will develop or, if it does develop, whether it
will provide you with liquidity for your notes.
PREPAYMENTS IN FULL ON THE CONTRACTS MAY CAUSE AN EARLIER REPAYMENT OF THE NOTES
THAN YOU EXPECT AND YOU MAY NOT BE ABLE TO FIND INVESTMENTS WITH THE SAME YIELD
AS THE NOTES AT THE TIME OF THE REPAYMENT
Under certain conditions, GreatAmerica Leasing Corporation, as servicer,
may consent to the prepayment in full of a contract. Prepayments in full may
cause us to pay principal on the notes sooner than you expected. In addition,
under certain circumstances such as damage to or theft or failure of the
underlying equipment related to the contracts, the servicer may receive
insurance proceeds with respect to such equipment, which may cause us to pay
principal sooner than expected. Similarly, upon the occurrence of an event of
default, you may also receive principal on the notes sooner than you expected.
See "Description of the Notes and Indenture -- Events of Default" and
"Prepayment and Yield Considerations". You may not be able to reinvest those
distributions of principal at yields equivalent to the yield on the notes;
therefore, the ultimate return you receive on your investment in the notes may
be less than the return you expected on the notes. The rate of early
terminations of contracts due to prepayments, including defaults, is influenced
by various factors including:
- changes in customer requirements;
- the level of interest rates;
- the level of casualty losses; and
- the overall economic environment.
We cannot assure you that prepayments on the contracts securing your notes
will conform to any historical experience. We cannot predict the actual rate of
prepayments that will be experienced on the contracts.
PAST PERFORMANCE OF ORIGINATOR'S CONTRACTS MAY NOT BE INDICATIVE OF THE
PERFORMANCE OF THE CONTRACTS SOLD TO THE ISSUER
Although the originator has a history of performance with respect to its
contracts, there can be no assurance that the delinquency and loss experience
with respect to the originator's portfolio of contracts will be representative
of the results that may be experienced with respect to the contracts transferred
to the issuer. For additional information regarding such performance, see
"Delinquency and Loss Information."
THE PRICE AT WHICH YOU CAN RESELL YOUR NOTES MAY DECREASE IF THE RATINGS OF YOUR
NOTES CHANGE
Standard & Poor's Ratings Group, Moody's Investors Service, Inc. and Fitch
Ratings are the rating agencies rating the notes. At any time, a rating may be
lowered or withdrawn entirely by a rating agency rating the notes. In the event
that the rating initially assigned to any note is subsequently lowered or
withdrawn for any reason, you may not be able to resell your notes without a
substantial discount. For more detailed information regarding the ratings
assigned to any class of the notes, see "Rating of the Notes."
12
THE SUBORDINATION OF THE CLASS A-2 NOTES, CLASS A-3 NOTES, CLASS A-4 NOTES,
CLASS B NOTES, CLASS C NOTES AND CLASS D NOTES IS A LIMITED FORM OF CREDIT
ENHANCEMENT
We will pay interest and principal on some classes of notes prior to paying
interest and principal, respectively, on other classes of notes. See
"Description of the Notes and Indenture -- Allocations". The subordination of
some classes of notes to others means that the subordinated classes of notes are
more likely to suffer the consequences of delinquent payments and defaults on
the contracts than the notes which receive payments prior to those subordinated
classes.
The more senior classes of notes could lose the credit enhancement provided
by the more subordinate classes, the overcollateralization and the reserve fund
and the funds in the residual account, if any, if delinquencies and defaults on
the contracts increase and if the collections on the contracts and amounts in
the reserve fund and the funds in the residual account, if any, are insufficient
to pay even the more senior classes of notes.
LIMITED ASSETS SECURE THE NOTES; NOTEHOLDERS WILL HAVE NO RECOURSE TO THE
ORIGINATOR, SERVICER, THE INDENTURE TRUSTEE OR THEIR AFFILIATES IN THE EVENT
DELINQUENCIES AND LOSSES DEPLETE THE PLEDGED ASSETS
The issuer is a limited purpose company with limited assets. Moreover, you
have no recourse to the general credit of the servicer, originator, the issuer,
the indenture trustee or their affiliates. Therefore, you must rely solely upon
the contracts, the issuer's rights in the equipment and amounts held in the
reserve fund for payment of principal and interest on the notes. If payments on
the contracts are delinquent or are insufficient to make payments on the notes,
no assets other than the reserve fund and funds, if any, on deposit in the
residual account and payahead account will be available to make payments on the
notes. Similarly, in the event that contracts become defaulted contracts, the
proceeds from the sale of the equipment securing the contracts may be
insufficient to make payments on the notes. There can be no assurance that the
delinquency and loss experience of the contracts will be comparable to the
information set forth in "Delinquency and Loss Information".
RISKS RELATING TO GENERAL ECONOMIC CONDITIONS
Like many other issuers, we are concerned about the possible continued
softening of the economy. Should the economic climate continue to deteriorate,
obligors may experience difficulty, and the level of defaults and delinquencies
could rise and distributions to you may be delayed or reduced.
BECAUSE DISPROPORTIONATE AMOUNTS OF CONTRACTS RELATE TO FIVE STATES, ADVERSE
CONDITIONS IN THOSE STATES AND SURROUNDING REGIONS MAY CAUSE INCREASED DEFAULTS
AND DELINQUENCIES
If adverse economic conditions were particularly severe in the geographic
regions in which there are substantial concentrations of obligors, the amount of
delinquent payments and defaults on the contracts may increase. As a result, the
overall timing and amount of collections on the contracts securing your notes
may differ from what you may have expected, and you may experience delays or
reductions in payments you expected to receive. As of March 1, 2002,
approximately 9.41% (calculated using the statistical discount rate) of the
aggregate discounted contract balance of the contracts securing your notes
related to obligors located in California, 8.34% to obligors in Florida, 7.24%
to obligors in New York, 6.86% to obligors in Texas and 6.31% to obligors in
Illinois. No other state accounts for more than 4.00% (calculated using the
statistical discount rate) of the aggregate discounted contract balance of the
contracts.
The contracts in these five states represent in the aggregate approximately
38.16% (calculated using the statistical discount rate) of the aggregate
discounted contract balance of the contracts securing your notes.
BECAUSE DISPROPORTIONATE AMOUNTS OF CONTRACTS RELATE TO EQUIPMENT USED IN
PARTICULAR INDUSTRIES, ADVERSE ECONOMIC CONDITIONS IN THOSE INDUSTRIES MAY CAUSE
INCREASED DEFAULTS AND DELINQUENCIES
The percentages below are only known for 76.15% of the aggregate discounted
contract balance of the contracts, because the classification by standard
industrial classification code is incomplete in the lease files.
13
The originator has no reason to believe that the concentrations for the
remainder of the contracts materially varies, and will represent to the issuer
and the indenture trustee that the concentrations overall by industries do not
materially vary from the figures listed below. If, however, the concentrations
are greater than listed below, a downturn in one of those industries could
increase delinquencies and defaults on the related contracts at a higher rate
than you anticipated. In such an event, distributions to you could be delayed or
reduced.
If the industries in which there are a substantial concentration of
obligors experience adverse events or economic conditions, the overall timing
and amount of collections on the contracts securing your notes may differ from
what you may have expected. This could result in delays or reduced payments to
you. As of March 1, 2002, contracts constituting approximately 47.63%
(calculated using the statistical discount rate) of the aggregate discounted
contract balance of 76.15% of the contracts securing your notes relate to
equipment used in the services industry, 12.12% relate to the manufacturing
business, 11.01% relate to the retail trade industry, 9.11% relate to the
finance business and 7.48% relate to the trade industry. A decline in demand for
goods and services in the services industry, the manufacturing business, the
retail trade industry, the finance business or the trade industry may
consequently increase delinquencies and defaults in the related contracts. No
other industry accounts for more than 5.00% (calculated using the statistical
discount rate) of the aggregate discounted contract balance of 76.15% of the
contracts securing your notes. Please see "Composition of the
Contracts -- Distribution of the Contracts by Obligor Industry as of March 1,
2002."
NONAPPROPRIATION RISK ASSOCIATED WITH GOVERNMENTAL OBLIGORS MAY CAUSE INCREASED
DEFAULTS
Contracts with governmental obligors represent 3.59% (calculated using the
statistical discount rate) of the aggregate discounted contract balance of the
contracts securing your notes as of March 1, 2002. In general, governmental
obligors rely on appropriated funds being available each year to make scheduled
payments on lease agreements and similar contracts. If the governmental obligors
on the contracts securing your notes do not have sufficient funds appropriated
to them for any fiscal year for such governmental obligors to make the required
payments under such contracts, the overall amount of collections on the
contracts securing your notes may differ from what you may have expected, and
you may experience reductions in payments you expected to receive.
TECHNOLOGICAL OBSOLESCENCE OF COPIERS, TELEPHONE SYSTEMS AND FAX MACHINES MAY
REDUCE VALUE OF CONTRACTS AND RESULT IN LOSSES ON YOUR INVESTMENT IN THE NOTES
IF PAYMENTS ON THE NOTES BECOME DEPENDENT UPON THE PROCEEDS FROM THE SALE OF
SUCH EQUIPMENT
If technological advances relating to copiers, telephone systems and fax
machines causes the leased copiers, telephone systems and fax machines to become
obsolete, the value of these copiers, telephone systems and fax machines will
decrease. This will reduce the amount recoverable should the servicer sell the
copiers, telephone systems and fax machines following a default on the related
contracts. Contracts relating to copiers represent 37.78% and telephone/fax
systems represent 24.24% (calculated using the statistical discount rate) of the
aggregate discounted contract balance of the contracts securing your notes as of
March 1, 2002. As such, you may not recoup the full amount due to you if
payments on the notes become dependent upon the proceeds from the sale of such
equipment should they become obsolete.
EVEN IF WE REPOSSESS AND SELL THE EQUIPMENT RELATING TO A CONTRACT AFTER AN
OBLIGOR DEFAULTS, SHORTFALLS IN AMOUNTS AVAILABLE TO PAY THE NOTES MAY OCCUR IF
THE MARKET VALUE OF THE EQUIPMENT HAS DECLINED
If a pledged contract becomes a defaulted contract, the only sources of
payment for amounts expected to be paid on that contract will be the income and
proceeds from the sale of any related repossessed equipment and a deficiency
judgment, if any, against the obligor under the defaulted contract as well as,
to the extent available, vendor recourse. See "The Transfer and Servicing
Agreement -- Definition of Defaulted Contracts". Because the market value of the
equipment may decline faster than the discounted contract balance, the servicer
may not recover the entire amount due on the contract, might not receive any
recoveries on the equipment, and the obligor may be unable to pay any deficiency
judgment. In addition, state laws may limit or delay recoveries on the
contracts. State laws impose requirements and restrictions relating to
foreclosure sales and obtaining deficiency judgments. If we must rely on
repossession and disposition of equipment to cover
14
losses, we may not be able to realize the full amount due. The reserve fund and
the residual account are intended to make up for deficiencies in the proceeds
and recoveries on the contracts. However, this protection is limited and could
be depleted if those deficiencies are larger than we currently anticipate.
SECURITY INTERESTS IN MOST EQUIPMENT ARE NOT PERFECTED AND OTHER CREDITORS MAY
HAVE RIGHTS TO THE EQUIPMENT
The obligors' obligations to make payment on the contracts are secured by a
security interest in the related equipment. The security interests are not
perfected unless a Uniform Commercial Code financing statement has been filed in
the appropriate filing office. The originator has not filed and does not expect
to file Uniform Commercial Code financing statements to perfect its security
interest in equipment that originally cost less than $25,000 or where the
related obligor was rated (1) Baa3 or better by Moody's Investors Service, (2)
BBB or better by Standard & Poor's Ratings Group or (3) 3A2 or better by Dun &
Bradstreet. Financing statements have been filed for equipment that originally
cost $25,000 or more and where the related obligor was rated lower than (1) Baa3
or better by Moody's Investors Service, (2) BBB or better by Standard & Poor's
Ratings Group or (3) 3A2 or better by Dun & Bradstreet. Equipment that
originally cost $25,000 or more represents approximately 45.10% (calculated
using the statistical discount rate) of the aggregate discounted contact
balance. As a result, the security interest in equipment that represents more
than 54.90% (calculated using the statistical discount rate) of the discounted
contact balance has not and will not be perfected in favor of the originator,
the issuer or the indenture trustee.
Another party (such as a creditor of an obligor) may acquire rights in some
of the equipment superior to those of the originator, the issuer and the
indenture trustee. The lack of a perfected security interest in the equipment
may result in claims against the obligors being unsecured and may adversely
affect the ability of the servicer to realize on the equipment, which may cause
you to experience delays in payments and losses on your investment.
SERVICER'S RETENTION OF CONTRACT FILES MAY HINDER OUR ABILITY TO REALIZE THE
VALUE OF EQUIPMENT SECURING THE CONTRACTS
To facilitate servicing and reduce administrative costs, the servicer will
retain possession of the documents evidencing the pledged contracts. Because the
documents evidencing the contracts will remain in the servicer's possession, if
a subsequent purchaser of the contracts were able to take physical possession of
the related documents without knowledge of their prior assignment to the
indenture trustee, that purchaser could have a security interest in the
contracts senior to the indenture trustee's security interest. The physical
possession of the documents by such a subsequent purchaser could limit the
indenture trustee's ability to enforce and receive payments on the contracts. In
the event that we must rely upon repossession and sale of the related equipment
securing defaulted contracts to recover payments due on the defaulted contracts,
our ability to realize upon the equipment may be limited due to the existence of
a third party's senior security interest in those contracts. In any such event,
distributions to you could be delayed or reduced. The contracts will be stamped
or otherwise marked to indicate the transfer to the issuer and the subsequent
pledge to the indenture trustee, which could limit the ability of a subsequent
purchaser of the contracts to assert that it had taken possession of the
documents without knowledge of their prior assignment, in which case the
indenture trustee's security interest should be prior to any security interest
of a subsequent purchaser.
REPURCHASE OBLIGATION OF ISSUER AND ORIGINATOR PROVIDES YOU ONLY LIMITED
PROTECTION AGAINST LIENS ON THE CONTRACTS
Federal or state law may grant liens on a contract and/or the related
equipment that have priority over the indenture trustee's interest. An example
of a lien arising under federal or state law is a tax or other government lien
on property of the originator or the issuer arising prior to the time a contract
is pledged to the indenture trustee. The tax lien may have priority over the
interest of the indenture trustee in the contract. To the extent a lien having
priority over the indenture trustee's lien exists with respect to a contract
and/or the related equipment, the indenture trustee's interest in the asset will
be subordinate to such lien. In the event the creditor associated with such lien
exercises its remedies on its security interest it is unlikely that, after the
15
senior creditor is repaid, sufficient cash proceeds from the contract and
related equipment will be available to pay the discounted contract balance to
the indenture trustee.
Under the transfer and servicing agreement, the originator will warrant to
the indenture trustee that the contracts and the originator's interest in the
equipment transferred thereunder will be transferred free and clear of the lien
of any third party other than certain permitted liens. The originator and the
issuer also will jointly and severally warrant to the indenture trustee that
they will not sell, pledge, assign, transfer or grant any lien on the contracts
or the originator's interest in the equipment. In the event that such warranties
are not true with respect to any contract or the originator's interest in the
equipment, the issuer and the originator are required under the transfer and
servicing agreement to repurchase the contract. There can be no assurance that
the issuer or originator will be able to repurchase a contract at the time that
the indenture trustee requests it.
IF A BANKRUPTCY COURT RULES THAT THE TRANSFER OF CONTRACTS FROM THE ORIGINATOR
TO THE ISSUER WAS NOT A TRUE SALE THEN PAYMENTS ON THE CONTRACTS COULD BE
REDUCED OR DELAYED
If the originator became a debtor in a bankruptcy case and creditors of the
originator, or the originator acting as a debtor-in-possession, or a bankruptcy
trustee, were to assert that the transfer of the contracts and the originator's
interest in the equipment from the originator to the issuer was ineffective to
remove such contracts from the originator's estate, the distribution of proceeds
of the contracts and the originator's interest in the equipment to the issuer
might be subject to the automatic stay provisions of the federal bankruptcy
code. This would delay the distribution of those proceeds for an uncertain
period of time. Furthermore, if the bankruptcy court rules in favor of the
creditor or originator, reductions in payments under the contracts to the
indenture trustee could occur. In either case, distributions to you then could
be delayed or reduced. In addition, if the transfer of the contracts and the
originator's interest in the equipment were not deemed a sale, a bankruptcy
trustee would have the power to sell the contracts and the originator's interest
in the equipment if the proceeds of the sale could satisfy the amount of the
debt deemed owed by the originator to the issuer. In such a case, the bankruptcy
trustee could also substitute other collateral in lieu of the contracts to
secure the debt. Additionally, the bankruptcy court could adjust the debt if the
originator were to file for reorganization under Chapter 11 of the federal
bankruptcy code. In the transfer and servicing agreement, the originator will
warrant to the issuer, for the benefit of the indenture trustee, that the
conveyance of the contracts and the originator's interests in the equipment to
the issuer is a valid sale and transfer of the contracts and the originator's
interests in the equipment to the issuer. In addition, the originator and the
issuer have agreed that they will each treat the transactions described in this
prospectus as a sale of the contracts and the originator's interest in the
equipment to the issuer. The originator will take all actions that are required
under applicable law to perfect the issuer's ownership interest in the contracts
and the interest in the equipment sold by the originator; provided, however,
that as between the originator and an obligor, the originator may not have
perfected its security interest in equipment against the relevant obligor as
discussed under "Risk Factors -- Security Interests in Most Equipment are Not
Perfected and Other Creditors May Have Rights to the Equipment."
If the transfer of the contracts and the originator's interest in the
equipment from the originator to the issuer were not found to be an absolute
assignment, any contracts considered to be "true" leases under the applicable
insolvency laws and any other contracts considered to be executory under such
insolvency laws, could be rejected by the trustee in bankruptcy or by the
originator as debtor-in-possession, which would result in the termination of
scheduled payments under any such contracts and reductions in distributions to
you, and you could incur a loss on your investment as a result. To reduce the
likelihood of such rejection, the issuer will file Uniform Commercial Code
financing statements perfecting a security interest for the benefit of the
issuer in the originator's interests in the equipment to the extent of the
originator's interest in such equipment, which perfected security interest will
be assigned to the indenture trustee. Even if such contracts were not so
rejected in the event of an insolvency of the originator, the indenture trustee
could experience a delay in or reduction of collections on all the contracts,
and you could incur a loss on your investment as a result.
16
SUBSTANTIVE CONSOLIDATION OF GREATAMERICA LEASING CORPORATION AND THE ISSUER MAY
RESULT IN LOSSES ON YOUR INVESTMENT
The issuer has taken and will take steps to ensure that a voluntary or
involuntary petition for relief by or against GreatAmerica Leasing Corporation
under the federal bankruptcy code will not result in the substantive
consolidation of the assets and liabilities of the issuer with those of
GreatAmerica Leasing Corporation. Nevertheless, it is possible that, in the
event of a bankruptcy of GreatAmerica Leasing Corporation, a court would order
the issuer's assets and liabilities to be substantively consolidated with those
of GreatAmerica Leasing Corporation. An order to substantively consolidate could
adversely affect the issuer's ability to receive payments on the contracts, and
you could therefore incur a loss on your investment.
LIMITED COMMINGLING OF PLEDGED ASSETS BY GREATAMERICA LEASING CORPORATION MAY
RESULT IN REDUCED OR DELAYED PAYMENTS TO YOU
While GreatAmerica Leasing Corporation is the servicer, a limited portion
of the collections will be held by GreatAmerica Leasing Corporation and will be
commingled and used for its benefit until those collections are required to be
deposited into the collection account. GreatAmerica Leasing Corporation will
receive cash if (i) an obligor does not return an invoice with its payment, (ii)
a buy-out of the contract is made, (iii) an obligor has more than one invoice
and only a portion of the equipment that it leases has been transferred to the
issuer or (iv) a check is sent directly to the offices of GreatAmerica Leasing
Corporation. If the servicer were unable to remit such collections, or if the
servicer became insolvent, the indenture trustee may not have a perfected
ownership or security interest in these types of collections. As a result, you
could incur a loss on your investment.
INSOLVENCY OF THE ISSUER COULD DELAY OR REDUCE PAYMENTS TO YOU
The issuer will warrant that the security interest in the contracts and the
equipment granted by the issuer to the indenture trustee is a valid and duly
perfected security interest to the extent of the originator's interest;
provided, however, that as between the originator and an obligor, the originator
may not have perfected its security interest in equipment against the relevant
obligor as discussed under "Risk Factors -- Security Interests in Most Equipment
are Not Perfected and Other Creditors May Have Rights to the Equipment." The
issuer will also agree to take all actions that are required under applicable
law to perfect the indenture trustee's interests in the contracts and the
equipment to the extent specified in "The Transfer and Servicing
Agreement -- Conveyance of the Contracts." The originator believes that the
issuer will be considered bankruptcy remote from the originator. If the issuer
were to become insolvent under any insolvency law, delays in the amount of
distributions to you would likely occur, amounts distributed to you may be
reduced and you could incur a loss on your investment as a result.
PROCEEDS FROM REQUIRED SALE OF THE CONTRACTS FOLLOWING ISSUER BANKRUPTCY MAY NOT
BE SUFFICIENT TO REPAY THE NOTES IN FULL
If the issuer is bankrupt or insolvent, then an event of default would
occur with respect to the notes. Under the indenture and the transfer and
servicing agreement, and assuming the issuer was not then a debtor in a
bankruptcy case, the indenture trustee would be required to sell the interests
in the contracts and the equipment. If the sum of the proceeds of the sale of
the contracts and the equipment and the proceeds of any collections on the
contracts and the equipment is insufficient to pay you in full, then you may
suffer losses on your investment in the notes.
RISK RELATING TO INSOLVENCY OF A VENDOR
A portion of the contracts the originator has acquired and will transfer to
the issuer were acquired by the originator from certain vendors pursuant to
separate vendor agreements. Each such vendor agreement provides for the purchase
by the originator of contracts that were originated by the applicable vendor and
a very limited number of such vendor agreements also provide that the originator
has recourse to the related vendor for a portion of the losses the originator
may incur as a result of a default under the contracts that are the subject of
17
the related vendor agreements. The originator's rights under the vendor
agreements as they relate to the contracts will be assigned to the issuer. In
the event of a vendor's bankruptcy, a bankruptcy trustee, a creditor of the
vendor or the vendor as debtor-in-possession might attempt to characterize the
sale to the originator and the subsequent assignment to the issuer as a
fraudulent transfer or as a secured loan to the vendor from the originator and
the issuer secured by the contracts sold thereunder. If such an attempt is
successful, then delay in payments under such contracts to the issuer could
occur or, should the court rule in favor of the bankruptcy trustee, creditor or
vendor, reductions in the amount of payments could result.
OBLIGOR BANKRUPTCY MAY REDUCE OR DELAY COLLECTIONS ON THE CONTRACTS
Bankruptcy and insolvency laws could affect your interests in contracts
with bankrupt obligors if those laws result in any of the contracts being
written off as uncollectible or result in delay in payments due on any
contracts. As a result, you may be subject to delays in receiving payments, and
you may also suffer losses if collections from the remaining unaffected
contracts and the reserve fund and funds held in the residual account, if any,
are insufficient to cover losses to the issuer. State laws impose requirements
and restrictions relating to foreclosure sales and obtaining deficiency
judgments following foreclosure sales. In the event that you must rely on
repossession and disposition of equipment to recover amounts due on defaulted
contracts, the amounts due may not be realized due to these requirements and
restrictions. Factors that may affect whether you receive the full amount due on
a contract include the failure to file financing statements to perfect the
originator's, or indenture trustee's security interest in the equipment securing
the contract. The depreciation, obsolescence, damage or loss of any item of
equipment will also affect whether you receive the full amount due on a
contract.
TRANSFER OF SERVICING MAY DELAY PAYMENTS TO NOTEHOLDERS DUE TO CONTRACT
PROCESSING DELAYS
If GreatAmerica Leasing Corporation were to cease acting as servicer,
delays in processing payments on the contracts and information in respect
thereof could occur and result in delays in payments to you. In addition, the
successor servicer may not have the benefit of existing relationships with the
various vendors of GreatAmerica Leasing Corporation from whom GreatAmerica
Leasing Corporation has acquired contracts. This may cause delays in the receipt
of payments and recoveries in instances in which the cooperation of the vendor
is necessary to effectuate the receipt of such payments.
RISKS RELATING TO SUBSTITUTE CONTRACTS
The originator may, but is not obligated to, substitute one or more
contracts in exchange for contracts that it is required to repurchase, defaulted
contracts, contracts that have been subject to a casualty loss, and contracts
that have been prepaid in full. Although any substitute contract must satisfy
certain criteria and is subject to certain limitations, we cannot assure you
that the delinquency and default experience of the issuer with respect to such
substitute contracts will be comparable to that of the contracts so replaced.
The servicer's monthly report to noteholders will disclose all substitute
contracts delivered to the issuer during the related monthly period, and the
originator will make representations and warranties regarding any substitute
contracts described under "The Transfer and Servicing
Agreement -- Representations and Warranties; Definition of Eligible Contracts"
but the characteristics of such substitute contracts will not be verified by
independent accountants or any other third party.
RISKS RELATING TO RELIANCE ON RESIDUAL RECEIPTS
The availability of residual receipts will depend on various factors,
including the timing of contract terminations and the future value of equipment,
which in each case is inherently uncertain. The servicer will be obligated to
use its best efforts to sell or re-lease any equipment upon the termination of
the contract to which such equipment is subject (whether as a result of early
termination or upon scheduled expiration of the contract), in a timely manner
and in a manner so as to maximize, to the extent possible under then prevailing
market conditions, the net proceeds from such equipment. However, because, among
other things, the market value of equipment generally declines with age and may
be subject to sudden, significant declines in value due to technological
obsolescence, we cannot assure you what amount the servicer will be able to
realize on any
18
such equipment at that time. Other factors that may also affect the amount of
the residual realization will include whether the equipment is returned to the
servicer upon termination or expiration of such contract and whether there has
been damage to or loss of any item of equipment. In addition, the expected
residual value of the equipment subject to some of the contracts is zero
(because it is a financing lease) or insignificant. The originator may, but is
not obligated to, substitute one or more contracts in exchange for contracts
that it is required to repurchase, defaulted contracts, contracts that have been
subject to a casualty loss and contracts that have been prepaid in full. If the
originator exercises this option, the residual receipts (if any) from the
contract being substituted for would belong to the originator and would not be
available to make payments on the notes.
Moreover, any month's residual receipts not used to pay interest or
principal on the related payment date generally will be, prior to the occurrence
of a residual event, released to the issuer, and, upon such release to the
issuer, will not thereafter be available to make payments on the notes.
Accordingly, we cannot assure you that residual receipts will be available on a
payment date when the collections on the contracts are insufficient to pay
interest and principal on the notes.
ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE MAY DIMINISH RECOVERIES
Most states have adopted a version of Article 2A of the Uniform Commercial
Code. Article 2A purports to codify many provisions of existing common law.
Although there is little precedent regarding how Article 2A will be interpreted,
it may limit the enforceability of any "unconscionable" lease or
"unconscionable" provisions in a lease.
Article 2A also may provide a lessee with remedies, including the right to
cancel the contract for lessor breaches or defaults. Article 2A may add to or
modify the terms of consumer leases and leases where the lessee is a merchant
lessee. Moreover, it recognizes typical consumer lease "hell or high water"
rental payment clauses and validates reasonable liquidated damages provisions in
the event of lessor or lessee defaults. Article 2A also recognizes the freedom
of contract and permits the parties in a commercial context a wide degree of
latitude to vary provisions of the law.
LIQUIDITY AND CAPITAL RESOURCES
GreatAmerica Leasing Corporation requires a substantial amount of cash to
implement its business strategy, including, without limitation, cash to: (i)
finance the purchase of equipment that it leases; (ii) pay the fees and expenses
incurred in the securitization of leases; (iii) pay the fees and interest
expenses under its bank lines of credit; (iv) pay operating expenses; and (v)
satisfy working capital requirements. These cash requirements, which have been
satisfied primarily through securitizations and bank borrowings, will increase
as GreatAmerica Leasing Corporation's lease originations increase. No assurance
can be given that GreatAmerica Leasing Corporation will have access to the
capital markets in the future for equity or debt issuances or for
securitizations or that financing through bank lines of credit or other means
will be available on acceptable terms to satisfy GreatAmerica Leasing
Corporation's cash requirements.
BOOK-ENTRY REGISTRATION WILL RESULT IN YOUR INABILITY TO EXERCISE DIRECTLY YOUR
RIGHTS AS A NOTEHOLDER
The notes will be registered in the name of Cede & Co., as nominee of The
Depositary Trust Company. As a result, unless and until definitive notes are
issued, you will not be recognized by the issuer or the indenture trustee as a
noteholder. You will only be able to exercise the rights of noteholders
indirectly, through DTC, Euroclear or Clearstream Luxembourg (formerly
Cedelbank) and their respective participating organizations. You will receive
reports and other information provided for in the indenture only to the extent
provided by DTC, Euroclear or Clearstream Luxembourg or by directly contacting
the indenture trustee and providing proof of ownership or beneficial interest.
If you are a beneficial owner of the book-entry notes, your ability to pledge
your notes, and the liquidity of your notes in general, may be limited due to
the fact that you will not have a physical note. In addition, you may experience
delays in receiving payments on your notes.
19
AVAILABLE INFORMATION
The issuer has filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended, with
respect to the notes offered by this prospectus. For further information, you
should read the registration statement. The registration statement may be
inspected and copied at the public reference facilities maintained by the
Securities and Exchange Commission at the following location:
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
You may obtain copies of the registration statement for a fee from the
Public Reference Branch of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Securities and Exchange Commission
also maintains a public access site on the internet through the World Wide Web
at which you may view reports, information statements and other information,
including all electronic filings, regarding the issuer. The internet address of
the World Wide Web site is http://www.sec.gov. The servicer, on behalf of the
issuer, will also file or cause to be filed with the Securities and Exchange
Commission the periodic reports required under the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder. Copies of those reports can be obtained as described
above. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information.
USE OF PROCEEDS
The issuer will apply the net proceeds from the sale of the notes as
follows: (i) to make the initial deposit to the reserve fund, in the amount of
approximately $2,565,467 (ii) to acquire the portfolio of contracts and the
originator's interest in the equipment; and (iii) to pay costs and expenses. To
the extent that the value of the contracts and other rights and interests
including the originator's interest in the equipment acquired from GreatAmerica
Leasing Corporation exceeds the amount of proceeds to purchase such assets,
GreatAmerica Leasing Corporation will contribute the balance of such assets to
the capital of the issuer.
GreatAmerica Leasing Corporation has, in a series of transactions,
previously transferred contracts to affiliates and the affiliates have
transferred the contracts to commercial paper conduits in return for cash or
have pledged the contracts as security for or a source of payment for notes
issued by the affiliates. The issuer will use proceeds from the sale of the
notes to acquire contracts from GreatAmerica Leasing Corporation, and
GreatAmerica Leasing Corporation will use proceeds from the sale of the
contracts in part to acquire the contracts from the current owners. The balance
of the contracts (or interests therein) to be included in the portfolio are
contracts originated or acquired by GreatAmerica Leasing Corporation and
currently held by GreatAmerica Leasing Corporation.
CALCULATION OF DISCOUNTED CONTRACT BALANCE
As used in this prospectus, the "discounted contract balance" of a contract
is,
(1) as of the related cutoff date, the present value of all the
remaining scheduled payments becoming due under such contract after the
applicable cutoff date (including payaheads) discounted monthly at the
discount rate, unless another rate is specifically mentioned, and
(2) as of any other date of determination, the present value of all of
the remaining scheduled payments becoming due under such contract after
such date of determination (including payaheads) discounted monthly at the
discount rate, unless another rate is specifically mentioned.
20
The discounted contract balance for each contract shall be calculated
assuming:
(1) all payments due in any collection period are due on the last day
of such collection period; and
(2) payments are discounted on a monthly basis using a 30 day month
and a 360 day year.
The discount rate is % and was calculated as the sum of:
(1) the average of the interest rate of the notes weighted by the
initial principal amount of each class of the notes and the initial
weighted average life of each class of notes, assuming a 0.0% constant
prepayment rate and no loss scenario, and assuming that the issuer will
exercise its option to redeem the notes when the aggregate discounted
contract balance of the contracts is less than 15% of the aggregate
discounted contract balance as of March 1, 2002;
(2) 0.75%; and
(3) 0.025%.
As used in this prospectus, "aggregate discounted contract balance" means,
as of any date of determination, the aggregate of the discounted contract
balances of the contracts (excluding contracts that have been removed due to
substitution, defaulted contracts, Excess Contracts, and contracts that have
become prepaid or subject to warranty or casualty events that are not
substituted for on or before the related determination date).
COMPOSITION OF THE CONTRACTS
On the closing date, the issuer will pledge to the indenture trustee the
contracts and its interest in the related equipment as of March 1, 2002 and may
from time to time substitute contracts, subject to certain limitations, as of
the applicable cutoff dates under the transfer and servicing agreement. A
portion of the contracts securing your notes were originated by GreatAmerica
Leasing Corporation and were either (A) previously transferred by GreatAmerica
Leasing Corporation to GreatAmerica Leasing Receivables 1998-A Corporation for
inclusion in a securitization from May, 2000 through and including December,
2001 or (B) previously transferred by GreatAmerica Leasing Corporation to
GreatAmerica Leasing Receivables 2001-A L.L.C. for inclusion in a securitization
from April, 2001 through and including December, 2001. All of the contracts
transferred to the issuer that were held by GreatAmerica Leasing Receivables
1998-A Corporation or GreatAmerica Leasing Receivables 2001-A L.L.C. have been
transferred to GreatAmerica Leasing Corporation pursuant to the terms of a
transfer agreement prior to that transfer to the issuer. The remaining portion
of the contracts securing your notes were originated by GreatAmerica Leasing
Corporation and selected on a random basis from GreatAmerica's current portfolio
of contracts. All of the contracts transferred to the issuer meet the
eligibility criteria specified in the transfer and servicing agreement. No
adverse selection procedure was used in selecting the contracts for transfer to
the issuer. See "The Transfer and Servicing Agreement -- Representations and
Warranties; Definition of Eligible Contracts" and
" -- Concentration Amounts; Definition of Excess Contract." The originator will
represent that all of the contracts transferred to the issuer relate to
commercial financings, rather than to consumer leases or consumer loans or
financings. No selection procedures believed by the originator to be adverse to
you were used in selecting the contracts for transfer to the issuer under the
transfer and servicing agreement.
The composition and distribution of the contracts by payment frequency,
geographic distribution, industry type, type of equipment, current discounted
contract balance, original term, remaining term, purchase option, documentation
type and lease type are set forth in the following tables and are reported as of
March 1, 2002 using the statistical discount rate. For further information
regarding the contracts, see "The Contracts".
As scheduled payments become due, the aggregate discounted contract balance
of all of the pledged contracts will decrease. This decrease in the discounted
contract balance of the contracts is referred to as amortization. The rate at
which the discounted contract balance of each contract is reduced may vary from
contract to contract. The variance will depend in large part on the contract
terms. As a result, the statistical
21
distribution of the pledged contracts, including the concentration of obligors
in any one state or of the contracts with respect to any one equipment type,
will vary as the contract balances amortize.
While reading the tables you should note that:
- Classification by obligor industry is based on GreatAmerica Leasing
Corporation's customary procedures for determining obligor industry.
- Percentages and amounts set forth in the following tables may not total
due to rounding.
- The final scheduled payment on the contract with the latest maturity or
expiration is December, 2007.
Some of the contracts intended, as of March 1, 2002, to be pledged to the
indenture trustee may be determined not to meet the eligibility requirements and
those contracts may not be pledged to the indenture trustee on the closing date
for the pledge of the contracts to the indenture trustee. While the statistical
distribution of the characteristics as of the closing date for the final pool of
contracts calculated at the discount rate will vary somewhat from the
statistical distribution of the characteristics as of March 1, 2002 calculated
at the statistical discount rate as presented in this prospectus, the variance
will not be material. Changes in the characteristics of the contracts between
March 1, 2002 and the closing date will not have an aggregate affect that will
change the aggregate discounted contract balance of the contracts by greater
than 5.00%.
The information presented in the following tables is as of March 1, 2002
and is calculated using the statistical discount rate of 4.998%. The statistical
discount rate is based on an average of the estimated interest rates of the
notes, weighted by estimated initial average life and initial principal amounts.
<Table>
Number of Contracts......................................... 25,618
Aggregate Discounted Contract Balance (Statistical Discount $256,546,671.11
Rate = 4.998%)............................................
Average Discounted Contract Balance......................... $10,014.31
Discounted Contract Balance Range........................... $361.60 - $479,930.17
Average Original Principal Balance.......................... $14,676.31
Weighted Average Original Term.............................. 50.44 months
(Range)(in months).......................................... 7-85 months
Average Original Term....................................... 44.46 months
Weighted Average Remaining Term............................. 39.30 months
(Range)(in months).......................................... 3-70 months
Average Remaining Term...................................... 32.53 months
</Table>
22
DISTRIBUTION OF THE CONTRACTS BY PAYMENT FREQUENCY AS OF MARCH 1, 2002
Monthly, quarterly, semi-annual and annual payment contracts generally
provide for regular scheduled payments by obligors. Variable payment contracts
provide for uneven monthly, quarterly or annual payment amounts, but do not
include contracts for which payments which are made after the first six payments
are either level or decreasing monthly, quarterly or annual payments. Skip
payment contracts are used for obligors who have seasonal downtimes typically
arising from weather conditions or industry characteristics. During such
downtimes, the contract payment schedules omit required payments for generally
up to three months per year. Balloon payment contracts generally provide for
regular monthly payments by obligors of a smaller fixed amount than a constant
monthly payment rate would require, but also provide for a larger balloon
payment at the end of the contract term. Scheduled payments on skip contracts
and balloon contracts are at amounts to assure that the contract does not extend
beyond a term appropriate for the creditworthiness of the obligor and to meet
the originator's yield requirements.
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
PAYMENT FREQUENCY CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- ----------------- --------- ------------- ---------------- --------------------
Monthly............................... 25,085 97.92% $248,587,403.63 96.90%
Balloon............................... 111 0.43 3,600,065.89 1.40
Variable.............................. 47 0.18 2,051,363.56 0.80
Quarterly............................. 308 1.20 1,459,428.44 0.57
Annual................................ 53 0.21 660,298.88 0.26
Skip Payment.......................... 14 0.05 188,110.71 0.07
------ ------- --------------- ------
Total....................... 25,618 100.00% $256,546,671.11 100.00%
====== ======= =============== ======
</Table>
23
DISTRIBUTION OF THE CONTRACTS BY JURISDICTIONS IN WHICH OBLIGORS ARE LOCATED
AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
LOCATION CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- -------- --------- ------------- ---------------- --------------------
Alabama............................... 358 1.40% $ 2,788,174.58 1.09%
Alaska................................ 40 0.16 231,685.65 0.09
Arizona............................... 325 1.27 3,949,613.39 1.54
Arkansas.............................. 281 1.10 2,122,594.70 0.83
California............................ 2,063 8.05 24,148,410.07 9.41
Colorado.............................. 624 2.44 5,996,326.09 2.34
Connecticut........................... 306 1.19 3,928,730.42 1.53
Delaware.............................. 29 0.11 317,969.20 0.12
District of Columbia.................. 76 0.30 1,009,809.42 0.39
Florida............................... 2,291 8.94 21,403,253.75 8.34
Georgia............................... 912 3.56 8,659,299.64 3.38
Hawaii................................ 40 0.16 827,149.55 0.32
Idaho................................. 157 0.61 1,184,642.15 0.46
Illinois.............................. 1,597 6.23 16,179,650.50 6.31
Indiana............................... 617 2.41 6,486,858.50 2.53
Iowa.................................. 391 1.53 4,288,950.21 1.67
Kansas................................ 120 0.47 908,019.19 0.35
Kentucky.............................. 297 1.16 2,105,688.16 0.82
Louisiana............................. 680 2.65 4,780,799.52 1.86
Maine................................. 64 0.25 485,909.37 0.19
Maryland.............................. 563 2.20 5,340,920.42 2.08
Massachusetts......................... 608 2.37 6,074,184.17 2.37
Michigan.............................. 661 2.58 8,439,048.00 3.29
Minnesota............................. 565 2.21 5,868,308.06 2.29
Mississippi........................... 131 0.51 958,830.90 0.37
Missouri.............................. 512 2.00 5,031,488.07 1.96
Montana............................... 64 0.25 500,909.33 0.20
Nebraska.............................. 126 0.49 1,341,185.09 0.52
Nevada................................ 341 1.33 3,876,087.75 1.51
New Hampshire......................... 106 0.41 1,248,208.95 0.49
New Jersey............................ 755 2.95 9,448,366.45 3.68
New Mexico............................ 130 0.51 1,132,551.52 0.44
New York.............................. 1,665 6.50 18,578,703.13 7.24
North Carolina........................ 697 2.72 6,278,240.90 2.45
North Dakota.......................... 61 0.24 470,374.02 0.18
Ohio.................................. 519 2.03 4,937,377.79 1.92
Oklahoma.............................. 306 1.19 2,711,222.74 1.06
Oregon................................ 204 0.80 1,846,311.35 0.72
Pennsylvania.......................... 842 3.29 7,569,084.81 2.95
Rhode Island.......................... 108 0.42 1,140,967.79 0.44
South Carolina........................ 370 1.44 3,156,838.78 1.23
South Dakota.......................... 239 0.93 2,258,849.99 0.88
Tennessee............................. 499 1.95 4,708,717.23 1.84
Texas................................. 1,749 6.83 17,587,121.99 6.86
US Virgin Islands..................... 173 0.68 1,583,038.98 0.62
Utah.................................. 156 0.61 1,361,569.79 0.53
Vermont............................... 30 0.12 236,967.62 0.09
Virginia.............................. 599 2.34 5,674,604.44 2.21
Washington............................ 365 1.42 3,819,035.12 1.49
West Virginia......................... 126 0.49 1,072,931.75 0.42
Wisconsin............................. 1,015 3.96 10,152,902.04 3.96
Wyoming............................... 65 0.25 338,188.11 0.13
------ ------ --------------- ------
Total....................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
24
DISTRIBUTION OF THE CONTRACTS BY OBLIGOR INDUSTRY
AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
INDUSTRY CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- -------- --------- ------------- ---------------- --------------------
Services............................ 9,299 36.30% $ 93,058,251.40 36.27%
Manufacturing....................... 2,165 8.45 23,674,286.76 9.23
Retail Trade........................ 1,813 7.08 21,501,370.61 8.38
Finance, Insurance and Real
Estate............................ 2,146 8.38 17,791,984.19 6.94
Wholesale Trade..................... 1,507 5.88 14,617,980.98 5.70
Construction........................ 1,059 4.13 9,333,839.36 3.64
Transportation and Public
Utilities......................... 841 3.28 8,490,855.36 3.31
Public Administration............... 398 1.55 3,708,767.18 1.45
Agriculture, Forestry and Fishing... 291 1.14 2,199,865.91 0.86
Mining.............................. 111 0.43 874,245.41 0.34
Nonclassifiable establishment....... 14 0.05 113,151.88 0.04
SIC Number Not Available in Contract
File.............................. 5,974 23.32 61,182,072.07 23.85
------ ------ --------------- ------
Total..................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
DISTRIBUTION OF THE CONTRACTS BY OBLIGOR INDUSTRY
AS OF MARCH 1, 2002 BASED UPON 76.15% OF THE
CONTRACTS FOR WHICH SIC NUMBERS ARE AVAILABLE
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
INDUSTRY CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- -------- --------- ------------- ---------------- --------------------
Services............................ 9,299 47.34% $ 93,058,251.40 47.63%
Manufacturing....................... 2,165 11.02 23,674,286.76 12.12
Retail Trade........................ 1,813 9.23 21,501,370.61 11.01
Finance, Insurance and Real
Estate............................ 2,146 10.92 17,791,984.19 9.11
Wholesale Trade..................... 1,507 7.67 14,617,980.98 7.48
Construction........................ 1,059 5.39 9,333,839.36 4.78
Transportation and Public
Utilities......................... 841 4.28 8,490,855.36 4.35
Public administration............... 398 2.03 3,708,767.18 1.90
Agriculture, Forestry and Fishing... 291 1.48 2,199,865.91 1.13
Mining.............................. 111 0.57 874,245.41 0.45
Nonclassifiable Establishment....... 14 0.07 113,151.88 0.06
------ ------ --------------- ------
Total..................... 19,644 100.00% $195,364,599.04 100.00%
====== ====== =============== ======
</Table>
25
DISTRIBUTION OF THE CONTRACTS BY EQUIPMENT TYPE
AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
EQUIPMENT TYPE CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- -------------- --------- ------------- ---------------- --------------------
Copier/Printer........................ 12,376 48.31% $ 96,911,036.06 37.78%
Telephone/Fax......................... 6,236 24.34 62,179,728.84 24.24
Miscellaneous(1)...................... 2,464 9.62 31,912,822.31 12.44
Computer/Software..................... 1,035 4.04 14,598,948.59 5.69
Postage............................... 2,170 8.47 12,694,126.09 4.95
Medical/Dental........................ 359 1.40 11,002,660.89 4.29
Point of Sale......................... 397 1.55 9,583,010.97 3.74
Office Equipment/Furniture............ 277 1.08 5,961,484.84 2.32
GPS Systems........................... 28 0.11 5,283,539.50 2.06
Construction Equipment................ 103 0.40 3,429,454.00 1.34
Restaurant Equipment.................. 173 0.68 2,989,859.02 1.17
------ ------ --------------- ------
Total....................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
- ---------------
(1) No one type of equipment represents more than 0.99% of the aggregate
discounted contract balance.
DISTRIBUTION OF THE CONTRACTS BY CURRENT DISCOUNTED CONTRACT BALANCE AS OF MARCH
1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
DISCOUNTED CONTRACT NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
BALANCE CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- ------------------- --------- ------------- ---------------- --------------------
$0 - $5,000..................... 12,346 48.19% $ 33,973,626.78 13.24%
$5,000.01 - $10,000............. 6,604 25.78 46,447,492.84 18.10
$10,000.01 - $15,000............ 2,502 9.77 30,475,995.61 11.88
$15,000.01 - $20,000............ 1,323 5.16 22,857,672.64 8.91
$20,000.01 - $25,000............ 780 3.04 17,438,870.23 6.80
$25,000.01 - $50,000............ 1,445 5.64 49,937,822.43 19.47
$50,000.01 - $100,000........... 462 1.80 30,881,841.78 12.04
$100,000.01 - $200,000.......... 133 0.52 17,910,564.22 6.98
$200,000.01 - $300,000.......... 15 0.06 3,575,754.92 1.39
$300,000.01 - $500,000.......... 8 0.03 3,047,029.66 1.19
------ ------ --------------- ------
Total................. 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
DISTRIBUTION OF THE CONTRACTS BY ORIGINAL CONTRACT TERM AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
ORIGINAL CONTRACT NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
TERM (MONTHS) CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- ----------------- --------- ------------- ---------------- --------------------
1 - 12.............................. 269 1.05% $ 717,290.21 0.28%
13 - 24............................. 1,784 6.96 7,048,062.48 2.75
25 - 36............................. 10,883 42.48 68,844,053.40 26.83
37 - 48............................. 3,770 14.72 37,436,376.55 14.59
49 - 60............................. 8,080 31.54 124,871,537.48 48.67
61 - 72............................. 810 3.16 17,084,324.31 6.66
73 - 84............................. 21 0.08 528,862.85 0.21
85 - 96............................. 1 0.00 16,163.83 0.01
------ ------ --------------- ------
Total..................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
26
DISTRIBUTION OF THE CONTRACTS BY REMAINING CONTRACT TERM AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
REMAINING CONTRACT TERM NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
(MONTHS) CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- ----------------------- --------- ------------- ---------------- --------------------
0 - 12.............................. 1,351 5.27% $ 3,639,410.44 1.42%
13 - 24............................. 6,947 27.12 35,797,010.41 13.95
25 - 36............................. 7,223 28.20 60,669,643.26 23.65
37 - 48............................. 5,609 21.89 79,298,986.93 30.91
49 - 60............................. 4,417 17.24 74,261,478.20 28.95
61 - 72............................. 71 0.28 2,880,141.87 1.12
------ ------ --------------- ------
Total..................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
DISTRIBUTION OF THE CONTRACTS BY PURCHASE OPTION AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
PURCHASE OPTION CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- --------------- --------- ------------- ---------------- --------------------
Dollar Buyout....................... 13,466 52.56% $146,150,057.96 56.97%
Fair Market Value................... 9,761 38.10 85,304,803.69 33.25
Lease Purchase...................... 1,521 5.94 14,534,458.50 5.67
Rental.............................. 870 3.40 10,557,350.96 4.12
------ ------ --------------- ------
Total..................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
DISTRIBUTION OF CONTRACTS BY DOCUMENTATION TYPE AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
DOCUMENTATION TYPE CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- ------------------ --------- ------------- ---------------- --------------------
Lease............................... 25,339 98.91% $252,537,531.24 98.44%
Software Only Agreement............. 202 0.79 3,440,846.33 1.34
Purchase Order...................... 61 0.24 397,987.82 0.16
Promissory Note..................... 16 0.06 170,305.72 0.07
------ ------ --------------- ------
Total..................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
DISTRIBUTION OF CONTRACTS BY LEASE TYPE AS OF MARCH 1, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF DISCOUNTED AGGREGATE DISCOUNTED
LEASE TYPE CONTRACTS CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
- ---------- --------- ------------- ---------------- --------------------
Finance............................. 13,466 52.56% $146,150,057.96 56.97%
True................................ 12,152 47.44 110,396,613.15 43.03
------ ------ --------------- ------
Total..................... 25,618 100.00% $256,546,671.11 100.00%
====== ====== =============== ======
</Table>
DELINQUENCY AND LOSS INFORMATION
The originator treats a contract as delinquent if the obligor does not make
a scheduled payment at the time or in an amount equal to at least 90 percent of
the amount required by the contract terms. Contract terms require payment by the
obligor by each contractual payment due date.
The following tables set forth the originator's delinquency and loss
experience on its aggregate equipment lease and loan portfolio. Not all of the
contracts in the originator's aggregate portfolio will be transferred to the
issuer. Therefore, the data in the following tables includes delinquency and
loss experience for all contracts owned by GreatAmerica Leasing Corporation
(including its wholly owned subsidiaries and affiliated trusts), including
contracts being transferred to the issuer. The delinquency and loss experience
set forth in the following tables is described in terms of gross receivables and
repossessed assets.
27
The data presented in the following tables and the period-to-period
discussion below reflect historical results. Such past performance is no
indication of the future performance of the pledged contracts. See "Risk
Factors -- Past Performance of Originator's Contracts May Not be Indicative of
the Performance of the Contracts Sold to the Issuer."
The data presented in the following table as of January 31, 2002, January
31, 2001, May 31, 2001, May 31, 2000 and May 31, 1999 are derived from unaudited
financial information of GreatAmerica Leasing Corporation.
CONTRACT PORTFOLIO
DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
AS OF
<Table>
<Caption>
JANUARY 31, 2002 JANUARY 31, 2001 MAY 31, 2001 MAY 31, 2000 MAY 31, 1999
----------------- ------------------- ---------------- ---------------- ----------------
Current.................. $426,910 98.36% $356,975 98.84% $390,769 98.92% $301,836 99.05% $220,602 98.83%
Past Due(1)
31-60 days............... 1,902 0.44 1,832 0.51 1,697 0.43 1,111 0.36 946 0.42
61-90 days............... 2,613 0.60 615 0.17 963 0.24 334 0.11 352 0.16
over 90 days............. 2,597 0.60 1,729 0.48 1,601 0.41 1,452 0.48 1,321 0.59
Gross Receivables(2)..... $434,022 100.0% $361,151 100.0% $395,032 100.0% $304,734 100.0% $223,222 100.0%
======== ===== ======== ======== ======== ===== ======== ===== ======== =====
</Table>
- ---------------
(1) The delinquency analysis is prepared on a contractual basis. Accordingly,
the entire contract, including the entire contract balance remaining and all
earned and unearned finance charges, is considered delinquent if less than
90 percent of a payment due has been made by its contractual payment due
date, subject to any grace periods permitted by the contract or required by
law. Any cash collected on a delinquent account is applied against the
earliest amount due. Therefore, an account classified as delinquent may be a
paying account.
(2) Amounts in columns may not total due to rounding.
The following table sets forth statistics relating to gross losses and
losses net of recoveries on defaulted contracts within GreatAmerica Leasing
Corporation's portfolio of receivables during the 12-month periods ending May
31, 2001, May 31, 2000, May 31, 1999 and May 31, 1998. For these purposes,
"gross losses" means total losses before recoveries measured against the net
investment of the contracts (gross of any allowance for losses), and "net
losses" means losses after recoveries measured against the net investment of the
contracts (gross of any allowance for losses).
<Table>
<Caption>
PERCENT OF PERCENT OF
AVERAGE GROSS AVERAGE AVERAGE
FISCAL YEAR RECEIVABLES LOSSES RECEIVABLES RECOVERIES NET LOSSES RECEIVABLES
- ----------- ------------ ---------- ----------- ---------- ---------- -----------
2001...................... $348,541,661 $6,519,167 1.87% $1,545,453 $4,973,714 1.43%
2000...................... $263,509,301 $3,763,933 1.43% $ 800,869 $2,963,064 1.12%
1999...................... $195,623,890 $3,383,059 1.73% $ 859,691 $2,523,368 1.29%
1998...................... $143,897,412 $2,521,153 1.75% $ 771,763 $1,749,390 1.22%
</Table>
GreatAmerica Leasing Corporation's delinquency and net loss experience has
historically been affected by prevailing economic conditions, and could be
affected more particularly in industries and geographic regions where it has
customer concentrations. These conditions are often volatile, and no predictions
can be made regarding them. There can be no assurance that the delinquency and
loss experience on the contracts will be comparable to that set forth above.
28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
As of the date of this prospectus, the issuer has no operating history. The
net proceeds of the sale of the notes will be used by the issuer to purchase the
contracts and the originator's interest in the equipment and to make the initial
deposit to the reserve account. See "Use of Proceeds." The issuer is prohibited
by its limited liability company agreement from engaging in business other than
(i) the purchase of equipment leases and lease receivables (including
equipment), loan agreements and other financing agreements from the originator,
(ii) the issuance of notes secured by its assets and (iii) engaging in acts
incidental, necessary or convenient to the foregoing and permitted under
Delaware law. The issuer's ability to incur, assume or guaranty indebtedness for
borrowed money is also restricted by its limited liability company agreement.
THE ISSUER
The issuer is a bankruptcy remote, limited liability company organized
under the laws of the State of Delaware. The issuer was formed for the limited
purpose of engaging in the transactions described herein, particularly to
acquire from the originator equipment leases (including equipment), loan
agreements and other financing agreements, to issue the securities secured by
its assets and any activities incidental to and necessary or convenient for the
accomplishment of such purposes. As a bankruptcy-remote entity, the issuer's
operations will be restricted so that it does not engage in business with, or
incur liabilities to, any other entity other than the indenture trustee and
other trustees and agents on behalf of other investors in nonrecourse,
asset-backed financings. The restrictions are intended to prevent the issuer
from engaging in business with other entities that may bring bankruptcy
proceedings against the issuer. The restrictions are also intended to reduce the
risk that the issuer will be consolidated into the bankruptcy proceedings of any
other entity.
The issuer will have no other assets available to pay amounts owing under
the indenture except the pledged assets, including the contracts and the
originator's interest in the equipment, the proceeds of the contracts and
earnings on the amounts on deposit in the collection account and the payahead
account and with respect to the reserve fund and the residual account. The
issuer's address is 625 First Street SE, Suite 601, Cedar Rapids, Iowa 52401,
and its phone number is (319) 366-7577.
The issuer was established pursuant to a certificate of formation dated as
of September 24, 2001. The issuer is governed pursuant to that certain limited
liability company agreement dated as of September 24, 2001, as may be amended
from time to time, which describes the administration of the issuer.
The servicer will service the contracts pursuant to the transfer and
servicing agreement, and will be compensated for acting as the servicer. See
"Description of the Notes and Indenture -- Servicing Compensation and Payment of
Expenses". To facilitate servicing and to minimize administrative burden and
expense, the servicer will be appointed custodian for the contracts by the
indenture trustee.
29
EXECUTIVE OFFICERS OF THE ISSUER
The following table sets forth the executive officers of the issuer and
their ages and positions as of March 1, 2002. Because the issuer is organized as
a special purpose limited liability company and will be largely passive, it is
expected that the officers of the issuer in such capacity will participate in
the management of the issuer to a limited extent. Most of the actions related to
maintaining and servicing the assets will be performed by GreatAmerica Leasing
Corporation or any successor thereto, as servicer. The member of the issuer is
GreatAmerica Leasing Corporation.
GREATAMERICA LEASING RECEIVABLES 2002-1, L.L.C.
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Tony Golobic......................... 57 President and Chief Executive Officer
Douglas D. Olson..................... 52 Executive Vice President
Stanley M. Herkelman................. 39 Chief Financial Officer, Senior Vice President and
Secretary
Marcene Tolly........................ 43 Controller
Brett Steffen........................ 31 Treasurer
</Table>
Tony Golobic has served as President and Chief Executive Officer of the
issuer since being appointed on September 24, 2001. He is also the President and
Chief Executive Officer of the originator. Prior to joining the originator in
November of 1992, Mr. Golobic was General Manager of GE Capital's Office
Technology Financial Services Office Equipment Group and President and Chief
Executive Officer of LeaseAmerica Corporation where he spent over five years.
Prior to his employment at GE Capital/LeaseAmerica, Mr. Golobic served for
five and one half years as Senior Vice President of Mellon Financial Services
Corporation, an affiliate of Mellon Bank. Mr. Golobic was responsible for the
start-up and operation of this middle market equipment finance operation.
Douglas Olson has served as Executive Vice President of the issuer since
being appointed on September 24, 2001. Mr. Olson has over 27 years of equipment
leasing experience and is the Executive Vice President of the originator. Prior
to joining the originator in 1993, Mr. Olson was the National Sales Manager of
GE Capital's Office Technology Financial Services Office Equipment Group. Mr.
Olson's other GE Capital assignments included Operations Manager for GE
Capital's Technology Equipment Finance Group and Vice President-Operations of GE
Capital's Dealer Distribution Finance.
Stan Herkelman has served as Chief Financial Officer, Senior Vice President
and Secretary of the issuer since being appointed on September 24, 2001. He is
also Senior Vice President, Chief Financial Officer and Assistant Corporate
Secretary of the originator. Before joining the originator in 1998, Mr.
Herkelman practiced law, representing primarily institutional lenders in
commercial asset based lending transactions, workouts and bankruptcies.
Marcene Tolley has served as Controller of the issuer since being appointed
on September 24, 2001. She is also the controller and treasurer of the
originator. Prior to joining the originator in 1993, Ms. Tolley worked for five
years for GE Capital's Office Technology Financial Services Office Equipment
Group and its predecessor, LeaseAmerica Corporation in various accounting
management capacities, including preparation of financial statements, budgeting,
long-range forecasting and financial analysis responsibilities.
Brett Steffen has served as Treasurer of the issuer since being appointed
on September 24, 2001. He is also the assistant controller of the originator.
Prior to joining the originator in 1996, Mr. Steffen was an auditor for Deloitte
& Touche, L.L.P. and Ernst & Young, L.L.P. where he primarily focused on audit
clients within the manufacturing and services industries.
None of the above-listed officers of the issuer will be compensated
directly by the issuer with any funds or assets of the issuer nor will the
officers receive compensation in the capacities in which they act for the
issuer.
30
DEFINITION OF DELINQUENCY FOR THE CONTRACTS TRANSFERRED TO THE ISSUER
As of March 1, 2002, no contract sold to the issuer was delinquent on any
scheduled payments for more than 60 days. Delinquent contract balances are
monitored on a contractual basis. The total outstanding contract balance,
including unearned finance charges, is considered delinquent if anything less
than 90 percent of each full payment is received by the contractual due date.
There are no defaulted contracts included in the contracts sold to the
issuer. For a definition of defaulted contracts, see "The Transfer and Servicing
Agreement -- Definition of Defaulted Contracts".
THE CONTRACTS
The indenture trustee on behalf of the noteholders will be entitled to all
collections on account of the contracts and its interest in the related
equipment. However, the indenture trustee on behalf of the noteholders will not
be entitled to the Excluded Amounts. See "Description of the Notes and
Indenture -- Amounts Available for Payments on the Notes". All of the contracts
are commercial contracts.
Almost all of the contracts in respect of equipment to be pledged from time
to time to the indenture trustee will consist of finance leases and true leases.
In addition, a small number of contracts to be pledged to the indenture trustee
are secured promissory notes, software only agreements and purchase orders.
Each contract must be an eligible contract as of the applicable cutoff
date. In order for a contract to be eligible to be pledged to the indenture
trustee it must have the characteristics that are more fully described in "The
Transfer and Servicing Agreement -- Representations and Warranties; Definition
of Eligible Contracts".
A portion of the contracts included in the pool of pledged contracts will
consist of contracts originated by vendors (equipment manufacturers or dealers)
and assigned to the originator in most cases under individual assignments from
vendors. All of the contracts in the pool of pledged contracts, whether
originated by a vendor or the originator, were subject to the originator's
credit underwriting policies and procedures that are more fully described in
"Great America Leasing Corporation -- Credit Underwriting Policies and
Procedures." Most of the vendor assignments are made without recourse against
the vendor for obligor defaults. Additionally, some of the vendor assignments
will contain typical vendor representations, warranties and covenants. In such
cases, in the event of a breach by the vendor of such representations,
warranties or covenants, the originator will either pursue repurchase or
replacement of the contracts and equipment by the vendor or a contract damage
payment from the vendor.
LEASES
The originator, either directly or by assignment from vendors, offers
financing of equipment under leases. In some instances, the leases may consist
of individual lease agreements each relating to a single, separate transaction.
In limited circumstances the leases may consist of individual transactions
written under and governed by a master lease agreement which contains the
general terms and conditions of the transaction. Specific terms and conditions,
such as descriptions of the specific equipment being leased or financed and the
schedule of related rental payments, are contained in a supplement or schedule
to the master lease agreement, which is signed by the end-user, as lessee, and
either the vendor or the originator, as lessor. The supplement or schedule
incorporates the master lease agreement by reference and is treated by the
originator as a separate lease.
Each lease is originated in the ordinary course of business by either the
originator or a vendor. The vendor assigns leases to the originator through a
vendor finance agreement or vendor assignment.
The initial terms of most of the leases pledged to the indenture trustee
range from one to seven years. Each lease provides for the periodic payment by
the end-user of rent in advance or arrears, usually monthly. The periodic
payments represent the amortization, usually on a level basis, of the total
amount that an end-user is required to pay throughout the term of a lease.
31
The leases to be pledged to the indenture trustee are "net leases" under
which the end-user assumes responsibility for the items financed thereunder,
including operation, maintenance, repair, insurance and the payment of all sales
and use and property taxes relating to such financed item during the lease term.
All leases of equipment require the end-user to maintain, at its expense,
casualty insurance covering damage to or loss of the equipment during the lease
term. The originator or vendor is named as loss payee on insurance policies
(acquired either directly by the end-user or the originator) covering the
equipment. The end-user usually further agrees to indemnify the lessor for any
liabilities arising out of the use or operation of the item financed by the
end-user. In most leases, the lessor is also authorized to perform the
end-user's obligations under the leases at the end-user's expense, if it so
elects, in cases where the end-user has failed to perform. In addition,
virtually all of the leases contain "hell or high water" clauses unconditionally
obligating the end-user to make periodic payments, without setoff, at the times
and in the amounts specified in the lease. If the originator is the lessor, the
lease contains no express or implied warranties with respect to the items
financed thereunder other than an implied warranty of quiet enjoyment.
The finance leases are intended for security as defined in Section
1-201(37) of the Iowa Uniform Commercial Code. Under such leases intended for
security, the lessor in effect finances the "purchase" of the leased property by
the lessee and retains a security interest in the leased property. The lessee
retains the leased property for substantially all its economic life and the
lessor retains no significant residual interest. Such leases are considered
conditional sales type leases for federal income tax purposes and, accordingly,
the lessor does not take any federal tax benefits associated with the ownership
of depreciable property. End of lease options for such leases depend on the
terms of the related individual lease agreement or master lease agreement
supplement or schedule. Those terms provide for the purchase of the equipment at
a specified nominal price (in most cases less than $101.00).
In general, any lease that is not a finance lease is a true lease. They
typically are used for short-term leases of equipment. The obligor can acquire
the use of equipment for just a fraction of the useful life of the asset and the
lessor retains the residual interest in the equipment. Because the term is
shorter than the expected useful life of the equipment, rental payments do not
cover the equipment cost for the lessor during the initial lease term. In most
instances GreatAmerica Leasing Corporation sells the equipment to the lessee at
the end of the lease term. If GreatAmerica Leasing Corporation is unable to do
so it will utilize its remarketing expertise to subsequently attempt to find
other users for the returned equipment.
End-users under a lease are either prohibited from altering or modifying
the equipment or may alter or modify the equipment only to the extent the
alterations or modifications are readily removable without damage to the
equipment.
There are no commonly permitted modifications to the leases. Modifications
will be permitted on an individual basis, and will depend on various factors.
Authority to approve modifications begins with senior documentation specialists
and extends through the management of the originator, depending on the nature of
the requested change.
SECURED PROMISSORY NOTES, SOFTWARE ONLY AGREEMENTS AND PURCHASE ORDERS
A portion of the contracts will consist of secured promissory notes,
software only agreements and purchase orders. Direct initial financing or
refinancing of new or existing equipment is made under secured promissory notes,
which either consist of an installment note and a separate security agreement or
a self-contained integrated document containing both a promissory note and
security agreement. In an initial financing transaction, the originator pays to
the vendor the purchase price for the equipment and in a refinancing
transaction, the originator pays off an end user's existing financing source. In
the case of a refinancing transaction, upon payment to the existing financing
source, the originator obtains a release of the other party's lien on the
financed equipment. In either case, the originator records its own lien against
the financed equipment and takes possession of the secured promissory note,
which constitutes chattel paper under the Uniform Commercial Code. In either
case, the transaction is documented as a direct loan by the originator to the
end user of the equipment using a secured promissory note. Software only
agreements are any installment sales contract or agreement pursuant to which the
originator finances the licensing of software for
32
any obligor at a specified periodic payment. A purchase order is any agreement
pursuant to which the originator invoices an obligor at a specified periodic
payment or rental for specified equipment.
EQUIPMENT
The contracts cover a wide variety of new and a de minimus amount of used
equipment. Some examples of the types of equipment are copiers, faxes, computer
equipment, telephone systems, postage equipment and related items. The
originator's interest, including any security interests of the originator, in
the equipment subject to the contracts will be pledged to the indenture trustee.
CONTRACT FILES
The originator will indicate in its books and records, including the
appropriate computer files relating to the contracts, that the contracts have
been pledged to the indenture trustee for the benefit of the holders of the
notes. The originator will also deliver to the indenture trustee a computer file
or microfiche or written list containing a true and complete list of all
contracts that have been pledged to the indenture trustee, identified by account
number and by the discounted contract balance as of the applicable cutoff date.
HOW COLLECTIONS ON THE CONTRACTS ARE TREATED
All collections received with respect to the contracts will be allocated as
described in "Description of the Notes and Indenture -- Allocations".
Prepayments in full will be treated as though they were received on the last day
of the collection period in which they are actually received for purposes of
calculating amounts available for distribution to you. Payaheads will be held in
the payahead account until they are to be released as a scheduled payment, in
which case they will be treated as if they were received on the last day of the
applicable collection period for purposes of calculating amounts available for
distribution to you. Each collection period coincides with a calendar month.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the notes, the aggregate amount of each
interest payment on the notes and the yield to maturity of the notes are
directly related to the rate of payments on the underlying contracts. The
payments on the contracts may be in the form of payments scheduled to be made
under the terms of the contracts, payaheads, prepayments or liquidations due to
default, casualty and other events that cannot be specified at present. Any
prepayments in full may result in distributions to you of amounts that would
otherwise have been distributed over the remaining term of the contracts. Each
prepayment on a contract (other than payaheads), if the contract is not replaced
by the issuer with a comparable substitute contract as described under "The
Transfer and Servicing Agreement -- Substitute Contracts", will shorten the
weighted average remaining term of the contracts and the weighted average life
of the notes.
In general, the rate of payments on the contracts may be influenced by a
number of other factors, including general economic conditions. The rate of
principal payments with respect to any class of notes may also be affected by
any repurchase by the issuer of contracts under the transfer and servicing
agreement. Under the transfer and servicing agreement, the issuer and the
originator must repurchase contracts if there is a breach of representation or
warranty as to the contracts that causes such contract to be ineligible to be a
pledged asset.
Under the indenture, the issuer may exercise the option to prepay the notes
when the aggregate discounted contract balance of the contracts is less than 15%
of the aggregate discounted contract balance of the contracts as of March 1,
2002.
Further, although the contracts are not prepayable by their terms, the
servicer may allow an early termination of a contract if the amount to be
prepaid is equal to the then discounted contract balance of such contract, plus
any scheduled payments due on the contract but not yet received. In the case of
contracts that must be removed from the pledged assets due to their failure to
have the characteristics set forth in the transfer and servicing agreement or
that are Excess Contracts, the rate of prepayment would also be influenced
33
by the issuer's decision not to repurchase those contracts and instead to accept
substitute contracts. See "The Transfer and Servicing Agreement -- Substitute
Contracts". In the event of a repurchase, the repurchase price will decrease the
aggregate discounted contract balance of the contracts, leading to a principal
repayment and causing the corresponding weighted average life of the notes to
decrease. See "Risk Factors -- Prepayments in Full on the Contracts May Cause an
Earlier Repayment of the Notes than You Expect and You May Not Be Able To Find
Investments with the Same Yield as the Notes at the Time of the Repayment".
A higher than anticipated rate of prepayment will reduce the aggregate
discounted contract balance of the contracts more quickly than expected and
thereby result in an increase in the rate at which principal is paid to you and
reduce the aggregate interest payments you may have expected to receive on the
notes.
The effective yield will depend upon, among other things, the amount of and
rate at which principal is paid to you. You will bear any reinvestment risks
resulting from a faster or slower incidence of prepayment of contracts. The
reinvestment risks include the risk that interest rates may be lower at the time
you receive payments with respect to the notes than interest rates would
otherwise have been had the prepayments not been made or had the prepayments
been made at a different time.
STATISTICAL MODELING ASSUMPTIONS
The following chart sets forth the percentage of the initial principal
amount of the Class A-l Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class B Notes, Class C Notes and Class D Notes that would be outstanding
on the payment dates set forth below assuming an annual constant prepayment rate
of 0.00%, 3.00%, 6.00%, 9.00% and 12.00%, respectively. Such information is
hypothetical and is set forth for illustrative purposes only. The annual
constant prepayment rate assumes that a fraction of the outstanding contracts is
prepaid on each payment date, which implies that each contract in the pool of
contracts is equally likely to prepay. This fraction, expressed as a percentage,
is annualized to arrive at the annual constant prepayment rate for the
contracts. The annual constant prepayment rate measures prepayments based on the
outstanding discounted contract balances of the contracts, after the payment of
all payments scheduled to be made under the terms of the contracts during each
collection period. The annual constant prepayment rate further assumes that all
contracts are the same size and amortize at the same rate and that each contract
will be either paid as scheduled or prepaid in full.
The percentages of initial class principal amount set forth below are based
upon information contained herein and further, assumes among other things: the
timely receipt of scheduled monthly contract payments as of March 1, 2002, that
the issuer exercises its option to cause a redemption of the notes when the
aggregate discounted contract balance of the contracts is less than 15% of the
aggregate discounted contract balance of the contracts as of March 1, 2002, and
the closing date for the transfer of the contracts to the issuer is March 26,
2002. Furthermore, the charts were calculated assuming that the residual
receipts equal the booked residual value in each collection period, no defaults
or events of default have occurred, all notes other than the Class A-1 Notes
accrue interest as of the 15th day of each month regardless of whether such day
is a business day and no successor servicer is appointed. These tables are based
upon the statistical discount rate of 4.998%.
In addition, it is assumed for the purposes of these tables only, that the
issuer issues the notes in the following amounts and at the following interest
rates:
<Table>
<Caption>
CLASS BALANCE INTEREST RATE
- ----- ------------ -------------
A-1................................................ $ 65,419,401 2.114%
A-2................................................ $ 12,827,334 3.090%
A-3................................................ $107,749,602 4.160%
A-4................................................ $ 27,450,494 4.950%
B.................................................. $ 10,774,960 4.370%
C.................................................. $ 10,903,234 4.720%
D.................................................. $ 13,725,247 5.110%
</Table>
34
PERCENTAGE OF THE INITIAL CLASS A-1 NOTE PRINCIPAL AMOUNT
AT THE ANNUAL CONSTANT PREPAYMENT RATES SET FORTH BELOW
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
03/26/2002.................................................. 100% 100% 100% 100% 100%
04/15/2002.................................................. 91 90 89 88 87
05/15/2002.................................................. 81 80 78 77 75
06/15/2002.................................................. 72 70 68 65 63
07/15/2002.................................................. 63 60 57 54 51
08/15/2002.................................................. 54 50 46 43 39
09/15/2002.................................................. 44 40 36 32 28
10/15/2002.................................................. 35 30 26 21 16
11/15/2002.................................................. 26 21 16 11 5
12/15/2002.................................................. 17 11 6 0 0
01/15/2003.................................................. 8 2 0 0 0
02/15/2003.................................................. 0 0 0 0 0
Weighted Average Life (Years) to Call:...................... 0.46 0.43 0.40 0.38 0.36
</Table>
PERCENTAGE OF THE INITIAL CLASS A-2 NOTE PRINCIPAL AMOUNT
AT THE ANNUAL CONSTANT PREPAYMENT RATES SET FORTH BELOW
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
03/26/2002.................................................. 100% 100% 100% 100% 100%
04/15/2002.................................................. 100 100 100 100 100
05/15/2002.................................................. 100 100 100 100 100
06/15/2002.................................................. 100 100 100 100 100
07/15/2002.................................................. 100 100 100 100 100
08/15/2002.................................................. 100 100 100 100 100
09/15/2002.................................................. 100 100 100 100 100
10/15/2002.................................................. 100 100 100 100 100
11/15/2002.................................................. 100 100 100 100 100
12/15/2002.................................................. 100 100 100 100 72
01/15/2003.................................................. 100 100 79 49 18
02/15/2003.................................................. 93 61 29 0 0
03/15/2003.................................................. 46 13 0 0 0
04/15/2003.................................................. 0 0 0 0 0
Weighted Average Life (years) to Call:...................... 1.00 0.95 0.89 0.84 0.80
</Table>
PERCENTAGE OF THE INITIAL CLASS A-3 NOTE PRINCIPAL AMOUNT
AT THE ANNUAL CONSTANT PREPAYMENT RATES SET FORTH BELOW
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
03/26/2002.................................................. 100% 100% 100% 100% 100%
04/15/2002.................................................. 100 100 100 100 100
05/15/2002.................................................. 100 100 100 100 100
06/15/2002.................................................. 100 100 100 100 100
07/15/2002.................................................. 100 100 100 100 100
08/15/2002.................................................. 100 100 100 100 100
09/15/2002.................................................. 100 100 100 100 100
10/15/2002.................................................. 100 100 100 100 100
11/15/2002.................................................. 100 100 100 100 100
12/15/2002.................................................. 100 100 100 100 100
</Table>
35
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
01/15/2003.................................................. 100% 100% 100% 100% 100%
02/15/2003.................................................. 100 100 100 100 96
03/15/2003.................................................. 100 100 98 94 90
04/15/2003.................................................. 100 96 92 88 84
05/15/2003.................................................. 95 90 86 82 78
06/15/2003.................................................. 89 85 81 76 72
07/15/2003.................................................. 84 80 75 71 67
08/15/2003.................................................. 79 74 70 66 62
09/15/2003.................................................. 74 69 65 61 56
10/15/2003.................................................. 69 64 60 56 52
11/15/2003.................................................. 64 60 55 51 47
12/15/2003.................................................. 60 55 51 47 42
01/15/2004.................................................. 55 51 46 42 38
02/15/2004.................................................. 51 46 42 38 34
03/15/2004.................................................. 46 42 38 34 30
04/15/2004.................................................. 42 38 34 30 26
05/15/2004.................................................. 38 34 30 26 23
06/15/2004.................................................. 34 30 26 23 19
07/15/2004.................................................. 30 27 23 19 16
08/15/2004.................................................. 27 23 20 16 13
09/15/2004.................................................. 23 20 16 13 10
10/15/2004.................................................. 20 17 13 10 7
11/15/2004.................................................. 17 14 11 8 5
12/15/2004.................................................. 14 11 8 5 0
01/15/2005.................................................. 11 8 5 0 0
02/15/2005.................................................. 9 6 0 0 0
03/15/2005.................................................. 6 0 0 0 0
04/15/2005.................................................. 0 0 0 0 0
Weighted Average Life (Years) to Call:...................... 2.00 1.92 1.84 1.77 1.69
</Table>
PERCENTAGE OF THE INITIAL CLASS A-4 NOTE PRINCIPAL AMOUNT
AT THE ANNUAL CONSTANT PREPAYMENT RATES SET FORTH BELOW
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
03/26/2002.................................................. 100% 100% 100% 100% 100%
04/15/2002.................................................. 100 100 100 100 100
05/15/2002.................................................. 100 100 100 100 100
06/15/2002.................................................. 100 100 100 100 100
07/15/2002.................................................. 100 100 100 100 100
08/15/2002.................................................. 100 100 100 100 100
09/15/2002.................................................. 100 100 100 100 100
10/15/2002.................................................. 100 100 100 100 100
11/15/2002.................................................. 100 100 100 100 100
12/15/2002.................................................. 100 100 100 100 100
01/15/2003.................................................. 100 100 100 100 100
02/15/2003.................................................. 100 100 100 100 100
03/15/2003.................................................. 100 100 100 100 100
04/15/2003.................................................. 100 100 100 100 100
05/15/2003.................................................. 100 100 100 100 100
06/15/2003.................................................. 100 100 100 100 100
07/15/2003.................................................. 100 100 100 100 100
08/15/2003.................................................. 100 100 100 100 100
</Table>
36
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
09/15/2003.................................................. 100% 100% 100% 100% 100%
10/15/2003.................................................. 100 100 100 100 100
11/15/2003.................................................. 100 100 100 100 100
12/15/2003.................................................. 100 100 100 100 100
01/15/2004.................................................. 100 100 100 100 100
02/15/2004.................................................. 100 100 100 100 100
03/15/2004.................................................. 100 100 100 100 100
04/15/2004.................................................. 100 100 100 100 100
05/15/2004.................................................. 100 100 100 100 100
06/15/2004.................................................. 100 100 100 100 100
07/15/2004.................................................. 100 100 100 100 100
08/15/2004.................................................. 100 100 100 100 100
09/15/2004.................................................. 100 100 100 100 100
10/15/2004.................................................. 100 100 100 100 100
11/15/2004.................................................. 100 100 100 100 100
12/15/2004.................................................. 100 100 100 100 0
01/15/2005.................................................. 100 100 100 0 0
02/15/2005.................................................. 100 100 0 0 0
03/15/2005.................................................. 100 0 0 0 0
04/15/2005.................................................. 0 0 0 0 0
Weighted Average Life (Years) to Call:...................... 3.05 2.97 2.89 2.80 2.72
</Table>
PERCENTAGE OF THE INITIAL CLASS B NOTE PRINCIPAL AMOUNT
AT THE ANNUAL CONSTANT PREPAYMENT RATES SET FORTH BELOW
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
03/26/2002.................................................. 100% 100% 100% 100% 100%
04/15/2002.................................................. 97 97 97 96 96
05/15/2002.................................................. 94 94 93 93 92
06/15/2002.................................................. 91 91 90 89 89
07/15/2002.................................................. 89 88 87 86 85
08/15/2002.................................................. 86 85 84 82 81
09/15/2002.................................................. 83 82 80 79 78
10/15/2002.................................................. 80 79 77 76 74
11/15/2002.................................................. 77 76 74 73 71
12/15/2002.................................................. 74 73 71 69 68
01/15/2003.................................................. 72 70 68 66 64
02/15/2003.................................................. 69 67 65 63 61
03/15/2003.................................................. 66 64 62 60 58
04/15/2003.................................................. 63 61 59 57 55
05/15/2003.................................................. 61 58 56 54 52
06/15/2003.................................................. 58 56 54 51 49
07/15/2003.................................................. 55 53 51 49 47
08/15/2003.................................................. 53 50 48 46 44
09/15/2003.................................................. 50 48 46 43 41
10/15/2003.................................................. 48 45 43 41 39
11/15/2003.................................................. 45 43 41 39 37
12/15/2003.................................................. 43 41 38 36 34
01/15/2004.................................................. 41 38 36 34 32
02/15/2004.................................................. 38 36 34 32 30
03/15/2004.................................................. 36 34 32 30 28
</Table>
37
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
04/15/2004.................................................. 34% 32% 30% 28% 26%
05/15/2004.................................................. 32 30 28 26 24
06/15/2004.................................................. 30 28 26 24 23
07/15/2004.................................................. 28 26 24 23 21
08/15/2004.................................................. 26 25 23 21 19
09/15/2004.................................................. 25 23 21 19 18
10/15/2004.................................................. 23 21 20 18 17
11/15/2004.................................................. 21 20 18 17 15
12/15/2004.................................................. 20 18 17 15 0
01/15/2005.................................................. 19 17 16 0 0
02/15/2005.................................................. 17 16 0 0 0
03/15/2005.................................................. 16 0 0 0 0
04/15/2005.................................................. 0 0 0 0 0
Weighted Average Life (Years) to Call:...................... 1.60 1.54 1.48 1.42 1.36
</Table>
PERCENTAGE OF THE INITIAL CLASS C NOTE PRINCIPAL AMOUNT
AT THE ANNUAL CONSTANT PREPAYMENT RATES SET FORTH BELOW
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
03/26/2002.................................................. 100% 100% 100% 100% 100%
04/15/2002.................................................. 97 97 97 96 96
05/15/2002.................................................. 94 94 93 93 92
06/15/2002.................................................. 91 91 90 89 89
07/15/2002.................................................. 89 88 87 86 85
08/15/2002.................................................. 86 85 84 82 81
09/15/2002.................................................. 83 82 80 79 78
10/15/2002.................................................. 80 79 77 76 74
11/15/2002.................................................. 77 76 74 73 71
12/15/2002.................................................. 74 73 71 69 68
01/15/2003.................................................. 72 70 68 66 64
02/15/2003.................................................. 69 67 65 63 61
03/15/2003.................................................. 66 64 62 60 58
04/15/2003.................................................. 63 61 59 57 55
05/15/2003.................................................. 61 58 56 54 52
06/15/2003.................................................. 58 56 54 51 49
07/15/2003.................................................. 55 53 51 49 47
08/15/2003.................................................. 53 50 48 46 44
09/15/2003.................................................. 50 48 46 43 41
10/15/2003.................................................. 48 45 43 41 39
11/15/2003.................................................. 45 43 41 39 37
12/15/2003.................................................. 43 41 38 36 34
01/15/2004.................................................. 41 38 36 34 32
02/15/2004.................................................. 38 36 34 32 30
03/15/2004.................................................. 36 34 32 30 28
04/15/2004.................................................. 34 32 30 28 26
05/15/2004.................................................. 32 30 28 26 24
06/15/2004.................................................. 30 28 26 24 23
07/15/2004.................................................. 28 26 24 23 21
08/15/2004.................................................. 26 25 23 21 19
09/15/2004.................................................. 25 23 21 19 18
10/15/2004.................................................. 23 21 20 18 17
</Table>
38
<Table>
<Caption>
0% 3% 6% 9% 12%
---- ---- ---- ---- ----
11/15/2004.................................................. 21% 20% 18% 17% 15%
12/15/2004.................................................. 20 18 17 15 0
01/15/2005.................................................. 19 17 16 0 0
02/15/2005.................................................. 17 16 0 0 0
03/15/2005.................................................. 16 0 0 0 0
04/15/2005.................................................. 0 0 0 0 0
Weighted Average Life (Years) to Call:...................... 1.60 1.54 1.48 1.42 1.36
</Table>
PERCENTAGE OF THE INITIAL CLASS D NOTE PRINCIPAL AMOUNT
AT THE ANNUAL CONSTANT PREPAYMENT RATES SET FORTH BELOW
<Table>
<Caption>
0% 3% 6% 9% 12%
--- --- --- --- ---
03/26/2002.................................................. 100% 100% 100% 100% 100%
04/15/2002.................................................. 97 97 97 96 96
05/15/2002.................................................. 94 94 93 93 92
06/15/2002.................................................. 91 91 90 89 89
07/15/2002.................................................. 89 88 87 86 85
08/15/2002.................................................. 86 85 84 82 81
09/15/2002.................................................. 83 82 80 79 78
10/15/2002.................................................. 80 79 77 76 74
11/15/2002.................................................. 77 76 74 73 71
12/15/2002.................................................. 74 73 71 69 68
01/15/2003.................................................. 72 70 68 66 64
02/15/2003.................................................. 69 67 65 63 61
03/15/2003.................................................. 66 64 62 60 58
04/15/2003.................................................. 63 61 59 57 55
05/15/2003.................................................. 61 58 56 54 52
06/15/2003.................................................. 58 56 54 51 49
07/15/2003.................................................. 55 53 51 49 47
08/15/2003.................................................. 53 50 48 46 44
09/15/2003.................................................. 50 48 46 43 41
10/15/2003.................................................. 48 45 43 41 39
11/15/2003.................................................. 45 43 41 39 37
12/15/2003.................................................. 43 41 38 36 34
01/15/2004.................................................. 41 38 36 34 32
02/15/2004.................................................. 38 36 34 32 30
03/15/2004.................................................. 36 34 32 30 28
04/15/2004.................................................. 34 32 30 28 26
05/15/2004.................................................. 32 30 28 26 24
06/15/2004.................................................. 30 28 26 24 23
07/15/2004.................................................. 28 26 24 23 21
08/15/2004.................................................. 26 25 23 21 19
09/15/2004.................................................. 25 23 21 19 18
10/15/2004.................................................. 23 21 20 18 17
11/15/2004.................................................. 21 20 18 17 15
12/15/2004.................................................. 20 18 17 15 0
01/15/2005.................................................. 19 17 16 0 0
02/15/2005.................................................. 17 16 0 0 0
03/15/2005.................................................. 16 0 0 0 0
04/15/2005.................................................. 0 0 0 0 0
Weighted Average Life (Years) to Call:...................... 1.60 1.54 1.48 1.42 1.36
</Table>
39
WEIGHTED AVERAGE LIFE
If the issuer does not exercise its option to cause a redemption of the
notes when the aggregate discounted contract balance of the contracts is less
than 15% of the aggregate discounted contract balance of the contracts as of
March 1, 2002, the average life of each class of notes would be as follows:
<Table>
<Caption>
WEIGHTED WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE LIFE AVERAGE LIFE AVERAGE LIFE AVERAGE LIFE AVERAGE LIFE
ASSUMING 0% ASSUMING 3% ASSUMING 6% ASSUMING 9% ASSUMING 12%
ANNUAL CONSTANT ANNUAL CONSTANT ANNUAL CONSTANT ANNUAL CONSTANT ANNUAL CONSTANT
CLASS PREPAYMENT RATE PREPAYMENT RATE PREPAYMENT RATE PREPAYMENT RATE PREPAYMENT RATE
- ----- --------------- --------------- --------------- --------------- ---------------
A-1.................. 0.46 Yrs... 0.43 Yrs 0.40 Yrs 0.38 Yrs 0.36 Yrs
A-2.................. 1.00 Yrs... 0.95 Yrs 0.89 Yrs 0.84 Yrs 0.80 Yrs
A-3.................. 2.00 Yrs... 1.92 Yrs 1.84 Yrs 1.77 Yrs 1.69 Yrs
A-4.................. 3.57 Yrs... 3.50 Yrs 3.43 Yrs 3.36 Yrs 3.28 Yrs
B.................... 1.78 Yrs... 1.72 Yrs 1.66 Yrs 1.60 Yrs 1.55 Yrs
C.................... 1.79 Yrs... 1.73 Yrs 1.68 Yrs 1.62 Yrs 1.57 Yrs
D.................... 1.80 Yrs... 1.74 Yrs 1.69 Yrs 1.62 Yrs 1.58 Yrs
</Table>
The weighted average life of a note is determined by:
- multiplying the amount of each cash distribution in reduction of the
outstanding principal amount of such class of notes, by the number of
years from the closing date of the transfer of the contracts to the
issuer to the respective note payment date on which such class of notes
is repaid in full;
- adding the results; and
- dividing the sum by the initial principal amount of such class of notes.
The following table sets forth the scheduled payments and the scheduled
booked residual value of the contracts. For the purposes of this table we have
assumed there are no delinquencies, losses or prepayments on the contracts. In
addition, we have assumed that an amount equal to the booked residual value of a
contract is received from the disposition of the related equipment in the
collection period immediately following the collection period in which the last
scheduled payment on the contract is due. The information set forth below is not
a prediction of the actual payments that will be received. The information
regarding delinquencies and defaults set forth under the caption "Delinquency
and Loss Information" in this prospectus, as well as the information under "Risk
Factors" should be reviewed together with the information set forth below.
<Table>
<Caption>
SCHEDULED AGGREGATE BOOKED
COLLECTION PERIOD CASHFLOW RESIDUAL VALUES
- ----------------- ------------- ----------------
Mar-02...................................................... $8,333,844.70 --
Apr-02...................................................... 8,352,358.93 --
May-02...................................................... 8,332,464.96 --
Jun-02...................................................... 8,308,479.66 11,766.03
Jul-02...................................................... 8,238,724.99 27,852.43
Aug-02...................................................... 8,188,157.07 10,085.61
Sep-02...................................................... 8,131,969.52 19,367.65
Oct-02...................................................... 8,071,428.40 30,740.31
Nov-02...................................................... 8,004,620.92 22,778.48
Dec-02...................................................... 7,967,759.06 24,185.61
Jan-03...................................................... 7,938,833.49 12,092.80
Feb-03...................................................... 7,835,696.85 17,593.81
Mar-03...................................................... 7,827,001.47 36,195.30
Apr-03...................................................... 7,769,550.35 107,878.10
May-03...................................................... 7,595,260.69 212,346.80
Jun-03...................................................... 7,422,671.50 335,662.26
Jul-03...................................................... 7,234,684.29 292,088.26
Aug-03...................................................... 7,066,508.22 279,385.72
</Table>
40
<Table>
<Caption>
SCHEDULED AGGREGATE BOOKED
COLLECTION PERIOD CASHFLOW RESIDUAL VALUES
- ----------------- ------------- ----------------
Sep-03...................................................... $6,866,025.86 355,219.63
Oct-03...................................................... 6,674,733.11 287,167.30
Nov-03...................................................... 6,482,826.95 308,954.80
Dec-03...................................................... 6,341,541.87 209,170.79
Jan-04...................................................... 6,152,127.97 279,866.52
Feb-04...................................................... 5,970,455.96 288,081.85
Mar-04...................................................... 5,810,676.84 350,218.94
Apr-04...................................................... 5,616,006.66 338,166.34
May-04...................................................... 5,387,284.33 333,818.63
Jun-04...................................................... 5,172,405.51 380,133.83
Jul-04...................................................... 4,900,784.89 358,662.43
Aug-04...................................................... 4,699,458.51 382,224.50
Sep-04...................................................... 4,467,913.79 405,522.21
Oct-04...................................................... 4,249,834.70 363,665.76
Nov-04...................................................... 4,036,665.29 331,101.91
Dec-04...................................................... 3,901,192.42 230,223.16
Jan-05...................................................... 3,788,770.59 178,616.58
Feb-05...................................................... 3,711,447.99 97,562.74
Mar-05...................................................... 3,642,766.32 118,989.78
Apr-05...................................................... 3,552,331.19 137,091.29
May-05...................................................... 3,429,916.81 202,412.51
Jun-05...................................................... 3,306,042.00 336,046.61
Jul-05...................................................... 3,083,775.44 368,746.86
Aug-05...................................................... 2,874,542.12 394,279.64
Sep-05...................................................... 2,665,100.13 440,542.99
Oct-05...................................................... 2,497,350.25 315,950.27
Nov-05...................................................... 2,281,712.82 355,473.25
Dec-05...................................................... 2,140,162.01 302,762.37
Jan-06...................................................... 1,951,658.52 396,372.62
Feb-06...................................................... 1,794,049.00 355,832.83
Mar-06...................................................... 1,592,723.77 384,346.35
Apr-06...................................................... 1,406,356.15 385,740.17
May-06...................................................... 1,233,504.59 397,920.11
Jun-06...................................................... 1,054,255.64 327,155.46
Jul-06...................................................... 860,576.52 380,162.96
Aug-06...................................................... 715,992.86 356,868.12
Sep-06...................................................... 585,165.69 381,046.33
Oct-06...................................................... 411,930.02 346,053.38
Nov-06...................................................... 274,614.65 335,157.77
Dec-06...................................................... 177,269.20 302,599.00
Jan-07...................................................... 64,552.83 322,731.14
Feb-07...................................................... 50,460.00 20,954.14
Mar-07...................................................... 41,282.28 10,385.23
Apr-07...................................................... 35,399.49 8,227.64
May-07...................................................... 20,664.24 3.00
Jun-07...................................................... 19,778.24 --
Jul-07...................................................... 14,210.87 1.00
Aug-07...................................................... 10,562.56 1.00
Sep-07...................................................... 9,813.45 --
Oct-07...................................................... 9,255.20 --
Nov-07...................................................... 15,385.13 5.00
Dec-07...................................................... 654.46 --
Jan-08...................................................... -- --
</Table>
41
GREATAMERICA LEASING CORPORATION
HISTORY OF GREATAMERICA LEASING CORPORATION
GreatAmerica Leasing Corporation, referred to herein as the originator, was
originally incorporated and headquartered in Michigan on July 12, 1990, as
Corporate Leasing International, Inc. and in the same year started leasing a
wide range of small-ticket equipment, ranging from office equipment to garage
equipment to dental equipment.
On November 30, 1992, Tony Golobic acquired a 20% ownership interest in the
originator, became its President and Chief Executive Officer and moved the
headquarters of the originator to Cedar Rapids, Iowa, where it is presently
located. Subsequently, the originator refocused its operation to emphasize
leasing of small-ticket office equipment originated through a nation-wide
network of office equipment and telephone dealers. At the same time, the
originator commenced operating under the trade name of GreatAmerica Leasing
Corporation. On May 31, 1994, the originator reincorporated in the State of
Iowa, at which time it legally changed its name to GreatAmerica Leasing
Corporation.
As of December 31, 2001 the originator had 25,000,000 authorized shares of
common stock of which 3,440,000 shares have been issued. 3,106,700 shares are
owned by the Golobic Family Limited Partnership and 333,300 shares are owned by
the Olson Family Limited Partnership. As of December 31, 2001 the originator had
2,019,830 authorized shares of Series A preferred stock of which 2,019,826
shares have been issued. In addition, the originator had 330,000 authorized
shares of Series B preferred stock of which 178,750 shares have been issued. As
of December 31, 2001, GreatAmerica Leasing Corporation has approximately 200
employees. Its executive office is located at 625 First Street, SE, Suite 800,
Cedar Rapids, Iowa 52401 (Telephone: (319) 365-8000).
MANAGEMENT
The principal officers of the originator, who are referred to herein as
"management", are listed below:
Tony Golobic, Chairman President/CEO. Before becoming President and Chief
Executive Officer of the originator in November, 1992, Mr. Golobic was General
Manager of GE Capital's Office Technology Financial Services Office Equipment
Group and President and Chief Executive Officer of LeaseAmerica Corporation
where he spent over five years.
Prior to his employment at GE Capital/LeaseAmerica, Mr. Golobic served for
five and one half years as Senior Vice President of Mellon Financial Services
Corporation, an affiliate of Mellon Bank. Mr. Golobic was responsible for the
start-up and operation of this middle market equipment finance operation.
Mr. Golobic has over 29 years of equipment finance experience including
credit, documentation, collections, accounting, sales and lease structuring. His
academic credentials include an M.B.A. degree from University of Chicago
Graduate School of Business and a B.S.B.A. degree from Roosevelt University. He
is a Certified Public Accountant and previously served as a Chairman of
Equipment Leasing Association of America's Small Ticket Leasing Committee. He
was also a member of the Board of Directors and Treasurer of the Foundation for
Leasing Education, was a member of the Board of Directors of the Equipment
Leasing Association of America and is currently a member of the Board of
Trustees of Coe College.
Douglas Olson, Executive Vice President. Mr. Olson has over 27 years of
equipment leasing experience. Prior to joining the originator in 1993, Mr. Olson
was the National Sales Manager of GE Capital's Office Technology Financial
Services Office Equipment Group. Mr. Olson's other GE Capital assignments
included Operations Manager for GE Capital's Technology Equipment Finance Group
and Vice President -- Operations of GE Capital's Dealer Distribution Finance.
Prior to his employment at GE Capital, Mr. Olson spent 13 years with Chase
Manhattan Leasing, ITT Financial and Security Pacific National Bank. His
positions included Vice President -- Operations, Western U.S. Credit Director,
Western U.S. Sales Manager and Commercial Loan Officer. Each of these positions
has given him a broad range of experience in credit, documentation, collections
and sales. His academic credentials include an M.B.A. degree from Pepperdine
University and B.S.B.A. degree from California State
42
University at Long Beach. Mr. Olson is a member of the Equipment Leasing
Association of America's Small Ticket Leasing Committee.
Lonnie Powers, Senior Vice President of Direct Programs. Mr. Powers has
over 27 years of finance and equipment leasing experience. Prior to joining the
originator in 1996, Mr. Powers was the President of Western Finance & Lease (a
subsidiary of Western State Bank). As President, he was responsible for
organizing, staffing and operations of this small-ticket equipment leasing
company and the implementation of its state-of-the-art computer system. Prior to
his employment at Western Finance & Lease, Mr. Powers was Vice President of
Operations of GE Capital's Office Technology Financial Services Office Equipment
Group (formerly Chase Third Century) for 8 years.
Previously, Mr. Powers was Collection Manager for the Western Region of
Chase Manhattan's Leasing division. Additionally, Mr. Powers was the Credit
Manager for CIT Corporation in Los Angeles.
Marcene Tolley, Controller. Ms. Tolley is the Controller and Treasurer of
the originator. Prior to joining the originator in 1993, Ms. Tolley worked for
five years for GE Capital's Office Technology Financial Services Office
Equipment Group and its predecessor, LeaseAmerica Corporation in various
accounting management capacities, including preparation of financial statements,
budgeting, long-range forecasting and financial analysis responsibilities.
Prior to her employment with GE Capital/LeaseAmerica, Ms. Tolley served for
four years in various accounting functions with Aegon, U.S.A. (LeaseAmerica's
parent company prior to its sale to GE Capital). Her academic credentials
include a B.A. in Accounting from Mount Mercy College.
BUSINESS STRATEGY
The originator believes there is sufficient room within the small-ticket
leasing industry for well-managed, competitive lessors with a business strategy
aimed at a growing market without a single dominant leader. The originator's
business strategy is to deliver to this market a superior small-ticket leasing
product at a premium, yet competitive, price, while maintaining its low cost,
efficient delivery systems.
SALES AND MARKETING STRATEGY
Currently, most larger small-ticket leasing companies operate through a
centralized operating center and a network of field sales offices supported by a
centralized sales support staff. The advantages of a field-based sales force are
increased knowledge of vendors and improved ability for the field sales offices
to support the vendors' sales efforts. The disadvantage is a substantially
higher lease production cost.
The originator believes that it is the only one of the significant
competitors that operates almost exclusively out of its headquarters location
without numerous field sales offices. In addition to being very cost effective,
this approach has been very successful for the originator in terms of volume
production and quality control.
The originator believes the future of small-ticket leasing will favor those
lessors that employ a low cost delivery system (i.e., lessors who can generate
and prudently process a large volume of transactions at the lowest possible
cost). Thus, the originator's centralized sales approach is being further
developed and improved upon to achieve even further efficiencies. The key
element of the centralized sales strategy is tele-sales, through which initial
vendor contact is established by telephone. Daily business activity is conducted
by telephone and through the mail. Vendors are targeted from a list of
manufacturer approved dealers and through recommendations from active vendors.
When a successful contact is made, vendors are investigated for their reputation
and banking, supplier and manufacturer relationships. The tele-sales of the
vendor base, combined with annual vendor visitations, account for the majority
of the originator's leasing volume.
Marketing materials emphasize the following: reasonable lease rates with
premier service, the originator's reputation for integrity, innovative lease
programs and customer care, quick credit approval aided by credit scoring
systems, instant payment of vendor invoices (provided all documentation has been
received properly executed and the equipment has been delivered to and accepted
by the obligor), low-cost, pre-calculated
43
upgrade options available to the originating vendor, easy, simplified "common
English" documentation, where all information is set forth on a single page,
unique "private label" programs to select vendors and cost-per-copy programs.
The originator has successfully expanded its primary marketing focus to
include telephone systems (CTI Team) which now accounts for 26% of the portfolio
by contract balance remaining.
GEOGRAPHIC MARKETS
The contracts are originated in all 50 states of the United States, the
United States territories of the Virgin Islands and Puerto Rico, the British
Virgin Islands and Canada.
EFFICIENT DELIVERY SYSTEM
The originator considers its ability to operate a low cost, efficient
small-ticket delivery system as being one of its critical elements for success.
There are two cost components of the delivery system: (1) the costs of selling;
and (2) the costs of credit investigation and documentation. The originator
believes its purely tele-sales approach to volume generation is the most cost
effective means of selling to a small-ticket office equipment vendor.
The management of the originator believes that it has extensive experience
in conducting an efficient and prudent process of credit investigation and
documentation. In addition to the assembly line-like approach to the credit and
documentation process, the originator employs system productivity features such
as automated fax, on-line on-screen credit reports, instantaneous access to
applicant's previous information and pre-approved lines of credit. The
originator believes that continuous vendor education of the originator's credit
and documentation parameters and monthly, disciplined monitoring of vendor
submittal, approval, funding, delinquency and loss ratios, ensures that it
efficiently conducts its business.
CREDIT UNDERWRITING POLICIES AND PROCEDURES
Overview
All applications for credit are evaluated by the originator according to
its established underwriting procedures. Potential obligors submit their credit
applications by fax, phone or the originator's web-site through the originator's
approved vendor base. In some cases, existing obligors may directly apply for
additional lease funding through various vendors of their choosing. Such vendors
are subsequently approved, generally following the originator's standard vendor
approval process.
The originator's credit analysts use a variety of sources to obtain credit
information regarding the applicant, including Dun & Bradstreet, Experian
Information Solutions, Inc., Moody's Investors Service, Inc., Equifax Inc.,
Trans Union LLC, Securities and Exchange Commission's Electronic Data Gathering,
Analysis and Retrieval System and bank and trade references. For an obligor
already doing business with the originator, the obligor's account history also
plays an important role in extending additional credit. Credit analysts enter
the application, obtain the necessary credit information, review available
financial data, utilize one of the commercial credit scoring systems as well as
an internally developed scoring matrix. Decisions are documented in the
originator's system and are identified by a deal specific application number.
The originator uses standard industry accepted lease documentation with
exceptions approved by an officer or senior level credit or documentation
analyst as delegated by policy. These documents include the lease agreement, a
personal or corporate guaranty (if required as part of the credit approval and
not part of the form of the lease agreement), the vendor invoice, a copy of the
security deposit check, municipal documentation (as required) and a Uniform
Commercial Code (UCC-1) filing for exposures equal to or greater than $25,000.
Exceptions to credit guidelines generally will only be considered when a
strong vendor relationship has been established, or additional information has
been obtained that warrants the exception. In such circumstances, at least two
credit authorities or, depending on the size of the credit exposure at issue,
the president, the executive vice president, the vice president of operations or
the chief credit officer must approve the change.
44
Credit Analysts and Credit Authority
Credit analysts are generally hired based upon their background and level
of experience in a lending environment. The originator believes that its
analysts have the ability and experience to identify poor risks and have the
authority, within specified limits, to reject or accept transactions based upon
the originator's policies and procedures.
A credit analyst's authority to approve certain levels of credit is based
on the individual's past experience, current knowledge and proven sound
judgment. The level of credit authority is graduated to ensure that the
individuals with the highest level of experience are reviewing transactions with
the largest exposure. The originator's front end software is set to control
approvals within those limits and will not allow approvals outside the assigned
authorities. Assigned credit authorities are reviewed periodically to determine
if sound judgment and proper decisions have been rendered by such person and
adjusted appropriately by the president, executive vice president or chief
credit officer.
Transaction Evaluation
a. Transactions Less Than $15,000
For transactions of $15,000 or less, a Dun & Bradstreet commercial score
report or an Experian business score report are utilized in addition to bank and
trade references as necessary. Personal credit bureau reports are obtained for
smaller, closely held businesses and for corporations wherein a personal
guaranty is required. Slow pay histories, bankruptcy, liens, judgments or weak
financial condition disclosed by one of the commercial credit scoring systems
will normally result in a rejection barring plausible mitigating circumstances
or additional credit support. Decisions are generally able to be made within one
hour of receipt of a complete application.
b. Transactions Greater Than $15,000
Transactions greater than $15,000 require a more complete credit report
than the scoring reports mentioned previously. In addition, depending on the
transaction size and financial information available in the credit reports,
financial statements and/or tax returns prepared by internal or independent
accountants may be required. Financial statements and/or tax returns are
generally required for transactions over $25,000, but may be waived for
applicants with strong operating characteristics or good tenure and a
demonstrated ability to repay the amount requested. Particularly for small
businesses, tax returns may be used in lieu of financial statements.
Credit analysts with authority for the larger ticket transactions are well
versed in financial statements from a creditor's perspective. Transactions in
excess of $100,000 require more in depth write ups and financial analysis,
including, as necessary, discussions with lessee finance personnel.
Unique customer credit account numbers are assigned to each obligor to
track the total exposure to that obligor under various lease contract numbers.
Total exposure, not individual transaction size, governs the level of analyst
authority required.
c. New Businesses
In general, the originator does not view favorably applications from
businesses with less than 24 months tenure, although some exceptions exist. For
example, a new business owned by a major corporation will generally be approved
for amounts less than $15,000 when the parent has a Dun & Bradstreet rating of
3A2 and above. Any larger amounts require individual approval from the
president, executive vice president, chief credit officer vice president of
operations or credit functional lender.
d. Existing Lessee Transactions
A credit application for an existing obligor is evaluated with careful
consideration of the obligor's existing payment history. If a satisfactory
payment history with the originator and/or a previously approved credit line
45
exists, then the new application may be approved based on the line or the
previous credit score sheet, without completing a new credit score sheet. When
an existing obligor requests that attachments to the original item of equipment
be included as part of the lease, the originator will finance the addition of
equipment for those obligors who have demonstrated a satisfactory payment
history and have the financial capacity to meet the incremental cost involved.
In addition, if the following conditions are met, the originator may not
require prior approval of the vendor: (i) payment history must reflect that at
least twelve payments have been made and the account has never been 31 days past
due (while an exception for delinquency may be granted at the time of a first
payment, all subsequent payments must remain current); and (ii) the additional
amount to be leased must be less than or equal to the original exposure.
e. Automatic Credit Approval for Applicants with Very High Credit Ratings
The originator may automatically approve obligors with certain
exceptionally strong credit ratings. For example if the financial statement on
the Dun & Bradstreet report is dated within the last 18 months, a credit line
may be issued for the following Dun & Bradstreet credit ratings: (i) 5A1 -- 5A2
($100,000); (ii) 4A1 -- 4A2 ($50,000); (iii) 3A1 -- 3A2 ($40,000); (iv)
2A1 -- 2A2 ($30,000); and (v) 1A1 -- 1A2 ($20,000). Credit lines may also be
issued based on the current month's Moody's Investors Services bond rating as
follows: (i) Aaa ($250,000); (ii) Aa1-Aa3 ($200,000); (iii) A1-A3 ($150,000);
(iv) Baa1-Baa3 ($100,000); and (v) Aaa (Insured) ($50,000).
Vendor Approval
The originator independently approves all vendors with whom it does
business. As part of this approval process, the originator attempts to gain a
thorough understanding of an applicant vendor's business and reputation. The
originator has established classifications for vendor applicants, to include
copier vendors, non-copier vendors, private label vendors and cost-per-copy
vendors.
a. Copier and Non-Copier Vendors
Copier and non-copier vendors are required to submit a complete application
on a vendor approval form. Such vendors should demonstrate a business tenure for
at least three years and have at least five employees for copier vendors and ten
employees for non-copier vendors. Copier vendors should have a relationship
established with their equipment supplier for at least two years with a
satisfactory recommendation or demonstrate a medium four-figure bank average
maintained in a satisfactory manner.
b. Private Label Vendors
The originator has established a specific policy to approve certain vendors
as "private label" lessors. On the private label lease document, the originator
does not appear as the lessor, but the lease is instead either sold or assigned.
The originator generally incorporates the following basic requirements of the
vendors for private label approval: (i) tenure should be equal to or greater
than five years; (ii) the vendor should generate at least $1.0 million in sales
per year; (iii) leasing volume should be at least $25,000 per month or
$300,000/year; (iv) the most recent annual and interim financial statements
should be supplied; and (v) all other vendor approval requirements should be met
and information submitted on the vendor approval form. Approximately 33% of the
contracts (by outstanding scheduled contract balances) are through private label
vendors. Most of the private label vendors use the originator's form of private
label lease. If the vendor does not use the originator's form, the originator
uses a checklist to ensure that all key lease terms are included.
c. Cost-Per-Copy Vendors
Most "cost-per-copy" lease agreements provide for a minimum lease payment,
often expressed in a minimum number of copies committed to by lessee, in
addition to additional cost-per-copy overages. The following are the basic
requirements of the vendors for cost-per-copy approval: (i) tenure should be
equal to or greater than five years; (ii) the vendor should generate at least
$1.5 million in sales per year; (iii) leasing
46
volume should be at least $15,000 per month; (iv) the most recent annual and
interim financial statements should be supplied; (v) all other vendor approval
requirements should be met and information submitted on a vendor approval form;
and (vi) only larger copiers may be included in the cost-per-copy lease
agreement.
d. Bulk Purchases
GreatAmerica Leasing Corporation also has purchased some contracts on a
bulk or portfolio basis. These contracts may be originated by a variety of
originators under several different underwriting guidelines. When reviewing
potential bulk or portfolio acquisitions, the existing originator's contracts
are reviewed and approved by GreatAmerica Leasing Corporation credit department,
using pre-determined guidelines. For each potential bulk or portfolio purchase,
GreatAmerica Leasing Corporation is able to accept or reject individual
contracts.
COLLECTION PROCEDURES
Collection procedures have been instituted by the originator and are
uniformly utilized. The originator's collections manager reviews aging and
collection schedules to identify material accounts that have become 31 days past
due or will become 31 days past due if a payment is not received by the end of
the month. A late charge is generally assessed to an obligor on the fifth day
after a payment is due. Telephone contact is normally initiated when an account
is 10-days past due, but may be initiated more quickly. The collections manager
conducts a more formalized review once per week in order to better target the
collection effort. 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.
When an account becomes 30-days past due, a past-due collection letter is
generally sent out to the obligor and to anyone providing personal guarantees on
the contracts. An acceleration letter is sent to the obligor and any guarantors,
as circumstances warrant. Telephone contact will be continued throughout the
delinquency period. Prior to the end of each month, the originator's collections
manager reviews all accounts that are more than 31 days past due and recommends
which accounts should be written off. Prior to being written off (which
generally occurs prior to the lease being 120-days delinquent), each contract is
evaluated on the merits of the individual situation, with the current financial
strength of the obligor being considered. The collections manager will determine
whether to pursue each written-off account further through litigation, a small
claims proceeding, in-house collection efforts or by referral to collection
agencies.
RESIDUAL VALUES
GreatAmerica Leasing Corporation has realized residual values that, on
average, exceeded the booked residual values for the contracts. For contracts in
which there is a pre-determined buy-out price, the buy-out price is the residual
value recorded on GreatAmerica Leasing Corporation's books. In the event that
the equipment is returned, GreatAmerica Leasing Corporation utilizes the
services of its vendors and also participates in an active secondary market for
the sale of this returned, used equipment.
LEGAL PROCEEDINGS
GreatAmerica Leasing Corporation is a party to various legal proceedings
through which it is attempting to enforce defaulted or delinquent contracts. In
some of these proceedings, the obligor and other obligors have asserted various
counterclaims. GreatAmerica Leasing Corporation does not believe that any of
these counterclaims, nor any other pending litigation against the originator,
will have a material adverse effect on the operating results of the originator.
There is no litigation pending with respect to any of the contracts being
transferred to the issuer on the closing date.
47
DESCRIPTION OF THE NOTES AND INDENTURE
The statements under this caption describe all of the material terms of the
notes and the indenture, to be dated as of March 1, 2002, between the issuer and
the indenture trustee. However, these statements are summaries. For a more
detailed description of the terms of the notes, you should read the transfer and
servicing agreement and the indenture, the forms of which have been filed as
exhibits to the registration statement of which this prospectus is a part.
Unless and until definitive notes are issued under the limited
circumstances described therein, all references to actions taken by noteholders
shall, in the case of the book-entry notes, refer to actions taken by DTC,
Euroclear or Clearstream Luxembourg, as applicable, upon instructions from their
respective participants, and all references herein to distributions, notices,
reports and statements to noteholders shall, in the case of the book-entry
notes, refer to distributions, notices, reports and statements to DTC or Cede &
Co., Euroclear or Clearstream Luxembourg, as applicable, as the registered
holder of the book-entry notes, as the case may be, for distribution to
beneficial owners in accordance with their respective procedures.
GENERAL
The offered notes will consist of five classes, the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B Notes.
The notes will be issued under the indenture. Only the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes and the Class B Notes are being
offered by this prospectus. Information regarding the Class C Notes and Class D
Notes is included in this document only to help you better understand the terms
of the Class A Notes and the Class B Notes.
The notes will be available for purchase in minimum denominations of $1,000
and in integral multiples of $1,000 in book-entry form; provided, however, that
one note of each class will be issued in an incremental denomination of less
than $1,000. The Class A-l Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class B Notes, Class C Notes and Class D Notes will initially be
represented by one or more certificates registered in the name of the nominee of
The Depository Trust Company, except as set forth below. Payments on the notes
will be made as described below to the noteholders in whose names the notes were
registered at the close of business on the day immediately preceding the day on
which such payments will be made. However, the final payment on the notes
offered hereby will be made only upon presentation and surrender of the notes.
All payments with respect to the principal of and interest on the notes will be
made in immediately available funds. See "-- Book-Entry Registration".
The indenture trustee will be granted a first priority lien on the issuer's
assets to secure the notes; provided, that distributions on the notes will be
allocated as provided in "-- Allocations". The notes are nonrecourse obligations
of the issuer and do not represent interests in or obligations of the
originator, the servicer, the indenture trustee or any affiliate of such
persons.
INTEREST AND PRINCIPAL
Interest on the notes will be payable on the 15th day of each calendar
month, or if that day is not a business day, the next business day, beginning on
April 15, 2002, until the notes have been paid in full or have matured. Interest
on the notes will be paid at the respective rates specified on the cover of this
prospectus. Interest on each class of notes will accrue at the interest rate
specified for the class, for the period from and including the most recent date
on which interest has been paid. However, in the case of the initial interest
payment date, interest will accrue from the closing date for the initial
transfer of the contracts to the issuer to but excluding the following payment
date. The interest will accrue on the outstanding principal amount of the notes
as of the first day of the interest accrual period.
The stated maturity dates of the notes are specified on the cover of this
prospectus. However, if all payments on the contracts are made as scheduled,
final payment with respect to the notes would occur prior to the stated maturity
date. Prior to the respective stated maturity dates, amounts to be applied in
reduction of the outstanding principal amount of any note, including the payment
of the Class A Principal Payment Amount, Class B Principal Payment Amount, Class
C Principal Payment Amount or Class D Principal
48
Payment Amount payable on any payment date, will not be due and payable,
although the failure of the issuer or servicer to remit any amounts available
for payment on the notes will, after the applicable grace period, constitute an
event of default under the indenture. See "-- Events of Default".
We will pay interest and principal on the notes using amounts representing
primarily collections of payments due under the contracts and amounts received
upon prepayment or purchase of the contracts or liquidation of the contracts and
disposition of the related equipment upon defaults thereunder and residual
receipts, but only after we use those amounts to repay servicer advances and
servicing fees (which includes amounts owed to the indenture trustee). See
"-- Amounts Available for Payments on the Notes" and "The Transfer and Servicing
Agreement -- Servicing Standard and Servicer Advances".
AMOUNTS AVAILABLE FOR PAYMENTS ON THE NOTES
As of any payment date, which shall be the 15th day of each calendar month,
or, if such day is not a business day, the next business day, the amounts
available for payment of interest and principal consist of:
- except for Excluded Amounts, all amounts on deposit in the collection
account as of the third business day immediately preceding the payment
date on account of scheduled payments due on or before, and prepayments
in full received on or before, the last day of the immediately preceding
collection period;
- recoveries on account of previously defaulted contracts received during
the preceding collection period, including proceeds of repossessed
equipment or other security or other property, insurance proceeds,
amounts representing late fees unrelated to servicer advances and
penalties and amounts, if any, subsequently received from the related
vendor, net of reimbursable collection and liquidation expenses and
servicer advances;
- residual receipts received during the preceding collection period;
- funds on deposit in the reserve fund in the amount specified in
"-- Reserve Fund";
- funds on deposit in the residual account as specified in "-- Residual
Account";
- funds on deposit in the payahead account received in previous collection
periods and due in the related collection period, as specified in
"-- Collection Account, Payahead Account and Collection Period"; and
- proceeds of any of the above items.
Each collection period for purposes of determining the amounts available
for distribution on the notes coincides with the previous calendar month.
Prepayments on the contracts (other than payaheads) that are treated as
available amounts are:
- optional prepayments that are full prepayments and that the servicer has
received, and expressly permitted the related obligor to make, in advance
of its scheduled termination date;
- payments upon repurchases by the originator through the issuer as a
result of the breach of representations and warranties or covenants in
the transfer and servicing agreement;
- liquidation proceeds from the sale, lease or re-lease of the equipment,
proceeds of related insurance policies and net recoveries with respect to
any defaulted contracts; and
- payments upon an optional redemption of the notes.
"Excluded Amounts" means:
- collections on deposit in the collection account or otherwise received by
the servicer on or with respect to the contracts or related equipment,
which collections are attributable to any late charges or to any taxes
and fees or other charges imposed by any governmental authority;
- collections representing reimbursements of insurance premiums or payments
for services that were not financed by the originator;
49
- collections representing indemnity payments or maintenance payments;
- other non-contract charges (including documentation fees) reimbursable to
the servicer in accordance with the servicer's customary policies and
procedures;
- collections with respect to repurchased or expired contracts; and
- amounts due to the originator prior to the applicable cutoff date.
ALLOCATIONS
Prior to an Event of Default.
On each payment date prior to the occurrence of an event of default under
the indenture, the servicer shall instruct the indenture trustee to withdraw,
and on the payment date the indenture trustee shall withdraw, from the
collection account the amounts available for payments on the notes. See
"-- Amounts Available for Payment on the Notes" and "-- Events of Default". The
indenture trustee will make payments on the 15th day of each calendar month, or
if such day is not a business day, the next business day, in the following order
of priority:
FIRST, to the servicer, reimbursement for the amount of any scheduled
payment on a contract that was not received when due and that the servicer
advanced for deposit in the collection account and that was subsequently
received with respect to that contract, and, if the servicer determines
that an advance will not be recovered from the contract to which its
advance relates, from collections related to other contracts included in
the pledged assets;
SECOND, if a successor servicer were being appointed, to the indenture
trustee, the costs and expenses associated with the appointment of such
successor servicer and the transition relating thereto (which amount shall
not, taken in the aggregate with all other amounts withdrawn for such
purpose, exceed in the aggregate during the term of the transaction the
lesser of (i) $200,000 and (ii) the product of (a) $10 and (b) the number
of contracts on such date);
THIRD, to the servicer, its monthly servicing fee for the preceding
monthly period;
FOURTH, to the indenture trustee (A) any amounts for the fees (to the
extent such fees have not been paid by the servicer), expenses and
indemnity payments, if any, due and payable to the indenture trustee and
(B) until such time as a successor servicer has been appointed pursuant to
the transfer and servicing agreement, an amount equal to the product of (1)
one-twelfth, (2) 0.025% and (3) the aggregate discounted contract balance
as of the first day of the related collection period;
FIFTH, pay to the noteholders, reimbursement for any indemnity
payments noteholders may have elected to make to the indenture trustee;
SIXTH, to the holders of the notes, the amounts specified in the
following table and in the order set forth in the following table:
<Table>
<Caption>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------- -----------------
A-1, A-2, A-3 and A-4 Pro rata, interest accrued on the Class A-l Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes at their
respective interest rates for the period from and including
the most recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
</Table>
50
<Table>
<Caption>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------- -----------------
B Interest accrued on the Class B Notes at the Class B Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
C Interest accrued on the Class C Notes at the Class C Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
D Interest accrued on the Class D Notes at the Class D Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
A-1 Class A Principal Payment Amount, until the outstanding
principal of the Class A-l Notes is reduced to $0.
A-2 - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes is reduced to $0.
- Class A Principal Payment Amount less the amount needed to
reduce the outstanding principal of the Class A-1 Notes to
$0, on subsequent payment dates until the outstanding
principal of the Class A-2 Notes is reduced to $0.
A-3 - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes and Class A-2 Notes is
reduced to $0.
- Class A Principal Payment Amount less the amount needed to
reduce the outstanding principal of the Class A-1 Notes and
Class A-2 Notes to $0, on subsequent payment dates until
the outstanding principal of the Class A-3 Notes is
reduced to $0.
A-4 - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes, Class A-2 Notes and Class
A-3 Notes is reduced to $0.
- Class A Principal Payment Amount less the amount needed to
reduce the outstanding principal amount of the Class A-1
Notes, Class A-2 Notes and Class A-3 Notes to $0, on
subsequent payment dates until the outstanding principal
of the Class A-4 Notes is reduced to $0.
B - Class B Principal Payment Amount until the outstanding
principal of the Class B Notes is reduced to $0.
C - Class C Principal Payment Amount until the outstanding
principal of the Class C Notes is reduced to $0.
D - Class D Principal Payment Amount until the outstanding
principal of the Class D Notes is reduced to $0.
A-1 - Additional Principal, if any, on subsequent payment dates
until the outstanding principal of the Class A-1 Notes is
reduced to $0.
A-2 - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes is reduced to $0.
</Table>
51
<Table>
<Caption>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------- -----------------
- The excess, if any, of Additional Principal over the
amount needed to reduce the outstanding principal of the
Class A-1 Notes to $0, on subsequent payment dates until
the outstanding principal on the Class A-2 Notes is
reduced to $0.
A-3 - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes and Class A-2 Notes is
reduced to $0.
- The excess, if any, of Additional Principal over the
amount needed to reduce the outstanding principal of the
Class A-1 Notes and Class A-2 Notes to $0, on subsequent
payment dates until the outstanding principal of the Class
A-3 Notes is reduced to $0.
A-4 - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes, Class A-2 Notes and Class
A-3 Notes is reduced to $0.
- The excess, if any, of Additional Principal over the
amount needed to reduce the outstanding principal of the
Class A-1 Notes, Class A-2 Notes and Class A-3 Notes to
$0, on subsequent payment dates until the outstanding
principal of the Class A-4 Notes is reduced to $0.
B - $0, prior to the payment date on which the outstanding
principal of the Class A Notes is reduced to $0.
- The excess, if any, of Additional Principal over the
amount needed to reduce the outstanding principal of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes to $0, on subsequent payment dates until
the outstanding principal of the Class B Notes is reduced
to $0.
C - $0, prior to the payment date on which the outstanding
principal of the Class A Notes and Class B Notes is reduced
to $0.
- The excess, if any, of Additional Principal over the
amount needed to reduce the outstanding principal of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes and Class B Notes to $0, on subsequent payment
dates until the outstanding principal of the Class C Notes
is reduced to $0.
D - $0, prior to the payment date on which the outstanding
principal of the Class A Notes, Class B Notes and Class C
Notes is reduced to $0.
- The excess, if any, of Additional Principal over the
amount needed to reduce the outstanding principal of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes, Class B Notes and Class C Notes to $0, on
subsequent payment dates until the outstanding principal
of the Class D Notes is reduced to $0.
</Table>
SEVENTH, to the holders of the notes, to the extent there are amounts
(including all collections through the determination date and amounts in
the reserve fund, residual account and payahead account) sufficient to pay
in full the remaining outstanding principal of all of the notes;
EIGHTH, to the extent that any amounts remain after allocating the
amounts available for distribution on the notes, the indenture trustee will
deposit into the reserve fund an amount, if any, which, when so deposited,
causes the balance in the reserve fund to equal the greater of 1.00% of the
initial aggregate discounted contract balance and 1.50% of the then
outstanding aggregate discounted contract balance;
NINTH, upon the occurrence and continuance of a residual event, the
lesser of (A) the remaining available amounts and (B) the aggregate amount
of residual receipts actually collected and included in amounts available
for that payment date will be deposited into the residual account;
52
TENTH, to the indenture trustee, all amounts due to it and not paid
pursuant to clause SECOND by reason of the limitation in such clause; and
ELEVENTH, any excess shall be paid to the issuer.
The indenture trustee will distribute available amounts on each note within
each class of notes based on the outstanding principal amount of the note
relative to the aggregate outstanding principal amount of that class of notes.
Following an Event of Default.
On each payment date after the occurrence of an event of default under the
indenture, the servicer shall instruct the indenture trustee to withdraw, and on
the payment date the indenture trustee will follow the instructions to withdraw,
from the collection account the amounts available for payments on the notes. See
"-- Amounts Available for Payment on the Notes" and see "-- Events of Default."
The payments listed below will be made only to the extent there are sufficient
amounts available on such payment date. The indenture trustee will make payments
on the 15th day of each calendar month, or if such day is not a business day,
the next business day, in the following order of priority:
FIRST, pay, first, to the indenture trustee (to the extent not paid by
the servicer) (A) the amount of any unpaid fees, expenses (including legal
fees and expenses) and indemnity payments to which the indenture trustee is
entitled, (B) the costs and expenses associated with the appointment of a
successor servicer and the transition relating thereto (which amount
described in clause (B) shall not, taken in the aggregate with all other
amounts withdrawn for any of the purposes described in (B) of this
paragraph, exceed the lesser of (i) $200,000 and (ii) the product of (a)
$10 and (b) the aggregate number of contracts on such date) and (C) until
such time as a successor servicer has been appointed pursuant to the
transfer and servicing agreement, an amount equal to the product of (1)
one-twelfth, (2) 0.025% and (3) the aggregate discounted contract balance
as of the first day of the related collection period;
SECOND, pay to the noteholders, reimbursement for any indemnity
payments noteholders may have elected to make to the indenture trustee;
THIRD, to the servicer, its monthly servicing fee for the preceding
monthly period together with any amounts in respect of the servicer's fee
that were due in respect of prior monthly periods that remain unpaid;
FOURTH, to the holders of the notes the amounts specified in the
following table and in the order set forth in the following table:
<Table>
<Caption>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------- -----------------
A-1, A-2, A-3 and A-4 Pro rata, interest accrued on the Class A-l Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes at their
respective interest rates for the period from and including
the most recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
B Interest accrued on the Class B Notes at the Class B Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
</Table>
53
<Table>
<Caption>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------- -----------------
C Interest accrued on the Class C Notes at the Class C Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
D Interest accrued on the Class D Notes at the Class D Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date (including
interest due on any overdue installment of interest) and
interest accrued in respect of prior periods for which no
allocation was previously made.
A-1 Outstanding principal of the Class A-1 Notes.
A-2, A-3 and A-4 Outstanding principal of the Class A-2 Notes, Class A-3
Notes and Class A-4 Notes, pro rata, according to the
outstanding principal for each class of notes.
B Outstanding principal of the Class B Notes.
C Outstanding principal of the Class C Notes.
D Outstanding principal of the Class D Notes.
</Table>
FIFTH, pay to the indenture trustee all amounts due it and not paid
pursuant to clause FIRST by reason of the limitation in such clause;
SIXTH, to the servicer, reimbursement for the amount of any scheduled
payment on a contract that was not received when due and that the servicer
advanced for deposit in the collection account; and
SEVENTH, any excess shall be paid to the issuer.
The terms used in describing the calculation of interest and principal
payments and allocations on the notes are defined as follows:
"Additional Principal" means, with respect to a date on which principal is
to be paid,
(1) if the Class B Target Investor Principal Amount, the Class C
Target Investor Principal Amount and Class D Target Investor Principal
Amount exceed the Class B Floor, the Class C Floor and the Class D Floor,
respectively, an amount of $0; or
(2) if any of the conditions in clause (1) are not satisfied, an
amount equal to the excess, if any, of
(A) the Monthly Principal Amount, over
(B) the sum of the Class A Principal Payment Amount, Class B
Principal Payment Amount, Class C Principal Payment Amount and the Class
D Principal Payment Amount for such payment date.
"Class A Percentage" means approximately 83.20%, which is the ratio of:
(1) the sum of the initial principal amount of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to
(2) the initial aggregate discounted contract balance.
"Class A Principal Payment Amount" means, with respect to a date on which
principal is to be paid, the amount necessary to reduce the sum of the
outstanding principal amount of the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes to the Class A Target Investor Principal Amount.
54
"Class A Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class A Percentage and
(2) the aggregate discounted contract balance as of the last day of
the immediately preceding completed collection period.
"Class B Floor" means, with respect to a date on which principal is to be
paid,
(1) 3.66% of the initial aggregate discounted contract balance plus
(2) the Cumulative Loss Amount as of such payment date, minus
(3) the sum of
(A) the outstanding principal amount of the Class C Notes and Class
D Notes as of the immediately preceding payment date after giving effect
to all principal payments made on such prior payment date,
(B) the Overcollateralization Balance as of the immediately
preceding payment date and
(C) the amount on deposit in the reserve fund and the residual
account after giving effect to amounts to be withdrawn on such payment
date.
"Class B Percentage" means approximately 4.20%, which is the ratio of:
(1) the initial principal amount of the Class B Notes to
(2) the initial aggregate discounted contract balance.
"Class B Principal Payment Amount" means, with respect to a date on which
principal is to be paid, the lesser of (1) the excess, if any, of (a) the
Monthly Principal Amount over (b) the Class A Principal Payment Amount and (2)
the excess, if any, of (a) the aggregate outstanding principal amount of the
Class B Notes over (b) the greater of (x) the Class B Target Investor Principal
Amount and (y) the Class B Floor.
"Class B Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class B Percentage and
(2) the aggregate discounted contract balance as of the last day of
the immediately preceding completed collection period.
"Class C Floor" means, with respect to a date on which principal is to be
paid,
(1) 2.82% of the initial aggregate discounted contract balance plus
(2) the Cumulative Loss Amount as of such payment date, minus
(3) the sum of
(A) the outstanding principal amount of the Class D Notes as of the
immediately preceding payment date after giving effect to all principal
payments made on such prior payment date,
(B) the Overcollateralization Balance as of the immediately
preceding payment date and
(C) the amount on deposit in the reserve fund and the residual
account after giving effect to amounts to be withdrawn on such payment
date;
provided, however, that if the Class B Target Investor Principal Amount
is less than or equal to the Class B Floor on such payment date, the
Class C Floor will equal the outstanding principal amount of the Class C
Notes utilized in the calculation of the Class B Floor for such payment
date.
55
"Class C Percentage" means approximately 4.25%, which is the ratio of:
(1) the initial principal amount of the Class C Notes to
(2) the initial aggregate discounted contract balance.
"Class C Principal Payment Amount" means, with respect to a date on which
principal is to be paid, the lesser of (1) the excess, if any, of (a) the
Monthly Principal Amount over (b) the sum of the Class A Principal Payment
Amount and the Class B Principal Payment Amount and (2) the excess, if any, of
(a) the aggregate outstanding principal amount of the Class C Notes over (b) the
greater of (x) the Class C Target Investor Principal Amount and (y) the Class C
Floor.
"Class C Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class C Percentage and
(2) the aggregate discounted contract balance as of the last day of
the immediately preceding completed collection period.
"Class D Floor" means, with respect to a date on which principal is to be
paid,
(1) 1.97% of the initial aggregate discounted contract balance plus
(2) the Cumulative Loss Amount as of such payment date, minus
(3) the sum of
(A) the Overcollateralization Balance as of the immediately
preceding payment date and
(B) the amount on deposit in the reserve fund and the residual
account after giving effect to amounts to be withdrawn on such payment
date;
provided, however, that if the Class C Target Investor Principal Amount
is less than or equal to the Class C Floor on such payment date, the
Class D Floor will equal the outstanding principal amount of the Class D
Notes utilized in the calculation of the Class C Floor for such payment
date.
"Class D Percentage" means approximately 5.35%, which is the ratio of:
(1) the initial principal amount of the Class D Notes to
(2) the initial aggregate discounted contract balance.
"Class D Principal Payment Amount" means, with respect to a date on which
principal is to be paid, the lesser of (1) the excess, if any, of (a) the
Monthly Principal Amount over (b) the sum of the Class A Principal Payment
Amount, the Class B Principal Payment Amount and the Class C Principal Payment
Amount and (2) the excess, if any, of (a) the aggregate outstanding principal
amount of the Class D Notes over (b) the greater of (x) the Class D Target
Investor Principal Amount and (y) the Class D Floor.
"Class D Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class D Percentage and
(2) the aggregate discounted contract balance as of the last day of
the immediately preceding completed collection period.
"Cumulative Loss Amount" means, with respect to a date on which principal
is to be paid, an amount equal to the excess, if any, of
(1) the total of:
(A) the outstanding principal amounts of all of the notes as of the
immediately preceding payment date after giving effect to all principal
payments made on such date, plus
56
(B) the Overcollateralization Balance as of the immediately
preceding payment date, minus
(C) the lesser of
(1) the Monthly Principal Amount; and
(2) the amounts available for distribution on the notes after
paying all amounts owing to the servicer and all interest due on the
notes on such payment date, over
(2) the aggregate discounted contract balance as of the last day of
the immediately preceding completed collection period.
"Monthly Principal Amount" means, with respect to any payment date, an
amount equal to the excess, if any, of:
(1) the total of:
(A) the outstanding principal amounts of all of the notes as of the
immediately preceding payment date after giving effect to all principal
payments made on such date, plus
(B) the Overcollateralization Balance as of the immediately
preceding payment date, over
(2) the aggregate discounted contract balance as of the last day of
the collection period completed immediately prior to such date.
"Overcollateralization Balance" means with respect to a payment date, an
amount equal to the excess, if any, of:
(1) the aggregate discounted contract balance as of the last day of
the collection period completed immediately prior to such date, over
(2) the sum of the outstanding principal amount of all of the notes as
of such date after giving effect to all principal payments made on such
date.
RESERVE FUND
The reserve fund will be an account, or a sub-account of the collection
account, held in the name of the indenture trustee on behalf of you. On the
closing date, the reserve fund balance will be approximately $2,565,467. On any
payment date, after distributing the amounts available to the servicer, the
indenture trustee and the noteholders as described in "-- Allocations", we will
deposit the remaining available amounts into the reserve fund until the amount
in the reserve fund equals the greater of 1.00% of the initial aggregate
discounted contract balance and 1.50% of the then outstanding aggregate
discounted contract balance.
If on any payment date, collections on the contracts and amounts, if any,
in the residual account are less than the amount needed to pay interest or
principal due on the notes, the indenture trustee will withdraw funds, if any,
from the reserve fund to pay the interest and principal as well as certain
amounts owed to the servicer and the indenture trustee.
Amounts in the reserve fund will be invested in investments deemed to be
eligible investments for funds held in the collection account. See
"-- Collection Account, Payahead Account and Collection Period". Earnings on the
eligible investments will be treated as amounts available for distribution to
the noteholders and the issuer.
If on any payment date, there are excess available amounts remaining after
we pay the servicer, the indenture trustee and noteholders and increase the
reserve fund balance to the greater of 1.00% of the initial aggregate discounted
contract balance and 1.50% of the then outstanding aggregate discounted contract
balance as described in "-- Allocations" and no residual event exists, we will
distribute such excess to the issuer. Upon any such distributions to the issuer,
you will have no further rights in, or claims to, such amounts.
The indenture trustee will allocate amounts withdrawn from the reserve fund
as described in "-- Allocations". Upon making these payments in full, the funds
on deposit in the reserve fund in excess of the greater of
57
1.00% of the initial aggregate discounted contract balance and 1.50% of the then
outstanding aggregate discounted contract balance shall be paid to the issuer
unless a residual event or an event of default exists.
RESIDUAL ACCOUNT
Residual receipts include cash flows realized from the sale or re-lease of
equipment following the scheduled expiration dates or voluntary early
termination of a contract or from periodic payments made for the continued use
of equipment after the termination date of a contract, other than equipment
subject to defaulted contracts or contracts for which the servicer delivers a
substitute contract.
If on any payment date, collections on the contracts are less than the
amount needed to pay interest or principal due on the notes, the indenture
trustee will withdraw funds, if any, from the residual account to pay the
interest and principal as well as certain amounts owed to the servicer and the
indenture trustee.
The residual account will be an account, or a sub-account of the collection
account, held in the name of the indenture trustee on behalf of you that will
hold funds when a residual event exists. If a residual event has occurred and is
continuing, then on each payment date, if any amounts available remain after the
servicer provides for the repayment of servicer advances, the payment of the
servicing fee, the payment of the indenture trustee's fees, expenses and
indemnitees including transition expenses, the payment of interest and principal
on the notes, and the deposit of any required amounts into the reserve fund,
then the servicer shall deposit into the residual account the lesser of (i) the
remaining amounts available and (ii) the aggregate amount of residual receipts
originally included in available amounts for such payment date. Actual residual
receipts may be more or less than the residual value of the equipment recorded
on the books of the issuer.
A residual event means the occurrence of one or more of the following: (a)
the occurrence of an event of default, (b) GreatAmerica Leasing Corporation is
no longer the servicer (other than in the circumstances that permit a successor
servicer by merger or acquisition as set forth under "The Transfer and Servicing
Agreement -- Servicer Resignation"); (c) the three-month residual realization
percentage calculated on the related determination date is less than 85.00%
(unless such three-month residual realization percentage has been less than
85.00% on any previous determination date, in which case the percentage for this
clause (c) shall be 100.00%); (d) the three-month delinquency percentage
calculated on the related determination date is greater than 6.00%; or (e) the
cumulative net loss percentage on the related determination date exceeds the
loss trigger percentage set forth below:
<Table>
<Caption>
LOSS TRIGGER
COLLECTION PERIOD PERCENTAGE
- ----------------- ------------
1st through, and including, the 12th collection period:..... 3.40%
13th through, and including, the 24th collection period:.... 5.00%
25th collection period ongoing:............................. 6.40%
</Table>
Notwithstanding the foregoing: (i) the residual event referred to in clause
(c) may be cured on any payment date the three-month residual realization
percentage is greater than or equal to 100% for the related determination date
and the five immediately preceding determination dates, (ii) the residual event
referred to in clause (d) above may be cured on any payment date if the
three-month delinquency percentage as of the end of the preceding collection
period is less than or equal to 6.00% for the related determination date and the
two immediately preceding determination dates and (iii) the residual event
referenced in clause (e) may be cured if the cumulative net loss percentage is
less than or equal to the associated loss trigger percentage for the related
determination date and the two immediately preceding determination dates.
The three-month residual realization percentage means with respect to any
payment date commencing with the third payment date, the percentage equivalent
of a fraction, (a) the numerator of which is the sum of the monthly residual
realization percentage for such payment date and the two immediately preceding
payment dates and (b) the denominator of which is three. The monthly residual
realization percentage means with respect to any payment date, the percentage
equivalent of a fraction, (a) the numerator of which is the cumulative amount of
residual receipts collected on all contracts (other than with respect to
defaulted contracts) as to which the servicer, during the related collection
period, determined that the full amount of
58
residual receipts to be received with respect to the related equipment has been
collected, and (b) the denominator of which is equal to the aggregate booked
residual value with respect to such contracts (other than with respect to
defaulted contracts). Booked residual value means with respect to each contract
and the related equipment, the estimated residual value of the equipment
recorded on the books of the originator (in accordance with the originator's
standard policies) as of March 1, 2002.
The three-month delinquency percentage means with respect to any payment
date commencing with the third payment date, the percentage equivalent of a
fraction, (a) the numerator of which is the sum of the monthly delinquency
percentages for such payment date and the two immediately preceding payment
dates, and (b) the denominator of which is three. The monthly delinquency
percentage means with respect to any payment date, the percentage equivalent of
a fraction, (a) the numerator of which is the aggregate contract balance
remaining of all contracts (other than defaulted contracts) that are 31 days or
more delinquent as of the last day of the immediately preceding collection
period, and (b) the denominator of which is the aggregate contract balance of
all contracts (other than defaulted contracts) remaining as of the last day of
the immediately preceding collection period.
The cumulative net loss percentage means with respect to any payment date,
the percentage equivalent of a fraction, (a) the numerator of which is the
excess of (x) the aggregate amount of the discounted contract balance
(immediately prior to a contract's classification as a defaulted contract) of
all contracts that become defaulted contracts during all prior collection
periods (including such collection period) over (y) the aggregate amount of all
recoveries related to those defaulted contracts, and (b) the denominator of
which is the initial aggregate discounted contract balance.
Amounts in the residual account will be invested in investments deemed to
be eligible investments for funds held in the collection account. See
"-- Collection Account, Payahead Account and Collection Period". Earnings on the
eligible investments will be treated as amounts available for distribution to
the noteholders and the issuer.
The indenture trustee will allocate amounts withdrawn from the residual
account as described in "-- Allocations". If on any payment date, there are
excess available amounts remaining after the indenture trustee pays the
servicer, the indenture trustee and the noteholders and increases the reserve
fund balance to the greater of 1.00% of the initial aggregate discounted
contract balance and 1.50% of the then outstanding aggregate discounted contract
balance as described in "--Allocations" and no residual event exists, the
indenture trustee will distribute such excess as provided under "--Allocations".
Upon any such distributions, you will have no further rights in, or claims to,
such amounts.
COLLECTION ACCOUNT, PAYAHEAD ACCOUNT AND COLLECTION PERIOD
The servicer, for your benefit, shall cause to be established an account
referred to as the "collection account" maintained in the name of the indenture
trustee, with an office or branch of a depository institution or trust company,
which may be the indenture trustee, organized under any state laws or laws of
the United States of America and located in the state designated by the
servicer. This account will be a non-interest bearing segregated corporate trust
account bearing a designation clearly indicating that the funds deposited in the
account are held in trust for the benefit of the noteholders.
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At all times such depository institution or trust company shall have the
following characteristics and the amounts in the collection account will be
invested in the following eligible investments:
ELIGIBLE DEPOSITORY INSTITUTION OR TRUST COMPANY
- - the corporate trust department of the indenture trustee or
- - a depository institution organized under any state laws or the laws of the
United States of America or the District of Columbia or any domestic branch of
a foreign bank,
(1) (A) which has either
(i) a long-term unsecured debt rating acceptable to the rating agencies
rating the notes or
(ii) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the rating agencies,
(B) the parent corporation of which has either
(i) a long-term unsecured debt rating acceptable to the rating agencies
rating the notes or
(ii) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the rating agencies or
(C) is otherwise acceptable to the rating agencies rating the notes and
(2) whose deposits are insured by the Federal Deposit Insurance Corporation
and that have a rating acceptable to the rating agencies.
ELIGIBLE INVESTMENTS
- - obligations fully guaranteed by the United States of America;
- - demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies having commercial paper and short-term
unsecured debt obligations, other than such obligation whose rating is based
on the credit of another person, with the highest rating from each rating
agency rating the notes;
- - commercial paper or other short-term obligations having the highest rating
from each rating agency rating the notes at the time the issuer purchased it;
- - demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC and that have a rating acceptable to the rating agencies;
- - notes or bankers' acceptances issued by any depository institution or trust
company having commercial paper and short-term unsecured debt obligations,
other than such obligation whose rating is based on the credit of another
person, with the highest rating from each rating agency rating the notes;
- - The JPMorgan Prime Money Market Fund that has the highest rating from, or have
otherwise been approved in writing by, each rating agency rating the notes;
- - Money market funds that have the highest rating from, or have otherwise been
approved in writing by, each rating agency rating the notes;
- - eligible repurchase agreements that have a rating acceptable to the rating
agencies; and
- - any other investments approved in writing by the rating agencies.
Any earnings, net of losses and investment expenses, on funds in the
collection account will be held in that account and be treated as amounts
available for distribution to you. The servicer will have the revocable power to
instruct the indenture trustee to make withdrawals and payments from the
collection account for the purpose of carrying out its duties under the transfer
and servicing agreement.
If any institution at which any of the collection account, reserve fund,
residual account or payahead account is established ceases to be an eligible
institution as described above, the servicer shall, within ten business days
after receiving notice of that fact, establish a replacement account at another
institution meeting the above eligibility requirements.
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The servicer, for your benefit, shall cause to be established a sub-account
of the collection account, referred to as the "payahead account," into which all
payaheads will be deposited. "Payaheads" mean early payments by or on behalf of
obligors that do not constitute scheduled payments due in the current collection
period other than prepayments in full, in any case in accordance with the
servicer's customary practices. Until such time as all or a portion of any
payaheads fall due and are released from the payahead account to the collection
account, they will not constitute amounts available and will not be available
for distribution to you. On each payment date the servicer will release
payaheads from the payahead account to the collection account to be included as
amounts available for such day (x) with respect to each contract for which the
payments made by or on behalf of the obligor for the related collection period
are less than the scheduled payment for the related collection period, the
amount of payaheads, if any, made with respect to such contract that, when added
to the amount of such payments, is equal to the amount of such scheduled
payment, (y) with respect to each contract for which prepayments insufficient to
prepay the contract in full have been made on or behalf of the obligor for the
related collection period, the amount of payaheads, if any, made with respect to
such contract that, when added to the amount of such prepayments, is equal to an
amount sufficient to prepay the contract in full, and (z) the amount of all
payaheads, if any, made with respect to any contract repurchased by the
originator.
Each collection period begins on the first day of a calendar month and ends
on and includes the last day of the calendar month.
EVENTS OF DEFAULT
Allocations of amounts of payments to you will be made as described above
under "-- Allocations; Prior to an Event of Default" unless and until an event
of default has occurred, in which case allocations of amounts will be made as
described above under "-- Allocations; Following an Event of Default".
An "event of default" refers to any of the following events:
- failure to pay the full amount of accrued interest on any note on a
payment date;
- failure to pay the then outstanding principal amount of any note, if any,
on the related maturity date of the note;
- (1) failure on the part of the originator or the servicer to make any
payment or deposit required under the transfer and servicing
agreement within three business days after the date the payment or
deposit is required to be made, or
(2) failure on the part of the originator, the servicer or the issuer to
observe or perform any other covenants or agreements in the transfer
and servicing agreement or the indenture, which failure has a
material adverse effect on the noteholders and which continues
unremedied for a period of 60 days after written notice; provided,
there is no 60-day cure period if the originator does not accept
reassignment of ineligible contracts as required by the transfer and
servicing agreement, and further provided that only a five-day cure
period shall apply in the case of a failure by the originator or the
issuer to comply with their respective covenants not to grant a
security interest in or otherwise intentionally create a lien on the
contracts;
- any representation or warranty made by the originator, the servicer or
the issuer in the transfer and servicing agreement or indenture or any
information required to be given by the originator or the issuer to the
indenture trustee to identify the contracts was incorrect in any material
respect when made and continues to be incorrect in any material respect
for a period of 60 days after written notice and as a result of which the
noteholders' interests are materially and adversely affected; provided,
however, that an event of default shall not be deemed to occur under the
transfer and servicing agreement if the originator has repurchased the
related contracts through the issuer during such period under the terms
of the transfer and servicing agreement;
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- the occurrence of any of the following events with respect to the issuer,
the originator or the servicer:
(1) a court files a decree or order for relief against the party in an
involuntary case under the bankruptcy code of the United States or any
other liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of
payments, or similar debt or relief laws affecting the rights of
creditors; provided that, in the case of any such proceeding
instituted against any of these parties, either such proceedings shall
remain undismissed or unstayed for a period of 60 days, or any actions
sought in such proceeding (including an order for relief against, or
the appointment of a receiver, trustee, custodian or other similar
official for, such party or any substantial part of such party's
property) shall occur,
(2) the party commences a voluntary case under any insolvency law,
(3) the party consents to a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official taking possession of any
substantial part of its property,
(4) the party makes a general assignment for the benefit of creditors, or
(5) the party fails to pay its debts as those debts become due;
- the issuer becomes an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In the case of any event described above, an event of default with respect
to the notes will be deemed to have occurred; provided the event of default
(unless it occurs under any of the five bankruptcy or insolvency events with
respect to the issuer described above) may be waived if the Required Holders
provide written notice to the indenture trustee, the issuer and the servicer of
the waiver. In the event the servicer or a responsible officer of the indenture
trustee has actual knowledge of an event of default, it will be required to
notify, among others, the issuer, the originator and the servicer.
"Required Holders" means 66 2/3% of the aggregate principal amount of all
outstanding notes taken as if they were all one single class of notes,
including, but not limited to, the Class C Notes and Class D Notes.
If events relating to the bankruptcy or insolvency of the issuer occur on
the day of such event, the issuer will promptly give notice to the indenture
trustee of the event, and the indenture trustee will give notice thereof
promptly to the holders of the notes and, upon being notified in writing by the
Required Holders, promptly act to sell, dispose of or otherwise liquidate the
contracts in a commercially reasonable manner and on commercially reasonable
terms. To the extent necessary or deemed advisable by the indenture trustee to
accomplish the foregoing, the indenture trustee promptly shall take reasonable
actions to obtain (A) relief from any stay or injunction, temporary or
otherwise, whether imposed by statute or court order, or (B) the permission or
consent of any trustee, receiver, assignee for the benefit of creditors or any
other person or entity with similar power with respect to the issuer or its
property. The proceeds from any transfer, disposition or liquidation of
contracts will be deposited in the collection account and allocated as described
in the transfer and servicing agreement and in "-- Allocations". If the proceeds
of any collections on contracts in the collection account allocated to
noteholders of any class is not sufficient to pay the principal amount of the
notes of the class in full, those noteholders will incur a loss.
REMEDIES AFTER EVENTS OF DEFAULT
If an event of default relating to bankruptcy or insolvency of the issuer
as described under the heading "Events of Default" has occurred, then the unpaid
principal of the notes, together with interest accrued but unpaid and all other
amounts due to you under the indenture, shall immediately become due and
payable.
If an event of default other than the event of default relating to
bankruptcy or insolvency of the issuer as described under the heading "Events of
Default" occurs, the Required Holders may waive the event of default by sending
a written notice of the waiver to the indenture trustee, the servicer and the
issuer. If the Required Holders do not waive the event of default then the
unpaid principal of the notes, together with interest accrued
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but unpaid and all other amounts due to you under the indenture, shall
immediately and without further act become due and payable.
THE INDENTURE TRUSTEE
The indenture trustee with respect to the notes is JPMorgan Chase Bank.
GreatAmerica Leasing Corporation and its affiliates may from time to time enter
into banking and trustee relationships with the indenture trustee and its
affiliates. GreatAmerica Leasing Corporation and its affiliates may hold notes
in their own names; however, any notes so held shall not be entitled to
participate in any decisions made or instructions given to the indenture trustee
by the noteholders as a group.
The indenture trustee's responsibilities will be ministerial in nature,
consisting principally of:
- the distribution of monies as required by the indenture or the transfer
and servicing agreement;
- the authentication and registration of transfer of notes under the
indenture; and
- the delivery of information received from the issuer.
For purposes of meeting the legal requirements of any jurisdictions in
which any part of the pledged assets may at the time be located, the indenture
trustee and the issuer will have the power to appoint a co-trustee or separate
trustee of all or any part of the pledged assets. To the extent permitted by
law, all rights, powers, duties and obligations conferred or imposed upon the
indenture trustee will be conferred or imposed upon and exercised or performed
by the indenture trustee and the separate trustee or co-trustee jointly. In any
jurisdiction in which the indenture trustee will be incompetent or unqualified
to perform as required by the indenture, all rights, powers, duties and
obligations conferred or imposed upon the indenture trustee will be conferred or
imposed upon such separate trustee or co-trustee who shall exercise and perform
such rights, powers, duties and obligations solely at the direction of the
indenture trustee.
The indenture trustee may resign at any time, in which event a successor
indenture trustee which meets the requirements of Section 310(a) of the Trust
Indenture Act of 1939, as amended, will be appointed by the issuer. The issuer
may also remove the indenture trustee if the indenture trustee ceases to be
eligible to continue as the trustee under the indenture. In such circumstances,
a successor indenture trustee which meets the requirements of Section 310(a) of
the Trust Indenture Act will be appointed by the issuer. Any resignation or
removal of the indenture trustee and appointment of a successor indenture
trustee does not become effective until acceptance of the appointment by the
successor indenture trustee.
GOVERNING LAW
The indenture will be governed by the laws of the state of New York.
AMENDMENTS
The issuer and the indenture trustee, without the written consent of the
Required Holders represented thereby, may execute an amendment of or a
supplement to the indenture to, among other things, cure any ambiguity, to
correct or supplement any provision in the indenture which may be inconsistent
with any other provision in the indenture or to make any other provisions with
respect to matters or questions arising under the indenture; provided that such
action shall not adversely affect the interests of the holders of the notes in
any material respect as evidenced by an opinion of counsel. Additionally, the
indenture trustee, with the written consent of the Required Holders represented
thereby, may consent to or execute an amendment of or supplement to, or waiver
or consent under, the indenture. However, in each case the consent of each
noteholder is required to:
(1) reduce the amount or extend the time of payment of any amount
owing or payable under any note,
(2) increase or reduce the interest payable on any note,
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(3) alter or modify the provisions of the transfer and servicing
agreement with respect to the order of priorities in which collections on
the contracts shall be paid to noteholders or with respect to the amount or
timing of payments on the notes,
(4) reduce, modify or amend any indemnities in favor of any noteholder
or in favor of or to be paid by the issuer, or alter the definition of
"Indemnitees" to exclude any noteholder, except as consented to by each
person adversely affected by the change,
(5) make any interest or principal payable in a currency other than
U.S. dollars,
(6) permit the creation of any lien on the contracts senior to or on a
parity with the lien of the indenture or permit the termination or
derogation of the lien of the indenture,
(7) modify, amend or supplement the provisions of the transfer and
servicing agreement relating to amendments, waivers and supplements to the
indenture, the transfer and servicing agreement or any other document, or
(8) modify the percentage of noteholders required to make any
modification of the indenture or to direct the indenture trustee to sell or
liquidate the contracts.
However, only the consent of the affected holder shall be required for any
decrease in an amount of or the rate of interest payable on the note or any
extension for the time of payment of any amount payable under the related note.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's compensation with respect to its servicing activities and
reimbursement for its expenses will be a servicing fee calculated monthly in
conjunction with the collection periods for the notes. The servicer's monthly
fee will be an amount equal to the product of
(1) one-twelfth,
(2) 0.75% and
(3) the aggregate discounted contract balance as of the first day of
the related collection period.
The servicer's fee (which prior to an event of default includes the
indenture trustee's fees) will be funded from payments due under the contracts
and amounts received upon the prepayment in full or purchase of contracts or
liquidation of the contracts and disposition of the related equipment upon
defaults thereunder and from residual receipts. See "-- Amounts Available for
Payments on the Notes". The servicer's monthly fee will be paid on the 15th day
of each calendar month from the collection account or, if such day is not a
business day, the next business day. See "-- Allocations" above.
The servicer will pay from its servicing compensation some of the expenses
incurred in connection with servicing the contracts including, without
limitation:
- expenses related to the enforcement of the contracts except that if a
defaulted obligor under a contract is required to pay the costs of
enforcement and the servicer recovers funds sufficient to pay any of such
costs, the servicer will be reimbursed for such costs out of such funds;
- payment, prior to an event of default, of the fees and expenses of the
indenture trustee; and
- any fees that are not expressly stated in the transfer and servicing
agreement to be payable by the issuer.
However, the servicer will not pay federal, state, local and foreign
income, franchise or other taxes based on income, if any, or any interest or
penalties on such income, imposed upon the issuer.
In the event that GreatAmerica Leasing Corporation is acting as servicer
and fails to pay the fees of the indenture trustee, the indenture trustee will
be entitled to receive the portion of the servicer's monthly servicing fee that
is equal to those unpaid amounts.
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In the event prior to an event of default a successor servicer shall be
appointed or the indenture trustee shall serve as successor servicer, an
additional amount will be payable to the indenture trustee to the extent
necessary to cover additional costs and expenses related to the transition to
the successor servicer, provided that the cumulative aggregate amount of such
payments shall not exceed in the aggregate during the term of the transaction
the lesser of (i) $200,000 and (ii) the product of (a) $10 and (b) the number of
contracts on such date. After an event of default, such amount will be included
with other payments due the indenture trustee and all such payments will be
subject to an overall limitation of in the aggregate during the term of the
transaction the lesser of (i) $200,000 and (ii) the product of (a) $10 and (b)
the number of contracts on such date until the notes are paid in full.
OPTIONAL REDEMPTION
If the aggregate discounted contract balance of the contracts is less than
or equal to 15% of the initial aggregate discounted contract balance of the
contracts as of March 1, 2002, the issuer will have the option to purchase
without penalty all, but not less than all, of the remaining outstanding notes.
The issuer will exercise this option only on a payment date for the notes and
upon payment of the full redemption price to the indenture trustee. The
redemption price will be equal to the sum of the outstanding principal amount of
the notes, together with accrued interest through the date of redemption and the
amount of any servicing advances made and not reimbursed. Following any
redemption, you will have no further rights with respect to the pledged assets.
MANDATORY REDEMPTION
If on any payment date, the aggregate amounts on deposit in the collection
account, the reserve fund, the residual account and the payahead account are
greater than or equal to the sum of (i) the entire outstanding note principal
balance, (ii) the interest accrued thereon, (iii) any accrued and unpaid
servicing fee (including therein amounts owed to the indenture trustee) and (iv)
unreimbursed servicer advances, the amounts on deposit in the reserve fund, the
residual account and the payahead account will be deposited in the collection
account and used to redeem the notes in full. The redemption price will be equal
to the unpaid principal amount of the notes plus accrued and unpaid interest
through the date of redemption.
REPORTS
No later than the third business day prior to each payment date, the
servicer will forward to the indenture trustee, each rating agency rating the
notes and Wachovia Securities a monthly report prepared by the servicer setting
forth information with respect to the issuer and the notes, including:
(1) the aggregate discounted contract balance of the contracts
(A) as of the end of the related collection period and
(B) as of the end of the second collection period preceding such
interest and principal payment date;
(2) the Class A Principal Payment Amount, the Class B Principal
Payment Amount, the Class C Principal Payment Amount, the Class D Principal
Payment Amount and the Additional Principal including the calculations
utilized in the determination of those principal payment amounts;
(3) the aggregate contract balance remaining of pledged contracts that
were 31, 61 and 91 days or more delinquent as of the end of such collection
period;
(4) the aggregate discounted contract balance of pledged contracts
that became defaulted contracts during such collection period and
cumulatively for each preceding collection period;
(5) the monthly servicing fee and amounts payable to the indenture
trustee for the related collection period;
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(6) the amounts available for distribution to the holders of the notes
with respect to the related collection period, including the calculation of
those amounts;
(7) the total amount distributed on the notes;
(8) the amount allocable to principal on each class of the notes;
(9) the amount allocable to interest on each class of the notes;
(10) any servicer advances;
(11) the balance of the reserve fund, residual account and payahead
account on the first day of the related collection period, deposits made
into the reserve fund, residual account and payahead account during such
collection period, withdrawals from the reserve fund, residual account and
payahead account during such collection period, and the balance of the
reserve fund, residual account and payahead account on the last day of the
related collection period; and
(12) the three-month residual realization percentage, the three-month
delinquency percentage and the cumulative net loss percentage.
On each payment date, the indenture trustee (or an agent on its behalf),
will forward or make available to each noteholder of record a copy of the
monthly report.
The servicer will forward to the indenture trustee, each rating agency
rating the notes and Wachovia Securities (a) within 120 days after each fiscal
quarter (other than the fiscal quarter which is also the end of the fiscal
year), commencing with the quarter ending August 31, 2002, the unaudited
quarterly financial statement of the servicer and (b) within 120 days after each
fiscal year of the servicer, commencing with the fiscal year ending May 31,
2002, the audited annual financial statement of the servicer, together with the
related report of the independent accountants to the servicer. On the payment
date following the receipt of each such financial statements and report, the
indenture trustee will forward to each noteholder of record a copy of such
financial statements and report.
On or before February 28 of each calendar year, commencing February 28,
2003, the indenture trustee will furnish or cause to be furnished to each person
who at any time during the preceding calendar year was a noteholder of record, a
statement provided by the servicer containing the information required to be
provided by an issuer of indebtedness under the Internal Revenue Code of 1986,
as amended for such preceding calendar year or the applicable portion of the
year during which you were a noteholder, together with such other customary
information as is necessary to enable you to prepare your tax returns. See
"Material Federal Income Tax Considerations".
As long as the notes remain in book-entry form, periodic reports,
containing information concerning the issuer, the contracts and the notes, will
be prepared by the servicer and sent on behalf of the issuer to Cede & Co., as
nominee of DTC, and the Euroclear System or Clearstream Luxembourg as registered
holders of the notes. These reports will be made available by DTC, Euroclear or
Clearstream Luxembourg and its participants to holders of interests in the notes
as required by the rules, regulations and procedures creating and affecting DTC,
Euroclear and Clearstream Luxembourg, respectively. See "-- Book-Entry
Registration" and "-- Reports". These reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles
or that have been examined and reported upon by, with an opinion expressed by,
an independent or certified public accountant. Upon the issuance of fully
registered, certificated notes, these reports will be sent to each registered
noteholder.
LIST OF NOTEHOLDERS
If the notes are subsequently issued in fully registered, certificated
form, the indenture trustee will afford you access during normal business hours
and upon prior written notice to the current list of noteholders for purpose of
communicating with other noteholders with respect to their rights under the
indenture, the transfer and servicing agreement or the notes. The indenture
trustee will provide this list upon written request of any noteholder or group
of noteholders of record holding notes evidencing not less than 10% of the
aggregate
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unpaid principal amount of the notes. While the notes are held in book-entry
form, holders of beneficial interests in the notes will not have access to a
list of other holders of beneficial interests in the notes, which may impede the
ability of such holders of beneficial interests to communicate with each other.
See "-- Book-Entry Registration" below.
BOOK-ENTRY REGISTRATION
You may hold your notes through DTC in the United States or Clearstream
Banking, society anonyme ("Clearstream Luxembourg") (formerly Cedelbank) or
Euroclear System in Europe if you are a participant of those systems, or
indirectly through organizations that are participants in those systems.
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 New York Uniform Commercial Code and a
"clearing agency" registered under Section 17A of the Exchange Act. DTC was
created to hold securities for its direct participants and to facilitate the
clearance and settlement of securities transactions between its direct
participants through electronic book-entries, thereby eliminating the need for
physical movement of certificates. DTC's direct participants include the
underwriters offering the notes to you, securities brokers and dealers, banks,
trust companies and clearing corporations, and may include other organizations.
Indirect access to the DTC system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly.
To facilitate subsequent transfers, all notes deposited with DTC will be
registered in the name of DTC's nominee, Cede & Co. You will maintain beneficial
ownership of the notes despite the deposit of notes with DTC and their
registration in the name of Cede. DTC has no knowledge of the actual
noteholders; DTC's records reflect only the identity of its direct participants
to whose accounts such notes are credited, which may or may not be the
noteholders. DTC's direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers.
You will not be entitled to receive a physical note representing your
interest in a class of notes. As long as the notes are registered in the name of
Cede & Co., any action to be taken by you or any other noteholders will be taken
by DTC upon instructions from DTC's participants, and all distributions,
notices, reports and statements to noteholders will be delivered to Cede, as the
registered holder of the notes, for distribution to noteholders in compliance
with DTC procedures.
You will receive all payments of principal and interest on the notes
through direct participants or indirect participants. DTC will forward such
payments to its direct participants which will forward them to indirect
participants or noteholders. Under a book-entry format, you may experience some
delay in your receipt of payments, because such payments will be forwarded to
Cede as nominee of DTC. You will not be recognized by the indenture trustee as a
noteholder, as such term is used in the indenture. You will be permitted to
exercise the rights of noteholders only indirectly through DTC and its direct
participants and indirect participants. Because DTC can act only on behalf of
direct participants, who in turn act on behalf of indirect participants, and on
behalf of banks, trust companies and other persons approved by it, your ability
to pledge the notes to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such notes, may be limited due to
the absence of physical notes for such notes.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to noteholders will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payments by DTC participants to noteholders
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such DTC
participant and not of DTC, the issuer, the indenture trustee or the originator,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility of
the indenture trustee, disbursement of such payments to direct participants
shall be the responsibility of DTC and disbursement of such payments to
noteholders shall be the responsibility of direct participants and indirect
participants.
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Purchases of notes under the DTC system must be made by or through direct
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual noteholder is in turn to be recorded on the
direct participants' and indirect participants' records. Noteholders will not
receive written confirmation from DTC of their purchase, but noteholders are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the direct participant or
indirect participant through which the noteholder entered into the transaction.
Transfers of ownership interests in the notes are to be accomplished by entries
made on the books of DTC's participants acting on behalf of noteholders.
Noteholders will not receive physical notes representing their ownership
interest in notes, except in the event that use of the book-entry system for the
notes is discontinued.
DTC will not comment or vote with respect to the notes. DTC has advised us
that it will take any action permitted to be taken by a noteholder under the
indenture only at the direction of one or more direct participants to whose
accounts with DTC the notes are credited. Additionally, DTC has advised us that
to the extent that the indenture requires that any action may be taken only by
noteholders representing a specified percentage of the aggregate outstanding
principal amount of the notes, DTC will take such action only at the direction
of and on behalf of direct participants whose holdings include undivided
interests that satisfy such specified percentage.
DTC may discontinue providing its services as securities depositary with
respect to the notes at any time by giving reasonable notice to the indenture
trustee. Under such circumstances, in the event that a successor securities
depositary is not obtained, fully registered, certificated notes are required to
be printed and delivered. The originator may decide to discontinue use of the
system of book-entry transfers through DTC or a successor securities depositary.
In that event, fully registered, certificated notes will be delivered to
noteholders. See "-- Issuance of Certificated Notes at a Later Date".
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but neither we
nor the originator or the indenture trustee take any responsibility for the
accuracy of this information.
Clearstream Luxembourg and Euroclear will hold omnibus positions on behalf
of the participants in the Clearstream Luxembourg and Euroclear systems,
respectively, through customers' securities accounts in Clearstream Luxembourg's
and Euroclear's names on the books of their respective depositaries which in
turn will hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC.
Clearstream Luxembourg advises it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream Luxembourg holds securities
for its participating organizations ("Clearstream Participants") and facilitates
the clearance and settlement of securities transactions between Clearstream
Participants through electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement of
certificates. Clearstream Luxembourg provides to Clearstream Participants, among
other things, services for safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing.
Clearstream Luxembourg interfaces with domestic markets in several countries. As
a professional depositary, Clearstream Luxembourg is subject to regulation by
the Luxembourg Monetary Institute. Clearstream Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations and may include the underwriter. Indirect access to Clearstream
Luxembourg is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Clearstream 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's 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. 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, under contract with Euroclear Clearance
Systems S.C., a Belgian cooperative corporation. All operations are conducted by
Euroclear's
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operator and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with Euroclear's operator. Euroclear Clearance Systems
S.C. establishes policy for Euroclear on behalf of Euroclear Participants.
Euroclear Participants include banks, securities brokers and dealers and other
professional financial intermediaries and may include the underwriter. 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.
Morgan Guaranty Trust Company of New York 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.
Those Euroclear 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 Euroclear Terms and Conditions only on behalf of Euroclear
Participants, and has no record of or relationship with persons holding through
Euroclear Participants.
Transfers between direct participants will comply with DTC rules. Transfers
between Clearstream Participants and Euroclear Participants will comply with
their rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Clearstream Luxembourg or Euroclear, on the other, will be effected in
DTC under DTC rules through the relevant European international clearing system
through its Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system as required by 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 using its normal procedures for same-day funds
settlement applicable to DTC. Clearstream Participants and Euroclear
Participants may not deliver instructions directly to the depositaries.
Because of time-zone differences, credits of securities in Clearstream
Luxembourg or Euroclear as a result of a transaction with a DTC participant will
be made during the subsequent securities settlement processing day, dated the
business day following the DTC settlement date, and such credits or any
transactions in such securities settled during such processing day will be
reported to the relevant Clearstream Participant or Euroclear Participant on
such business day. Cash received in Clearstream Luxembourg or Euroclear as a
result of transfers of securities by or through a Clearstream Participant or a
Euroclear Participant to a DTC participant will be received with value on the
DTC settlement date but will be available in the relevant Clearstream Luxembourg
or Euroclear cash account only as of the business day following settlement in
DTC.
Although DTC, Clearstream Luxembourg and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of notes among
participants of DTC, Clearstream Luxembourg and Euroclear, they are under no
obligation to perform or continue to perform such procedures and such procedures
may be discontinued at any time.
Except as required by law, none of the originator, the issuer or the
indenture trustee will have any liability for any aspect of the records relating
to, actions taken or implemented by, or payments made on account of, beneficial
ownership interests in the notes held through DTC, or for maintaining,
supervising or reviewing any records or actions relating to such beneficial
ownership interests.
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ISSUANCE OF CERTIFICATED NOTES AT A LATER DATE
The notes will be issued in fully registered, certificated form to
beneficial owners or their nominees rather than to DTC or its nominee only if:
(1) we advise the indenture trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as depository
with respect to such notes, and we or the indenture trustee are unable to
locate a qualified successor or
(2) we elect to terminate the book-entry system.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the indenture trustee is required to notify all beneficial
owners for each class of notes held through DTC of the availability of notes in
fully registered, certificated form. Upon surrender by DTC of the global note
representing the notes and instructions for reregistration, the issuer will
issue such fully registered, certificated notes, and the indenture trustee will
recognize the holders of such fully registered, certificated notes as
noteholders under the indenture. After such certificated notes are issued, the
notes may only be transferred to the book-entry system (if still in effect) or
by surrender of the old instrument and either the reissuance of the old
instrument by the issuer to the new holder or the issuance of a new instrument
to the new holder.
Additionally, upon the occurrence of any such event described above,
distribution of principal of and interest on the notes will be made by the
indenture trustee directly to you as required by the indenture. Distributions
will be made by wire transfer or check, mailed to your address 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 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. The final payment will be made in this manner
whether the notes are fully registered, certificated notes or the note for such
class is registered in the name of Cede & Co. representing the notes of such
class.
Fully registered, certificated notes of each class will be transferable and
exchangeable at the offices of the indenture trustee, which the indenture
trustee shall designate on or prior to the issuance of any fully registered,
certificated notes with respect to such class. No service charge will be imposed
for any registration of transfer or exchange, but the indenture trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection with the transfer or exchange.
THE TRANSFER AND SERVICING AGREEMENT
The following is a summary of all of the material terms of the transfer and
servicing agreement to be dated as of March 1, 2002 among the issuer, the
originator and the indenture trustee. You should read the transfer and servicing
agreement, the form of which was filed as an exhibit to the registration
statement of which this prospectus is a part.
CONVEYANCE OF THE CONTRACTS
The contracts and interests in the equipment will be transferred to the
issuer by the originator as required by the transfer and servicing agreement.
The originator has sold, transferred, assigned, set over and otherwise conveyed
to the issuer, without recourse, all of the originator's right, title and
interest in and to:
- the contracts, including any substitute contracts, and all monies due or
to become due in payment of the contracts on or after the related cutoff
date, including all scheduled payments, other than excluded amounts,
thereunder due on or after the cutoff date;
- any prepayment amounts including payaheads, any payments in respect of a
casualty or early termination, and any recoveries on the contracts but
excluding any scheduled payments due prior to the related cutoff date,
and any Excluded Amounts;
- the equipment and the security interest in the related equipment,
including all proceeds from any sale or other disposition of the
equipment;
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- any documents delivered to the issuer or held by the servicer on its
behalf with respect to each contract;
- all payments made or to be made in the future with respect to each
contract, other than excluded amounts, and the obligor thereunder and
under any other guarantee or similar credit enhancement with respect to
the contracts;
- all payments made with respect to each contract under any insurance
policy covering physical damage to the related equipment; and
- all income and proceeds of the foregoing.
As of the initial cutoff date or any subsequent cutoff date for substitute
contracts, the issuer will pledge the assets described in the previous seven
bullet points to the indenture trustee for the benefit of the noteholders.
Prior to the conveyance of any contracts and its interest in the equipment
to the issuer, the originator indicated in its books and records, including the
computer files relating to the contracts and the equipment, that the contracts
and its interest in the equipment have been transferred to the issuer. Prior to
each pledge of any assets to the indenture trustee, the issuer will file Uniform
Commercial Code financing statements reflecting the grant of a lien on those
assets described in the previous seven bullet points to the indenture trustee.
The issuer will mark its books and records, including the appropriate computer
files relating to the contracts and the equipment, to indicate that the
contracts and its interest in the equipment have been pledged to the indenture
trustee for the benefit of the noteholders. The issuer will give the indenture
trustee a list of the contracts transferred to the issuer, identified by account
number and by the discounted contract balance as of the related cutoff date.
REPRESENTATIONS AND WARRANTIES; DEFINITION OF ELIGIBLE CONTRACTS
The originator will make the following representations and warranties in
the transfer and servicing agreement with respect to each contract as of the
closing date. Similarly, the originator will make or be deemed to have made
those representations and warranties with respect to each substitute contract
which may be transferred as of its related cutoff date, including that:
(1) the contract is valid and enforceable, except the enforcement may
be limited by insolvency, bankruptcy, moratorium, reorganization, or other
similar laws affecting enforceability of creditors' rights and the
availability of equitable remedies, and the contract contains a clause that
has the effect of unconditionally obligating the obligor to make periodic
contract payments (including taxes, if any) to the assignee of the
contract, notwithstanding any rights the obligor may have against the
assignor and is in full force and effect and has not been satisfied,
subordinated or rescinded as of the cutoff date;
(2) the contract is noncancellable by the obligor and does not contain
early termination options (except for contracts that contain early
termination or prepayment clauses, but require full repayment upon
cancellation of the contract);
(3) all payments payable under the contract are absolute,
unconditional obligations of the obligor, the contract does not provide for
offset for any reason and each contract provides for acceleration of the
scheduled payments upon default by the obligor;
(4) the contract (other than each purchase order and each software
only agreement) is a triple net lease and requires the obligor to maintain
the equipment in good working order, to bear all the costs of operating the
equipment, including taxes, if any, and insurance relating thereto and to
assume all risk of loss or malfunction of the related equipment;
(5) all requirements of federal, state and local laws, and regulations
thereunder, including, without limitation, usury laws, if any, in respect
of the contracts have been complied with, and the contracts complied at the
time they were originated or made and as of the closing date or related
cutoff date will comply with all legal requirements of the jurisdiction in
which they were originated;
(6) no proceedings or investigations are pending or, to the best of
the originator's knowledge after due inquiry, have been threatened before
any court, regulatory body, administrative agency or other
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tribunal or governmental instrumentality asserting the invalidity of any
contract seeking to prevent payment and performance of any contract, or
seeking any determination or ruling that might adversely and materially
affect the validity or enforceability of any contract;
(7) no contract was originated nor was it subject to the laws of any
jurisdiction the laws of which would make unlawful the sale, transfer and
assignment of such document under either the transfer agreement or the
transfer and servicing agreement;
(8) the contract requires that (a) the obligor will obtain insurance
and list GreatAmerica Leasing Corporation as the loss payee in an amount
not less than the replacement cost of the related equipment; or (b) in the
event of a casualty loss, the servicer may require the obligor (i) to pay
at a minimum the outstanding discounted contract balance of the contract or
(ii) to replace the equipment with like equipment in good repair,
acceptable to servicer, at the obligor's expense;
(9) in addition to the insurance maintained by the obligors with
respect to the equipment, the originator maintains, with an insurer with a
general policy rating of A or better with a class of VI or better by A.M.
Best & Co., a general liability insurance policy with coverage in the
amount of $1,000,000 per occurrence and coverage in the aggregate amount of
$2,000,000. The policy is in full force and effect and covers all equipment
owned by the originator. All premiums in respect of such policies have been
paid. The indenture trustee is named as an additional insured on such
liability policies;
(10) the contract and any related equipment or interest therein has
been transferred to the issuer free and clear of any liens (except for
permitted liens) and is assignable without prior written consent of the
obligor (or such consent has been obtained); with respect to leases that
are not true leases, the originator has transferred its first priority
perfected security interest (if the book value is $25,000 or more and where
the related obligor was rated below (1) Baa3 or better by Moody's Investors
Service, (2) BBB or better by Standard & Poor's Ratings Group or (3) 3A2 or
better by Dun & Bradstreet) in the equipment to the issuer, free and clear
of adverse claims, except permitted liens and the originator had the power
to convey such contract and its interest in the equipment free and clear of
any liens or encumbrances;
(11) no contract provides for the substitution, addition or exchange
or any item of equipment subject to such contract that would result in any
reduction, or change the timing of, payments due, or modification of the
obligor's other obligations under such contract,
(12) the contract has an original maturity of not greater than 84
months;
(13) the obligor on each contract has paid at least one scheduled
payment to the originator or paid the security deposit;
(14) the contract is a U.S. dollar-denominated obligation and, at
inception, the obligor and the associated equipment were located in the
United States, the United States territories of the Virgin Islands and
Puerto Rico and will continue to be located in the United States, the
United States territories of the Virgin Islands and Puerto Rico;
(15) there is not more than one "secured party's original" counterpart
of the contract and the sole manually executed counterpart of each contract
that constitutes an instrument is in the possession of the custodian and
has been properly endorsed through the proper chain of title to the
indenture trustee;
(16) immediately prior to the closing date or the related cutoff date,
the originator will have possession of each original contract, and
immediately prior to the originator's execution and delivery of the
transfer agreement, there will be no other custodial agreements in effect
adversely affecting the rights of the originator to make, or cause to be
made, any delivery required thereunder or under the transfer and servicing
agreement;
(17) the contract is not a consumer contract or a "consumer lease" as
defined in Section 2A-103(1)(e) of the Uniform Commercial Code;
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(18) each obligor is a corporation, partnership, limited liability
company, or unincorporated business association not using the related
equipment for personal, family or household purposes, and no item of
equipment has been repossessed;
(19) the contract is not subject to any guaranty by the originator,
nor has the originator established any specific credit reserve with respect
to the related obligor;
(20) each contract originated by, or assigned to, the originator
conforms, in all material respects, to one of the forms of contracts
attached as an exhibit to the transfer and servicing agreement;
(21) the contract was either originated by, or purchased in a true
sale transaction, by the originator in the ordinary course of its business
in accordance with its customary underwriting practices and credit policies
and no adverse selection procedure was used in selecting the contract for
transfer to the issuer;
(22) the originator has duly fulfilled all material obligations on its
part to be fulfilled under, or in connection with, each contract and has
done nothing to materially impair the rights of the issuer, the indenture
trustee or the noteholders in such contract, the equipment, the scheduled
payments or any income or proceeds with respect thereto;
(23) the origination and collection practices used by the originator
with respect to each contract have been in all respects legal and customary
in the equipment financing and servicing business and complies in all
material respects to the originator's customary underwriting practice and
credit policies.
(24) each obligor has accepted the equipment under its contract
therefore as being in good working condition, after adequate opportunity to
test and inspect, has not notified the originator of any defects therein
and the originator has no knowledge of any material equipment malfunction
or other claim by the obligor with respect to the material performance of
the equipment under the contract;
(25) at the time that any item of equipment is assigned, transferred
and contributed pursuant to the transfer and servicing agreement, such
equipment has not suffered any loss or damage except for such equipment
that has been restored to its original value, ordinary wear and tear
excepted;
(26) no contract is the subject of litigation;
(27) the obligor is not, as of the applicable cutoff date, subject to
bankruptcy or other insolvency proceedings;
(28) the contract is not a defaulted contract;
(29) the contract is not more than 60 days past due;
(30) the operation of any of the terms of the contracts or the
exercise by the issuer, the indenture trustee or the servicer of any right
under any contract will not render the contract unenforceable in whole or
in part, and no right of rescission, set-off, counterclaim or defense has
been asserted in writing with respect thereto;
(31) the information with respect to the contract and the equipment,
where the contract relates to equipment being currently acquired, is true
and correct in all material respects;
(32) no provision of the contract has been waived, altered or modified
in any way, except by instruments or documents contained in the files
relating to the contract and each contract is for the item of equipment
identified therein;
(33) the original date of the final scheduled payment of any contract
has not been extended more than once since the origination of such
contract;
(34) except as otherwise reflected in the list of contracts, no
contract has been amended prior to the closing date or the related cutoff
date such that the amount of any scheduled payment or the aggregate
scheduled payments have been decreased, or any other obligations of the
obligor under the contract have been diminished;
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(35) all filings necessary to evidence the conveyance or transfer of
the originator's ownership interest in the contract, and the originator's
corresponding interest in the related equipment, to the issuer (as well as
the concurrent pledge of such property from the issuer to the indenture
trustee), have been made; provided, that Uniform Commercial Code financing
statement filings with respect to equipment that name the originator as
secured party have not been amended to indicate either the issuer or the
indenture trustee as an assignee;
(36) no item of equipment has been relocated from the jurisdiction set
forth in the contract;
(37) the transfer, assignment and contribution to the issuer of the
contracts and the originator's right, title and interest in and to any item
of equipment will not violate the terms or provisions of any such contract
or any other agreement to which the originator then is a party or by which
it is bound;
(38) the originator has obtained a security interest (subject to
permitted liens) in the equipment related to the contracts, which interest
shall be a first priority perfected security interest in the case of
equipment with an original book value of $25,000 or more unless the related
obligor was rated (1) Baa3 or better by Moody's Investors Service, (2) BBB
or better by Standard & Poor's Ratings Group or (3) 3A2 or better by Dun &
Bradstreet;
(39) if the contract is a lease of equipment subject to certificate of
title statutory requirements, the title is held either in the name of the
obligor and the certificate of title indicates the originator as lienholder
or in the name of the originator as lessor;
(40) the contract constitutes "chattel paper" or "instruments" as
defined under the Uniform Commercial Code;
(41) each contract provides for either monthly, quarterly, annual,
variable, skip or balloon payments; provided, however, that the discounted
contract balance of all contracts with (a) quarterly payments shall not
exceed 0.57% of the aggregate discounted contract balance, (b) annual
payments (paid in advance) shall not exceed 0.26% of the aggregate
discounted contract balance, (c) variable payments shall not exceed 0.80%
of the aggregate discounted contract balance, (d) skip payments shall not
exceed 0.07% of the aggregate discounted contract balance and (e) balloon
payments shall not exceed 1.40% of the aggregate discounted contract
balance (in each case, calculated using the statistical discount rate);
(42) in the case of each contract that consists of a master lease and
one or more exhibits or schedules thereto, (i) the originator has not
assigned, and will not assign, such master lease in its entirety or in part
(except for the assignment of its rights under such master lease as
collateral in connection with the financing of a schedule issued pursuant
to and incorporating the terms of such master lease and not constituting a
contract), and has not delivered and will not deliver physical possession
of such master lease, to any person other than the indenture trustee or the
servicer, (ii) such exhibits or schedules constitute a separate contract to
which all representations and warranties referred to herein apply and are
not part of any other contract not sold to the issuer, and (iii) no
schedule shall be related to an upgrade of equipment unless the entire item
of equipment is financed under such schedule;
(43) other customary provisions for this type of transaction.
These representations and warranties will be reaffirmed by the originator
with respect to substitute contracts when it transfers a substitute contract to
the issuer. A contract that satisfies all of the above representations and
warranties shall be deemed an "eligible contract". In addition, the originator
will represent and warrant to the issuer that it has validly sold and assigned
to the issuer all right, title and interest of the originator in the contracts,
the proceeds of the contracts and the related interest in the financed
equipment.
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Permitted liens on the contracts consist of:
(1) liens for state, municipal and other local taxes but only if
(a) such taxes shall not at the time be due and payable or
(b) the issuer shall currently be contesting the validity of those
liens in good faith by appropriate proceedings;
(2) liens in favor of the issuer created under the transfer and
servicing agreement; and
(3) liens in favor of the indenture trustee created under the transfer
and servicing agreement and the indenture.
Permitted liens on the equipment securing the contracts consist of:
(1) materialmen's, warehousemen's, mechanics' and other liens arising
by operation of law in the ordinary course of business for sums not due or
sums which are being contested in good faith;
(2) liens for state, municipal and other local taxes if:
(A) such taxes shall not at the time be due and payable or
(B) the issuer shall currently be contesting the validity of those
liens in good faith by appropriate proceedings;
(3) liens in favor of the issuer created by the originator and
transferred to the indenture trustee pursuant to the indenture; and
(4) liens in favor of the indenture trustee created under the transfer
and servicing agreement and the indenture.
None of the indenture trustee, the issuer or any of them in their
individual capacities, shall make or be deemed to have made any representations
or warranties, express or implied, regarding the pledged assets or the transfers
of those assets by the originator or the issuer.
REMEDIES FOR BREACHES OF REPRESENTATIONS AND WARRANTIES
Under the terms of the transfer and servicing agreement, each contract must
be an eligible contract as of its date of transfer to the issuer. Unless a
substitute contract is assigned by the issuer to the indenture trustee, the
indenture trustee shall reassign any contract to the issuer, upon the written
request of the issuer or the originator, and the originator will be concurrently
obligated to purchase from the issuer, such contract transferred by the
originator no later than the next succeeding determination date after the
originator becomes aware, or receives written notice from the servicer or the
issuer, of the breach of any representation or warranty made by the originator
in the transfer and servicing agreement. That transfer and repurchase of the
contract is required only if the breach of the representation or warranty by the
originator materially adversely affects the interests of the issuer or the
indenture trustee on behalf of the noteholders or their successors or assigns in
such contract or the documents relating to such contract, which breach has not
been cured or waived in all material respects. This purchase obligation and the
originator's right to provide a substitute contract will constitute the only
remedies against the originator and the issuer available to you for a breach of
a representation or warranty under the transfer and servicing agreement made by
the originator with respect to that contract.
An ineligible contract shall be reassigned to the issuer and the issuer
shall make a deposit in the collection account in immediately available funds in
an amount equal to the discounted contract balance of the ineligible contract
and any scheduled payments due on the contract but not yet received. Any amount
deposited into the collection account in connection with the reassignment of an
ineligible contract shall be considered payment in full of the ineligible
contract, and that amount shall be treated as an amount available for
distribution to you. In the alternative, the issuer may instead obtain a
substitute contract and pledge the substitute contract to the
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indenture trustee in replacement for the affected ineligible contract. The
indenture trustee will release the ineligible contract and the issuer will
reconvey it to the originator. See "-- Substitute Contracts".
CONCENTRATION AMOUNTS; DEFINITION OF EXCESS CONTRACT
In addition to the representations and warranties made by the originator
and the issuer with respect to the contracts as described above under
"-- Representations and Warranties; Definition of Eligible Contracts", the
issuer will represent and warrant (using the statistical discount rate) as of
the closing date as follows:
(1) the aggregate discounted contract balance of all contracts that
finance, lease or are related to the services industry will not exceed
48.00% of the aggregate discounted contract balance of the contracts;
(2) the aggregate discounted contract balance of all contracts with
obligors who comprise the ten largest obligors (measured by aggregate
discounted contract balance) does not exceed 2.50% of the aggregate
discounted contract balance of the contracts;
(3) the aggregate discounted contract balance of all contracts of each
obligor or affiliated group of obligors shall not exceed 0.35% of the
aggregate discounted contract balance of the contracts;
(4) the aggregate discounted contract balance of all contracts with
obligors located in a single state of the United States does not exceed
10.00% of the aggregate discounted contract balance of the contracts;
(5) the aggregate discounted contract balance of all contracts with
obligors that are the United States or any state or local government or any
agency, department, subdivision or instrumentality of any such government
shall not exceed 3.85% of the aggregate discounted contract balance of the
contracts;
(6) with respect to all contracts, the aggregate balance of true
leases and ten percent purchase option leases shall not be less than 35.00%
of the aggregate discounted contract balance;
(7) with respect to all contracts, the aggregate discounted contract
balance of all contracts that are purchase orders shall not exceed 0.25% of
the aggregate discounted contract balance of the contracts;
(8) with respect to all contracts, the aggregate discounted contract
balance of all contracts that are software only agreements shall not exceed
1.75% of the aggregate discounted contract balance of the contracts.
On the date a substitute contract is added to the pledged assets, the
issuer will make with respect to the substitute contract the foregoing
representations and warranties (except those made under (4)) as of the closing
date of the pledge of the contracts to the indenture trustee on behalf of the
noteholder. We will treat the substitute contract as though it, and not the
replaced contract, was included in the contracts on the initial closing date;
however, the discounted contract balance of such substitute contract shall be
equal to its discounted contract balance as of the actual cutoff date.
If there is a breach of any of the foregoing representations or warranties
(an "Excess Contract"), which breach has not been cured or waived in all
material respects, the removal of which shall remedy such breach, the servicer
will select a contract, and the indenture trustee will, upon the written
direction of the servicer, reassign such contract to the issuer, and the
originator will be obligated to purchase such contract from the issuer. Such
purchase shall occur no later than the next determination date after the issuer
or the originator becomes aware, or receives written notice from the servicer or
the issuer, of such breach. This purchase obligation will constitute the sole
remedy against the originator and issuer available to you for a breach of one of
the foregoing representations or warranties.
An Excess Contract shall be reassigned to the issuer and the issuer shall
make a deposit in the collection account in immediately available funds in an
amount equal to the discounted contract balance of the Excess Contract and any
scheduled payments due on the contract but not yet received. Any amount
deposited into the collection account in connection with the reassignment of an
Excess Contract shall be considered payment in full of the Excess Contract and
shall be treated as an amount available for distribution to you. In the
alternative, the issuer may instead cause the originator to convey to the issuer
a substitute contract in
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replacement for the Excess Contract, which shall thereupon be deemed released by
the indenture trustee and reconveyed through the issuer to the originator. See
"-- Substitute Contracts".
MATERIAL MODIFICATIONS TO CONTRACTS
Under the terms of the transfer and servicing agreement, the servicer may
vary the provisions of a contract, some of which constitute material
modifications. Under the transfer and servicing agreement, only the following
modifications are permitted:
- except as provided below, waivers and other modifications that:
(1) conform with the servicer's customary and usual credit and
collection practices, and
(2) do not have the effect of accelerating, delaying, reducing or
extending the dates for scheduled payments for the contract; however, the
rating agencies may waive this requirement;
- to the extent consistent with the servicer's customary and usual credit
and collection practices, the servicer may grant extensions or
adjustments on any contract; provided, however, that if the servicer (i)
extends a contract by more than three months in any calendar year, (ii)
extends a contract more than twice in the life of such contract, (iii)
reduces the frequency of periodic payments under a contract, (iv) reduces
the unpaid principal balance or the rate of interest with respect to a
contract, or (v) extends a contract in a manner that is inconsistent with
the servicer's customary and usual credit and collection practices, the
servicer shall purchase the affected contract no later than the next
succeeding determination date by either (a) depositing the discounted
contract balance of the contract and any scheduled payments due on the
contract but not yet received in the collection account, or (b) pledging
a substitute contract to the indenture trustee in exchange for such
contract;
- waivers of any late payment charge and other service fees that may be
collected in the ordinary course of servicing the contract;
- waivers that permit prepayment of a contract that is not otherwise
prepayable by its terms. The prepayment may include, without limitation,
a full or partial buy out of the equipment which is the subject of the
contract, or an equipment upgrade. In the event of an early termination
of a contract which has been prepaid in full, the issuer will have the
option to reinvest the proceeds of the contract in one or more contracts
having similar characteristics to the terminated contract. See
"-- Substitute Contracts". The servicer is not authorized to permit an
early termination of a contract, without the addition to the indenture
trustee of a substitute contract, unless the amount to be prepaid,
whether by the related obligor, or through a combination of payments from
the related obligor and from the originator or servicer, on such
terminated contract is equal at least to the then discounted contract
balance of the contract and any scheduled payments due on the contract
but not yet received; or
Non-material adjustments or modifications in contract terms may be effected by
the servicer on behalf of the issuer without your consent and without affecting
the status of the contract as part of the pledged assets.
SUBSTITUTE CONTRACTS
In the event we subsequently determine that (i) a contract has become
subject to either a warranty event or a casualty loss or has become either a
defaulted contract or an Excess Contract or (ii) a contract has become a prepaid
contract, the originator will have the option, but shall not be obligated to, to
substitute for that contract another contract or contracts having similar
characteristics. See "-- Remedies for Breaches of Representations and
Warranties;" "-- Representations and Warranties; Definition of Ineligible
Contracts," "-- Concentration Amounts; Definition of Excess Contract" and
"-- Material Modifications to Contracts". Our ability to substitute contracts
for those contracts set forth in category (i) is limited in the aggregate to 10%
of the initial aggregate discounted contract balance for all contracts.
The substitute contracts will have a discounted contract balance equal to
or greater than that of the contracts being substituted. In addition, the sum of
the discounted contract balances and the booked residual values of such
substitute contracts is not materially less than the sum of the discounted
contract balances and
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the booked residual values of the contracts being replaced. Also, the weighted
average life of all the contracts after giving effect to such substitutions will
not be materially greater than the weighted average life of all the contracts
prior to such substitutions. In addition, (1) the final payment on the
substitute contract will be on or prior to December, 2007 and (2) the
substitution will not result in a material change of the concentration limits
applicable to the contract pool pledged to the indenture trustee.
DEFINITION OF DEFAULTED CONTRACTS
A contract will automatically be deemed to be a defaulted contract on the
earlier occurrence of either (1) or (2) below:
(1) less than ninety percent of a contractual payment has been
received from the obligor for 120 days or a shorter period as the
originator may determine consistent with its collection policy; or
(2) if at any time the servicer determines, under its customary and
usual practices, that the contract is not collectible.
The current policy of the servicer with respect to writing off contracts is
described in "GreatAmerica Leasing Corporation -- Collection Procedures" above.
Upon classification as a defaulted contract, the servicer shall accelerate
all payments due thereunder or take any other action as the servicer reasonably
believes will maximize the amount of recoveries and shall otherwise follow its
customary and usual collection procedures, which may include the repossession
and transfer of any related equipment or other security on behalf of the
indenture trustee.
INDEMNIFICATION
The transfer and servicing agreement provides that the servicer will
indemnify the issuer and the indenture trustee from and against any loss,
liability, expense, damage or injury suffered or sustained arising out of the
servicer's actions or omissions with respect to the issuance of the notes. The
indenture provides that the issuer shall indemnify the indenture trustee for all
losses, liabilities or expenses incurred by it in connection with the
administration of the indenture and the performance of its duties under the
transaction documents.
The issuer is not liable to you for any losses, claims, damages or
liabilities incurred by you in your capacity as an investor in the notes. In the
event a successor servicer is appointed, the successor servicer will indemnify
and hold harmless the issuer for any losses, claims, damages and liabilities of
the issuer as described in this paragraph arising from the actions or omissions
of the successor servicer. Except as provided in the preceding paragraph, the
transfer and servicing agreement provides that none of the issuer, the servicer
or any of their directors, officers, employees or agents will be under any other
liability to the indenture trustee, the noteholders or any other person for any
action taken, or for refraining from taking any action, in good faith under the
transfer and servicing agreement. However, none of the issuer, the servicer or
any of their directors, officers, employees or agents will be protected against
any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence of any such person in the performance of their
duties or by reason of reckless disregard of their obligations and duties
thereunder.
In addition, the transfer and servicing agreement provides that the
servicer is not under any obligation to appear in, prosecute or defend any legal
action that is not incidental to its servicing responsibilities under the
transfer and servicing agreement. The servicer may, in its sole discretion,
undertake any legal action which it may deem necessary or desirable for the
benefit of the noteholders with respect to the transfer and servicing agreement
and the rights and duties of the parties thereunder.
SERVICING STANDARD AND SERVICER ADVANCES
The servicer is responsible for servicing, collecting, enforcing and
administering the contracts in a manner consistent with its customary and usual
procedures for servicing contracts comparable to the contracts. Although
GreatAmerica Leasing Corporation has the right to delegate its servicing duties
to a sub-servicer, it remains liable for the performance or non-performance of
those duties.
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If the servicer determines that any scheduled payment with respect to any
contract that was due during the collection period was not received in full
prior to the related determination date, the servicer has the right to elect,
but is not obligated, to advance the unpaid scheduled payment if it reasonably
believes that the advance will be recovered from subsequent payments with
respect to that contract. The servicer shall be entitled to reimbursement of the
servicer advances from subsequent payments on or with respect to the contract
with respect to which an advance was made, including collections of any
prepayment amount, amounts deposited in the collection account for the
repurchase of the contract as ineligible or recoveries with respect to such
contract, and, if the servicer determines that an advance will not be recovered
from the contract to which its advance relates, from collections related to
other contracts included in the pledged assets.
SERVICER RESIGNATION
The servicer may not resign from its obligations and duties under the
transfer and servicing agreement, except upon determination that its duties are
no longer permissible under applicable law. No such resignation will become
effective until a successor to the servicer has assumed the servicer's
responsibilities and obligations under the transfer and servicing agreement.
Assuming that the action complies with the transfer and servicing agreement
(1) any person into which GreatAmerica Leasing Corporation or the
servicer may be merged or consolidated;
(2) any person resulting from any merger or consolidation to which
GreatAmerica Leasing Corporation or the servicer is a party; or
(3) any person succeeding by acquisition or transfer to the business
of GreatAmerica Leasing Corporation or the servicer will be permitted to be
the successor to GreatAmerica Leasing Corporation, as the servicer, under
the transfer and servicing agreement. GreatAmerica Leasing Corporation is
required to notify the rating agencies and the indenture trustee within 30
days of the completion of any such merger, consolidation or succession but
is not required to get the consent of either the rating agencies or the
holders of the notes.
SERVICER DEFAULT
In the event of any servicer default, either the indenture trustee or the
Required Holders, by written notice to the servicer and the issuer, and to the
indenture trustee, if given by the noteholders, may terminate all of the rights
and obligations of the servicer, as servicer, under the transfer and servicing
agreement. The indenture trustee is entitled to receive upon reasonable notice
after the end of any collection period a copy of the servicer's computer records
related to the contracts. In accordance with the transfer and servicing
agreement, in the event of any servicer default, if the servicer is terminated
the indenture trustee has represented that it intends to appoint Textron
Business Services, Inc. as successor servicer if such entity is an eligible
servicer, provided, however, the indenture trustee is under no obligation to
appoint Textron Business Services, Inc. An entity shall be considered an
eligible servicer if such entity is an established institution having a net
worth of at least $50,000,000 and whose regular business includes the servicing
of contracts similar to the contracts described herein at the time of any
transition. The indenture trustee has represented that it will enter into an
agreement with Textron Business Services, Inc. to act as successor servicer if
so selected by the indenture trustee for a fee not in excess of the servicing
fee. If the indenture trustee is unable to act as successor servicer, the
indenture trustee decides not to appoint Textron Business Services, Inc. as
successor servicer or the indenture trustee within 60 days of receipt of the
termination notice is unable to obtain bids from eligible servicers and the
servicer delivers an officer's certificate to the effect that the servicer
cannot in good faith cure the servicer default which gave rise to the
termination notice, then the indenture trustee shall offer the issuer the right
at its option to accept retransfer of the pledged assets on the following note
interest and principal payment date. The purchase price for the retransfer of
the pledged assets shall be equal to the sum of the aggregate principal amount
of all notes on such payment date plus accrued and unpaid interest at the
applicable interest rate through the date of the retransfer. The purchase price
shall also include interest on interest payments that were due but not paid when
due.
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The indenture trustee shall, as promptly as possible after giving a
termination notice, appoint a successor servicer and if no successor servicer
has been appointed by the indenture trustee and has accepted the appointment by
the time the servicer ceases to act as servicer, all rights, authority, power
and obligations of the servicer under the transfer and servicing agreement shall
pass to and be vested in the indenture trustee, unless at the time it would be
contrary to law for the indenture trustee to act in such capacity. If the
indenture trustee decides not to appoint Textron Business Services, Inc. as
successor servicer prior to any appointment of any other successor, the
indenture trustee will seek to obtain bids from potential servicers to serve as
a successor servicer for servicing compensation not in excess of the servicing
fee described in "Description of the Notes and Indenture -- Servicing
Compensation and Payment of Expenses".
A "servicer default" refers to any of the following events:
(a) any failure by the servicer to make any payment, transfer or
deposit or to give instructions or notice to the issuer or the indenture
trustee as required by the transfer and servicing agreement on or before
the date occurring three business days after the date the payment,
transfer, deposit, or the instruction or notice or report is required to be
made or given, as the case may be, under the terms of the transfer and
servicing agreement; or
(b) failure on the part of the servicer duly to observe or perform in
any material respect any other covenants or agreements of the servicer set
forth in the transfer and servicing agreement which has a material adverse
effect on the noteholders, which continues unremedied for a period of 30
days after the first to occur of:
(1) the date on which written notice of such failure requiring the
same to be remedied shall have been given to the servicer by the
indenture trustee or the issuer or to the servicer and the indenture
trustee by the noteholders or the indenture trustee on behalf of the
holders of notes aggregating not less than 25% of the principal amount
of any class of notes adversely affected thereby and
(2) the date on which the servicer becomes aware of the failure and
such failure continues to materially adversely affect the noteholders
for such period; or
(c) any representation, warranty or certification made by the servicer
in the transfer and servicing agreement or in any certificate delivered
under the transfer and servicing agreement shall prove to have been
incorrect when made, which has a material adverse effect on the noteholders
and which continues to be incorrect in any material respect for a period of
30 days after the first to occur of:
(1) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the servicer
by the indenture trustee or the issuer, or to the servicer, the issuer
and the indenture trustee by noteholders or by the indenture trustee on
behalf of holders of notes aggregating not less than 25% of the
principal amount of any class adversely affected thereby and
(2) the date on which the servicer becomes aware of the
incorrectness, and such incorrectness continues to materially adversely
affect such holders for such period; or
(d) any event relating to bankruptcy, insolvency or receivership shall
occur with respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five business days or
referred to under clause (b) or (c) for a period of 60 days, in addition to any
period provided in clause (a), (b) or (c), shall not constitute a servicer
default until the expiration of such additional five business days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the servicer and such delay or failure was caused by an
act of God or other events beyond servicer's control. Regardless of whether the
events described in clause (a)-(d) have occurred, the servicer is required to
use its best efforts to perform its obligations in a timely manner as required
by the transfer and servicing agreement. The servicer shall provide the
indenture trustee and the issuer prompt notice
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of such failure or delay by it, together with a description of its efforts to
perform its obligations. The servicer shall immediately notify the indenture
trustee in writing of any servicer default.
If an event relating to bankruptcy, insolvency or receivership occurs with
respect to the servicer and no other event that would result in a servicer
default has occurred, an unpaid creditor of the servicer or a representative of
creditors of the servicer, such as a trustee in bankruptcy, or the servicer
acting as a debtor-in-possession, could have the power to prevent either the
indenture trustee or the noteholders from appointing a successor servicer.
EVIDENCE AS TO COMPLIANCE
The transfer and servicing agreement provides that on or about August 31 of
each year the servicer will cause a firm of nationally recognized independent
public accountants to furnish a report to the effect that such firm has applied
the procedures agreed upon with the servicer and examined documents and records
relating to the servicing of the related contracts and shall report thereon as
provided in the transfer and servicing agreement. Those accountants may also
render other services to the servicer or the issuer.
The transfer and servicing agreement provides for delivery to the indenture
trustee and each rating agency rating the notes on or before August 31 of each
year of a statement signed by an officer of the servicer to the effect that, to
the best of the officer's knowledge, the servicer has performed its obligations
in all material respects under the transfer and servicing agreement throughout
the preceding fiscal year or, if there has been a default in the performance of
any obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
indenture trustee may be obtained by a request in writing delivered to the
indenture trustee.
AMENDMENTS
The transfer and servicing agreement may be amended from time to time by
agreement of the indenture trustee, the originator, the servicer and the issuer
without your consent, to cure any ambiguity or to add any consistent provisions;
provided, that we first obtain an opinion of counsel stating that the amendment
does not adversely affect in any material respect the interests of any
noteholder.
The transfer and servicing agreement may also be amended from time to time
by the issuer, the originator, the servicer and the indenture trustee with the
consent of the Required Holders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the transfer and
servicing agreement or of modifying in any manner your rights. No amendment,
however, may
(1) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any note without the consent
of each noteholder affected thereby; or
(2) change the definition of or the manner of calculating the "Class
A-1 Principal Payment Amount", the "Class A-2 Principal Payment Amount",
the "Class A-3 Principal Payment Amount", the "Class A-4 Principal Payment
Amount", the "Class B Principal Payment Amount", the "Class C Principal
Payment Amount", "Class D Principal Payment Amount", the "Additional
Principal", the "Discounted Contract Balance", the "Required Holders", the
amounts available for distribution to noteholders or the principal amount
of the notes without the consent of each noteholder; or
(3) reduce the aforesaid percentage required to consent to any
amendment without the consent of each holder of the security affected
thereby; or
(4) modify, amend or supplement the provisions of the transfer and
servicing agreement relating to the allocation of collections on the
contracts without the consent of each noteholder; or
(5) make any security issued by the issuer payable in money other than
United States dollars without the consent of each holder of the security
affected thereby.
Promptly following the execution of an amendment that requires the consent
of any noteholder, the indenture trustee will furnish written notice of the
substance of such amendment to each affected noteholder.
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MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
This section generally describes certain material United States federal
income tax consequences of owning the notes we are offering. This section does
not apply to you if you are a member of a class of holders subject to special
rules, such as:
- a dealer in securities or currencies,
- a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings,
- a bank,
- a life insurance company,
- a tax-exempt organization,
- a person who owns notes that are a hedge or that are hedged against
interest rate risks,
- a person who owns notes as part of a straddle or conversion transaction
for tax purposes, or
- a person whose functional currency for tax purposes is not the U.S.
dollar.
This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court decisions, all as currently in effect.
These laws are subject to change, possibly on a retroactive basis.
Please consult your own tax advisor concerning the consequences of owning these
notes in your particular circumstances under the Code and the laws of any other
taxing jurisdiction.
CLASSIFICATION OF THE NOTES AND THE ISSUER
In connection with the issuance of the notes, Chapman and Cutler has
delivered its opinion that, for federal income tax purposes, under existing law
the issuer will not be treated as an association or publicly traded partnership
taxable as a corporation, and the notes will be treated as indebtedness. In
rendering these opinions, Chapman and Cutler has assumed that the terms of the
various documents relating to the issuance of the notes will be complied with by
all of the parties to the transaction including the limited liability company
agreement creating the issuer. Those terms include a requirement, which each
investor agrees to by virtue of acquiring ownership of any beneficial interest
in a note, that the issuer and the investors in the notes treat the notes as
indebtedness for federal income tax purposes. The opinion of Chapman and Cutler
does not foreclose the possibility of a contrary determination by the IRS or by
a court of competent jurisdiction, or of a contrary position by the IRS or
Treasury Department in regulations or rulings issued in the future.
Although it is the opinion of Chapman and Cutler that the issuer will not
be treated as an association or publicly traded partnership taxable as a
corporation and that the notes will be characterized as indebtedness for federal
income tax purposes, no assurance can be given that this characterization of the
issuer or the notes will prevail. If, contrary to the opinion of Chapman and
Cutler, the IRS successfully asserted that one or more classes of the notes does
not represent debt for federal income tax purposes, such notes could be treated
as equity interests in the issuer or as an ownership interest in the assets.
If the notes are treated as equity interests in the issuer, the issuer
might be classified as a publicly traded partnership. If the partnership were
classified as a publicly traded partnership, the issuer itself would be subject
to United States federal income tax. Any such corporate income tax could
materially reduce cash available to make payments on the notes.
If the notes are determined to be equity interests in the issuer (and the
issuer itself is not subject to tax), the holders of the notes would be required
to take into account their allocable share of the issuer's income and
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deductions. Such treatment may have adverse federal income tax consequences for
some noteholders. For example:
(1) income to some tax-exempt entities will constitute "unrelated
business taxable income,"
(2) income to foreign holders is often subject to U.S. tax and U.S.
tax return filing and withholding requirements,
(3) individual holders might be subject to limits on their ability to
deduct their share of expenses, and
(4) income from the issuer's assets would be taxable to noteholders
without regard to whether cash distributions are actually made by the
issuer or any particular noteholder's method of tax accounting.
If the notes are treated as an ownership interest in the issuer's assets,
all income on the issuer's assets would be included in the income of the owners
of the notes, the fees and expenses related to the issuer's assets may be
deductible by the owners of the notes and other provisions of the Internal
Revenue Code may apply to the owners of the notes.
The discussion that follows assumes treatment of the notes as indebtedness
for United States federal income tax purposes.
GENERAL TAX TREATMENT OF NOTEHOLDERS
United States Holders.
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a note and you
are:
- a citizen or resident of the United States,
- a domestic corporation or partnership,
- an estate whose income is subject to United States federal income tax
regardless of its source, or
- a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder, this section does not apply to you and
you should refer to "-- United States Alien Holders" below.
Payments of Interest.
Assuming that the notes will not be issued with more than a de minimis
amount of original issue discount, you will be taxed on any interest on your
note as ordinary income at the time you receive the interest or when it accrues,
depending on your method of accounting for tax purposes. If you acquire a note
at less than its stated principal amount, please contact your tax advisor.
Discount and Premium.
A subsequent holder who purchases a note at a discount may be subject to
the "market discount" rules of Section 1276 of the Internal Revenue Code. These
rules provide, in part, for the treatment of gain attributable to accrued market
discount as ordinary income upon the receipt of partial principal payment of on
the sale or other disposition of such note, and for the deferral of interest
deductions with respect to debt incurred to acquire or carry such market
discount note. An owner of a note may, however, elect to include market discount
in gross income as it accrues and, if such election is made, is not subject to
the deferral of interest deductions provision. Any such election will apply to
all debt instruments acquired by the taxpayer on or after the first day of the
first taxable year to which such election applies. Further, the adjusted tax
basis of a note subject to such election will be increased to reflect market
discount included in gross income, thereby reducing any gain or increasing any
loss on a sale or taxable disposition.
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A subsequent holder who purchases a note at a premium may elect to amortize
and deduct this premium over the remaining term of the note in accordance with
the rules set forth in Section 171 of the Internal Revenue Code.
Sale and Retirement of the Notes.
Your tax basis in your note will generally be the amount you paid for the
note reduced by any principal payments previously received. You will generally
recognize gain or loss on the sale or retirement of your note equal to the
difference between the amount you realize on the sale (except to the extent
attributable to accrued but unpaid interest) or retirement and your tax basis in
your note. Most taxpayers, other than dealers of securities, are likely to be
treated as holding the notes as capital assets. The gain or loss recognized on
the sale of a capital asset is capital gain or loss. Capital gain of a
noncorporate United States holder is generally taxed at a maximum rate of 20%
where the property is held more than one year. If a note is not a capital asset
in the hands of a taxpayer, the gain or loss recognized on the sale of a note
will be treated as ordinary income or loss.
Backup Withholding and Information Reporting.
In general, if you are a noncorporate United States holder, we and other
payors are required to report to the Internal Revenue Service all payments of
principal and interest on your note. In addition, the proceeds of the sale of
your note before maturity within the United States will be reported to the
Internal Revenue Service. Additionally, backup withholding at a rate of 30.5%
will apply to any payments if you fail to provide an accurate Form W-9 Payers
Request for Taxpayer Identification Number, or a substantially identical form,
or you are notified by the Internal Revenue Service that you have failed to
report all interest and dividends required to be shown on your federal income
tax returns. 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 fails to do so.
United States Alien Holders.
This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner of
a note and are, for United States federal income tax purposes:
- a nonresident alien individual,
- a foreign corporation,
- a foreign partnership, or
- an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a note.
If you are a United States holder, this section does not apply to you.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below, if you are a United States alien
holder of a note:
- we and other payors will not be required to deduct United States
withholding tax from payments of principal and interest to you if, in the
case of interest:
1. you do not actually or constructively own 10% or more of the total
combined voting power of the issuer,
2. in general, you are not a bank or controlled foreign corporation
that is related to the issuer through stock ownership, and
a. you provide to us or a U.S. payor, a Form W-8BEN, Certificate of
Foreign Status of Beneficial Owner for United States Withholding, signed
under penalties of perjury, that you are not a United States holder and
provide your name and address, or
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b. a non-U.S. securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary
course of its trade or business and holds the note certifies to us or a
U.S. payor under penalties of perjury that a Form W-8BEN or a
substantially similar statement has been received from you by it or by a
similar financial institution between it and you and furnishes the payor
with a copy thereof, and
- no deduction for any United States federal withholding tax will be made
from any gain that you realize on the sale or exchange of your note.
Further, a note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the individual's gross
estate for United States federal estate tax purposes if:
- the decedent did not actually or constructively own 10% or more of the
total combined voting power of the issuer at the time of death, and
- the income on the note would not have been effectively connected with a
United States trade or business of the decedent at the time of death.
If you are a partner in a foreign partnership, after December 31, 2000,
you, in addition to the foreign partnership, must provide the certification
described above, and the partnership must provide certain information. The
Internal Revenue Service will apply a look-through rule in the case of tiered
partnerships.
Backup Withholding and Information Reporting.
You are generally exempt from backup withholding and information reporting
with respect to any payments of principal or interest made by us and other
payors provided that you provide the certification described under "-- United
States Alien Holders", and provided further that the payor does not have actual
knowledge that you are a United States person. See "-- United States Alien
Holders" above for a discussion of the rules under the final withholding
regulations. We and other payors, however, may report payments of interest on
your notes on Internal Revenue Service Form 1042-S.
In general, payment of the proceeds from the sale of notes to or through a
United States office of a broker is subject to both United States backup
withholding and information reporting. If, however, you are a United States
alien holder, you will not be subject to information reporting and backup
withholding if you certify as to your non-United States status, under penalties
of perjury, or otherwise establish an exemption. Payments of the proceeds from
the sale by a United States alien holder of a note made to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding. However, information reporting, but not backup withholding, may
apply to a payment made outside the United States of the proceeds of a sale of a
note through an office outside the United States if the broker is:
- a United States person,
- a controlled foreign corporation for United States tax purposes,
- a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified
three-year period, or
- with respect to payments made after December 31, 2000, a foreign
partnership, if at any time during its tax year:
- one or more of its partners are "U.S. persons", as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership, or
- such foreign partnership is engaged in a United States trade or business
unless the broker has documentary evidence in its records that you are a
non-U.S. person and does not have actual knowledge that you are a U.S.
person, or you otherwise establish an exemption or are a United States
branch of a foreign bank or a foreign insurance company subject to
regulation within the United States or any state.
85
STATE AND LOCAL TAX CONSIDERATIONS
IOWA TAX CONSIDERATIONS
The principal place of business of the servicer is in the State of Iowa and
some of the activities to be performed by servicer in collecting and servicing
the contracts will also take place there. Also, the obligors on certain of the
contracts will be located in Iowa. In the opinion of Chapman and Cutler, special
Iowa tax counsel to the issuer, the issuer will not be subject to the Business
Tax on Corporations imposed by the State of Iowa under Chapter 422.32 of the
Iowa Code or to the Iowa Business Corporation Act under Chapter 490.101 of the
Iowa Code and noteholders that are not otherwise subject to income taxation by
the State of Iowa will not become subject to income taxation by the State of
Iowa solely as a result of their ownership of notes.
OTHER STATES
Because of the differences in state and local tax laws and their
applicability to different investors, it is not possible to summarize the
potential state and local tax consequences of purchasing, holding or disposing
of the notes and no opinions of counsel have been obtained regarding state tax
matters, other than with respect to the State of Iowa. ACCORDINGLY, IT IS
RECOMMENDED THAT EACH PROSPECTIVE INVESTOR CONSULT A TAX ADVISOR REGARDING THE
STATE AND LOCAL TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE NOTES.
LEGAL INVESTMENT
The Class A-1 Notes will be an "eligible security" within the meaning of
Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes specific requirements on employee benefit plans subject to ERISA and
prohibits some transactions between ERISA-regulated plans and persons who are
"parties in interest" (as defined under ERISA) with respect to assets of such
plans. Section 4975 of the Internal Revenue Code prohibits a similar set of
transactions between specified plans or individual retirement accounts and
persons who are "disqualified persons" (as defined in the Internal Revenue Code)
with respect to plans exempt from taxation under the Internal Revenue Code. Some
employee benefit plans, such as governmental plans and church plans, if no
election has been made under Section 410(d) of the Internal Revenue Code, are
not subject to the requirements of ERISA or Section 4975 of the Internal Revenue
Code, and assets of such plans may be invested in the notes, subject to the
provisions of other applicable federal and state law.
Investments by ERISA-regulated plans are subject to ERISA's general
fiduciary requirements, including the requirement of investment prudence and
diversification and the requirement that investments comply with the terms of
the documents governing the ERISA-regulated plan. Before investing in the notes,
the fiduciary of an ERISA-regulated plan should consider, among other factors,
whether to do so is appropriate in view of the overall investment policy and
liquidity needs of the plan.
PROHIBITED TRANSACTIONS
In addition, Section 406 of ERISA and Section 4975 of the Internal Revenue
Code prohibit parties in interest and disqualified persons with respect to
ERISA-regulated plans and plans exempt from taxation under the Internal Revenue
Code from engaging in some transactions involving such plans or "plan assets"
(as defined under ERISA) of such plans, unless a statutory or administrative
exemption applies to the transaction. Section 4975 of the Internal Revenue Code
and Sections 502(i) and 502(1) of ERISA provide for the imposition of excise
taxes and civil penalties on persons that engage or participate in such
non-exempt prohibited transactions. The issuer, the underwriters, the servicer,
the indenture trustee or their affiliates may be considered or may become
parties in interest or disqualified persons with respect to a plan. If so, the
86
acquisition or holding of the notes by, on behalf of or with plan assets of such
plan may be considered to give rise to a transaction that is prohibited by
Section 406 of ERISA and/or Section 4975 of the Internal Revenue Code, unless an
administrative exemption described below or some other exemption is available.
The notes may not be purchased with plan assets if the issuer, the
underwriters, the servicer or the indenture trustee or any of their affiliates
either:
(a) has discretionary authority or control with respect to the
investment or management of such assets; or
(b) has authority or responsibility to give, or regularly gives,
investment advice with respect to such assets pursuant to an agreement or
understanding that such advice will serve as a primary basis for investment
decisions with respect to such assets and that such advice will be based on
the particular needs of the plan; or
(c) is an employer of employees covered under the plan unless such
investment is made through an insurance company general or pooled separate
account or a bank collective investment fund and a prohibited transaction
exemption is available.
Depending on the relevant facts and circumstances, some prohibited
transaction exemptions may apply to the purchase or holding of the notes -- for
example, Prohibited Transaction Class Exemption ("PTCE") 96-23, which exempts
transactions effected on behalf of a plan by an "in-house asset manager"; PTCE
95-60, which exempts transactions between insurance company general accounts and
parties in interest; PTCE 91-38, which exempts transactions between bank
collective investment funds and parties in interest; PTCE 90-1, which exempts
transactions between insurance company pooled separate accounts and parties in
interest; or PTCE 84-14, which exempts transactions effected on behalf of a Plan
by a "qualified professional asset manager". Each investor using the assets of
an ERISA-regulated plan that 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 not result in a non-exempt prohibited
transaction.
Due to the complexity of these rules and the penalties imposed, any plan
fiduciary or other plan investor who proposes to invest plan assets in the notes
should consult with its counsel with respect to the potential consequences under
ERISA and Section 4975 of the Internal Revenue Code of doing so.
87
PLAN OF DISTRIBUTION
GENERAL
Under the terms of an underwriting agreement for the sale of the notes
offered by this prospectus, the issuer has agreed to sell to First Union
Securities, Inc., an indirect, wholly-owned subsidiary of Wachovia Corporation,
as the underwriter and the underwriter has agreed to purchase from the issuer,
the principal amount of the notes set forth below. Wachovia Corporation conducts
its investment banking, institutional, and capital markets businesses through
its various bank, broker-dealer and non-bank subsidiaries (including First Union
Securities, Inc.) under the trade name of Wachovia Securities. Any references to
Wachovia Securities in this prospectus, however, do not include Wachovia
Securities, Inc., member NASD/SIPC, a separate broker-dealer subsidiary of
Wachovia Corporation, and an affiliate of First Union Securities, Inc., which
may or may not be participating as a selling group member in the distribution of
the notes.
<Table>
<Caption>
INITIAL AGGREGATE UNDERWRITING
CLASS OF NOTES PRINCIPAL AMOUNT DISCOUNT PER NOTE
- -------------- ----------------- -----------------
A-1............................................ $ 65,419,401 %
A-2............................................ $ 12,827,334 %
A-3............................................ $107,749,602 %
A-4............................................ $ 27,450,494 %
B.............................................. $ 10,774,960 %
</Table>
In the underwriting agreement, the underwriter has agreed, subject to the
terms and conditions set forth in the agreement, to purchase all the notes
offered by this prospectus if any of the notes are purchased.
The underwriter has advised the issuer that the underwriter proposes
initially to offer the notes of each of the following classes to the public at
the prices set forth on the cover page hereof and to dealers at those prices
less a selling concession not in excess of the following percentages of the
principal amounts of the notes:
<Table>
<Caption>
SELLING CONCESSION
(AS A PERCENTAGE OF THE PRINCIPAL
CLASS OF NOTES AMOUNT OF THE CLASS OF NOTES)
- -------------- ---------------------------------
A-1................................................ %
A-2................................................ %
A-3................................................ %
A-4................................................ %
B.................................................. %
</Table>
Additionally, the underwriter may allow and the dealers may reallow a
concession not in excess of the following percentages of the principal amounts
of the notes:
<Table>
<Caption>
REALLOWANCE CONCESSION
(AS A PERCENTAGE OF THE PRINCIPAL
CLASS OF NOTES AMOUNT OF THE CLASS OF NOTES)
- -------------- ---------------------------------
A-1................................................ %
A-2................................................ %
A-3................................................ %
A-4................................................ %
B.................................................. %
</Table>
The expenses of the offering of the Class A Notes and the Class B Notes,
exclusive of underwriting discounts and commissions, are estimated to be
approximately $720,631.
The underwriting agreement provides that GreatAmerica Leasing Corporation
and the issuer, jointly and severally, will indemnify the underwriter of the
Class A Notes and the Class B Notes against some civil liabilities, including
liabilities under the Securities Act of 1933, as amended, or contribute to
payments the underwriters may be required to make.
88
There is currently no secondary market for the notes and you should not
assume that one will develop. The underwriter currently expects, but is not
obligated, to make a market in the notes. You should not assume that any such
market will develop, or if one does develop, that it will continue or provide
sufficient liquidity.
Until the distribution of the Class A Notes and the Class B Notes is
completed, rules of the Securities and Exchange Commission may limit the ability
of the underwriter to bid for and purchase the notes. As an exception to these
rules, the underwriter is permitted to engage in some transactions that
stabilize the price of the notes. These transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
notes.
Some of the persons participating in this offering may engage in
transactions that affect the price of the Class A Notes and the Class B Notes.
These transactions may include the purchase of the notes to cover syndicate
short positions. If the underwriter creates a short position in the notes in
connection with the offering, i.e., if it sells more notes than are set forth on
the cover page of this prospectus, the underwriter may reduce that short
position by purchasing such classes of notes in the open market. In general,
purchases of a security to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchases.
Neither the originator nor the underwriter makes any representations or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the notes. In
addition, neither the originator nor the underwriter makes any representation
that the underwriter will engage in those transactions or that those
transactions, once commenced, will not be discontinued without notice.
In the ordinary course of its business, the underwriter and its affiliates
have engaged and may engage in commercial banking and investment banking
transactions with GreatAmerica Leasing Corporation and its affiliates.
RATING OF THE NOTES
It is a condition to the issuance of the notes that they receive the
following ratings from the following rating agencies:
<Table>
<Caption>
MOODY'S
STANDARD & POOR'S INVESTORS FITCH
CLASS RATINGS GROUP SERVICE, INC. RATINGS
- ----- ----------------- ----------------- -------
Class A-1 Notes........................ A-1+ P-1 F1+/AAA
Class A-2 Notes........................ AAA Aaa AAA
Class A-3 Notes........................ AAA Aaa AAA
Class A-4 Notes........................ AAA Aaa AAA
Class B Notes.......................... AA Aa2 AA
</Table>
In addition Standard & Poor's Ratings Group and Fitch Ratings will rate the
Class C Notes and the Class D Notes that are not offered by the prospectus. The
Class C Notes will be rated "A" by Standard & Poor's Ratings Group and "A" by
Fitch Ratings. The Class D Notes will be rated "BBB" by both Standard & Poor's
Ratings Group and Fitch Ratings. Moody's Investors Service, Inc. will rate the
Class C Notes "A2". Moody's Investors Service, Inc. will not rate the Class D
Notes.
The rating will reflect only the views of the rating agencies and will be
based primarily on the subordination of some classes of notes to other classes
of notes as described in this prospectus, the reserve fund and the benefit of
certain residual cashflows, as well as the value and creditworthiness of the
contracts and equipment. The ratings are not a recommendation to purchase, hold
or sell the notes, since the ratings do not comment as to market price or
suitability for a particular investor. Each rating may be subject to revision or
withdrawal at any time by the assigning rating agency. There is no assurance
that any 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 the rating may have an
adverse affect on the market price of the notes. The rating of the notes
addresses the likelihood of the timely payment of interest and the
89
ultimate payment of principal on the notes as required by their terms. The
rating does not address the rate of prepayments that may be experienced on the
contracts and, therefore, does not address the effect of the rate of prepayments
on the return of principal to you.
LEGAL MATTERS
Chapman and Cutler, Chicago, Illinois will provide a legal opinion relating
to the notes in its capacity as special counsel to the issuer, the originator
and the servicer. Chapman and Cutler will provide a legal opinion relating to
federal tax matters in its capacity as tax counsel to the issuer and a legal
opinion relating to Iowa tax matters in its capacity as special Iowa tax counsel
to the issuer. Other legal matters for the underwriter will be passed upon by
Moore & Van Allen, PLLC, Charlotte, North Carolina.
EXPERTS
The balance sheet of GreatAmerica Leasing Receivables 2002-1, L.L.C. as of
January 1, 2002 included in this prospectus has been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing herein and
is included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
90
INDEX OF TERMS
<Table>
<Caption>
PAGE
----
Additional Principal........................................ 54
Class A Percentage.......................................... 54
Class A Principal Payment Amount............................ 54
Class A Target Investor Principal Amount.................... 55
Class B Floor............................................... 55
Class B Percentage.......................................... 55
Class B Principal Payment Amount............................ 55
Class B Target Investor Principal Amount.................... 55
Class C Floor............................................... 55
Class C Percentage.......................................... 56
Class C Principal Payment Amount............................ 56
Class C Target Investor Principal Amount.................... 56
Class D Floor............................................... 56
Class D Percentage.......................................... 56
Class D Principal Payment Amount............................ 56
Class D Target Investor Principal Amount.................... 56
Cumulative Loss Amount...................................... 56
Excess Contract............................................. 76
Excluded Amounts............................................ 49
Monthly Principal Amount.................................... 57
Overcollateralization Balance............................... 57
Required Holders............................................ 62
</Table>
91
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To GreatAmerica Leasing Receivables 2002-1, L.L.C.:
We have audited the accompanying balance sheet of GreatAmerica Leasing
Receivables 2002-1, L.L.C. (a Delaware limited liability company) (the
"Company") as of January 1, 2002. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the balance
sheet is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of GreatAmerica Leasing Receivables
2002-1, L.L.C. as of January 1, 2002 in conformity with accounting principles
generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Cedar Rapids, Iowa
January 23, 2002
F-1
GREATAMERICA LEASING RECEIVABLES 2002-1, L.L.C.
BALANCE SHEET
AS OF JANUARY 1, 2002
<Table>
ASSETS -- Cash.............................................. $1,000
======
MEMBERS' EQUITY/Membership Interests........................ $1,000
======
</Table>
NOTE TO THE BALANCE SHEET
GreatAmerica Leasing Receivables 2002-1, L.L.C. (the "Issuer") is a limited
purpose limited liability company established under the laws of the State of
Delaware and was formed by GreatAmerica Leasing Corporation (the "Originator"),
who holds a 100% membership interest, pursuant to the Limited Liability Company
Agreement dated as of September 24, 2001 (the "Limited Liability Company
Agreement"). The activities of the Issuer are limited by the terms of the
Limited Liability Company Agreement to purchasing equipment leases and lease
receivables (including equipment), loan agreements and other financing
agreements, issuing notes secured by such assets and other activities related
thereto. Prior to and including January 1, 2002, the Issuer did not conduct any
activities.
The Originator will pay all fees and expenses related to the organization
and operations of the Issuer (including any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States or any other domestic taxing authority upon the Issuer).
The Originator has also agreed to indemnify the indenture trustee, the
underwriter and certain other persons.
F-2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING
TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER THIS PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
$224,221,791
(APPROXIMATE)
GREATAMERICA LEASING RECEIVABLES 2002-1, L.L.C.
$65,419,401 % CLASS A-1 RECEIVABLE-BACKED NOTES, SERIES 2002-1
$12,827,334 % CLASS A-2 RECEIVABLE-BACKED NOTES, SERIES 2002-1
$107,749,602 % CLASS A-3 RECEIVABLE-BACKED NOTES, SERIES 2002-1
$27,450,494 % CLASS A-4 RECEIVABLE-BACKED NOTES, SERIES 2002-1
$10,774,960 % CLASS B RECEIVABLE-BACKED NOTES, SERIES 2002-1
GREATAMERICA LEASING CORPORATION,
AS SERVICER
PROSPECTUS
WACHOVIA SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<Table>
SEC Registration Fee........................................ $ 20,631
Printing Expenses........................................... $ 75,000
Trustee's Fees and Expenses................................. $ 5,000
Legal Fees and Expenses..................................... $300,000
Blue Sky Fees and Expenses.................................. $ 5,000
Accountants' Fees and Expenses.............................. $ 40,000
Rating Agency Fees.......................................... $250,000
Miscellaneous Fees.......................................... $ 25,000
--------
Total.................................................. $720,631
========
</Table>
- ---------------
* All amounts except the SEC Registration Fee are estimates of expenses incurred
or to be incurred in connection with the issuance and distribution of the
Notes.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware Limited Liability Company Act (Section 18-108) gives Delaware
limited liability companies broad powers to indemnify and hold harmless any
member or manager or other person from and against any and all claims and
demands whatsoever. The issuer shall, to the fullest extent permitted by the
Act, indemnify and hold harmless, and advance expenses to, each member or
manager against any losses, claims, damages or liabilities to which the
indemnified party may become subject in connection with any matter arising from,
related to, or in connection with, the issuer's business or affairs.
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, as amended, 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
None.
II-1
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
<Table>
1.1 Form of Underwriting Agreement
3.1 Form of Certificate of Formation of the issuer
3.2 Form of Certificate of Amendment of Certificate of Formation
of the issuer
3.3 Form of Limited Liability Company Agreement of the issuer
4.1 Form of Indenture (including form of notes)
5.1 Opinion of Chapman and Cutler
8.1 Tax opinion of Chapman and Cutler
8.2 Tax opinion of Chapman and Cutler
10.1 Form of Transfer and Servicing Agreement
10.2 Form of Custodian Agreement
23.1 Consent of Chapman and Cutler (included in Exhibit 5.1)
23.2 Consent of Chapman and Cutler (included in Exhibit 8.1)
23.3 Consent of Chapman and Cutler (included in Exhibit 8.2)
23.4 Consent of Deloitte & Touche LLP
24.1 Power of Attorney (previously filed)
25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of indenture trustee
</Table>
- ---------------
(b) Financial Statements
Balance Sheet of GreatAmerica Leasing Receivables 2002-1, L.L.C.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 14 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the act and will be governed by the final adjudication of such issue.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(c) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration
II-2
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.
(d) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(e) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Act"), the Registrant has duly caused this amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cedar Rapids, State of Iowa, on March 7, 2002.
GreatAmerica Leasing Receivables
2002-1, L.L.C.
By: /s/ TONY GOLOBIC
------------------------------------
Tony Golobic
President and Chief Executive
Officer
GreatAmerica Leasing Corporation, as
member
By: /s/ TONY GOLOBIC
------------------------------------
Tony Golobic
President and Chief Executive
Officer
Pursuant to the requirements of the Act, this Amendment to the Registration
Statement has been signed with respect to GreatAmerica Leasing Receivables
2002-1, L.L.C. by the following persons in the capacities and on the date
indicated:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ TONY GOLOBIC President, Chief Executive Officer March 7, 2002
------------------------------------------------ and Director (Principal
Tony Golobic Executive Officer)
* Senior Vice President, Chief *
------------------------------------------------ Financial Officer, Secretary and
Stanley M. Herkelman Director (Principal Financial
and Accounting Officer)
* Executive Vice President and *
------------------------------------------------ Director
Douglas D. Olson
* Controller and Director *
------------------------------------------------
Marcene Tolley
* Director *
------------------------------------------------
Michael P. Donahue
</Table>
Tony Golobic, by signing his name hereto, does sign and execute this
Amendment to the Registration Statement on behalf of the above-named officers
and directors of the Registrant on the seventh day of March, 2002 pursuant to
powers of attorney executed on behalf of each of such officers and directors and
filed with the Securities and Exchange Commission.
<Table>
*By: /s/ TONY GOLOBIC
-----------------------------------------
Tony Golobic
Attorney-in-Fact
</Table>
II-4