<PAGE>

    As filed with the Securities and Exchange Commission on August 23, 1999

                                                 Registration Nos. 333-
                                                                   333-     -01
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     under
                          The Securities Act of 1933

                                ---------------

                       GREEN TREE LEASE FINANCE II, INC.
            (Exact name of registrant as specified in its charter)

               Minnesota                             41-1892359
    (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)             Identification Number)

                     GREEN TREE LEASE FINANCE 1999-1, LLC
            (Exact name of registrant as specified in its charter)

               Delaware                                 None
    (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)             Identification Number)

                                ---------------

                             1100 Landmark Towers
                             345 St. Peter Street
                        St. Paul, Minnesota 55102-1639
                                (651) 293-3400
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                               BRIAN COREY, ESQ.
                             1100 Landmark Towers
                             345 St. Peter Street
                        St. Paul, Minnesota 55102-1639
                                (651) 293-3400
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                ---------------

              COPIES TO:                             COPIES TO:
        CHARLES F. SAWYER, ESQ.               SIEGFRIED P. KNOPF, ESQ.
         Dorsey & Whitney LLP                     Brown & Wood LLP
        220 South Sixth Street                 One World Trade Center
     Minneapolis, Minnesota 55402             New York, New York 10048
            (612) 343-7986                         (212) 839-5300

                                ---------------

  Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [_]

  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]

  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

                                ---------------

                        CALCULATION OF REGISTRATION FEE

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                         Proposed
                                          Proposed       Maximum
   Title of each Class                     Maximum      Aggregate    Amount of
      of Securities       Amount to be Aggregate Price   Offering   registration
    to be Registered       registered    per Unit(1)     Price(1)       fee
--------------------------------------------------------------------------------
<S>                       <C>          <C>             <C>          <C>
Lease-Backed Notes......  $336,000,000      100%       $336,000,000   $93,408
--------------------------------------------------------------------------------
</TABLE>
-------------------------------------------------------------------------------
(1) Estimated solely for the purposes of calculating the registration fee
    pursuant to Rule 457.

                                ---------------

  The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
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.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A         +
+registration statement relating to these securities has been filed with the   +
+Securities and Exchange Commission. These securities may not be sold nor may  +
+offers to buy be accepted prior to the time the registration statement        +
+becomes effective. This prospectus shall not constitute an offer to sell or   +
+the solicitation or an offer to buy nor shall there be any sale of these      +
+securities in any State in which such offer, solicitation or sale would be    +
+unlawful prior to registration or qualification under the securities laws of  +
+any such State.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

PROSPECTUS
                                     $

                     Green Tree Lease Finance 1999-1, LLC,
                                     Issuer
                    Green Tree Vendor Services Corporation,
                                    Servicer
                               Lease-Backed Notes


 We are offering the following classes of Notes:

<TABLE>
<CAPTION>
                          Original   Price
                         Principal    to    Underwriting Proceeds to
  Class    Interest Rate   Amount   Public    Discount     Issuer
  -----    ------------- ---------- ------- ------------ -----------
  <S>      <C>           <C>        <C>     <C>          <C>
  A-1             %      $                %         %            %
  A-2             %                       %         %            %
  A-3             %                       %         %            %
  A-4             %                       %         %            %
  B               %                       %         %            %
  C               %                       %         %            %
                         ---------- -------   -------      -------
    Total                $          $         $            $
</TABLE>


           Consider carefully the Risk Factors beginning on page   .

    Neither the Securities and Exchange Commission nor any state securities
 commission has approved or disapproved of these securities or passed upon the
 accuracy or adequacy of this prospectus. Any representation to the contrary is
                              a criminal offense.

   The Notes are obligations only of the Issuer. The Notes will not represent
interests in or obligations of Green Tree Vendor Services Corporation, Green
Tree Financial Corporation or any of their affiliates other than the Issuer.

   These Notes will be delivered on or about        , 1999.

   The underwriters named below will offer these securities to the public at
the offering price listed on this cover page and they will receive the discount
listed above. See "Underwriting."

                       Underwriters of the Class A Notes
                                 [Underwriters]

               Underwriter of the Class B Notes and Class C Notes
                                 [Underwriter]

                  The date of this Prospectus is        , 1999
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                   Page
-------                                                                   ----
<S>                                                                       <C>
REPORTS TO NOTEHOLDERS................................................... iii
WHERE YOU CAN FIND MORE INFORMATION...................................... iii
SUMMARY..................................................................   1
RISK FACTORS.............................................................   9
THE ISSUER AND THE SPC...................................................  15
GREEN TREE VENDOR SERVICES CORPORATION...................................  17
THE LEASES...............................................................  21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE
 ISSUER..................................................................  37
MANAGERS OF THE ISSUER...................................................  38
WEIGHTED AVERAGE LIFE OF THE NOTES.......................................  39
COLLATERAL CASHFLOWS AND RESIDUALS.......................................  44
DESCRIPTION OF THE NOTES.................................................  46
DESCRIPTION OF THE CONTRIBUTION AND SERVICING AGREEMENT..................  68
CERTAIN LEGAL ASPECTS OF THE LEASES......................................  75
FEDERAL INCOME TAX CONSEQUENCES..........................................  77
ERISA CONSIDERATIONS.....................................................  84
RATINGS OF THE NOTES.....................................................  85
USE OF PROCEEDS..........................................................  86
EXPERTS..................................................................  86
UNDERWRITING.............................................................  86
LEGAL MATTERS............................................................  87
INDEX OF PRINCIPAL TERMS.................................................  88
INDEX TO FINANCIAL STATEMENTS............................................ F-1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES............ A-1
</TABLE>

    The Underwriters may engage in transactions that stabilize, maintain, or in
some way affect the price of the Notes. These types of transactions may include
stabilizing, the purchase of Notes to cover syndicate short positions and the
imposition of penalty bids. For a description of these activities, please read
the section entitled "Underwriting."

    If you have received a copy of this prospectus in an electronic format, and
if the legal prospectus delivery period has not expired, you may obtain a paper
copy of this prospectus from Green Tree Financial Corporation or an underwriter
by asking for it.

    Certain capitalized terms used in this prospectus are defined on the pages
indicated in the section entitled "Index of Principal Terms."

                                       ii
<PAGE>

                             REPORTS TO NOTEHOLDERS

    Unless the Notes are issued in physical, rather than book-entry, form,
unaudited monthly and annual reports, which contain information concerning the
Issuer prepared by the Servicer, will be sent by the Trustee on behalf of the
Issuer only to Cede & Co. You can find a more detailed description of this
under the heading "Description of the Notes--Book-Entry Registration."

    If you purchase a Note, you may receive these reports by making a written
request to the Trustee, together with a certification that you are a Note
Owner. You should send any such request to the Trustee at the following
address: 180 East Fifth Street, St. Paul, Minnesota 55102. These reports do not
constitute financial statements prepared in accordance with generally accepted
accounting principles. Neither Green Tree Financial Corporation nor Green Tree
Vendor Services Corporation intends to send any of its financial reports to
Note Owners. The Servicer, on behalf of the Issuer, will file with the
Securities and Exchange Commission periodic reports concerning the Issuer as
required by law.

                      WHERE YOU CAN FIND MORE INFORMATION

    The Issuer and the SPC have filed a registration statement relating to the
Notes with the Securities and Exchange Commission. This prospectus is part of
the registration statement, but the registration statement contains additional
information. Federal securities law requires the filing of certain information
with the SEC, including annual, quarterly and special reports, proxy statements
and other information. You can read and copy the registration statement and
these documents at the public reference facility maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You
can also read and copy the registration statement and such reports, proxy
statements and other information at the following regional offices of the SEC:

<TABLE>
        <S>                 <C>
        New York Regional
        Office              Chicago Regional Office
        Seven World Trade
        Center              Citicorp Center
        Suite 1300          500 West Madison Street, Suite 1400
        New York, NY 10048  Chicago, IL 60661
</TABLE>

    Please call the SEC at 1-800-SEC-0330 for more information about the public
reference rooms. SEC filings are also available to the public on the SEC's web
site at http://www.sec.gov.

                                      iii
<PAGE>

                                    SUMMARY

    This summary highlights selected information regarding the Notes, and does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of the Notes, read this
entire prospectus.

Securities Offered..........
                              We are offering six classes of Notes:

<TABLE>
<CAPTION>
                                                                       Original
                                                              Interest Principal
Class                                                           Rate    Amount
-----                                                         -------- ---------
<S>                                                           <C>      <C>
A-1..........................................................      %     $
A-2..........................................................      %     $
A-3..........................................................      %     $
A-4..........................................................      %     $
B............................................................      %     $
C............................................................      %     $
</TABLE>

    The Class C Notes will be subordinate to the Class B Notes, and the Class B
Notes will be subordinate to the Class A Notes. For a further explanation of
this subordination, see "Subordination" below.

Issuer......................  Green Tree Lease Finance 1999-1, LLC, will issue
                              the Notes. It is referred to as the "Issuer" in
                              this prospectus. The sole member of the Issuer is
                              Green Tree Lease Finance II, Inc., a special-
                              purpose corporation that is a subsidiary of Green
                              Tree Vendor Services Corporation. Green Tree
                              Lease Finance II, Inc. is referred to as the
                              "SPC" in this prospectus.

Seller and Servicer.........  Green Tree Vendor Services Corporation will sell
                              the leases to the SPC, which will in turn sell
                              them to the Issuer. Vendor Services will service
                              the leases owned by the Issuer. As Servicer,
                              Vendor Services will collect payments on the
                              Leases and enforce defaulted leases when
                              necessary.

Trustee.....................  U.S. Bank Trust National Association will act as
                              Trustee under the Indenture that governs the
                              terms of the Notes.

Terms of the Notes

 . Payment Date............   The 20th day of each month, beginning on      ,
                              1999.

                                       1
<PAGE>


 .  Interest...............
                              Interest on the Notes will accrue at the
                              applicable interest rate from each payment date
                              to the day before the next payment date. For the
                              first payment date, interest begins to accrue on
                              the day the Notes are issued.

                              The interest rate for each class of Notes is
                              specified above.

                              Interest on the Class A-1 Notes will be computed
                              on the basis of the actual number of days elapsed
                              and a 360-day year. Interest on the other classes
                              of Notes will be computed on the basis of a 360-
                              day year comprised of twelve 30-day months.

 . Principal...............   Principal will be paid on the Notes on each
                              payment date. On each payment date, the Trustee
                              will pay principal to the Noteholders in the
                              following order of priority:

                                    ^  First, all principal payable on the
                                       Notes will be paid to the Class A-1
                                       Notes until they are paid in full;

                                    ^  After the Class A-1 Notes have been paid
                                       in full, a portion of the principal
                                       payable on the Notes will be paid to the
                                       Class A-2 Notes until paid in full, then
                                       to the Class A-3 Notes until paid in
                                       full, and then to the Class A-4 Notes
                                       until paid in full;

                                    ^  After the Class A-1 Notes have been paid
                                       in full, a portion of the principal
                                       payable on the Notes will be paid to the
                                       Class B Notes, but only if specified
                                       credit enhancement levels for the Class
                                       A Notes have been maintained;

                                    ^  After the Class A-1 Notes have been paid
                                       in full, a portion of the principal
                                       payable on the Notes will be paid to the
                                       Class C Notes until paid in full, but
                                       only if specified credit enhancement
                                       levels for the Class A and Class B Notes
                                       have been maintained.

                              See "Description of the Notes--Principal" for a
                              more complete description of the amount of
                              principal payable on each class of Notes on each
                              payment date.


                                       2
<PAGE>

 . Stated Maturity Dates...   Each class of Notes must be paid in full on or
                              before the stated maturity date of that class:

<TABLE>
<CAPTION>
                                                                         Stated
                                                                        Maturity
                   Class                                                  Date
                   -----                                                --------
                   <S>                                                  <C>
                   A-1.................................................
                   A-2.................................................
                   A-3.................................................
                   A-4.................................................
                   B...................................................
                   C...................................................
</TABLE>

 . Closing Date............          , 1999.

 . Subordination...........   The Class C Notes will be subordinated to the
                              Class A and Class B Notes, and the Class B Notes
                              will be subordinated to the Class A Notes:

                                *  On each Payment Date, the Indenture Trustee
                                   will use the Amount Available to pay
                                   interest on the Class A Notes, then interest
                                   on the Class B Notes, and then interest on
                                   the Class C Notes, and

                                *  On each Payment Date, the Indenture Trustee
                                   will use the Amount Available, after paying
                                   interest on the Notes as described above, to
                                   pay the amount of principal due on the Class
                                   A Notes, then the amount of principal due on
                                   the Class B Notes, and then the amount of
                                   principal due on the Class C Notes.

                              This makes it more likely that the Class A Notes
                              will be paid all interest and principal due on
                              them, but less likely that the Class C Notes will
                              be paid all interest and principal due on them.
                              For a more complete description of the
                              subordination of the Class B and Class C Notes,
                              see "Description of the Notes."

 . Ratings.................   We will not issue the Notes unless Standard &
                              Poor's Rating Services and Fitch IBCA, Inc. have
                              assigned the following ratings to each class of
                              Notes:

<TABLE>
<CAPTION>
                   Class            S&P   Fitch
                   -----            ---- --------
                   <S>              <C>  <C>
                   A-1............. A-1+ F-1+/AAA
                   A-2............. AAA  AAA
                   A-3............. AAA  AAA
                   A-4............. AAA  AAA
                   B............... A    A
                   C............... BBB  BBB
</TABLE>


                                       3
<PAGE>

                              The rating of each class of Notes addresses the
                              likelihood of the timely receipt of interest and
                              the payment of principal on that class on or
                              before the stated maturity date for that class. A
                              rating is not a recommendation to buy, sell or
                              hold securities and may be subject to revision or
                              withdrawal at any time by the assigning rating
                              agency. The ratings of the Notes do not address
                              the likelihood of payment of principal on any
                              class of Notes prior to its stated maturity date.
                              For a more complete description of the ratings of
                              the Notes, see "Ratings of the Notes."

Issuer's Assets.............  Payments on the Notes will be made solely from
                              the Issuer's assets. The Issuer's assets will
                              consist of:

                                ^  a pool of equipment leases;

                                ^  limited rights to the proceeds from
                                   disposition of the leased equipment
                                   following expiration of each lease that is a
                                   lease rather than a loan; and

                                ^  amounts on deposit in the collection
                                   account, the reserve account, and several
                                   other incidental accounts.

The Leases..................  As of        , 1999, the pool of leases that the
                              SPC will transfer to the Issuer had the following
                              characteristics (unless otherwise noted, amounts
                              and percentages are calculated using a
                              statistical discount rate and all percentages are
                              expressed as percentages of the statistical
                              discounted present value of the leases):

                                ^  the statistical discounted present value of
                                   the leases was $      ;

                                ^  there were       leases;

                                ^  the average lease principal balance was
                                   approximately $     ;

                                ^  approximately   % of the leases related to
                                   data processing equipment; approximately   %
                                   of the leases related to office machines;
                                   approximately   % of the leases related to
                                   telecommunications; and no other equipment
                                   type represented more than   % of the
                                   leases;

                                       4
<PAGE>


                                ^  the obligors on approximately 11.52% of the
                                   leases were located in California;
                                   approximately 10.32% were located in New
                                   York; approximately 8.27% were located in
                                   Florida; approximately 7.35% were located in
                                   Texas; approximately 6.12% were located in
                                   New Jersey; and no other state represented
                                   more than 5.0% of the leases;

                                ^  approximately   % of the leases were
                                   originated by Vendor Services, and the
                                   remaining   % of the leases were originated
                                   by third parties and purchased by Vendor
                                   Services;

                                ^  the remaining term of the leases ranged from
                                     months to    months; and

                                ^  the weighted average remaining term of the
                                   leases was approximately    months and the
                                   weighted average age of the leases was
                                   approximately    months.

                              All the percentages shown above are based on an
                              assumed principal balance for the leases. In
                              preparing these statistics, we calculated the
                              principal balance of each lease by computing the
                              present value of all future scheduled payments on
                              that lease (and not including delinquent
                              amounts), using a discount rate of   %. Based on
                              this assumed discount rate, which we refer to as
                              the statistical discount rate, the aggregate
                              principal balance of the leases as of        ,
                              1999 was calculated to be $       . For more
                              information about the leases, see "The Leases--
                              Certain Statistics Relating to the Cut-Off Date
                              Pool".

                              The aggregate principal balance of the leases as
                              of each payment date will be calculated using a
                              discount rate of   %. As of the initial cut-off
                              date, the aggregate principal balance of the
                              leases calculated using the discount rate was
                              $     .

                              As described under "The Leases--Substitution,"
                              under certain circumstances Vendor Services or
                              the SPC may substitute new leases for leases to
                              be removed from the Issuer.


                                       5
<PAGE>

Servicer Advances...........  For any payment date, the servicer may, but will
                              not be required to, advance to the Trustee an
                              amount to cover delinquencies in scheduled
                              payments on the leases. If the servicer makes
                              such an advance, it will be entitled to recover
                              that advance from late payments made on that
                              delinquent lease or, if necessary, from payments
                              made on other leases.

Leased Equipment and
 Residual Realizations......
                              Because many of the leases are "true leases," the
                              equipment subject to those leases will belong to
                              the SPC, and the SPC will sell or re-lease the
                              equipment following the expiration of the lease.
                              The SPC will not transfer to the Issuer its
                              interest in the equipment subject to the leases,
                              but it will make the cash flows realized from the
                              sale or re-lease of equipment during any month
                              available to the Issuer on the next payment date,
                              to be used to make payments on the Notes if
                              collections on the leases are insufficient. As of
                                     , 1999, Vendor Services estimated the
                              residual value of the equipment subject to the
                              leases to be $      . The amounts the SPC
                              actually realizes from the disposition of the
                              equipment could be less.

Reserve Account.............
                              The SPC will establish a reserve account and
                              deposit an amount equal to   % of the initial
                              pool principal balance, or approximately $     .
                              The Trustee will use amounts on deposit in the
                              reserve account to pay the following amounts if
                              payments received on the leases are insufficient:

                                ^  amounts owed to the servicer, if Vendor
                                   Services or an affiliate is no longer the
                                   servicer;

                                ^  interest due on the Notes; and

                                ^  principal due on the Notes.

                              For more information about the reserve account,
                              see "Description of the Notes--Reserve Account."

                                       6
<PAGE>


Mandatory Purchase or
 Replacement of Certain
 Leases.....................
                              Vendor Services will make representations and
                              warranties with respect to each lease and the
                              related equipment, as more fully described in
                              "The Leases--Representations and Warranties Made
                              by Vendor Services." If there is a serious breach
                              of any such representation or warranty and it is
                              not cured within a specified period, the Trustee
                              can require Vendor Services to purchase that
                              lease. In lieu of purchasing a lease, Vendor
                              Services may, at its option, replace that lease
                              with a substitute lease. See "The Leases--
                              Substitution."

Priority of Payments........
                              On each payment date, the Trustee will use
                              payments collected on the leases in the following
                              order of priority:

                                    ^  if Vendor Services is no longer the
                                       servicer, to pay the servicing fee to
                                       the successor servicer;

                                    ^  to repay the servicer for any advances
                                       it made in prior months but has not
                                       recovered;

                                    ^  to pay interest on the Notes in the
                                       priority described under "Interest"
                                       above;

                                    ^  to pay principal on the Notes in the
                                       priority described under "Principal"
                                       above;

                                    ^  to deposit in the reserve account the
                                       amount, if any, necessary to increase
                                       the balance therein to its requisite
                                       amount;

                                    ^  if Vendor Services is the servicer, to
                                       pay the servicing fee to Vendor
                                       Services; and

                                    ^  to pay the remainder, if any, to the
                                       SPC.

Optional Purchase of          Once the unpaid principal balance of the Notes is
 Leases.....................  less than 10% of the initial principal balance of
                              the lease pool, the SPC may repurchase all the
                              leases. That would result in a prepayment of the
                              outstanding Notes. For a more complete
                              description of this repurchase right, see
                              "Description of the Notes -- Optional Purchase of
                              Leases."

                                       7
<PAGE>


U.S. Taxation...............
                              In the opinion of Dorsey & Whitney LLP, counsel
                              to the Issuer, the Notes will be characterized as
                              indebtedness and the Issuer will not be
                              characterized as an "association" or "publicly
                              traded partnership" taxable as a corporation for
                              federal income tax purposes. By purchasing a
                              Note, you will agree to treat your Note as
                              indebtedness for federal, state and local income
                              tax purposes. You should consult your own tax
                              advisor regarding the federal income tax
                              consequences of the purchase, ownership and
                              disposition of Notes, and the tax consequences
                              arising under the laws of any state or other
                              taxing jurisdiction. See "United States
                              Taxation."

ERISA Considerations........  Subject to the considerations described in "ERISA
                              Considerations," employee benefit plans that are
                              subject to the Employee Retirement Income
                              Security Act of 1974, as amended, may purchase
                              Notes. A fiduciary of an employee benefit plan
                              must determine that the purchase of a Note is
                              consistent with its fiduciary duties under
                              applicable law and does not result in a non-
                              exempt prohibited transaction under applicable
                              law.

Legal Investment............
                              The Class A-1 Notes will be eligible securities
                              for purchase by money market funds under Rule 2a-
                              7 under the Investment Company Act of 1940.

                                       8
<PAGE>

                                  RISK FACTORS

    You should consider the following factors in deciding whether to purchase
Notes.

The Issuer has limited assets to make payments on the Notes.

    The Issuer will have no assets other than the leases, rights to residual
realizations on the related equipment, amounts on deposit from time to time in
the collection account, the residual account, the reserve account and the
accounts established pursuant to the Contribution and Servicing Agreement. The
Notes will represent obligations solely of the Issuer, and will not be insured
or guaranteed by Vendor Services, the SPC, or the Trustee. As a result, you may
be subject to delays in payment and may incur losses on your investment as a
result of defaults or delinquencies on the leases, or because of depreciation
in the value of the related equipment or because of some other inability to
realize on the equipment. See "--Some leases may not be enforceable" below.

The Class B and Class C Notes have a greater risk of loss from delinquencies
and defaults on the leases.

    Delinquencies and defaults on the leases will result in a smaller amount of
cash available for distribution on a payment date. Because the available cash
is distributed in a specified order of priority, there is a risk that Notes
that are lower in that order of priority may not receive some or even any of
the amount due to them on that payment date. The only protection against
delinquencies and liquidation losses for the Class C Notes will be any residual
realizations each month, and the amounts, if any, on deposit in the residual
account and the reserve account that are not used to make payments on the Class
A or Class B Notes.

The more senior classes of Notes have limited protection from delinquencies and
defaults.

    The only protection against delinquencies and liquidation losses for the
more senior classes of Notes is the subordination of the more subordinate
classes, plus the amounts, if any, on deposit in the residual account and the
reserve account. High delinquencies and losses on the leases could eliminate
the protection afforded the Class B Notes by the subordination of the Class C
Notes, and the Class B Noteholders could incur losses on their investment as a
result. Higher delinquencies and losses on the leases could eliminate the
protection offered to the Class A Noteholders by the subordination of the Class
B and Class C Notes, and the Class A Noteholders could incur a loss on their
investment as a result.

If Vendor Services became insolvent, there may be delays or reductions in
distributions to holders of Notes.

  .   The transfer of the leases and equipment might be characterized as a
      borrowing by Vendor Services.

     Dorsey & Whitney LLP, counsel to the Issuer, will deliver a legal
     opinion to the effect that the transfer of the leases and the related
     equipment from Vendor Services to the SPC constitutes a sale or
     absolute assignment, rather than a pledge to secure indebtedness of
     Vendor Services; and that in the event that Vendor

                                       9
<PAGE>

     Services were to become a debtor under the federal bankruptcy code,
     the leases, payments thereunder and the equipment would not be
     property of the bankruptcy estate of Vendor Services. However, if
     Vendor Services were to become a debtor under the federal bankruptcy
     code or similar applicable state laws, a creditor or trustee in
     bankruptcy of Vendor Services, or Vendor Services as debtor-in-
     possession, might argue that the transfer of the Leases and the
     equipment from Vendor Services to the SPC should be characterized as a
     pledge of such assets rather than a sale or absolute assignment. If
     this position were accepted by a court, any leases considered to be
     "true" leases under the applicable insolvency laws, as described under
     "The Leases-- Description of the Leases," and any other lease
     considered to be executory under these insolvency laws, could be
     rejected by the trustee in bankruptcy or by Vendor Services as debtor-
     in-possession, which would result in the termination of scheduled
     payments under those leases 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 SPC will file UCC financing
     statements perfecting a security interest for the benefit of the SPC
     in Vendor Services' interests in the equipment, and assignments of
     such perfected security interest to the Issuer and the Trustee,
     against Vendor Services in those states where equipment subject to
     leases constituting at least 75% of the initial pool principal balance
     and at least 75% of the aggregate book value of the equipment is
     located. Even if these leases were not ultimately rejected in the
     event of an insolvency of Vendor Services, the Issuer and the Trustee
     could experience a delay in or reduction of collections on all of the
     leases, and you could incur a loss on your investment as a result.

  .   The SPC might be consolidated with Vendor Services.

     Dorsey & Whitney LLP will deliver a legal opinion to the effect that,
     if Vendor Services were to become a debtor in a bankruptcy case, the
     bankruptcy court would not order that the assets and liabilities of
     the SPC be consolidated with those of Vendor Services. The SPC has
     taken steps to prevent an insolvency of Vendor Services resulting in
     the consolidation of the assets and liabilities of the SPC with those
     of Vendor Services. These steps include the maintenance of separate
     books and records and the insistence on arm's-length terms in all
     agreements with Vendor Services and affiliates thereof. Nevertheless,
     there can be no assurance that, in the event of a bankruptcy or
     insolvency of Vendor Services, a court would not order that the
     Issuer's or the SPC's assets and liabilities be consolidated with
     those of Vendor Services. Any such order would reduce or delay the
     Issuer's receipt of payments on the leases, and you could incur a loss
     on your investment as a result.

  .   The transfer of the leases to the SPC might be deemed a fraudulent
      transfer.

     If Vendor Services were to become bankrupt or insolvent, then the
     bankruptcy court could rule that the transfer of the leases and the
     equipment to the SPC was a fraudulent transfer if Vendor Services
     received less than reasonably equivalent value or fair consideration
     for the leases and the equipment and was insolvent

                                       10
<PAGE>

     when it made the transfer or was rendered insolvent as a result of the
     transfer. In that case, the court could subordinate the rights of the
     Noteholders to payments on the leases to the rights of Vendor
     Services' creditors, and you could incur a loss on your investment as
     a result.

  .   Vendor Services will be allowed to commingle the collections on the
      leases with its own assets.

     While Vendor Services is the servicer, cash collections held by Vendor
     Services will be commingled and used for its benefit prior to the date
     on which those collections must be deposited in a separate collection
     account. In the event of the insolvency of the servicer or, in certain
     circumstances, the lapse of certain time periods, the Issuer may not
     have a perfected ownership or security interest in those collections,
     and you could suffer delays or reductions in payments on the Notes as
     a result.

  .   You are relying on representations and warranties made by Vendor
      Services.

     Vendor Services will make representations and warranties regarding the
     leases, the equipment and other matters. See "The Leases--
     Representations and Warranties Made by Vendor Services." In the event
     that any representation or warranty with regard to a specific lease is
     breached, is not cured within a specified period of time, and the
     value of that lease is materially and adversely affected by the
     breach, Vendor Services will be required to purchase the lease from
     the Issuer, or may be allowed to deliver a substitute lease therefor.
     In the event of a bankruptcy or insolvency of Vendor Services, the
     Trustee may be unable to compel Vender Services to repurchase leases,
     and you could incur a loss on your investment as a result.

The SPC or the Issuer might become insolvent.

    If the SPC or the Issuer were to become insolvent under any insolvency law,
delays in the amount of distributions to Noteholders would be likely and
Noteholders could incur a loss on their investment as a result. The SPC and the
Issuer have each taken steps to minimize the likelihood that it will become
bankrupt or otherwise insolvent. The SPC is prohibited by its organizational
documents and the agreements related to this transaction from engaging in
activities--including the incurrence or guaranty of debt--other than
specifically permitted activities. See "The Issuer and the SPC."

A financial intermediary might become insolvent.

    As described under "Green Tree Vendor Services Corporation--Equipment Lease
Business," Vendor Services from time to time acquires leases from financial
intermediaries. Similar to the risks described above related to any insolvency
of Vendor Services, in the event that a financial intermediary were to become
insolvent, the sale of the related leases from that financial intermediary to
Vendor Services could be characterized as a fraudulent transfer or as a pledge
to secure indebtedness rather than a sale. In this event, the Issuer and the
Trustee could experience a delay in or reduction of collections on such leases,
and you could incur a loss on your investment as a result.

                                       11
<PAGE>

The leases may be prepaid or terminated before their scheduled maturity.

    The weighted average life of the Notes may be reduced by prepayments and
early terminations of the leases. Prepayments and early terminations may result
from voluntary prepayments by obligors, defaults, physical damage to the
related equipment, purchases by Vendor Services of leases as a result of
uncured breaches of the representations and warranties made by it with respect
thereto, as described in "The Leases--Representations and Warranties Made by
Vendor Services," or purchases by Vendor Services of leases because, as
servicer, it agreed to modifications of the terms of the lease. In addition,
the Notes may be prepaid in full if the SPC exercises its option to purchase
all of the remaining leases, See "Description of the Notes--Optional Purchase
of Leases." The servicer may allow a voluntary prepayment of a lease by an
obligor at any time so long as the amount paid by or on behalf of the obligor
is at least equal to the required payoff amount of that lease. The rate of
prepayments and early terminations on the leases, including those due to
obligors seeking early termination and those due to defaults, may be influenced
by a wide variety of economic and other factors, including, among others,
changes in the reimbursement policies of governmental or third party payors,
obsolescence of the equipment, changes in interest rates, changes in local,
regional or national economies or changes in federal income tax laws.
Therefore, you must not assume the leases will prepay at a certain rate, or
when any prepayments will occur. As the rate of payment of principal of the
Notes will depend on the rate of payment, including prepayments, on the leases,
the rate at which such principal will be paid cannot be predicted and the final
payment of a class of Notes could occur significantly earlier than the stated
maturity date of that class of Notes. You may not be able to reinvest principal
paid on any Notes at an interest rate equal to the interest rate for those
Notes, and you will bear all reinvestment risk resulting from the timing of
payments of principal on your Notes. See "Weighted Average Life of the Notes."

Vendor Services may substitute leases.

    Vendor Services may, but is not obligated to, substitute one or more leases
in exchange for

  .liquidated leases,

  .leases that it is required to repurchase,

  .leases that have been modified, and

  .leases that have been prepaid in full.

Although any substitute lease must satisfy certain criteria, we cannot assure
you that the delinquency and default experience of the Issuer with respect to
substitute leases will be comparable to that of the leases so replaced. The
servicer's monthly report to Noteholders will disclose all substitute leases
delivered to the Issuer during the related monthly period, and Vendor Services
will make representations and warranties regarding any substitute leases
described under "The Leases--Representations and Warranties Made by Vendor
Services," but the characteristics of such substitute leases will not be
verified by independent accountants or any other third party.


                                       12
<PAGE>

Residual realizations may be less than we expect, and will provide only limited
support for the Notes.

    The availability of residual realizations will depend on various factors,
including the timing of lease 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 lease to which such equipment is subject, whether as a result of early
termination or upon scheduled expiration of the lease, 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 the equipment. However, 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 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 lease 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 leases is zero or
insignificant. Vendor Services may, but is not obligated to, substitute one or
more leases in exchange for liquidated leases, leases that it is required to
repurchase, leases that have been modified, and leases that have been prepaid
in full. If Vendor Services exercises this option, the residual realizations,
if any, from the lease being substituted for would belong to Vendor Services
and would not be available to make payments on the Notes.

    Moreover, any month's residual realizations not used to pay interest or
principal on the related payment date generally will be

    (1) deposited into the reserve account to the extent that the amount on
  deposit in the reserve account is less than the required reserve amount,
  or

    (2) released to the SPC, and, upon such release to the SPC, will not
  thereafter be available to make payments on the Notes.

Accordingly, we cannot assure you that residual realizations will be available
on a payment date when the collections on the leases are insufficient to pay
interest and principal on the Notes.

Some leases may not be enforceable.

    UCC financing statements were not filed to perfect Vendor Services'
security interest in some of the equipment. It has been the general policy of
Vendor Services, depending on the dollar amount of the particular lease, not to
file UCC financing statements with respect to the equipment relating to some
leases. See "Green Tree Vendor Services Corporation--Documentation." Vender
Services will make no representation and warranty about the perfection or
priority of any security interest in the related equipment. See "The Leases--
Representations and Warranties Made by Vendor Services." With respect to some
of the leases, that means a purchaser from the applicable obligor of the
related equipment would acquire the equipment free and clear of the interest of
Vendor Services in the equipment, and

                                       13
<PAGE>

a creditor of the obligor which has taken a security interest in the equipment
and filed a UCC financing statement with respect thereto or a trustee in the
bankruptcy of such obligor would have priority over the interest of Vendor
Services in the equipment. Any such purchaser, creditor or trustee would have
an interest superior to the interest of the Issuer in that equipment. All of
the leases prohibit the obligor from selling or pledging the related equipment
to third parties.

    Due to the administrative burden and expense, we will not file assignments
of the UCC financing statements perfecting the security interest of Vendor
Services in the equipment--to the extent that such financing statements have
been filed against the obligor, as discussed above--to reflect the SPC's, the
Issuer's or the Trustee's interests therein. While not filing such assignments
does not affect the Issuer's interest in the leases or perfection of the
Trustee's interest in such leases, it does expose the Issuer, and thus
Noteholders, to the risk that Vendor Services could release its security
interest in the equipment of record, and it could complicate the Issuer's
enforcement, as assignee, of Vendor Services's security interest in the
equipment. While these risks should not affect the perfection or priority of
the interest of the Trustee in the leases or rights to payment thereunder, they
may adversely affect the right of the Trustee to receive proceeds of
disposition of the equipment subject to a liquidated lease. Additionally,
statutory liens for repairs or unpaid taxes and other liens arising by
operation of law may have priority even over prior perfected security interests
in the equipment assigned to the Trustee.

Vendor Services will hold the lease documents.

    The Servicer will hold the leases and certain related documents on behalf
of the Issuer and the Trustee. To facilitate servicing and save administrative
costs, the documents will not be physically segregated from other similar
documents that are in the Servicer's possession. UCC financing statements will
be filed in the appropriate jurisdictions reflecting

  .   the sale and assignment of the leases and Vendor Services' interests
      in the equipment to the SPC, provided that filings with respect to
      Vendor Services' interests in the equipment will be made only in some
      states, as described above under "The transfer of the leases and
      equipment might be characterized as a borrowing by Vendor Services,"

  .   the transfer and assignment of the leases and rights to residual
      realizations by the SPC to the Issuer, and

  .   the pledge of the leases and the residual realizations by the Issuer
      to the Trustee.

The Servicer's accounting records and computer systems will also reflect these
transfers. The leases will not, however, be stamped or otherwise marked to
reflect that they have been sold to the SPC, transferred to the Issuer or
pledged to the Trustee. If, through inadvertence or otherwise, Vendor Services
were to sell any of the leases to another party, or grant a security interest
to another party that purchased or took a security interest in any of such
leases in the ordinary course of business and took possession of such leases,
that purchaser or secured party might acquire an interest in the leases
superior to the interest of the Issuer and the

                                       14
<PAGE>

Trustee. Such superior interest may include an ownership interest, which would
cut off all rights of the Issuer to such leases and payments thereunder, or a
security interest, which would be senior to the security interest held by the
Issuer; in either case, you could incur a loss on your investment as a result.

The Notes may have limited liquidity.

    There is currently no market for the Notes. Each Underwriter expects, but
will not be obligated, to make a market for the classes of Notes for which it
is acting as underwriter. We cannot assure you that a secondary market for the
Notes will develop or, if it does develop, that it will provide you with
liquidity of investment or will continue for the life of such Notes. As a
result, you must be prepared to bear the risk of holding the Notes for as long
as the Notes are outstanding.

                                       15
<PAGE>

                             THE ISSUER AND THE SPC

The Issuer

    The Issuer is a Delaware limited liability company. Green Tree Lease
Finance II, Inc. ("SPC"), a Minnesota corporation, is the sole and managing
member of the Issuer. The SPC is wholly owned by Vendor Services.

    The Issuer has been formed solely for the purposes of the transactions
described in this Prospectus. Under its LLC Agreement and the Indenture, the
Issuer is not permitted to engage in any activity other than:

      (1) acquiring the leases and rights to the residual realizations from
  the SPC,

      (2) pledging the leases and its rights to the residual realizations to
  the Trustee,

      (3) performing its obligations under the Contribution and Servicing
  Agreement and the Indenture, and

      (4) engaging in other transactions, including entering into
  agreements, that are necessary, suitable or convenient to accomplish the
  foregoing or are incidental thereto or connected therewith.

The Issuer is prohibited from incurring any debt, issuing any obligations,
incurring any liabilities, except in connection with the issuance of the Notes,
and is prohibited from filing for bankruptcy without the approval of all of the
SPC's directors, including the independent director.

The SPC

    The SPC, as sole and managing member of the Issuer, does not intend to
engage in any business or activities other than

      (1) becoming a member or shareholder of, making capital contributions
  to, and acting as the managing member of, the Issuer and other similar
  special purpose entities;

      (2) acquiring, owning, leasing, transferring, receiving and pledging
  the Leases and related equipment, other similar leases and related
  equipment, and related activities set forth in the SPC's Articles of
  Incorporation; and

      (3) engaging in any lawful act or activity and exercising any powers
  permitted to Minnesota corporations that are incidental to and necessary
  or convenient for the accomplishment of the above mentioned business and
  purposes, all as more specifically set forth in its Articles of
  Incorporation, provided that none of the actions referenced in clauses (2)
  and (3) for other leases and equipment and related activities above, may
  result in a downgrade of a rating issued by a rating agency for the Notes.

The SPC is not liable, responsible or obligated, directly or indirectly, for
payment of any principal, interest or any other amount in respect of any of the
Notes. Pursuant to its Articles of Incorporation, the SPC must at all times
have at least one director who is "independent" of Green Tree and its
affiliates, as defined in its articles.


                                       16
<PAGE>

Transfer of Leases and Equipment

    On the closing date, Vendor Services will contribute the leases and the
related equipment to the SPC pursuant to the Transfer Agreement, dated as of
      , 1999, between Vendor Services, as seller and the SPC, as purchaser.
Immediately thereafter, the SPC will, pursuant to the Contribution and
Servicing Agreement, among the Issuer, the SPC, Vendor Services, as Servicer
and the Trustee, contribute to the Issuer all of the leases and certain rights
to the residual realizations and the reserve account, and Vendor Services will
agree to service the leases on behalf of the Issuer.

    The Issuer will pledge substantially all of its assets to the Trustee and
issue the Notes pursuant to the Indenture. The Issuer's assets that will be
pledged to secure payment of the Notes will consist of:

    (1) a pool of equipment lease contracts (each, a "Lease" and in the
  aggregate, the "Lease Pool") with various lessees, borrowers or other
  obligors thereunder, including all monies at any time paid or payable
  thereon or in respect thereof from and after       , 1999 (the "Initial
  Cut-Off Date") or, in the case of Substitute Leases, the first day of the
  month of transfer to the Issuer (each such date, or the Initial Cut-Off
  Date, as applicable to each Lease, a "Cut-Off Date") (in the form of (i)
  Scheduled Payments (including all Scheduled Payments due prior to, but not
  received as of, the Cut-Off Date, but excluding any Scheduled Payments due
  on or after, but received prior to, the Cut-Off Date), (ii) Prepayments,
  and (iii) Liquidation Proceeds (including all net proceeds from the
  disposition of the related Equipment) received with respect to defaulted
  Leases;

    (2) certain rights to Residual Realizations and amounts, if any, on
  deposit in the Residual Account, to the extent necessary to make payments
  of interest and principal then due on the Notes;

    (3) amounts on deposit in (and Eligible Investments allocated to)
  certain accounts established pursuant to the Indenture and the
  Contribution and Servicing Agreement, including the Collection Account;

    (4) funds on deposit in the Reserve Account; and

    (5) the Issuer's rights under the Contribution and Servicing Agreement
  and the SPC's rights under the Transfer Agreement.

                                       17
<PAGE>

                     GREEN TREE VENDOR SERVICES CORPORATION

General

    The Leases comprising the Trust Assets have been originated by Green Tree
Vendor Services Corporation ("Vendor Services") or, in some cases, purchased
from third parties by Vendor Services. Vendor Services is a leading independent
provider of vendor/manufacturer-oriented equipment finance programs, with
headquarters in Bloomington, Minnesota, additional operations in Paramus, New
Jersey, and twelve regional sales offices located throughout the United States.
Vendor Services, a wholly-owned subsidiary of Green Tree Financial Corporation
("Green Tree"), was acquired from FINOVA Corporation in November 1996. Vendor
Services' original predecessor, TriContinental Leasing Corporation, was
established in 1968, although its equipment leasing business has undergone
several restructurings and changes of ownership since that time.

    Vendor Services offers "small-ticket" equipment leasing programs, for
assets with a purchase price generally less than $100,000, to manufacturers,
dealers and distributors, and to a select group of financial intermediaries
nationwide, facilitating the sale of their products to end-user customers.

Equipment Lease Business

  Market Position

    Vendor Services establishes customized financing programs for the end-user
customers of equipment vendors and select financial intermediaries that focus
on end-user customers who meet Vendor Services's general customer profiles. The
equipment vendor segment has been the primary focus of Vendor Services's
activities. In total, as of [      ,] Vendor Services had in its portfolio a
total of [    ] individual end-user customers with active accounts. Vendor
Services attempts to maintain geographical diversity and a broad cross-section
of commercial account types in its lease portfolio.

  Equipment Vendors

    The primary sales focus of Vendor Services is on providing point-of-sale
financing for the customers of equipment vendors, including equipment
manufacturers, dealers and distributors that sell their products regionally or
nationally. While Vendor Services primarily finances office equipment such as
copy machines, fax machines, personal computers and related peripherals, office
furniture and telephone systems, its vendor base also consists of sellers of
commercial laundry equipment, automotive diagnostic equipment and health-care
related products.

  Financial Intermediaries

    With respect to financial intermediaries, Vendor Services focuses its
activities on those that have industry recognition, proven track records in
generating new business through end-user contracts or through low-end equipment
dealers and a customer base consistent with Vendor Services's general customer
profiles. Each lease acquired from financial

                                       18
<PAGE>

intermediaries is individually approved by Vendor Services using Vendor
Services' own credit underwriting criteria.

Credit Underwriting Standards

    Vendor Services has established policies, controls, systems and procedures
designed to manage and limit credit risk. These policies, controls, systems and
procedures are subject to periodic review by management.

    Vendor Services seeks to minimize credit risk through diversification of
the portfolio by customer, industry segment, equipment type, geography and
transaction maturity. Vendor Services's financing activities are spread across
a wide range of equipment types, including general equipment, office equipment,
information technology and light commercial equipment, with end-users located
throughout the United States.

    Underwriting procedures are divided into three main categories: Equipment
Dealers and Manufacturers, Financial Intermediaries and Lessees. Listed below
is an overview of each underwriting process.

  Equipment Dealers and Manufacturers

    Vendor Services requires that all leased equipment be sold by authorized
sellers that have sufficient experience with each brand they sell. Credit
requirements vary depending on the degree to which Vendor Services relies on
the dealer or manufacturer to support and service the equipment.

  Financial Intermediaries

    Financial intermediaries are required to have well-established histories
and conform to Vendor Services's approved equipment Dealer/Manufacturers
business line. Although standard industry representations and warranties are
required, Vendor Services's credit decision will not depend on an financial
intermediary's ability to honor these obligations.

  Lessees

    Vendor Services's underwriting standards are intended to evaluate a
prospective customer's credit standing and repayment ability. Credit decisions
are based on the credit characteristics of the applicant, loss experience with
comparable customers, the amount, terms and conditions of the proposed
transaction and the type of equipment to be leased or financed. Vendor Services
uses a proprietary automated credit scoring system, which is a statistically
based scoring system that quantifies information obtained from customers'
credit applications and credit reports.

Documentation

    Prior to funding a leasing and financing transaction, a complete
documentation package must be completed. Generally, such a package includes a
credit application, signed

                                       19
<PAGE>

lease/installment sale or financing agreement, vendor invoice, initial
lease/advance payment, proof of insurance (where relevant), delivery and
acceptance acknowledgments and appropriate UCC financing statements. UCC
filings are generally required if the underlying equipment cost is over
$25,000.

Collections

    Invoices are generated 21 days prior to the due date with a 10-day grace
period before late charges accrue. Identified payments are electronically
posted according to an established hierarchy.

    The collection processes begin after 15 days with an automatic late notice.
Collection calls are placed between 15 and 30 days after the due date. A
contract is classified as delinquent when it reaches 31 days past due.
Automated "work to be done screens" are updated daily, allowing individual
collectors to customize their follow-up procedures. Management approval is
required for contract rewrites or extensions.

Charge-off Policy

    Vendor Services works closely with vendors to manage delinquencies by
maintaining and closely monitoring non-accrual and write-off policies. Vendor
Services requires that accounts 90-plus days past due (or less, if in the
judgment of the collection manager the account is impaired) are deemed "non-
earning" and are placed on non-accrual status. Non-accrual accounts are
assigned to the legal administration department. This department is responsible
for ensuring collection costs are reasonable in relation to exposure and
ability to collect from a lessee or guarantor, and for negotiating and
processing settlements and write-offs within authorized levels. A write-off is
recommended by the legal administration department if it has been determined
that the lease is uncollectible even through litigation. A legal administrator
may refer a delinquent account to a pre-approved collection agency or to an
attorney, based upon dollar amount and the likelihood of collection.

    Before an account is written-off or settled, its disposition must be
approved at a level of management commensurate with the size of the account.
Similarly, re-writes and extensions must be approved at a level of management
commensurate with the size of the account.

Portfolio Monitoring

  Portfolio Performance Tracking

    Vendor Services uses a number of tools to monitor portfolio performance.
Monthly vendor performance reports are prepared for all active accounts,
indicating the dollar amount of delinquent accounts, the percentage of accounts
delinquent, the dollar amount of accounts on non-accrual status, the percentage
of accounts on non-accrual status and the dollar amount of any accounts written
off. Accounts that fall outside standard Vendor Services guidelines are subject
to further analysis.


                                       20
<PAGE>

    Each vendor relationship with a portfolio balance in excess of $1,000,000
is given an annual in-depth review covering portfolio performance, an analysis
of management, the quality of the business sent to Vendor Services and the
financial condition of the vendor. Any vendors whose portfolio performance
falls outside the standard guidelines are assigned to a more senior analyst or
manager for further review.

  Ongoing Credit Review

    In addition to the initial credit review, Vendor Services conducts ongoing
credit review procedures to identify at an early stage those customers who may
be experiencing financial difficulty. These customers are monitored by credit
personnel, who periodically summarize for the credit committee the possible
remedial actions, what portion, if any, of total credit exposures should be
written off, and whether a specific allocation of Vendor Services's loss
reserves is appropriate.

    In establishing allowances for credit losses, Vendor Services' management
reviews, among other things, the maturity of Vendor Services' portfolio, the
status of all non-performing leases and receivables, prior collection
experience and Vendor Services' overall exposure and changes in credit risk.

Year 2000 Compliance

    Many existing computer programs had been designed and developed to use only
two digits to identify a year in the date field. If not corrected, these
computer programs could cause system failures in the year 2000, with possible
adverse effects on Vendor Services' operations. In 1997, Vendor Services
initiated a comprehensive program designed to ensure that its computer programs
function properly in the year 2000. A number of Vendor Services' employees
(including several officers), as well as external consultants and contract
programmers, are working on various year-2000 projects.

    Vendor Services also has been working with vendors and other external
business relations to help avoid year-2000 problems related to the software or
services they provide to Vendor Services. Under the program, Vendor Services is
analyzing its application systems, operating systems, hardware, networks,
electronic data interfaces and infrastructure devices (such as facsimile
machines and telephone systems).

    Vendor Services' year-2000 projects are currently on schedule. It is
conducting its year-2000 projects in three phases:

    (1) an audit and assessment phase, designed to identify year-2000
  issues;

    (2) a modification phase, designed to correct year-2000 issues; and

    (3) a testing phase, designed to test the modifications after they have
  been installed.

Vendor Services has completed the audit and assessment phase for all critical
systems. It expects to substantially complete the second phase of its program
by the end of the second quarter of 1999. The testing phase of its program will
be conducted throughout 1999. Vendor Services has provided for significant
contingency time in order to complete any additional modifications before
December 31, 1999.

                                       21
<PAGE>

                                   THE LEASES

Description of the Leases

  General

    Substantially all of the Leases are commercial leases rather than consumer
leases. The following description of the Leases generally describes the
material terms of the Leases to be included in the Lease Pool, although an
immaterial number of Leases may differ in one or more provisions from the
following description.

    Vendor Services offers a variety of lease and financing plans based on

  .   the type of equipment sold by the vendor,

  .   the average transaction size,

  .   the vendor's monthly lease volume,

  .   the general credit characteristics of the vendor's end-user customers,
      and

  .   the end-of-lease purchase option.

    The Leases include both true leases and leases intended for security. Under
a true lease the lessor bears the risk of ownership and takes any federal tax
benefits associated with the lease, and no title is conferred upon the lessee.
The lessee under a true lease has the right to the temporary use of equipment
for a term shorter than the economic life of the equipment in exchange for
payments at scheduled intervals during the lease term and the lessor retains a
significant "residual" economic interest in the leased equipment. End of lease
options for true leases include purchase of the equipment at fair market value
or renewal of the lease at fair market value. Under leases intended for
security, the lessor in effect finances the "purchase" of the leased assets by
the lessee and retains a security interest in the leased assets. The lessee
retains the leased property for substantially all its economic life and the
lessor retains no significant residual interest. These leases are considered
conditional sales type leases for federal tax purposes, and, accordingly, the
lessor may not claim any federal tax benefits of ownership of the leased
equipment. End of lease options for such leases depend on the terms of the
related Lease, although generally these terms provide for purchase of the
equipment at a prestated price. The inclusion of true leases in the Lease Pool
will have no income tax impact on Noteholders since the Notes are treated as
debt for income tax purposes. See "Federal Income Tax Consequences." However,
true leases are treated differently under the Bankruptcy Code from leases
intended for security. See "Risk Factors--If Vendor Services become insolvent,
there may be delays or reductions in distributions to holders of Notes" and
"Certain Legal Aspects of the Leases--Insolvency Matters" for a discussion of
these differences.

  Lease Forms

    The Leases are generally in one of two forms: (a) a master lease agreement
containing all of the general terms and conditions of the lease transaction or
transactions, with schedules setting forth the specific terms of each lease
transaction with that particular obligor (a "Master Form Lease") or (b) a
specific lease agreement form containing all of the terms

                                       22
<PAGE>

and conditions of the lease transaction (a "Specific Lease Form"). In some
cases, the Lease may be written on another form which was created by Vendor
Services, by a customer or by a financial intermediary.

  Payments

    All of the Leases require that the obligor make periodic payments on a
monthly basis. The payments under all of the Leases are required to be made in
United States dollars and are fixed and specified payments, rather than
payments which are tied to a formula or are determined by a floating rate.
Payments under the Leases are ordinarily payable in advance, although a small
percentage provide for payments in arrears. Many Leases also require security
deposits which are held until all contractual obligations are met.

  Expenses Relating to Equipment

    The Leases require the obligors to assume the responsibility for payment of
all expenses of the related Equipment including (without limitation) any
expenses in connection with the maintenance and repair of the related
Equipment, the payment of any and all premiums for casualty and liability
insurance and the payment of all taxes relating to the Equipment.

  Insurance; Repair and Replacement

    The Leases (except for a small number of Leases which, in relation to the
Initial Pool Principal Balance, is not material) require the obligors to
maintain liability insurance which must name the lessor as additional insured.
Each Lease requires the obligor to procure property insurance against the loss,
theft or destruction of, or damage to, the Equipment for its full replacement
value, naming the lessor (or lender) as loss payee. This requirement is, from
time to time, waived by the originator for a small number of transactions and,
for some Leases, the obligor is permitted to self-insure the Equipment under
the obligor's already existing self-insurance program.

    For most transactions involving Equipment with a cost of $200,000 or less,
the obligor is provided with written information concerning its property
insurance obligations under the Lease and the originator's own property
insurance coverage that will be provided at the expense of the obligor if the
obligor does not provide the originator with satisfactory evidence of its own
insurance coverage. The obligor is given a specified time period in which to
provide such evidence. Proper evidence of coverage is verified independently
and tracked by a third party tracking company and licensed broker. If the
originator provides the insurance coverage, the obligor is charged a monthly
fee covering the insurance charges and other related administrative charges.
The obligor has the ability to "opt out" of the program by providing evidence
of its own coverage, at which time such monthly charges cease.

    For transactions involving Equipment with a cost of more than $200,000,
insurance coverage generally is verified and traced by the respective
originator, and the failure to maintain such insurance constitutes an event of
default under the applicable Lease. Generally, either pursuant to the Specific
Lease Form or the Master Form Lease, the obligor also agrees to indemnify the
originator for all liability and expenses arising from the use, condition or
ownership of the Equipment.


                                       23
<PAGE>

    Under each Lease, if the Equipment is damaged or destroyed, the obligor is
required

  .   to repair such Equipment,

  .   to make a termination payment to the lessor in an amount not less than
      the Required Payoff Amount, or

  .   in some cases, to replace such damaged or destroyed Equipment with
      other equipment of comparable use and value.

Under the Contribution and Servicing Agreement, the Servicer is permitted (in
the case of the destruction of the Equipment related to a particular Lease)
either to allow the obligor to replace such Equipment (provided that the
replacement equipment is, in the judgment of the Servicer, of comparable use
and at least equivalent value to the value of the Equipment which was
destroyed) or to accept the termination payment referred to above.

  Assignment of Leases

    Most of the Leases permit the assignment thereof by the lessor or secured
party without the consent of the obligor. A small number of Leases require
notification of the assignment to, or the consent of, the obligor.

    The Leases do not permit the assignment thereof (or the Equipment related
thereto) by the obligor without the prior consent of the lessor or secured
party, other than Leases which:

      (1) may permit assignments to a parent, subsidiary or affiliate,

      (2) permit the assignment to a third party, provided the Obligor
  remains liable under the Lease or

      (3) permit assignment to a third party with a credit standing
  determined by Vendor Services in accordance with its underwriting policy
  and practice at the time for an equivalent contract type, term and amount
  equal to or better than the original obligor.

    Under the Contribution and Servicing Agreement, the Servicer may permit an
assignment of a particular Lease from an obligor to a third party only if the
Servicer utilizing the current underwriting criteria for its contract
origination activities generally determines that such third party is of
sufficient credit quality that the Servicer would permit such third party to
become an obligor with respect to a Lease originated by the Servicer
generally.

  Hell-or-High-Water Leases

    The Leases are "hell-or-high-water" contracts which require any payments
thereunder to be made regardless of the condition or suitability of the
related Equipment and notwithstanding any defense, set-off or counterclaim
that the obligor may have against the lessor.

  Events of Default and Remedies

    Events of default under the Leases generally include the failure to pay
all amounts required by the Lease when due, the failure of the obligor to
perform its agreements and covenants under the applicable Lease, material
misrepresentations made by the obligor, the

                                      24
<PAGE>

bankruptcy or insolvency of the obligor or the appointment of a receiver for
the obligor and, in some cases, default by the obligor under other contracts or
agreements. Some of these default provisions are subject to notice provisions
and cure periods. Remedies available to the lessor or secured party upon the
occurrence of an event of default by the obligor include the right to cancel or
terminate the Lease, to recover possession of the related Equipment, and to
receive an amount intended to make the lessor or secured party (as the case may
be) whole plus costs and expenses (including legal fees) incurred by the lessor
or secured party as a result of such default. Notwithstanding such events of
default and remedies, under the Contribution and Servicing Agreement, the
Servicer is permitted to take such actions, with respect to delinquent and
defaulted Leases, as a reasonably prudent creditor would do under similar
circumstances. See "Description of the Contribution and Servicing Agreement--
Servicing." Vendor Services may occasionally provide payment extensions
(generally of three months or less, although longer extensions are occasionally
granted) to customers experiencing delays in payment due to cash flow shortages
or other reasons. However, it is not intended that extensions be used to
provide a temporary solution for a delinquent account. Rather, extensions are
intended to be used when, in the judgment of the relevant credit authority, it
will permit the permanent resolution of the delinquency.

  Prepayments and Early Termination

    None of the Leases permit the prepayment or early termination of the Lease
(except for a de minimis number of Leases which allow for a prepayment or early
termination upon payment of an amount which is not less than the Required
Payoff Amount). Nevertheless, the Servicer is permitted under the Contribution
and Servicing Agreement to accept prepayments of any of the Leases, but only if
the amount paid by or on behalf of the obligor (or, in the case of a partial
prepayment, the sum of such amount and the remaining Principal Balance of the
Lease after application of such amount) is at least equal to the Required
Payoff Amount for such Lease.

  Disclaimer of Warranties

    The Leases contain provisions whereby the lessor (or Vendor Services, as
assignee of the lessor) disclaims all warranties with respect to the Equipment
and, in the majority of cases, the lessor assigns the manufacturer's warranties
to the obligor for the term of the Lease. Under the Leases, the obligor
"accepts" the Equipment under the applicable Lease following delivery and an
opportunity to inspect the related Equipment.

Representations and Warranties Made by Vendor Services

    Under the Transfer Agreement, Vendor Services will make the following
representations and warranties regarding each lease (and the related Equipment)
as of the Initial Cut-Off Date, and regarding each substitute lease as of the
applicable Cut-Off Date:

    (A) Each lease

         (1) constitutes a valid, binding and enforceable payment
     obligation of the Obligor in accordance with its terms, except as may
     be limited by applicable bankruptcy, insolvency or other similar laws
     affecting the enforceability of creditors' rights generally and the
     availability of equitable remedies,

                                       25
<PAGE>

         (2) has been duly and properly sold, assigned and conveyed by
     Vendor Services under the Transfer Agreement to the SPC and has been
     duly and properly transferred and conveyed by the SPC to the Issuer
     pursuant to the Contribution and Servicing Agreement,

         (3) was originated by Vendor Services in the ordinary course of
     its business, or in the case of any Lease purchased by Vendor Services
     was acquired by Vendor Services for proper consideration and was
     validly assigned to Vendor Services by the originator of such Lease,
     and

         (4) contains customary and enforceable provisions adequate to
     enable realization against the Obligor and/or the related Equipment
     although no representation or warranty is made with respect to the
     perfection or priority of any security interest in such related
     Equipment;

    (B) No selection procedures adverse to the Noteholders were utilized in
  selecting the Leases from those leases owned by Vendor Services on the
  Cut-Off Date;

    (C) All requirements of applicable Federal, state and local laws, and
  regulations thereunder, in respect of all of the Leases, have been
  complied with in all material respects;

    (D) There is no known default, breach, violation or event permitting
  cancellation or termination of the Lease by the lessor under the terms of
  any Lease (other than Scheduled Payment delinquencies (in excess of 10% of
  the Scheduled Payment due) of not more than 59 days), and (except for
  payment extensions and waivers of Administrative Fees in accordance with
  Vendor Services's servicing and collection policies and procedures) there
  has been no waiver of any of the foregoing; and as of the Cut-Off Date, no
  related Equipment had been repossessed;

    (E) Immediately prior to the sale, assignment and conveyance of each
  Lease by Vendor Services to the SPC, Vendor Services had good title to
  such Lease and Vendor Services' interest in the related Equipment (subject
  to the terms of such Lease) and was the sole owner thereof, free of any
  lien; and immediately prior to the transfer and conveyance of the Leases
  by the SPC to the Issuer, the SPC had good title to such Leases and such
  interest in the related Equipment and was the sole owner thereof, free of
  any lien (other than the rights of the Obligor under the related Lease);

    (F) No person has a participation in or other right to receive Scheduled
  Payments under any Lease, and neither the SPC nor Vendor Services has
  taken any action to convey any right to any person that would result in
  such person having a right to Scheduled Payments received with respect to
  any Lease;

    (G) Each Lease was originated by Vendor Services or acquired by Vendor
  Services and was sold and assigned by Vendor Services to the SPC without
  any fraud or misrepresentation on the part of Vendor Services;

    (H) Each Obligor

         (1) is located in the United States, and

                                       26
<PAGE>

         (2) is not (a) the United States of America or any state or local
     government or any agency, department, subdivision, or instrumentality
     thereof except for Leases representing no more than 1% of the Initial
     Pool Principal Balance or (b) Vendor Services or an affiliate thereof;

    (I) The sale, transfer and assignment of such Lease and Vendor Services'
  interest in the related Equipment to the SPC under the Transfer Agreement,
  and the transfer and conveyance of such Lease from, and the grant of
  rights to the related Residual Realizations by, the SPC to the Issuer
  under the Contribution and Servicing Agreement, are not unlawful, void or
  voidable under the laws of the jurisdiction applicable to such Lease;

    (J) All filings and other actions required to be made, taken or
  performed by any person in any jurisdiction to give the Issuer a first
  priority perfected lien or ownership interest in the Leases and a first
  priority perfected security interest in Vendor Services' interest in the
  Equipment have been made, taken or performed;

    (K) There exists a Lease File pertaining to each Lease, and such Lease
  File contains the Lease or a facsimile copy thereof;

    (L) There is only one original executed copy of each Lease;

    (M) The Leases constitute chattel paper within the meaning of the UCC as
  in effect in the States of Minnesota and Delaware (other than those Leases
  in which the lessor is financing exclusively the Obligor's software
  license or maintenance contract for Equipment, which Leases, in proportion
  to the Initial Pool Principal Balance, are not material);

    (N) Each Lease was entered into by an Obligor who, at the Cut-Off Date,
  had not been identified on the records of Vendor Services as being the
  subject of a current bankruptcy proceeding;

    (O) The computer tape containing information with respect to the Leases
  that was made available by Vendor Services to the Trustee on the Closing
  Date and was used to select the Leases was complete and accurate in all
  material respects as of the Cut-Off Date and includes a description of the
  same Leases that are described in the Schedule of Leases to the
  Contribution and Servicing Agreement;

    (P) By the Closing Date, the portions of the electronic master record of
  Vendor Services relating to the Leases will have been clearly and
  unambiguously marked to show that the Leases constitute part of the Trust
  Assets and are owned by the Issuer in accordance with the terms of the
  Contribution and Servicing Agreement;

    (Q) No Lease has a Scheduled Payment delinquency in excess of 10% of the
  Scheduled Payment due of more than 59 days past due as of the Cut-Off
  Date;

    (R) Each Lease may be sold, assigned and transferred by Vendor Services
  to the SPC, and may be assigned and transferred by the SPC to the Issuer,
  without the consent of, or prior approval from, or any notification to,
  the applicable Obligor, other than (1) certain Leases (which, in
  proportion to the aggregate of all of the Leases, are not material) that
  require notification of the assignment to the Obligor, which notification
  will be given by the Servicer not later than 10 days following the Closing
  Date, and

                                       27
<PAGE>

  (2) Leases (which, in proportion to the aggregate of all of the Leases,
  are not material) that require the consent of the Obligor, which consent
  will be obtained by the Servicer not later than 10 days following the
  Closing Date;

    (S) Each Lease prohibits the sale, assignment or transfer of the
  Obligor's interest therein, the assumption of the Lease by another person
  in a manner that would release the Obligor thereof from the Obligor's
  obligation, or any sale, assignment or transfer of the related Equipment,
  without the prior consent of the lessor, other than Leases which may (1)
  permit assignment to a subsidiary, corporate parent or other affiliate,
  (2) permit the assignment to a third party, provided the Obligor remains
  liable under the Lease, or (3) permit assignment to a third party with a
  credit standing (determined by Vendor Services in accordance with its
  underwriting policy and practice at the time for an equivalent contract
  type, term and amount) equal to or better than the original Obligor;

    (T) The Obligor under each Lease is required to make payments thereunder
  (1) in United States dollars, and (2) in fixed amounts and on fixed and
  predetermined dates;

    (U) Each Lease requires the Obligor to assume responsibility for payment
  of all expenses in connection with the maintenance and repair of the
  related Equipment, the payment of all premiums for insurance of such
  Equipment and the payment of all taxes (including sales and property
  taxes) relating to such Equipment;

    (V) Each Lease requires the Obligor thereunder to make all Scheduled
  Payments thereon under all circumstances and regardless of the condition
  or suitability of the related Equipment and notwithstanding any defense,
  set-off or counterclaim that the Obligor may have against the
  manufacturer, lessor or lender (as the case may be);

    (W) Under each Lease, if the Equipment is damaged or destroyed, the
  Obligor is required either (1) to repair such Equipment, (2) to make a
  termination payment to the lessor in an amount not less than the Required
  Payoff Amount, or (3) in some cases, to replace such damaged or destroyed
  Equipment with other equipment of comparable use and value;

    (X) None of the Leases permit the Obligor to terminate the Lease prior
  to the latest Stated Maturity Date or to otherwise prepay the amounts due
  and payable thereunder, except for a de minimis number of Leases which
  allow for an early termination or prepayment upon payment of an amount
  which is not less than the Required Payoff Amount;

    (Y) It is not a precondition to the valid transfer or assignment of
  Vendor Services' interest in any of the Equipment related to any Lease
  that title to such Equipment be transferred on the records of any
  governmental or quasi-governmental agency, body or authority;

    (Z) The information with respect to the Leases listed on the Schedule of
  Leases attached to the Contribution and Servicing Agreement is true,
  correct and complete in all material respects;

    (AA) No provisions of any Lease have been waived, altered or modified in
  any material respect, except as indicated in the Lease File;

                                       28
<PAGE>

    (BB) No Lease is a "consumer lease" as defined in Article 2A of the
  Uniform Commercial Code, except for a de minimis number of Leases;

    (CC) To the best of Vendor Services' knowledge, each Obligor has
  accepted the related Equipment and has had reasonable opportunity to
  inspect and test such Equipment; and

    (DD) The Obligor has made at least one payment under the Lease.

    The above-described representations and warranties of Vendor Services will
survive the transfer and assignment of the related Leases and other Trust
Assets to the Issuer.

    In the event of a breach of any such representation or warranty with
respect to a Lease that materially and adversely affects the value of such
Lease (any such breach being a "Repurchase Event"), Vendor Services, unless it
cures the breach by the end of the second Collection Period after the date on
which Vendor Services becomes aware of or receives written notice from the
Trustee or the Servicer of such breach, will be obligated to repurchase (or
substitute another lease for) the Lease and the related Equipment. Any such
repurchase shall be made on the Deposit Date immediately following the end of
such second Collection Period at a price equal to the Required Payoff Amount
applicable to such Lease plus the Book Value of the related Equipment. The
"Required Payoff Amount," with respect to any Collection Period for any Lease,
is equal to the sum of: (1) the Scheduled Payment due in such Collection
Period, together with any Scheduled Payments due in prior Collection Periods
and not yet received, plus (2) the Principal Balance of such Lease as of the
last day of such Collection Period (after taking into account the Scheduled
Payment due in such Collection Period). This repurchase or substitution
obligation may be enforced by the Trustee on behalf of the holders of the
Notes, and will constitute the sole remedy available to the Noteholders against
Vendor Services for any such uncured breach, except that pursuant to the
Transfer Agreement, Vendor Services will indemnify the Trustee, the Issuer and
the Noteholders against losses, damages, liabilities and claims which may be
asserted against any of them as a result of third-party claims arising out of
the facts giving rise to such breach.

    Upon the repurchase or substitution by Vendor Services of a Lease and any
related Equipment, such Lease and related Equipment will be released to Vendor
Services.

Substitution

    Vendor Services will have the option to substitute one or more Leases
having similar characteristics (each, a "Substitute Lease") for

  .   Liquidated Leases,

  .   Leases that have been prepaid in full, whether pursuant to their terms
      or with the Servicer's consent ("Prepaid Leases"),

  .   Leases subject to repurchase as a result of a breach or representation
      or warranty ("Warranty Leases"), and

                                       29
<PAGE>

  .   Leases following a material modification or adjustment to the terms of
      such Lease ("Adjusted Leases").

The aggregate Principal Balance of the Liquidated Leases, Warranty Leases or
Adjusted Leases for which Vendor Services may substitute Substitute Leases
cannot exceed 10% of the Initial Pool Principal Balance.

    In no event will the Lease Pool Principal Balance after the inclusion of
the Substitute Leases be less than the Lease Pool Principal Balance prior to
such substitution. In addition, after giving effect to such substitutions, the
aggregate Book Value of the Equipment subject to the Leases cannot be
materially less than the aggregate Book Value of the Equipment subject to the
Leases immediately prior to such substitutions. Additionally, the final payment
on each Substitute Lease must be on or prior to         or, to the extent the
final payment on such Lease is due subsequent to         only scheduled
payments due on or prior to such date may be included in calculating the
Principal Balance of such Lease.

Certain Statistics Relating to the Cut-Off Date Pool

  General

    Vendor Services has prepared certain statistics relating to the Lease Pool
as of the Initial Cut-Off Date (the "Cut-Off Date Pool"). All statistical
information concerning the Leases set forth herein, insofar as it involves
calculations of the Principal Balances of the Leases, are made using the
Statistical Discount Rate of    %.

    The aggregate Principal Balance of the Leases calculated using the
Statistical Discount Rate, and not including delinquent amounts (the
"Statistical Discounted Present Value of the Leases") is equal to $      . The
aggregate Principal Balance of each Lease (the "Lease Pool Principal Balance")
as of the Initial Cut-Off Date (the "Initial Pool Principal Balance") and as of
each Payment Date will be calculated at the "Discount Rate" of    %.

    The total number of Leases in the Cut-Off Date Pool is    . The average
Principal Balance of the Leases, as of the Initial Cut-Off Date, was
approximately $    .

                      Composition of the Cut-Off Date Pool

<TABLE>
<CAPTION>
                                                                                   Average
           Statistical Discounted    Weighted Average      Weighted Average       Principal
 Number     Present Value of the      Original Term         Remaining Term         Balance
of Leases          Leases                (Range)                (Range)            (Range)
---------  ---------------------- ---------------------- ---------------------  -------------
<S>        <C>                    <C>                    <C>                    <C>
                  $                                               months            $
                                  (  months to   months) (  months to   months) ($   to $    )
</TABLE>

  Geographical Diversity

    The following table shows the geographical diversity of the Cut-Off Date
Pool, by indicating the number of Leases, the aggregate Statistical Discounted
Present Value of the Leases and the percentage (by number of Leases and by
aggregate Statistical Discounted

                                       30
<PAGE>

Present Value) of such Leases relative to all of the Leases in the Cut-Off Date
Pool by reference to the State in which the Obligors on such Leases are
(according to the Servicer's records) located:

<TABLE>
<CAPTION>
                                                                   Aggregate         % of Statistical
                                                             Statistical Discounted Discounted Present
                                           % of Total Number     Present Value         Value of the
State                     Number of Leases     of Leases         of the Leases            Leases
-----                     ---------------- ----------------- ---------------------- ------------------
<S>                       <C>              <C>               <C>                    <C>
Alabama.................          358             1.04%         $  2,250,707.40             0.67%
Alaska..................           63             0.18               589,990.66             0.18
Arizona.................          718             2.10             6,581,977.29             1.95
Arkansas................          140             0.41               977,658.86             0.29
California..............        3,431            10.01            38,831,372.58            11.52
Colorado................          744             2.17             5,674,469.43             1.68
Connecticut.............          617             1.80             6,731,665.65             2.00
Delaware................          165             0.48             1,425,931.71             0.42
District of Columbia....          106             0.31             1,224,097.75             0.36
Florida.................        3,036             8.86            27,878,054.61             8.27
Georgia.................          907             2.65             7,081,389.15             2.10
Hawaii..................           83             0.24               475,272.38             0.14
Idaho...................           73             0.21               574,894.88             0.17
Illinois................        1,225             3.57            11,625,858.43             3.45
Indiana.................          684             2.00             5,653,392.98             1.68
Iowa....................          316             0.92             1,696,204.05             0.50
Kansas..................          292             0.85             2,868,215.27             0.85
Kentucky................          296             0.86             2,051,212.96             0.61
Louisiana...............          412             1.20             2,783,370.69             0.83
Maine...................          150             0.44               984,550.98             0.29
Maryland................          553             1.61             5,077,069.21             1.51
Massachusetts...........        1,079             3.15            10,576,022.53             3.14
Michigan................          786             2.29             7,819,594.21             2.32
Minnesota...............        1,029             3.00             9,976,461.01             2.96
Mississippi.............          204             0.60             1,495,196.65             0.44
Missouri................          655             1.91             6,915,099.85             2.05
Montana.................           90             0.26               379,305.18             0.11
Nebraska................          109             0.32               564,979.16             0.17
Nevada..................          426             1.24             5,038,238.37             1.50
New Hampshire...........          226             0.66             2,067,469.19             0.61
New Jersey..............        1,793             5.23            20,631,042.47             6.12
New Mexico..............          148             0.43             1,011,001.63             0.30
New York................        3,018             8.81            34,790,999.37            10.32
North Carolina..........        1,507             4.40            16,331,263.15             4.85
North Dakota............           55             0.16               215,712.48             0.06
Ohio....................        1,128             3.29             9,462,524.46             2.81
Oklahoma................          325             0.95             3,316,676.21             0.98
Oregon..................          326             0.95             3,109,953.30             0.92
Pennsylvania............        1,583             4.62            16,164,407.65             4.80
Rhode Island............          142             0.41             2,198,314.14             0.65
South Carolina..........          493             1.44             3,758,635.67             1.12
South Dakota............           61             0.18               352,451.70             0.10
Tennessee...............          430             1.25             4,298,727.81             1.28
Texas...................        2,078             6.06            24,783,198.87             7.35
Utah....................          170             0.50             1,758,367.80             0.52
Vermont.................           79             0.23               339,823.47             0.10
Virginia................          906             2.64             9,061,253.25             2.69
Washington..............          518             1.51             4,000,729.06             1.19
West Virginia...........          109             0.32               574,012.04             0.17
Wisconsin...............          359             1.05             2,673,972.64             0.79
Wyoming.................           66             0.19               267,638.90             0.08
                               ------           ------          ---------------           ------
 Total..................       34,267           100.00%         $336,970,429.14           100.00%
                               ======           ======          ===============           ======
</TABLE>

                                       31
<PAGE>

    Adverse economic conditions in states where a substantial number of
Obligors are located, such as New York, California and Florida, may adversely
affect such Obligors' ability to make payments on the related Leases, and the
Noteholders could suffer a loss on their investment as a result.

  Payment Status

    The following table shows the payment status of the Cut-Off Date Pool, by
indicating the number of Leases, the aggregate Statistical Discounted Present
Value of such Leases and the percentage (by number of Leases and by aggregate
Statistical Discounted Present Value) of such Leases relative to all of the
Leases in the Cut-Off Date Pool by reference to whether such Leases were
current as of the Initial Cut-Off Date or were 31-60 days delinquent. For these
purposes, a "delinquency" means that the Obligor on the Lease has failed to
make a required Scheduled Payment in an amount equal to at least 90% of the
required Scheduled Payment within 30 days of the due date.

<TABLE>
<CAPTION>
                                                      Aggregate
                                                     Statistical
                                                     Discounted  % of Statistical
                                          % of Total   Present      Discounted
                                          Number of   Value of   Present Value of
Payment Status           Number of Leases   Leases   the Leases     the Leases
--------------           ---------------- ---------- ----------- ----------------
<S>                      <C>              <C>        <C>         <C>
Current.................                          %    $                    %
31-60 Days Delinquent...
                               ---          ------     -------        ------
  Total.................                    100.00%    $              100.00%
                               ===          ======     =======        ======
</TABLE>

                                       32
<PAGE>

  Leases by Equipment Type

    The following table shows the type of Equipment securing or otherwise
related to the Leases, by the number of Leases, the aggregate Statistical
Discounted Present Value of such Leases, and the percentage (by number of
Leases and by aggregate Statistical Discounted Present Value) of such Leases
relative to all of the Leases:

<TABLE>
<CAPTION>
                                                        Aggregate
                                                       Statistical   % of Statistical
                                          % of Total   Discounted       Discounted
                                          Number of   Present Value  Present Value of
Type of Equipment        Number of Leases   Leases    of the Leases     the Leases
-----------------        ---------------- ---------- --------------- ----------------
<S>                      <C>              <C>        <C>             <C>
Data Processing
 Equipment..............      19,804         57.79%  $134,460,878.54       39.90%
Office Machines.........       6,676         19.48     77,304,744.81       22.94
Telecommunications......       4,216         12.30     55,473,008.26       16.46
Auto Services...........       1,056          3.08     10,035,108.34        2.98
Healthcare Related......         342          1.00     10,123,907.02        3.00
Laundry & Cleaning......         472          1.38     12,036,671.59        3.57
Furniture...............         431          1.26      8,849,179.05        2.63
Machine Tool............         286          0.83      7,906,619.07        2.35
Other...................          22          0.06        509,139.64        0.15
Recreation..............         102          0.30      2,052,419.47        0.61
Secured Loans...........          44          0.13      4,390,863.06        1.30
Food & Lodging..........         217          0.63      2,984,691.57        0.89
Printing................         116          0.34      2,121,493.27        0.63
HVAC....................          87          0.25      1,138,820.97        0.34
Imaging.................         119          0.35      1,273,253.11        0.38
Construction............          31          0.09        667,299.16        0.20
Material Handling.......          47          0.14        655,516.41        0.19
Maintenance.............          21          0.06        249,529.58        0.07
Unclassified............         156          0.46      4,378,114.92        1.30
Waste Management........          17          0.05        269,423.75        0.08
Manufacturing...........           2          0.01         37,035.49        0.01
Transportation..........           3          0.01         52,712.05        0.02
                              ------        ------   ---------------      ------
  Total.................      34,267        100.00%  $336,970,429.14      100.00%
                              ======        ======   ===============      ======
</TABLE>

                                       33
<PAGE>

  Principal Balances

    The following table shows the distribution of the Cut-Off Date Pool by
Principal Balance by indicating the number of Leases which have a Principal
Balance within a defined range and the aggregate Statistical Discounted Present
Value of the Leases, and the percentage (by number of Leases and by aggregate
Statistical Discounted Present Value) of such Leases relative to all of the
Leases:

<TABLE>
<CAPTION>
                                                        Aggregate
                                                       Statistical   % of Statistical
                                          % of Total   Discounted       Discounted
                                          Number of   Present Value  Present Value of
Principal Balance        Number of Leases   Leases    of the Leases     the Leases
-----------------        ---------------- ---------- --------------- ----------------
<S>                      <C>              <C>        <C>             <C>
$      0.01 to
 $   10,000.00..........      26,020         75.93%   $98,738,005.52       29.30%
$ 10,000.01 to
 $   25,000.00..........       5,468         15.96     83,258,946.31       24.71
$ 25,000.01 to
 $   40,000.00..........       1,497          4.37     47,158,128.11       13.99
$ 40,000.01 to
 $   60,000.00..........         630          1.84     30,228,653.79        8.97
$ 60,000.01 to
 $   80,000.00..........         250          0.73     17,139,910.47        5.09
$ 80,000.01 to
 $  100,000.00..........         119          0.35     10,602,333.65        3.15
$100,000.01 to
 $  150,000.00..........         153          0.45     18,663,991.21        5.54
$150,000.01 to
 $  200,000.00..........          63          0.18     10,842,908.82        3.22
$200,000.01 to
 $  300,000.00..........          44          0.13     10,455,393.87        3.10
$300,000.01 to
 $  400,000.00..........          12          0.04      4,116,492.19        1.22
$400,000.01 to
 $  500,000.00..........           5          0.01      2,210,418.88        0.66
$500,000.01 to
 $1,000,000.00..........           6          0.02      3,555,246.33        1.06
                              ------        ------   ---------------      ------
  Total.................      34,267        100.00%  $336,970,429.14      100.00%
                              ======        ======   ===============      ======
</TABLE>

  Original Equipment Costs

    The following table shows the distribution of the Cut-Off Date Pool by
original equipment costs by indicating the number of Leases, the aggregate
Statistical Discounted Present Value of such Leases, and the percentage (by
number of Leases and by aggregate Statistical Discounted Present Value) of such
Leases relative to all of the Leases:

<TABLE>
<CAPTION>
                                                           Aggregate      % of Statistical
                                           % of Total     Statistical        Discounted
                                           Number of  Discounted Present  Present Value of
Original Equipment Costs  Number of Leases   Leases   Value of the Leases    the Leases
------------------------  ---------------- ---------- ------------------- ----------------
<S>                       <C>              <C>        <C>                 <C>
$      0.01 to
 $   10,000.00..........       25,239         73.65%    $ 92,031,028.31         27.31%
$ 10,000.01 to
 $   25,000.00..........        5,923         17.28       82,837,707.24         24.58
$ 25,000.01 to
 $   40,000.00..........        1,582          4.62       45,733,630.17         13.57
$ 40,000.01 to
 $   60,000.00..........          796          2.32       34,841,690.43         10.34
$ 60,000.01 to
 $   80,000.00..........          266          0.78       16,882,396.85          5.01
$ 80,000.01 to
 $  100,000.00..........          139          0.41       11,273,809.34          3.35
$100,000.01 to
 $  150,000.00..........          171          0.50       19,344,670.90          5.74
$150,000.01 to
 $  200,000.00..........           72          0.21       11,576,721.43          3.44
$200,000.01 to
 $  300,000.00..........           53          0.15       11,720,586.47          3.48
$300,000.01 to
 $  400,000.00..........           12          0.04        3,927,245.28          1.17
$400,000.01 to
 $  500,000.00..........            6          0.02        2,301,502.73          0.68
$500,000.01 to
 $1,000,000.00..........            8          0.02        4,499,440.00          1.34
                               ------        ------     ---------------        ------
  Total.................       34,267        100.00%    $336,970,429.14        100.00%
                               ======        ======     ===============        ======
</TABLE>

                                       34
<PAGE>

  Remaining Terms of Leases

    The following table shows the remaining term of the Leases from the Initial
Cut-Off Date to the scheduled expiration date of such Leases, by indicating the
number of Leases, the aggregate Statistical Discounted Present Value of such
Leases, and the percentage (by number of Leases and by aggregate Statistical
Discounted Present Value) of such Leases relative to all of the Leases:

<TABLE>
<CAPTION>
                                                          Aggregate
                                                         Statistical   % of Statistical
                                            % of Total   Discounted       Discounted
                                            Number of   Present Value  Present Value of
Remaining Terms of Leases  Number of Leases   Leases    of the Leases     the Leases
-------------------------  ---------------- ---------- --------------- ----------------
<S>                        <C>              <C>        <C>             <C>
One Month to 12 Months...        1,030          3.01%    $2,999,357.17        0.89%
13 Months to 24 Months...        5,124         14.95     21,476,267.39        6.37
25 Months to 36 Months...       18,740         54.69    133,065,684.68       39.49
37 Months to 48 Months...        3,084          9.00     34,090,526.98       10.12
49 Months to 60 Months...        6,040         17.63    134,065,113.46       39.79
Over 60 Months...........          249          0.73     11,273,479.46        3.35
                                ------        ------   ---------------      ------
  Total..................       34,267        100.00%  $336,970,429.14      100.00%
                                ======        ======   ===============      ======
</TABLE>

  Original Terms of Leases

    The following table shows the original term of the Leases from the date of
origination to the scheduled expiration date of such leases, by indicating the
number of Leases, the aggregate Statistical Discounted Present Value of such
Leases, and the percentage (by number of Leases and by aggregate Statistical
Discounted Present Value) of such Leases relative to all of the Leases:

<TABLE>
<CAPTION>
                                                         Aggregate
                                                        Statistical   % of Statistical
                                           % of Total   Discounted       Discounted
                                           Number of   Present Value  Present Value of
Original Terms of Leases  Number of Leases   Leases    of the Leases     the Leases
------------------------  ---------------- ---------- --------------- ----------------
<S>                       <C>              <C>        <C>             <C>
One Month to 12 Months..          833          2.43%  $  2,445,207.48        0.73%
13 Months to 24 Months..        4,851         14.16     19,904,255.61        5.91
25 Months to 36 Months..       18,871         55.07    132,087,241.55       39.20
37 Months to 48 Months..        3,262          9.52     35,537,418.15       10.55
49 Months to 60 Months..        5,871         17.13    130,358,499.84       38.69
61 Months to 72 Months..          569          1.66     14,271,646.52        4.24
73 Months to 84 Months..           10          0.03      2,366,159.99        0.70
                               ------        ------   ---------------      ------
  Total.................       34,267        100.00%  $336,970,429.14      100.00%
                               ======        ======   ===============      ======
</TABLE>

  Leases by Purchase Options

    The following table shows the types of equipment purchase options related
to the Leases, by the number of Leases, the aggregate Statistical Discounted
Present Value of such Leases, and the percentage (by number of Leases and by
aggregate Statistical Present Value) of such Leases relative to all of the
Leases. The purchase option types listed below indicate Leases for which the
purchase price of the related Equipment at the scheduled lease termination date
is set at

      (1) $1.00 or another nominal amount ("Nominal Buyout"),

                                       35
<PAGE>

      (2) 10% or a similar fixed percentage of the original equipment cost
  ("Fixed Purchase Option"),

      (3) the fair market value of the Equipment at Lease termination, as
  determined pursuant to the Lease terms ("Fair Market Value") or

      (4) a predetermined amount which the Obligor is required to pay
  ("Guaranteed Purchase"):

<TABLE>
<CAPTION>
                                                      Aggregate
                                                     Statistical
                                                     Discounted  % of Statistical
                                          % of Total   Present      Discounted
                                          Number of   Value of   Present Value of
Type                     Number of Leases   Leases   the Leases     the Leases
----                     ---------------- ---------- ----------- ----------------
<S>                      <C>              <C>        <C>         <C>
Nominal Buyout..........                          %   $                     %
Fixed Purchase Option...
Fair Market Value.......
Guaranteed Purchase.....
                               ---          ------    --------        ------
  Totals................                    100.00%   $               100.00%
                               ===          ======    ========        ======
</TABLE>

Certain Statistics Relating to Delinquencies and Defaults

  Delinquencies

    The following table sets forth statistics relating to delinquencies on
leases within Vendor Services' owned and managed portfolio of receivables
similar to the Leases as of December 31, 1996, December 31, 1997, December 31,
1998 and      , 1999. Vendor Services was acquired by Green Tree in November
1996, and current management accordingly cannot certify delinquency and default
experience for prior periods. However, current management does not believe that
Vendor Services' delinquency and default experience in prior periods was
substantially different from the experience presented here. For these purposes,
a "Delinquency" means that the obligor on the lease has failed to make a
required Scheduled Payment in an amount equal to at least 90% of the required
Scheduled Payment within 30 days of the due date. For these purposes, any
payment made by the obligor on a lease subsequent to the required payment date
is applied to the earliest payment which was unpaid. The following table is
based, where indicated, on the gross receivable balance of the leases, as it
appears on the accounting records of Vendor Services as of the date set forth
below and not solely the overdue payments.

<TABLE>
<CAPTION>
                                                Percentage of Gross Receivable
                                                 Balance of Leases Which Were
                                      Gross               Delinquent
                                    Receivable  -------------------------------
                                    Balance of  31 to 60 61 to 90 Over 90
   Date of Calculation                Leases      Days     Days    Days   Total
   -------------------             ------------ -------- -------- ------- -----
   <S>                             <C>          <C>      <C>      <C>     <C>
   12/31/96....................... $618,075,465   2.20%    0.36%   0.13%  2.69%
   12/31/97....................... $735,621,630   2.07%    0.39%   0.15%  2.61%
   12/31/98....................... $893,014,108       %        %       %      %
    / /99......................... $                  %        %       %      %
</TABLE>

  Non-Accruals

    The following table sets forth statistics relating to Non-Accruals on
leases within Vendor Services' owned and managed portfolio of receivables
similar to the Leases as of December 31, 1996, December 31, 1997, December 31,
1998 and as of      , 1999. Vendor Services was acquired by Green Tree in
November 1996, and current management,

                                       36
<PAGE>

accordingly, cannot certify non-accrual experience for prior periods. However,
current management does not believe that Vendor Services' non-accrual
experience in prior periods was substantially different from the experience
presented here. For these purposes, a "Non-Accrual" means that, as of the date
indicated, the obligor on the relevant lease had failed to make payments in an
amount at least equal to 90% of the required Scheduled Payment for at least 90
days beyond the date required (or less, if in the judgment of the collection
manager the account is impaired), or commenced a bankruptcy or insolvency
proceeding. The following table is based, where indicated, on the net
investment of the leases (gross of any allowance for losses) as it appears on
the records of Vendor Services as of the date specified below:

<TABLE>
<CAPTION>
                                                             Percentage of
                                          Aggregate Net Aggregate Net Investment
                                          Investment of   of Leases Which Were
     Date of Calculation                     Leases          on Non-Accrual
     -------------------                  ------------- ------------------------
     <S>                                  <C>           <C>
     12/31/96............................ $558,040,000            3.42%
     12/31/97............................ $672,210,148            3.58%
     12/31/98............................ $                           %
      / /99.............................. $                           %
</TABLE>

  Losses and Recoveries

    The following table sets forth statistics relating to gross losses and
losses net of recoveries on defaulted leases within Vendor Services' owned and
managed portfolio of receivables similar to the Leases during the twelve-month
periods ending December 31, 1996 and December 31, 1997, December 31, 1998 and
during the period ending      , 1999. Vendor Services was acquired by Green
Tree in November 1996, and current management, accordingly, cannot certify loss
and recovery experience for prior periods. However, current management does not
believe that Vendor Services' loss and recovery experience in prior periods was
substantially different from the experience presented here. For these purposes,
"gross losses" means total losses before recoveries measured against the net
investment of the leases (gross of any allowance for losses), and "net losses"
means losses after recoveries measured against the net investment of the leases
(gross of any allowance for losses).

<TABLE>
<CAPTION>
                                 Aggregate
                                    Net      Gross Losses as a  Net Losses as a
                                 Investment  Percentage of Net Percentage of Net
   Date of Calculation           of Leases      Investment        Investment
   -------------------          ------------ ----------------- -----------------
   <S>                          <C>          <C>               <C>
   12/31/96.................... $558,040,000       2.96%             1.83%
   12/31/97....................  672,210,148       2.40%             1.51%
   12/31/98....................                        %                 %
    / /99......................                        %                 %
</TABLE>

    Vendor Services' delinquency, non-accrual and net loss experience has
historically been affected by prevailing economic conditions, 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, non-accrual and net loss
experience on the Leases will be comparable to that set forth above.

                                       37
<PAGE>

    It has been Vendor Services' experience that collections from the obligors
constitute a significant portion of recoveries on defaulted equipment lease
receivables, in addition to the proceeds from liquidation of the related
equipment. The resale value of individual items of Equipment, which would be
collected by the Servicer in the event of a default under the related Lease,
will vary substantially, depending on such factors as the expected remaining
useful life of the Equipment at the time of the default and the obsolescence of
the Equipment, it is possible that the resale values for some Equipment would
be negligible or insufficient to justify repossession and resale. See "Risk
Factors--Residual realizations may be less than we expect, and will provide
only limited support for the Notes."

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE ISSUER

    As of the date of this Prospectus, the Issuer has had no operating history.
The net proceeds of the sale of the Notes will be employed to purchase the
Leases. See "Use of Proceeds." The Issuer is prohibited by its LLC Agreement
from engaging in business other than

  .   acquiring the Leases and rights to the Residual Realizations from the
      SPC,

  .   pledging the Leases and its rights to the Residual Realizations to the
      Trustee,

  .   executing and performing its obligations under the Contribution and
      Servicing Agreement and the Indenture, and

  .   engaging in other transactions, including entering into agreements,
      that are necessary, suitable or convenient to accomplish the foregoing
      or are incidental thereto or connected therewith.

                                       38
<PAGE>

                             MANAGERS OF THE ISSUER

    The following table sets forth the managers of the Issuer and their ages
and positions as of the date of this Prospectus. Because the Issuer is
organized as a special purpose company and will be largely passive, it is
expected that the managers 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 the Servicer.

<TABLE>
<CAPTION>
     Name                             Age                Position
     ----                             --- --------------------------------------
     <S>                              <C> <C>
     Joel H. Gottesman............... 50  Manager and Chair of Board of Managers
     Phyllis A. Knight............... 37  Manager
</TABLE>

    Joel H. Gottesman was named to the Board of Managers of the Issuer in
November 1998. Mr. Gottesman has been Senior Vice President of Green Tree
Financial Corporation since September 1995. From 1983 to 1995, Mr. Gottesman
was an attorney at Briggs & Morgan, Professional Association, Minneapolis,
Minnesota.

    Phyllis A. Knight is Senior Vice President and Treasurer of Green Tree
Financial Corporation. She joined Green Tree in September 1994. Prior to
joining Green Tree, she was a Senior Manager at KPMG Peat Marwick.

    None of the above-listed managers of the Issuer will be compensated
directly by the Issuer nor with any funds or assets of the Issuer nor will any
such managers receive compensation in the capacities in which they act for the
Issuer.

    Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to managers and controlling persons of the Issuer pursuant to
its LLC Agreement, or otherwise, the Issuer has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Issuer of expenses incurred or paid by a manager, officer or
controlling person of the Issuer in the successful defense of any action, suit
or proceeding) is asserted by such manager or controlling person in connection
with the Notes, the Issuer 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 Securities Act and will be governed
by the final adjudication of such issue.

                                       39
<PAGE>

                       WEIGHTED AVERAGE LIFE OF THE NOTES

    The following information is given solely to illustrate the effect of
prepayments on the Leases on the weighted average life of the Notes under the
assumptions stated below and is not a prediction of the prepayment rate that
might actually be experienced by the Leases.

    Weighted average life refers to the average amount of time from the date of
issuance of a security until each dollar of principal of such security will be
repaid to the investor. The weighted average life of the Notes will be
primarily a function of the rate at which payments are made on the Leases.
Payments on the Leases may be in the form of Scheduled Payments or prepayments
(including, for this purpose, liquidations due to default). See "Risk Factors--
Prepayment and Early Termination of Leases and Related Reinvestment Risks."

    The Constant Prepayment Rate prepayment model ("CPR") represents an assumed
constant rate of prepayment of Leases outstanding as of the beginning of each
month expressed as a per annum percentage. There can be no assurance that
Leases will experience prepayments at a constant prepayment rate or otherwise
in the manner assumed by the prepayment model. See "Risk Factors--Prepayment
and Early Termination of Leases and Related Reinvestment Risk."

    The weighted average lives in the following tables were created using the
Discount Rate, assuming that: (i) Scheduled Payments on the Leases are received
in a timely manner and prepayments are made at the percentages of the
prepayment model set forth in the table; (ii) with respect to the caption
"Weighted Average Life to Call" the SPC will exercise its right to purchase the
Leases on the Payment Date following the date on which the unpaid principal
balance of all of the outstanding Notes is less than 10% of the Initial Pool
Principal Balance, and with respect to the caption "Weighted Average Life to
Maturity," the SPC will not exercise that right at any time; (iii) payments are
made on the Notes on the 20th day of each month commencing         ,   ; (iv)
the Notes are issued on       , 1999; (v) the SPC does not substitute new
leases for Leases that are prepaid in full and (vi) there are no investment
earnings on funds in the Collection Account, Reserve Account or Residual
Account. On the Closing Date the Issuer will issue $      aggregate principal
amount of   % Class A-1 Notes, $     aggregate principal amount of   % Class A-
2 Notes, $     aggregate principal amount of   % Class A-3 Notes, $
aggregate principal amount of   % Class A-4 Notes, $     aggregate principal
amount of   % Class B Notes, and $     aggregate principal amount of   % Class
C Notes. No representation is made that these assumptions will be correct,
including the assumption that the Leases will not experience delinquencies or
losses.

                                       40
<PAGE>

    In making an investment decision with respect to the Notes, investors
should consider a variety of possible prepayment scenarios, including the
limited scenarios described in the tables below.

<TABLE>
<CAPTION>
                               Percentage of the               Percentage of the
                           Initial Principal Balance       Initial Principal Balance
                                    of the                          of the
                                Class A-1 Notes                 Class A-2 Notes
                          ------------------------------  ------------------------------
                                      CPR                             CPR
                          ------------------------------  ------------------------------
      Payment Date          0%      7%     12%     18%      0%      7%     12%     18%
      ------------        ------  ------  ------  ------  ------  ------  ------  ------
<S>                       <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Closing Date............  100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 20, 1999.......   91.99   90.10   88.67   86.85  100.00  100.00  100.00  100.00
December 20, 1999.......   83.95   80.27   77.51   74.01  100.00  100.00  100.00  100.00
January 20, 2000........   75.85   70.51   66.50   61.46  100.00  100.00  100.00  100.00
February 20, 2000.......   67.74   60.82   55.67   49.22  100.00  100.00  100.00  100.00
March 20, 2000..........   59.61   51.23   45.02   37.29  100.00  100.00  100.00  100.00
April 20, 2000..........   51.48   41.75   34.58   25.69  100.00  100.00  100.00  100.00
May 20, 2000............   43.36   32.38   24.33   14.41  100.00  100.00  100.00  100.00
June 20, 2000...........   35.25   23.13   14.28    3.43  100.00  100.00  100.00  100.00
July 20, 2000...........   27.13   13.96    4.40    0.00  100.00  100.00  100.00   85.27
August 20, 2000.........   19.00    4.89    0.00    0.00  100.00  100.00   89.23   64.15
September 20, 2000......   10.88    0.00    0.00    0.00  100.00   91.73   69.93   43.63
October 20, 2000........    2.76    0.00    0.00    0.00  100.00   73.73   50.97   23.66
November 20, 2000.......    0.00    0.00    0.00    0.00   89.06   55.89   32.33    4.20
December 20, 2000.......    0.00    0.00    0.00    0.00   72.46   38.20   13.98    0.00
January 20, 2001........    0.00    0.00    0.00    0.00   55.89   20.72    0.00    0.00
February 20, 2001.......    0.00    0.00    0.00    0.00   39.44    3.55    0.00    0.00
March 20, 2001..........    0.00    0.00    0.00    0.00   23.21    0.00    0.00    0.00
April 20, 2001..........    0.00    0.00    0.00    0.00    7.18    0.00    0.00    0.00
May 20, 2001............    0.00    0.00    0.00    0.00    0.00    0.00    0.00    0.00
Weighted Average Life to
 Call (in years)........    0.55    0.47    0.42    0.37    1.31    1.14    1.04    0.93
Weighted Average Life To
 Maturity (in years)....    0.55    0.47    0.42    0.37    1.31    1.14    1.04    0.93
</TABLE>


                                       41
<PAGE>

<TABLE>
<CAPTION>
                               Percentage of the               Percentage of the
                           Initial Principal Balance       Initial Principal Balance
                                    of the                          of the
                                Class A-3 Notes                 Class A-4 Notes
                          ------------------------------  ------------------------------
                                      CPR                             CPR
                          ------------------------------  ------------------------------
      Payment Date          0%      7%     12%     18%      0%      7%     12%     18%
      ------------        ------  ------  ------  ------  ------  ------  ------  ------
<S>                       <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Closing Date............  100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 20, 1999.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
December 20, 1999.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
January 20, 2000........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
February 20, 2000.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
March 20, 2000..........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
April 20, 2000..........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
May 20, 2000............  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
June 20, 2000...........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
July 20, 2000...........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
August 20, 2000.........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
September 20, 2000......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
October 20, 2000........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
November 20, 2000.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
December 20, 2000.......  100.00  100.00  100.00   93.76  100.00  100.00  100.00  100.00
January 20, 2001........  100.00  100.00   98.31   85.97  100.00  100.00  100.00  100.00
February 20, 2001.......  100.00  100.00   90.90   78.44  100.00  100.00  100.00  100.00
March 20, 2001..........  100.00   94.41   83.71   71.20  100.00  100.00  100.00  100.00
April 20, 2001..........  100.00   87.48   76.72   64.21  100.00  100.00  100.00  100.00
May 20, 2001............   96.33   80.69   69.93   57.48  100.00  100.00  100.00  100.00
June 20, 2001...........   89.69   74.04   63.32   50.99  100.00  100.00  100.00  100.00
July 20, 2001...........   83.12   67.51   56.89   44.73  100.00  100.00  100.00  100.00
August 20, 2001.........   76.60   61.11   50.62   38.67  100.00  100.00  100.00  100.00
September 20, 2001......   70.12   54.81   44.51   32.83  100.00  100.00  100.00  100.00
October 20, 2001........   63.66   48.61   38.53   27.16  100.00  100.00  100.00  100.00
November 20, 2001.......   57.22   42.49   32.68   21.68  100.00  100.00  100.00  100.00
December 20, 2001.......   50.79   36.46   26.95   16.36  100.00  100.00  100.00  100.00
January 20, 2002........   44.44   30.55   21.40   11.24  100.00  100.00  100.00  100.00
February 20, 2002.......   38.37   24.95   16.16    6.45  100.00  100.00  100.00  100.00
March 20, 2002..........   32.66   19.72   11.29    2.03  100.00  100.00  100.00  100.00
April 20, 2002..........   27.35   14.89    6.81    0.00  100.00  100.00  100.00   95.77
May 20, 2002............   22.53   10.52    2.77    0.00  100.00  100.00  100.00   88.15
June 20, 2002...........   18.15    6.55    0.00    0.00  100.00  100.00   98.14   81.30
July 20, 2002...........   14.17    2.97    0.00    0.00  100.00  100.00   91.24   75.14
August 20, 2002.........   10.56    0.00    0.00    0.00  100.00   99.43   85.02   69.60
September 20, 2002......    7.33    0.00    0.00    0.00  100.00   93.34   79.45   63.82
October 20, 2002........    4.21    0.00    0.00    0.00  100.00   87.54   74.16   58.37
November 20, 2002.......    1.29    0.00    0.00    0.00  100.00   82.10   69.24   53.33
December 20, 2002.......    0.00    0.00    0.00    0.00   96.56   76.73   63.60    0.00
January 20, 2003........    0.00    0.00    0.00    0.00   90.44   71.44   58.07    0.00
February 20, 2003.......    0.00    0.00    0.00    0.00   84.43   65.72   52.75    0.00
March 20, 2003..........    0.00    0.00    0.00    0.00   78.55   59.89    0.00    0.00
April 20, 2003..........    0.00    0.00    0.00    0.00   72.80   54.24    0.00    0.00
May 20, 2003............    0.00    0.00    0.00    0.00   66.77    0.00    0.00    0.00
June 20, 2003...........    0.00    0.00    0.00    0.00   60.36    0.00    0.00    0.00
July 20, 2003...........    0.00    0.00    0.00    0.00   54.11    0.00    0.00    0.00
August 20, 2003.........    0.00    0.00    0.00    0.00    0.00    0.00    0.00    0.00
Weighted Average Life to
 Call (in years)........    2.25    2.04    1.90    1.74    3.66    3.40    3.22    2.98
Weighted Average Life to
 Maturity (in years)....    2.25    2.04    1.90    1.74    3.85    3.63    3.46    3.24
</TABLE>

                                       42
<PAGE>

<TABLE>
<CAPTION>
                                                     Percentage of the
                                                 Initial Principal Balance
                                                          of the
                                                       Class B Notes
                                                ------------------------------
                                                            CPR
                                                ------------------------------
                 Payment Date                     0%      7%     12%     18%
                 ------------                   ------  ------  ------  ------
<S>                                             <C>     <C>     <C>     <C>
Closing Date................................... 100.00% 100.00% 100.00% 100.00%
November 20, 1999.............................. 100.00  100.00  100.00  100.00
December 20, 1999.............................. 100.00  100.00  100.00  100.00
January 20, 2000............................... 100.00  100.00  100.00  100.00
February 20, 2000.............................. 100.00  100.00  100.00  100.00
March 20, 2000................................. 100.00  100.00  100.00  100.00
April 20, 2000................................. 100.00  100.00  100.00  100.00
May 20, 2000................................... 100.00  100.00  100.00  100.00
June 20, 2000.................................. 100.00  100.00  100.00  100.00
July 20, 2000.................................. 100.00  100.00  100.00   96.72
August 20, 2000................................ 100.00  100.00   97.61   92.03
September 20, 2000............................. 100.00   98.16   93.31   87.46
October 20, 2000............................... 100.00   94.16   89.10   83.02
November 20, 2000..............................  97.57   90.19   84.95   78.69
December 20, 2000..............................  93.88   86.25   80.87   74.47
January 20, 2001...............................  90.19   82.37   76.87   70.38
February 20, 2001..............................  86.53   78.55   72.97   66.41
March 20, 2001.................................  82.92   74.82   69.18   62.60
April 20, 2001.................................  79.36   71.17   65.51   58.92
May 20, 2001...................................  75.83   67.59   61.93   55.38
June 20, 2001..................................  72.33   64.09   58.45   51.96
July 20, 2001..................................  68.88   60.66   55.07   48.67
August 20, 2001................................  65.44   57.29   51.77   45.48
September 20, 2001.............................  62.03   53.98   48.55   42.41
October 20, 2001...............................  58.63   50.71   45.40   39.42
November 20, 2001..............................  55.24   47.49   42.33   36.54
December 20, 2001..............................  51.86   44.31   39.31   33.74
January 20, 2002...............................  48.52   41.21   36.39   31.04
February 20, 2002..............................  45.32   38.26   33.63   28.52
March 20, 2002.................................  42.32   35.51   31.07   26.19
April 20, 2002.................................  39.52   32.97   28.71   24.06
May 20, 2002...................................  36.99   30.66   26.58   22.15
June 20, 2002..................................  34.68   28.58   24.66   20.43
July 20, 2002..................................  32.59   26.69   22.93   18.88
August 20, 2002................................  30.69   24.98   21.36   17.49
September 20, 2002.............................  28.98   23.45   19.96   17.49
October 20, 2002...............................  27.35   22.00   18.64   17.49
November 20, 2002..............................  25.80   20.63   17.40   17.49
December 20, 2002..............................  24.26   19.28   17.40    0.00
January 20, 2003...............................  22.73   17.95   17.40    0.00
February 20, 2003..............................  21.22   17.26   17.40    0.00
March 20, 2003.................................  19.74   17.26    0.00    0.00
April 20, 2003.................................  18.29   17.26    0.00    0.00
May 20, 2003...................................  17.07    0.00    0.00    0.00
June 20, 2003..................................  17.07    0.00    0.00    0.00
July 20, 2003..................................  17.07    0.00    0.00    0.00
August 20, 2003................................   0.00    0.00    0.00    0.00
Weighted Average Life To Call (in years).......   2.40    2.19    2.05    1.88
Weighted Average Life To Maturity (in years)...   2.56    2.38    2.25    2.11
</TABLE>

                                       43
<PAGE>

<TABLE>
<CAPTION>
                                                     Percentage of the
                                                 Initial Principal Balance
                                                          of the
                                                       Class C Notes
                                                ------------------------------
                                                            CPR
                                                ------------------------------
                 Payment Date                     0%      7%     12%     18%
                 ------------                   ------  ------  ------  ------
<S>                                             <C>     <C>     <C>     <C>
Closing Date................................... 100.00% 100.00% 100.00% 100.00%
November 20, 1999.............................. 100.00  100.00  100.00  100.00
December 20, 1999.............................. 100.00  100.00  100.00  100.00
January 20, 2000............................... 100.00  100.00  100.00  100.00
February 20, 2000.............................. 100.00  100.00  100.00  100.00
March 20, 2000................................. 100.00  100.00  100.00  100.00
April 20, 2000................................. 100.00  100.00  100.00  100.00
May 20, 2000................................... 100.00  100.00  100.00  100.00
June 20, 2000.................................. 100.00  100.00  100.00  100.00
July 20, 2000.................................. 100.00  100.00  100.00   96.72
August 20, 2000................................ 100.00  100.00   97.61   92.03
September 20, 2000............................. 100.00   98.16   93.31   87.46
October 20, 2000............................... 100.00   94.16   89.10   83.02
November 20, 2000..............................  97.57   90.19   84.95   78.69
December 20, 2000..............................  93.88   86.25   80.87   74.47
January 20, 2001...............................  90.19   82.37   76.87   70.38
February 20, 2001..............................  86.53   78.55   72.97   66.41
March 20, 2001.................................  82.92   74.82   69.18   62.60
April 20, 2001.................................  79.36   71.17   65.51   58.92
May 20, 2001...................................  75.83   67.59   61.93   55.38
June 20, 2001..................................  72.33   64.09   58.45   51.96
July 20, 2001..................................  68.88   60.66   55.07   48.67
August 20, 2001................................  65.44   57.29   51.77   45.48
September 20, 2001.............................  62.03   53.98   48.55   42.41
October 20, 2001...............................  58.63   50.71   45.40   39.42
November 20, 2001..............................  55.24   47.49   42.33   36.54
December 20, 2001..............................  51.86   44.31   39.31   33.74
January 20, 2002...............................  48.52   41.21   36.39   31.04
February 20, 2002..............................  45.32   38.26   33.63   28.52
March 20, 2002.................................  42.32   35.51   31.07   26.19
April 20, 2002.................................  39.52   32.97   28.71   24.06
May 20, 2002...................................  36.99   30.66   26.58   22.15
June 20, 2002..................................  34.68   28.58   24.66   20.43
July 20, 2002..................................  32.59   26.69   22.93   18.88
August 20, 2002................................  30.69   24.98   21.36   17.49
September 20, 2002.............................  28.98   23.45   19.96   17.49
October 20, 2002...............................  27.35   22.00   18.64   17.49
November 20, 2002..............................  25.80   20.63   17.40   17.49
December 20, 2002..............................  24.26   19.28   17.40    0.00
January 20, 2003...............................  22.73   17.95   17.40    0.00
February 20, 2003..............................  21.22   17.95   17.40    0.00
March 20, 2003.................................  19.74   17.95    0.00    0.00
April 20, 2003.................................  18.29   17.95    0.00    0.00
May 20, 2003...................................  18.29    0.00    0.00    0.00
June 20, 2003..................................  18.29    0.00    0.00    0.00
July 20, 2003..................................  18.29    0.00    0.00    0.00
August 20, 2003................................   0.00    0.00    0.00    0.00
Weighted Average Life To Call (in years).......   2.40    2.19    2.05    1.88
Weighted Average Life To Maturity (in years)...   2.69    2.48    2.34    2.20
</TABLE>


                                       44
<PAGE>

                       COLLATERAL CASHFLOWS AND RESIDUALS

    The following table sets forth the Scheduled Payments and the scheduled
Book Value (as described under "Description of the Notes--Residual
Realizations") of the Leases comprising the Cut-Off Date Pool. For the purposes
of this table, we have assumed there are no delinquencies, losses or
prepayments on the Leases. In addition, we have assumed that an amount equal to
the Book Value of a Lease 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 Lease is due. The information set
forth below is not a prediction of the actual payments that will be received.
The information regarding delinquencies, non-accruals and net losses set forth
under the caption "The Leases--Certain Statistics Relating to Delinquencies and
Defaults," as well as the information under "Risk Factors--Risks Relating to
Reliance on Residual Realizations," should be reviewed together with the
information set forth below.

<TABLE>
<CAPTION>
                                                         Scheduled   Scheduled
                   Collection Period                     Payments    Book Value
                   -----------------                    ----------- ------------
<S>                                                     <C>         <C>
  September 1999....................................... $           $   1,938.20
  October 1999.........................................                 2,799.23
  November 1999........................................                 3,133.59
  December 1999........................................                10,023.44
  January 2000.........................................                11,928.13
  February 2000........................................                31,337.00
  March 2000...........................................                24,935.09
  April 2000...........................................                15,483.77
  May 2000.............................................                30,463.79
  June 2000............................................                23,076.66
  July 2000............................................                24,485.81
  August 2000..........................................                13,716.69
  September 2000.......................................                15,009.09
  October 2000.........................................                26,727.73
  November 2000........................................                91,478.50
  December 2000........................................               215,319.13
  January 2001.........................................               216,371.81
  February 2001........................................               234,554.74
  March 2001...........................................               270,209.38
  April 2001...........................................               209,054.18
  May 2001.............................................               178,270.78
  June 2001............................................               248,037.28
  July 2001............................................               205,214.36
  August 2001..........................................               102,072.15
  September 2001.......................................               113,013.11
  October 2001.........................................               359,520.66
  November 2001........................................               825,915.30
  December 2001........................................             1,634,080.04
  January 2002.........................................             1,590,982.71
  February 2002........................................             1,693,705.24
  March 2002...........................................             2,101,292.04
  April 2002...........................................             1,780,113.53
  May 2002.............................................             1,480,712.48
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>
                                                         Scheduled   Scheduled
                   Collection Period                     Payments   Book Value
                   -----------------                     --------- -------------
<S>                                                      <C>       <C>
  June 2002.............................................  $        $1,421,907.97
  July 2002.............................................            1,295,104.58
  August 2002...........................................               93,839.20
  September 2002........................................               95,631.62
  October 2002..........................................              122,068.00
  November 2002.........................................              182,151.06
  December 2002.........................................              376,300.23
  January 2003..........................................              248,841.78
  February 2003.........................................              201,273.56
  March 2003............................................              432,952.61
  April 2003............................................              301,490.88
  May 2003..............................................              215,127.40
  June 2003.............................................              236,118.31
  July 2003.............................................              236,229.30
  August 2003...........................................               32,187.94
  September 2003........................................               66,629.47
  October 2003..........................................              273,752.73
  November 2003.........................................              689,935.89
  December 2003.........................................            1,130,527.32
  January 2004..........................................              924,667.52
  February 2004.........................................              897,842.30
  March 2004............................................            1,562,632.41
  April 2004............................................            1,252,155.82
  May 2004..............................................            1,055,534.10
  June 2004.............................................            1,516,880.65
  July 2004.............................................            1,229,507.16
  August 2004...........................................               77,738.71
  September 2004........................................              131,552.31
  October 2004..........................................              173,771.52
  November 2004.........................................                1,285.45
  December 2004.........................................                    7.00
  January 2005..........................................               50,299.27
  February 2005.........................................                    7.00
  March 2005............................................                    3.00
  April 2005............................................                    4.00
  May 2005..............................................                    2.00
  June 2005.............................................                     --
  July 2005.............................................                9,716.40
  August 2005...........................................                     --
  September 2005........................................                     --
  October 2005..........................................                    1.00
  November 2005.........................................                     --
  December 2005.........................................               25,001.00
  January 2006..........................................                     --
  February 2006.........................................                    2.00
  March 2006............................................                     --
  April 2006............................................                     --
  May 2006..............................................                    2.00
  June 2006.............................................                     --
  July 2006.............................................                    1.00
</TABLE>

                                       46
<PAGE>

                            DESCRIPTION OF THE NOTES

General

    The Notes will be issued pursuant to the terms of the Indenture. The
following summary describes certain terms of the Notes and the Indenture. A
copy of the form of the Indenture has been filed with the Commission as an
Exhibit to the Registration Statement of which this Prospectus is a part. U.S.
Bank Trust National Association, a national banking association headquartered
in St. Paul, Minnesota, will be the Trustee.

    Pursuant to the Indenture, the Issuer will issue six classes of notes (the
"Notes"), consisting of    classes of senior notes, designated as the   %
Lease-Backed Notes, Class A-1, in the original principal amount of $    , the
  % Lease-Backed Notes, Class A-2, in the original principal amount of $    ,
the   % Lease-Backed Notes, Class A-3, in the original principal amount of
$     and the   % Lease-Backed Notes, Class A-4, in the original principal
amount of $     (together, the "Class A Notes") and two classes of subordinated
notes, designated as the   % Lease-Backed Notes, Class B, in the original
principal amount of $     and the   % Lease-Backed Notes, Class C, in the
original principal amount of $    .

    Payments on the Notes will be made by the Trustee on each Payment Date to
persons in whose names the Notes are registered as of the related Record Date
(the "Holders" or "Noteholders"). The Payment Date for the Notes will be the
20th day of each month (or if such 20th day is not a Business Day, the next
succeeding Business Day), commencing in     , 1999. If the Class A-1 Notes have
not been paid in full on or before the       2000 Payment Date, the Payment
Date for the Class A-1 Notes in      2000 will be     , 2000. The Record Date
for any Payment Date will be the Business Day immediately preceding the Payment
Date (so long as the Notes are held in the book-entry form), or the last day of
the prior calendar month (if Definitive Notes have been issued).

    A "Business Day" is any day (other than a Saturday, Sunday or legal
holiday) on which commercial banks in New York City, or any other location of a
successor Servicer or Trustee, are open for regular business.

      Each Class of Notes initially will be represented by one or more
certificates (the "Book-Entry Certificates") registered in the name of the
nominee of DTC (together with any successor depository selected by the Trustee,
the "Depository"), except as set forth below. Beneficial interests in each
Class of Notes will be available for purchase in minimum denominations of
$10,000 and integral multiples of $1,000 in excess thereof, except that one
Class C Note may be issued in another denomination in book-entry form only. The
Issuer has been informed by DTC that DTC's nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the Holder of record of the Notes.
Unless and until Definitive Notes are issued under the limited circumstances
described herein, no Note Owner acquiring an interest in any Class of Notes
will be entitled to receive a certificate representing such Note Owner's
interest in such Notes. Until such time, all references herein to actions by
Noteholders of any Class of Notes will refer to actions taken by the Depository
upon instructions from its participating

                                       47
<PAGE>

organizations and all references herein to distributions, notices, reports and
statements to Noteholders of any Class of Notes will refer to distributions,
notices, reports and statements to the Depository or its nominee, as the
registered Holder of the Notes of such Class, for distribution to Note Owners
of such Class in accordance with the Depository's procedures. See "--Book-Entry
Registration" and "--Definitive Notes."

    Subject to applicable laws with respect to escheat of funds, any money held
by the Trustee or any paying agent in trust under the Indenture for the payment
of any amount due with respect to any Note and remaining unclaimed for two
years after such amount has become due and payable shall be discharged from
such trust and, upon request of the Issuer, shall be deposited by the Trustee
in the Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and
all liability of the Trustee or such paying agent with respect to such money
shall thereupon cease.

Distributions

    Principal of and interest on the Notes will be paid on each Payment Date,
solely from, and secured by, the "Amount Available" for such Payment Date,
which is equal to the sum of:

      (a) Pledged Revenues on deposit in the Collection Account as of the
  last Business Day preceding the related Determination Date (the "Deposit
  Date") which were received by the Servicer during the related Collection
  Period or which represent amounts paid by Vendor Services to repurchase
  Leases as of the end of such Collection Period and investment earnings on
  funds on deposit in the Collection Account (the "Available Pledged
  Revenues") plus

      (b) Servicer Advances made by the Servicer, plus

      (c) funds, if any, on deposit in the Residual Account and investment
  earnings thereon, as described under "--Residual Realizations" below, plus

      (d) funds on deposit in the Reserve Account and investment earnings
  thereon. See "--The Reserve Account" below.

    "Pledged Revenues" will consist of

      (1) "Scheduled Payments" on the Leases (which will consist of all
  required payments under the Leases other than those portions of such
  payments which, under the Leases, are to be (A) applied by the Servicer to
  the payment of insurance charges, maintenance, taxes and other similar
  obligations, or (B) under the Contribution and Servicing Agreement, are to
  be retained by the Servicer in payment of Administrative Fees or are late
  payments as to which Servicer Advances were made on a Payment Date)
  received on or after the Cut-Off Date and due during the term of the
  Leases, without giving effect to end-of-term extensions or renewals
  thereof (including all Scheduled Payments due prior to, but not received
  as of, the Cut-Off Date, but excluding any Scheduled Payments due on or
  after, but received prior to, the Cut-Off Date);

                                       48
<PAGE>

      (2) any voluntary prepayments ("Prepayments") of Scheduled Payments
  received on or after the Cut-Off Date under the Leases (unless Vendor
  Services has delivered a Substitute Lease for that Prepaid Lease);

      (3) any amounts paid by Vendor Services to repurchase Leases (to the
  extent Vendor Services has not delivered a Substitute Lease) due to a
  breach of representations and warranties with respect thereto, as
  described under "The Leases--Representations and Warranties Made by Vendor
  Services" or as a result of a Lease becoming an Adjusted Lease, as
  described under "Description of the Contribution and Servicing Agreement--
  Servicing";

      (4) any amounts paid by the SPC to repurchase the Leases as described
  under "--Optional Repurchase of Leases";

      (5) Liquidation Proceeds derived from the liquidation of the Leases
  and the disposition of the related Equipment, as described under "--
  Liquidated Leases" below (unless Vendor Services has substituted a
  Substitute Lease therefor); and

      (6) any earnings on the investment of amounts credited to the
  Collection Account.

    On each Payment Date, the Trustee will be required to make the following
payments, first, from Available Pledged Revenues plus any Servicer Advances,
second, from amounts on deposit in the Residual Account as described under "--
Residual Realizations" below, and third, from amounts on deposit in the
Reserve Account, in the following order of priority (except as otherwise
described under "--Events of Default; Rights Upon Event of Default" below):

    (1) the Servicing Fee if Vendor Services or an affiliate is no longer
  the Servicer;

    (2) to reimburse the Servicer for unreimbursed Nonrecoverable Servicer
  Advances made with respect to a prior Payment Date;

    (3) interest on the Notes in the following order of priority:

       (a) interest on the Class A Notes,

       (b) interest on the Class B Notes, and

       (c) interest on the Class C Notes;

    (4) an amount equal to the Monthly Principal Amount as of such Payment
  Date, in respect of principal on the Notes in the amounts and in the
  priority described under "--Principal" below;

    (5) from Available Pledged Revenues and amounts (if any) on deposit in
  the Residual Account, to the Reserve Account, an amount equal to the
  excess of the Required Reserve Amount over the Available Reserve Amount;

    (6) from Available Pledged Revenues only, for so long as Vendor Services
  or an affiliate is the Servicer, the Servicing Fee; and

    (7) the remainder of Available Pledged Revenues, if any, to the SPC.

Class A Interest

    Interest will be paid to the Holders of each Class of the Class A Notes on
each Payment Date, to the extent the Amount Available (after taking into
account any prior applications

                                      49
<PAGE>

described under "--Distributions" above) is sufficient therefor, at the
Interest Rate for such Class on the Outstanding Principal Amount of such Class.
Interest on the Class A-1 Notes will be calculated on the basis of actual days
elapsed in a year of 360 days, and interest on the Class A-2 Notes, Class A-3
Notes and Class A-4 Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Such interest so payable on such Payment
Date will be equal to the product of (1) the Interest Rate for such Class
(calculated in the manner described above) and (2) the Outstanding Principal
Amount of such Class as of such Payment Date. Interest on each Class of the
Class A Notes will accrue from and including the Closing Date to but excluding
    , 1999 (in the case of the first interest period), and thereafter for each
successive Payment Date from and including the most recent prior Payment Date
to which interest has been paid, to but excluding such Payment Date.

    In the event that, on a given Payment Date, the Amount Available is not
sufficient to make a full payment of interest to the Holders of Class A Notes,
the amount of interest to be paid on the Class A Notes will be allocated among
the Notes of each Class of Class A Notes pro rata in accordance with their
respective entitlements to interest (and within each such Class pro rata among
the holders of such Class), and the amount of such shortfall will be carried
forward and, together with interest thereon at the applicable Interest Rate,
added to the amount of interest such Holders will be entitled to receive on the
next Payment Date.

Class B Interest

    Interest will be paid to the Holders of the Class B Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
all prior applications described under "--Distributions" above) is sufficient
therefor, at the Class B Interest Rate on the Outstanding Principal Amount of
the Class B Notes, and will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Such interest so paid on such Payment Date
will be equal to one-twelfth of the product of ( 1) the Class B Interest Rate
and (2) the Outstanding Principal Amount of the Class B Notes as of such
Payment Date. Interest on the Class B Notes will accrue from and including the
Closing Date to but excluding      , 1999 (in the case of the first interest
period), and thereafter for each successive Payment Date from and including the
most recent prior Payment Date to which interest has been paid, to but
excluding such Payment Date.

    In the event that, on a given Payment Date, the Amount Available, after
payment of interest on the Class A Notes, is not sufficient to make a full
payment of interest to the Holders of Class B Notes, the amount of interest to
be paid on the Class B Notes will be allocated among the Class B Notes pro
rata, and the amount of such shortfall will be carried forward and, together
with interest thereon at the Class B Interest Rate, added to the amount of
interest such Holders will be entitled to receive on the next Payment Date.

Class C Interest

    Interest will be paid to the Holders of the Class C Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
all prior applications described under "--Distributions" above) is sufficient
therefor, at the Class C Interest Rate

                                       50
<PAGE>

on the Outstanding Principal Amount of the Class C Notes, and will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Such interest so paid on such Payment Date will be equal to one-twelfth of the
product of (1) the Class C Interest Rate and (2) the Outstanding Principal
Amount of the Class C Notes as of such Payment Date. Interest on the Class C
Notes will accrue from and including the Closing Date to but excluding     ,
1999 (in the case of the first interest period), and thereafter for each
successive Payment Date from and including the most recent prior Payment Date
to which interest has been paid, to but excluding such Payment Date.

    In the event that, on a given Payment Date, the Amount Available, after
payment of interest on the Class A and Class B Notes, is not sufficient to make
a full payment of interest to the Holders of Class C Notes, the amount of
interest to be paid on the Class C Notes will be allocated among the Class C
Notes pro rata, and the amount of such shortfall will be carried forward and,
together with interest thereon at the Class C Interest Rate, added to the
amount of interest such Holders will be entitled to receive on the next Payment
Date.

Principal

    For each Payment Date, each of the Class A Noteholders, the Class B
Noteholders and the Class C Noteholders will be entitled to receive payments of
principal, to the extent funds are available therefor, in the priorities set
forth in the Indenture and described herein below and under "--Distributions."
On each Payment Date, to the extent funds are available therefor, principal
will be paid to the Noteholders in the following priority:

    (a) (i) to the Class A-1 Noteholders only, until the Outstanding
  Principal Amount on the Class A-1 Notes has been reduced to zero, the
  Class A Principal Payment, then (ii) to the Class A-2 Noteholders,
  Class A-3 Noteholders and Class A-4 Noteholders, sequentially, the Class A
  Principal Payment in that order, until the Outstanding Principal Amount of
  each such Class has been reduced to zero,

    (b) to the Class B Noteholders, the Class B Principal Payment,

    (c) to the Class C Noteholders, the Class C Principal Payment,

    (d) to the extent that the Class B Floor exceeds the Class B Target
  Investor Principal Amount and the Class C Floor exceeds the Class C Target
  Investor Principal Amount, Additional Principal (defined below) shall be
  distributed, sequentially, as an additional principal payment on the Class
  A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes and
  the Class C Notes, in that order, until the Outstanding Principal Amount
  of each such Class has been reduced to zero, and

    (e) to the extent the Class C Floor exceeds the Class C Target Investor
  Principal Amount, but the Class B Floor does not exceed the Class B Target
  Investor Principal Amount, Additional Principal shall be distributed as an
  additional principal payment on the Class A and Class B Notes, pro rata
  (and among the Class A Notes, sequentially on the Class A-2, Class A-3 and
  Class A-4 Notes, in that order), until the Outstanding Principal Amount of
  each such Class has been reduced to zero.


                                       51
<PAGE>

    The "Outstanding Principal Amount" as of a Payment Date shall mean the then
unpaid principal amounts of the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes and the Class C Notes, as
applicable (determined prior to payment of any principal in respect thereof on
such Payment Date).

    The "Class A Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, (i) on all Payment Dates prior to the       Payment Date, the
lesser of (1) the amount necessary to reduce the Outstanding Principal Amount
on the Class A-1 Notes to zero and (2) the Monthly Principal Amount, and (ii)
on the      2000 Payment Date, the entire Outstanding Principal Amount on the
Class A-1 Notes and (b) after the Class A-1 Notes have been paid in full, the
amount necessary to reduce the aggregate Outstanding Principal Amount of the
Class A Notes to the Class A Target Investor Principal Amount.

    The "Class B Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount on the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class B
Target Investor Principal Amount and the Class B Floor.

    The "Class C Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount of the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class C Notes to the greater of the Class C
Target Investor Principal Amount and the Class C Floor.

    "Additional Principal" with respect to each Payment Date is an amount equal
to (a) the Monthly Principal Amount, less (b) the Class A Principal Payment,
the Class B Principal Payment and the Class C Principal Payment to be paid on
such Payment Date.

    The "Class A Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class A Percentage and (b)
the Lease Pool Principal Balance as of the last day of the Collection Period
related to such Payment Date.

    The "Class B Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class B Percentage and (b)
the Lease Pool Principal Balance as of the last day of the Collection Period
related to such Payment Date.

    The "Class C Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class C Percentage and (b)
the Lease Pool Principal Balance as of the last day of the Collection Period
related to such Payment Date.

    The "Class A Percentage" will be approximately     %. The "Class B
Percentage" will be approximately    %. The "Class C Percentage" will be
approximately    %.


                                       52
<PAGE>

    The "Class B Floor" with respect to each Payment Date means (a)   % of the
Initial Pool Principal Balance, plus (b) the Cumulative Loss Amount with
respect to such Payment Date, minus (c) the sum of the Outstanding Principal
Amount of the Class C Notes as of such Payment Date and the amount on deposit
in the Reserve Account after giving effect to withdrawals to be made on such
Payment Date.

    The "Class C Floor" with respect to each Payment Date means (a)   % of the
Initial Pool Principal Balance, plus (b) the Cumulative Loss Amount with
respect to such Payment Date minus (c) the amount on deposit in the Reserve
Account after giving effect to withdrawals to be made on such Payment Date;
provided that if the Outstanding Principal Amount on the Class B Notes is
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 as of such Payment Date.

    The "Monthly Principal Amount" for any Payment Date will equal the excess,
if any, of (a) the sum of the Outstanding Principal Amount of the Notes for
such Payment Date, over (b) the Lease Pool Principal Balance as of the last
day of the Collection Period relating to such Payment Date.

    The "Cumulative Loss Amount" with respect to each Payment Date is an
amount equal to the excess, if any, of

    (a) the total of (1) the Outstanding Principal Amount of the Notes for
  such Payment Date, minus (2) the lesser of (A) the Monthly Principal
  Amount and (B) the Amount Available remaining after the payment of amounts
  owing to the Servicer (other than the Servicing Fee to the extent that
  Vendor Services is the Servicer) and in respect of interest on the Notes
  on such Payment Date, over

    (b) the Lease Pool Principal Balance as of the last day of the
  Collection Period related to such Payment Date.

    The "Principal Balance" of any Lease as of the last day of any Collection
Period is:

    (1) in the case of any Lease that does not by its terms permit
  prepayment or early termination, the present value of the unpaid Scheduled
  Payments due on such Lease after such last day of the Collection Period
  (excluding all Scheduled Payments due on or prior to, but not received as
  of, such last day, as well as any Scheduled Payments due after such last
  day and received on or prior thereto), after giving effect to any
  Prepayments received on or prior to such last day, discounted monthly
  (assuming, for purposes of such calculation, that each Scheduled Payment
  is due on the last day of the applicable Collection Period) at the
  Discount Rate;

    (2) in the case of any Lease that permits prepayment or early
  termination only upon payment of a premium that is at least equal to the
  present value (calculated in the manner described in clause (1) above) of
  the unpaid Scheduled Payments due on such Lease after the date of such
  prepayment, the amount specified in clause (1) above; and

    (3) in the case of any Lease that permits prepayment or early
  termination without payment of a premium at least equal to the amount
  specified in clause (2) above, the

                                      53
<PAGE>

  lesser of (a) the outstanding principal balance of such Lease after giving
  effect to Scheduled Payments due on or prior to such last day of the
  Collection Period, whether or not received, as well as any Prepayments,
  and any Scheduled Payments due after such last day, received on or prior
  to such last day, and (b) the amount specified in clause (1) above.

    The "Initial Pool Principal Balance," which is the aggregate Principal
Balance of the Leases as of the Initial Cut-Off Date, calculated at the
Discount Rate, is $     .

    The Principal Balance of any Lease which became a Liquidated Lease during a
given Collection Period or which Vendor Services was obligated to purchase as
of the end of a given Collection Period due to a breach of representations and
warranties, will be deemed to be zero on and after the last day of such
Collection Period.

    A "Liquidated Lease" is any Lease (a) which the Servicer has charged off as
uncollectible in accordance with its credit and collection policies and
procedures (which shall be no later than the date as of which the Servicer has
repossessed and disposed of the related Equipment, or otherwise collected all
proceeds which, in the Servicer's reasonable judgment, can be collected under
such Lease), or (b) as to which 10% or more of a Scheduled Payment is
delinquent 180 days or more.

    The "Collection Period" for any Payment Date will be the calendar month
preceding the month in which such Payment Date occurs.

Servicer Advances

    Prior to any Payment Date, the Servicer may, but will not be required to,
advance to the Trustee an amount sufficient to cover delinquencies in Scheduled
Payments on the Leases with respect to the prior Collection Period (a "Servicer
Advance"). The Servicer will be reimbursed for Servicer Advances from late
payments on the delinquent Leases with respect to which such advances were made
and, if the Servicer later determines that such Servicer Advance will not be
reimbursed from the recovery on the delinquent Lease (a "Nonrecoverable
Servicer Advance"), from the Amount Available on the next Payment Date.

Residual Realizations

    Cash flows realized from the sale or re-lease of the Equipment following
the scheduled expiration dates or voluntary early termination of the Leases,
other than Equipment subject to Liquidated Leases or Leases for which Vendor
Services delivers a Substitute Lease (the "Residual Realizations"), will
provide additional credit support for the Notes. Historically Vendor Services
has realized amounts greater than book value through sale or re-lease of
equipment similar to the Equipment, but there can be no assurance as to the
amount or timing of Residual Realizations. See "Risk Factors--Risks Relating to
Reliance on Residual Realizations." The Residual Realizations will be deposited
in the Residual Account. As provided in the Indenture, funds on deposit in the
Residual Account will be available to cover shortfalls in the Available Pledged
Revenues to pay interest and principal payments

                                       54
<PAGE>

then due on the Notes. As of the Initial Cut-Off Date, the aggregate residual
value of the Equipment recorded on the accounting books of Vendor Services (the
"Book Value") of the Leases was $      . Actual Residual Realizations may be
more or less than Book Value. The Residual Realizations for a Collection Period
not distributed to Noteholders, paid to the Servicer or deposited into the
Reserve Account on the related Payment Date will be released to the SPC on such
Payment Date, except during the continuation of certain limited circumstances
specified in the Indenture (a "Residual Event"). Amounts released to the SPC
will not be available to the Noteholders under any circumstances. During the
continuation of a Residual Event, amounts in the Residual Account that
otherwise would be released to the SPC will be retained in the Residual Account
for application on future Payment Dates.

    Upon the termination of a Residual Event, any amounts on deposit in the
Residual Account will be (i) deposited into the Reserve Account, to the extent
that the amount on deposit in the Reserve Account is less than the Required
Reserve Amount, or (ii) released to the SPC, and thereafter will not be
available to Noteholders under any circumstance. The Residual Events will be
established prior to the Closing Date based on criteria prescribed by the
Rating Agencies. Such criteria may be amended or otherwise altered after the
Closing Date, without the consent of Noteholders, to alter the performance
parameters that must occur to cause a Residual Event, so long as doing so would
not cause either Rating Agency to reduce, withdraw or qualify any of its
ratings on the Notes.

Reserve Account

    On the Closing Date, the SPC will make an initial deposit in an amount
equal to   % of the Initial Pool Principal Balance into the Reserve Account. In
the event that Available Pledged Revenues are insufficient to pay the amounts
owing the Servicer, interest payments on the Notes and the Class A Principal
Payment, the Class B Principal Payment, the Class C Principal Payment and any
Additional Principal for the related Payment Date (such payments, the "Required
Payments"), and amounts on deposit in the Residual Account are insufficient to
make up such shorfall, the Trustee will withdraw from the Reserve Account an
amount equal to the lesser of the funds on deposit in the Reserve Account (the
"Available Reserve Amount") and such deficiency. In addition, on each Payment
Date, the Amount Available remaining after the payment of the Required Payments
will be deposited into the Reserve Account to the extent that the Required
Reserve Amount exceeds the Available Reserve Amount. The "Required Reserve
Amount" equals the lesser of (a)   % of the Initial Pool Principal Balance and
(b) the Outstanding Principal Amount of the Notes. Any amounts on deposit in
the Reserve Account in excess of the Required Reserve Amount will be released
to the SPC, and thereafter will not be available to Noteholders under any
circumstance.

Subordination of Class B Notes and Class C Notes

    The likelihood of payment of interest on each Class of Notes will be
enhanced by the application of the Amount Available to the payment of such
interest prior to the payment of principal on any of the Notes, as well as by
the preferential right of the Holders of Class A and Class B Notes to receive
such interest (1) in the case of the Class A Notes, prior to the

                                       55
<PAGE>

payment of any interest on the Class B Notes or the Class C Notes, and (2) in
the case of the Class B Notes, prior to the payment of any interest on the
Class C Notes. Likewise, the likelihood of payment of principal, to the extent
of the Class A Principal Payment and the Class B Principal Payment on a Payment
Date on the Class A and Class B Notes, respectively, will be enhanced by the
preferential right of the Holders of Notes of each such Class to receive such
principal, to the extent of the Amount Available, after payment of interest on
the Notes as aforesaid, (i) in the case of the Class A Notes, prior to the
payment of any principal on the Class B Notes or the Class C Notes and (ii) in
the case of the Class B Notes, prior to the payment of any principal on the
Class C Notes.

Liquidated Leases

    Liquidation Proceeds (which will consist generally of all amounts received
by the Servicer in connection with the liquidation of a Liquidated Lease and
disposition of the related Equipment, net of any related out-of-pocket
liquidation expenses) will be deposited in the Collection Account and
constitute Pledged Revenues to be applied to the payment of interest and
principal on the Notes in accordance with the priorities described under "--
Distributions" above (except that, to the extent that Vendor Services elects to
substitute one or more Substitute Leases for all or a portion of the unpaid
Principal Balance of the Liquidated Lease, Liquidation Proceeds will be
remitted to Vendor Services and will not be available to Noteholders).

Optional Repurchase of Leases

    The SPC may purchase all of the Leases on any Payment Date following the
date on which the unpaid principal balance of the Notes is less than 10% of the
Initial Pool Principal Balance. The purchase price to be paid in connection
with such purchase shall be at least equal to the unpaid principal balance of
the Notes as of such Payment Date plus interest to be paid on the Notes on such
Payment Date. The proceeds of such purchase shall be applied on such Payment
Date to the payment of the remaining principal balance of the Notes, together
with accrued interest thereon.

Trust Accounts

    The Trustee will establish and maintain under the Indenture segregated
trust accounts (which need not be deposit accounts, but which shall constitute
"Eligible Accounts"), consisting of the "Collection Account," the "Servicing
Account," the "Residual Account," the "Reserve Account" and the "Note
Distribution Account" (collectively, the "Trust Accounts"). An "Eligible
Account" means any account which is

      (1) an account maintained with an Eligible Institution (as defined
  below);

      (2) an account or accounts the deposits in which are fully insured by
  either the Bank Insurance Fund or the Savings Association Insurance Fund
  of the FDIC;

      (3) a "segregated trust account" maintained with the corporate trust
  department of a federal or state chartered depository institution or trust
  company with trust powers and acting in its fiduciary capacity for the
  benefit of the Trustee, which depository institution or trust company has
  capital and surplus or, if depository institution or trust company is a
  subsidiary of a bank holding company system, the bank holding company

                                       56
<PAGE>

  has capital and surplus, of not less than $50,000,000 and the securities
  of such depository institution or trust company or, if such depository
  institution or trust company is a subsidiary of a bank holding company
  system and such depository institution's or trust company's securities are
  not rated, the securities of the bank holding company, have a credit
  rating from each of the Rating Agencies if rated by such Rating Agency
  which signifies "investment grade"; or

      (4) an account that will not cause any Rating Agency to reduce,
  qualify or withdraw its then-current rating assigned to the Notes, as
  confirmed in writing by such Rating Agency.

"Eligible Institution" means any depository institution organized under the
laws of the United States or any state, the deposits of which are insured to
the full extent permitted by law by the Bank Insurance Fund (currently
administered by the Federal Deposit Insurance Corporation), whose short-term
deposits or unsecured long-term debt have a credit rating that is acceptable to
each of the Rating Agencies, and which is subject to supervision and
examination by federal or state authorities.

    The Servicer, as agent for the Trustee, may designate, or otherwise arrange
for the purchase by the Trustee of, investments to be made with funds in the
Trust Accounts, which investments shall be Eligible Investments (as defined in
the Indenture) that will mature not later than the business day preceding the
applicable monthly Payment Date. "Eligible Investments" include, among other
investments, obligations of the United States or of any agency thereof backed
by the full faith and credit of the United States; federal funds, certificates
of deposit, time deposits and bankers' acceptances sold by eligible financial
institutions; certain repurchase agreements with eligible institutions and
other investments which would not result in the reduction, qualification or
withdrawal of any rating of the Notes by any Rating Agency.

Reports to Noteholders

    The Servicer will furnish to the Trustee, and the Trustee will include with
each distribution to a Noteholder, a statement in respect of the related
Payment Date setting forth, among other things:

    (1) the amount of interest paid on each Class of Class A Notes,
  including any unpaid interest from the prior Payment Date, and any
  remaining unpaid interest on each Class of Class A Notes;

    (2) the amount of interest paid on the Class B Notes, including any
  unpaid interest from the prior Payment Date, and any remaining unpaid
  interest on the Class B Notes;

    (3) the amount of interest paid on the Class C Notes, including any
  unpaid interest from the prior Payment Date, and any remaining unpaid
  interest on the Class C Notes;

    (4) the amount of principal paid on each Class of Class A Notes;

    (5) the amount of principal paid on the Class B Notes;

    (6) an amount of principal paid on the Class C Notes;

    (7) the Cumulative Loss Amount, if any, for such Payment Date;

    (8) all Substitute Leases delivered by Vendor Services;

                                       57
<PAGE>

    (9) the balance in the Reserve Account and the Required Reserve Amount;
  and

     (10) the balance in the Residual Account.

    The Notes will be registered in the name of a nominee of DTC and will not
be registered in the names of the beneficial owners or their nominees. As a
result, unless and until Definitive Notes are issued in the limited
circumstances described under "--Definitive Notes" below, beneficial owners
will not be recognized by the Trustee as Noteholders, as that term is used in
the Indenture. Hence, until such time, beneficial owners will receive reports
and other information provided for under the Indenture only if, when and to the
extent provided by DTC and its participating organizations.

Book-Entry Registration

    Notes may only be held through the Depository Trust Company (in the United
States) or, Cedel or Euroclear (in Europe) if they are participants of such
systems, or indirectly through organizations that are participants in such
systems. Cede & Co., as nominee for DTC, will hold the Notes. Cedel and
Euroclear will hold omnibus positions in the Notes on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the "Cedel/Euroclear Depositaries"),
which in turn will hold such positions in customers' securities accounts in the
Cedel/Euroclear Depositaries' names on the books of DTC. All references in this
Prospectus to "Holders" or "Noteholders" shall reflect the right of beneficial
owners of the Notes (the "Note Owners") as they may indirectly exercise such
rights through DTC, Cedel and Euroclear and their respective Participants
(except as otherwise specified herein).

    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 UCC and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934. DTC
was created to hold securities for its Participants and to facilitate the
clearance and settlement of securities transactions between Participants
through electronic book-entries, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations. Indirect access to the DTC
system also is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").

    Transfers between DTC's participating organizations (the "Participants")
will occur in accordance with DTC rules. Transfers between Cedel Participants
and Euroclear Participants will occur in the ordinary way in accordance with
their applicable rules and operating procedures.

    Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant

                                       58
<PAGE>

European international clearing system by 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 in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.

    Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Cedel Participant or Euroclear Participant on such business day. Cash received
in Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.

    Note Owners that are not Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
Notes may do so only through Participants and Indirect Participants. In
addition, Note Owners will receive all distributions of principal and interest
from the Trustee, only through Participants. Under a book-entry format, Note
Owners may therefore experience some delay in their receipt of payments, since
such payments will be forwarded by the Trustee to DTC's nominee. DTC will
forward such payments to its Participants, which thereafter will forward them
to Indirect Participants or Note Owners. The only "Noteholder" will be DTC's
nominee. Note Owners will not be recognized by the Trustee as Noteholders, as
such term is used in the Indenture, and Note Owners will be permitted to
exercise the rights of Noteholders only indirectly through DTC and its
Participants.

    Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
securities among Participants on whose behalf it acts with respect to the Notes
and to receive and transmit distributions of principal of, and interest on, the
Notes. Participants and Indirect Participants with which Note Owners have
accounts with respect to the Notes similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their owners.
Accordingly, although Note Owners will not possess Notes, the Rules provide a
mechanism by which Participants will receive payments and will be able to
transfer their interests.

    Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Note Owner
to pledge 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 lack of a physical certificate for such Notes.


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<PAGE>

    DTC has advised the Issuer that it will take any action permitted to be
taken by a Note Owner under the Indenture only at the direction of one or more
Participants to whose accounts with DTC the Notes are credited. DTC may take
conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of Participants whose holdings include
such undivided interests.

    Except as required by law, Vendor Services, the SPC, the Issuer, and the
Trustee will not have any liability for any aspect of the records relating to
or payments made on account of beneficial ownership interest of the Notes held
by DTC's nominee, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

    DTC has advised the Issuer that DTC management is aware that some computer
applications, systems, and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 Problems." DTC has informed its Participants and
other members of the financial community (the "Industry") that it has developed
and is implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC,
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames.

    However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information of the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to:
(i) impress upon them the importance of such services being Year 2000
compliant; and (ii) determine the extent of their efforts for Year 2000
remediation (and, as appropriate, testing) of their services. In addition, DTC
is in the process of developing such contingency plans as it deems appropriate.

    According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.

    Cedelbank ("Cedel") is incorporated under the laws of Luxembourg as a
professional depository. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars.
Cedel provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is

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<PAGE>

subject to regulation by the Luxembourg Monetary Institute. Cedel Participants
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters for the Notes.
Indirect access to Cedel is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.

    The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in Euroclear
in any of 32 currencies, including United States dollars. The Euroclear System
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. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "Euroclear Operator" or "Euroclear"), under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters of the Notes. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.

    The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.

    Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear Operator
acts under the Terms and Conditions only on behalf of Euroclear Participants
and has no record of or relationship with persons holding through Euroclear
Participants.

    Distributions with respect to Notes held through Cedel or Euroclear will be
credited to the cash accounts of Cedel Participants or Euroclear Participants
in accordance with the relevant system's rules and procedures, to the extent
received by its Depositary. Such

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<PAGE>

distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Federal Income Tax Consequences"
in this Prospectus and "Global Clearance, Settlement and Tax Documentation
Procedures" in Annex I to this Prospectus. Cedel or the Euroclear Operator, as
the case may be, will take any other action permitted to be taken by a
Noteholder under the Indenture on behalf of a Cedel Participant or Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Depositary's ability to effect such actions on its behalf
through DTC.

    Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.

    In the event that any of DTC, Cedel or Euroclear should discontinue its
services, the Trustee would seek an alternative depository (if available) or
cause the issuance of Definitive Notes to the owners thereof or their nominees
in the manner described below under "--Definitive Notes".

Definitive Notes

    The Notes of each Class will be issued in registered, certificated form to
the Note Owners of such Class or their nominees ("Definitive Notes"), rather
than to the Depository or its nominee, only if (i) the Depository advises the
Trustee in writing that it is no longer willing or able to discharge properly
its responsibilities as Depository with respect to the Notes of such Class, and
the Trustee is unable to locate a qualified successor, or (ii) an Event of
Default has occurred, and Note Owners representing not less than 50% of the
principal balance of such Class advise the Trustee and the Depository through
Participants in writing that the continuation of a book-entry system through
the Depository is no longer in the best interest of the Note Owners of such
Class.

    Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Notes. Upon surrender by
the Depository of the definitive certificate representing the Notes of the
affected Class and instructions for registration, the Trustee will issue the
Notes of such Class as Definitive Notes, and thereafter the Trustee will
recognize the Note Owners of such Definitive Notes as Noteholders under the
Indenture.

    Distributions of principal and interest on the Notes will be made by the
Trustee directly to Noteholders in accordance with the procedures set forth
herein and in the Indenture. Interest payments and any principal payments on
each Payment Date will be made to Noteholders in whose names the Definitive
Notes were registered at the close of business on the related Record Date.
Distributions will be made by check mailed to the address of such Noteholder as
it appears on the register maintained by the Trustee. The final payment on any
Note, however, 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 Trustee will

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<PAGE>

provide such notice to registered Noteholders mailed not later than the fifth
day of the month of such final distributions.

    Definitive Notes will be transferable and exchangeable at the offices of
the transfer agent and registrar, which initially will be the Trustee (in such
capacity, the "Transfer Agent and Registrar"). No service charge will be
imposed for any registration of transfer or exchange, but the Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith. The Transfer Agent and
Registrar will not be required to register the transfer or exchange of
Definitive Notes for the period from the Record Date preceding the due date for
any payment to the Payment Date with respect to such Definitive Notes.

Modification of Indenture Without Noteholder Consent

    The Issuer and the Trustee may, when authorized by an Issuer Order, without
consent of the Noteholders, enter into one or more supplemental indentures for
any of the following purposes:

  .   to correct or amplify the description of the collateral or add
      additional collateral;

  .   to provide for the assumption of the Notes and the Indenture
      obligations by a permitted successor to the Issuer (as described under
      "--Certain Covenants");

  .   to add additional covenants for the benefit of the Noteholders, or to
      surrender any rights or power conferred upon the Issuer;

  .   to convey, transfer, assign, mortgage or pledge any property to or
      with the Trustee;

  .   to cure any ambiguity or correct or supplement any provision in the
      Indenture or in any supplemental indenture which may be inconsistent
      with any other provision of the Indenture;

  .   to provide for the acceptance of the appointment of a successor
      Trustee or to add to or change any of the provisions of the Indenture
      or in any supplemental indenture as shall be necessary and permitted
      to facilitate the administration by more than one trustee;

  .   to modify, eliminate or add to the provisions of the Indenture in
      order to comply with the Trust Indenture Act of 1939, as amended;

  .   to avoid a reduction, qualification or withdrawal of any rating of the
      Notes; or

  .   to add any provisions to, or change in any manner or eliminate any of
      the provisions of, the Indenture or to modify in any manner the rights
      of the Holders of the Notes under the Indenture,

provided that such action shall not (a) result in a reduction, qualification or
withdrawal of the then-current ratings of the Notes, or (b) as evidenced by an
opinion of counsel, adversely affect in any material respect the interests of
any Noteholder.


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<PAGE>

Modification of Indenture With Noteholder Consent

    With the consent of the Holders representing a majority of the principal
balance of each Class of the Notes affected thereby, the Issuer and the Trustee
may, when authorized by an Issuer Order, execute a supplemental indenture to
add provisions to change in any manner or eliminate any provisions of, the
Indenture, or modify in any manner the rights of the Noteholders.

    Without the consent of the Holder of each outstanding Note affected
thereby, however, no supplemental indenture may:

  .   change the date, timing or method of determination of any installment
      of principal of or interest on any Note or reduce the principal amount
      thereof, the interest rate specified thereon or the redemption price
      with respect thereto or change the manner of calculating any such
      payment or any place of payment where, or the coin or currency in
      which, any Note or any interest thereon is payable;

  .   impair the right to institute suit for the enforcement of certain
      provisions of the Indenture regarding payment;

  .   reduce the percentage of each Class of the Notes then outstanding the
      consent of the Holders of which is required for any such supplemental
      indenture or for any waiver of compliance with certain provisions of
      the Indenture or of certain defaults thereunder and their
      consequences;

  .   modify or alter the provisions of the Indenture regarding the voting
      of Notes held by the Issuer, any other obligor on the Notes, the
      Issuer or an affiliate of any of them;

  .   reduce the percentage of the Notes the consent of the Holders of which
      is required to direct the Trustee to sell or liquidate the Trust
      Assets if the proceeds of such sale would be insufficient to pay the
      principal amount and accrued but unpaid interest on the outstanding
      Notes;

  .   reduce the percentage of each Class of the Notes then outstanding
      required to amend the sections of the Indenture which specify the
      applicable percentage of each Class of the Notes then outstanding
      necessary to amend the Indenture or certain other related agreements;

  .   permit the creation of any lien ranking prior to or on a parity with
      the lien of the Indenture with respect to any of the collateral for
      the Notes or, except as otherwise permitted or contemplated in the
      Indenture, terminate the lien of the Indenture on any such collateral
      or deprive the Holder of any Note of the security afforded by the lien
      of the Indenture; or

  .   result in a reduction, qualification or withdrawal of the rating of
      any Class of Notes by a Rating Agency, as confirmed in writing by each
      Rating Agency.


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<PAGE>

Events of Default; Rights Upon Event of Default

    "Events of Default" under the Indenture will consist of:

  .   a default for five calendar days or more in the payment of interest
      due on any Note;

  .   failure to pay the unpaid principal amount of any Class of Notes on
      the Stated Maturity Date or any redemption date for such Class;

  .   a default in the observance or performance in any material respect of
      any covenant or agreement of the Issuer made in the Indenture, or any
      representation or warranty made by the Issuer in the Indenture or in
      any certificate delivered pursuant thereto or in connection therewith
      having been incorrect as of the time made, and the continuation of any
      such default or the failure to cure such breach of a representation or
      warranty for a period of 30 calendar days after notice thereof is
      given to the Issuer by the Trustee or to the Issuer and the Trustee by
      the Holders of at least 25% in principal amount of the Notes then
      outstanding; or

  .   certain events of bankruptcy, insolvency, receivership or liquidation
      of the Issuer.

    If an Event of Default should occur and be continuing with respect to the
Notes, the Trustee or a Note Majority may declare the principal of the Notes to
be immediately due and payable. Such declaration may, under certain
circumstances, be rescinded by a majority of the Principal Balance of each
Class of the Notes then outstanding (a "Note Majority").

    If the Notes have been declared due and payable following an Event of
Default, the Trustee may institute proceedings to collect amounts due or
foreclose on Trust Assets or any portion thereof, exercise remedies as a
secured party, sell the Trust Assets or any portion thereof or elect to have
the Issuer maintain possession of the Trust Assets and continue to apply
collections on the Trust Assets as if there had been no declaration of
acceleration. The Trustee, however, will be prohibited from selling the Trust
Assets following an Event of Default, unless

      (1) the Holders of all the outstanding Notes consent to such sale;

      (2) the proceeds of such sale distributable to Holders of the Notes
  are sufficient to pay in full the principal of and the accrued interest on
  all the outstanding Notes at the date of such sale; or

      (3) the Trustee determines that the Trust Assets would not be
  sufficient on an ongoing basis to make all payments on the Notes as such
  payments would have become due if such obligations had not been declared
  due and payable, and the Trustee obtains the consent of the Holders of 66
  2/3% of the aggregate outstanding amount of the Notes.

Following a declaration upon an Event of Default that the Notes are immediately
due and payable, any proceeds of liquidation of the Trust Assets, will be
applied in the following order of priority:

    (1) to the Servicer, the Servicing Fee (if Vendor Services or an
  affiliate is no longer the Servicer);

    (2) to the reimbursement of the Trustee for its expenses;

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<PAGE>

    (3) to the payment of interest, sequentially, on the Class A Notes until
  paid in full (and among the Class A Notes, pro rata), then on the Class B
  Notes until paid in full, and then on the Class C Notes until paid in
  full;

    (4) to the payment of principal, sequentially, on the Class A Notes, the
  Class B Notes and the Class C Notes;

    (5) to the Servicer, the Servicing Fee (if Vendor Services or an
  affiliate is the Servicer); and

    (6) the remainder, if any, to the Issuer.

    Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders of the Notes, if the Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain limitations
contained in the Indenture, a Note Majority will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the Trustee, and a Note Majority may, in certain cases, waive any default with
respect thereto, except a default in the payment of principal or interest or a
default in respect of a covenant or provision of the Indenture that cannot be
modified without the waiver or consent of all of the Holders of such
outstanding Notes.

    No Holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless

    (1) such Holder previously has given to the Trustee written notice of a
  continuing Event of Default,

    (2) the Holders of not less than 25% in principal amount of the
  outstanding Notes have made written request of the Trustee to institute
  such proceeding in its own name as Trustee,

    (3) such Holder or Holders have offered the Trustee reasonable
  indemnity,

    (4) the Trustee has for 60 days failed to institute such proceeding, and

    (5) no direction inconsistent with such written request has been given
  to the Trustee during such 60-day period by the Holders of a majority in
  principal amount of such outstanding Notes.

    If an Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee will mail to each Noteholder notice of the Event of
Default within 90 days after it occurs. Except in the case of a failure to pay
principal of or interest on any Note, the Trustee may withhold the notice if
and so long as it determines in good faith that withholding the notice is in
the interests of the Noteholders.

    In addition, the Trustee and the Noteholders, by accepting the Notes, will
covenant that they will not at any time institute against the Issuer any
bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.


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<PAGE>

    Neither the Trustee nor the Issuer in its individual capacity, nor any
Holder of a Note including, without limitation, the SPC, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
affiliates, successors or assigns will, in the absence of an express agreement
to the contrary, be personally liable for the payment of the Notes or for any
agreement or covenant of the Issuer contained in the Indenture.

Certain Covenants

    The Indenture will provide that the Issuer may not consolidate with or
merge into any other entity, unless

  .   the entity formed by or surviving such consolidation or merger is
      organized under the laws of the United States or any state,

  .   such entity expressly assumes the Issuer's obligation to make due and
      punctual payments upon the Notes and the performance or observance of
      every agreement and covenant of the Issuer under the Indenture,

  .   no Event of Default shall have occurred and be continuing immediately
      after such merger or consolidation,

  .   the Issuer has been advised that the rating of the Notes then in
      effect would not be reduced, qualified or withdrawn by the Rating
      Agencies as a result of such merger or consolidation, (v) the Issuer
      has received an opinion of counsel to the effect that such
      consolidation or merger would have no material adverse tax consequence
      to the Issuer or to any Noteholder, and (vi) the Issuer or the Person
      (if other than the Issuer) formed by or surviving such consolidation
      or merger has a net worth, immediately after such consolidation or
      merger, that is (a) greater than zero and (b) not less than the net
      worth of the Issuer immediately prior to giving effect to such
      consolidation or merger.

    The Issuer will not, among other things,

  .   except as expressly permitted by the Indenture, sell, transfer,
      exchange or otherwise dispose of any of the Trust Assets,

  .   claim any credit on or make any deduction from the principal and
      interest payable in respect of the related Notes (other than amounts
      withheld under the Code or applicable state law) or assert any claim
      against any present or former Holder of such Notes because of the
      payment of taxes levied or assessed upon the Issuer,

  .   dissolve or liquidate in whole or in part,

  .   permit the validity or effectiveness of the Indenture to be impaired
      or permit any person to be released from any covenants or obligations
      with respect to the Notes under the indenture except as may be
      expressly permitted thereby, or

  .   except as expressly permitted by the Indenture or the Contribution and
      Servicing Agreement, permit any lien, charge, excise, claim, security
      interest, mortgage or other encumbrance to be created on or extend to
      or otherwise arise upon or burden

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<PAGE>

      the assets of the Issuer or any part thereof, or any interest therein
      or proceeds thereof.

    The Issuer may not engage in any activity other than as specified under
"The Issuer and the SPC." The Issuer will not incur, assume or guarantee any
indebtedness other than indebtedness incurred pursuant to the Notes and the
Indenture or otherwise in accordance with the Indenture and the Contribution
and Servicing Agreement.

Annual Compliance Statement

    The Issuer will be required to file annually with the Trustee a written
statement as to the fulfillment of its obligations under the Indenture.

Trustee's Annual Report

    The Trustee will be required to mail each year to all Noteholders a brief
report relating to its eligibility and qualification to continue as Trustee
under the related Indenture, any amounts advanced by it under the Indenture,
the amount, interest rate and maturity date of certain indebtedness owing by
the Issuer to the Trustee in its individual capacity, the property and funds
physically held by the Trustee as such and any action taken by it that
materially affects the Notes and that has not been previously reported.

Satisfaction and Discharge of Indenture

    The Indenture will be discharged with respect to the collateral securing
the Notes upon the delivery to the related Trustee for cancellation of all such
Notes or, with certain limitations, upon deposit with the Trustee of funds
sufficient for the payment in full of all of such Notes.

The Trustee

    U.S. Bank Trust National Association will be the Trustee. The Trustee may
resign at any time, in which event the Issuer will be obligated to appoint a
successor trustee. The Issuer may also remove the Trustee if the Trustee ceases
to be eligible to continue as such under the Indenture, if the Trustee becomes
insolvent or if the rating assigned to the long-term unsecured debt obligations
of the Trustee (or the holding company thereof) by the Rating Agencies shall be
lowered below an investment grade rating or be withdrawn by any Rating Agency.
In such circumstances and others set forth in the Indenture, the Issuer will be
obligated to appoint a successor trustee. Any resignation or removal of the
Trustee and appointment of a successor trustee will not become effective until
acceptance of the appointment by a successor trustee.

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<PAGE>

            DESCRIPTION OF THE CONTRIBUTION AND SERVICING AGREEMENT

Transfer and Assignment of Leases and Equipment

    On the Closing Date, Vendor Services will transfer to the SPC pursuant to
the Transfer Agreement all of its right, title and interest in the Leases and
the related Equipment, including all security interests created thereby and
therein, the right to receive all Scheduled Payments and Prepayments received
on the Leases on or after the Cut-Off Date (including all Scheduled Payments
due prior to, but not received as of, the Cut-Off Date, but excluding any
Scheduled Payments due on or after, but received prior to, the Cut-Off Date),
all rights under insurance policies maintained on the Equipment pursuant to the
Leases, all documents contained in the Lease Files and all proceeds derived
from any of the foregoing. Pursuant to the Contribution and Servicing
Agreement, on the Closing Date, the SPC will transfer all of its rights in the
Leases and certain rights to Residual Realizations, together with all its
rights under the Transfer Agreement, to the Issuer.

    The Contribution and Servicing Agreement will designate the Servicer as
custodian to maintain possession, as the Issuer's agent, of the Leases and all
documents related thereto. To facilitate servicing and save administrative
costs, the documents will not be physically segregated from other similar
documents that are in the Servicer's possession. UCC financing statements will
be filed on the Closing Date in the applicable jurisdictions reflecting the
transfer of the Leases by Vendor Services to the SPC, by the SPC to the Issuer,
and the pledge of the Leases by the Issuer to the Trustee, and Vendor
Services's accounting records and computer systems will also reflect such
assignments and pledge. The Leases will not, however, be stamped or otherwise
physically marked to reflect their assignment to the Issuer. If, through fraud,
negligence or otherwise, a subsequent purchaser were able to take physical
possession of the Leases without knowledge of the assignment, the Issuer's
interest in the Leases could be defeated. See "Risk Factors--Some leases may
not be enforceable" and "Certain Legal Aspects of the Leases."

Collections on Leases

    The Trustee will establish and maintain a Servicing Account, into which the
Servicer will deposit, no later than the second Business Day after receipt
thereof, all Scheduled Payments, Prepayments, Liquidation Proceeds, Residual
Realizations and other amounts received by the Servicer in respect of the
Leases on and after the Cut-Off Date. The Servicer will thereafter transfer to
the Collection Account, no later than the third Business Day after deposit
thereof in the Servicing Account, the following amounts:

    (1) all Scheduled Payments made by or on behalf of Obligors under the
  Leases;

    (2) all Prepayments (unless Vendor Services has delivered a Substitute
  Lease for such Lease);

    (3) all amounts constituting Liquidation Proceeds on Liquidated Leases
  (unless Vendor Services has delivered a Substitute Lease for such Lease);


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<PAGE>

    (4) any and all payments made by Vendor Services pursuant to the
  Transfer Agreement in connection with the purchase of any Leases as a
  result of a breach of a representation or warranty with respect thereto,
  as described under "The Leases--Representations and Warranties Made by
  Vendor Services," or pursuant to the Contribution and Servicing Agreement
  as a result of the Lease becoming an Adjusted Lease as described below
  under "--Servicing"; and

    (5) the amount paid by the SPC to purchase the Leases, as described
  under "Description of the Notes--Optional Purchase of Leases."

    The Servicer will transfer all Residual Realizations from the Servicing
Account to the Residual Account no later than the third Business Day after
deposit thereof in the Servicing Account.

    So long as no Event of Termination shall have occurred and be continuing
with respect to the Servicer, the Servicer, if Vendor Services or an affiliate
is no longer the Servicer, may make the remittances to be made by it to the
Collection Account net of amounts (which amounts may be netted prior to any
such remittance for a Collection Period) otherwise to be distributed to it in
payment of its Servicing Fee.

    The Servicer will be entitled to withdraw from the Collection Account any
amounts deposited therein in error or required to be repaid to an Obligor,
based on the Servicer's good-faith determination that such amount was deposited
in error or must be returned to the Obligor.

    Under the Contribution and Servicing Agreement, the Servicer is required to
establish in its own name one or more "Insurance, Maintenance and Tax
Accounts," into which are to be deposited any payments made by or on behalf of
Obligors which constitute

  .   insurance charges paid by an Obligor to the lessor or secured party
      under a Lease (unless such payments are made directly by the Obligor
      to the applicable insurance company, or Vendor Services has previously
      paid such charges),

  .   any insurance payments or recoveries paid by an insurance company or
      comparable third party and related to the damage to, or destruction
      of, the Equipment related to such Lease (unless paid directly by such
      insurance company or comparable third party directly to the Obligor),

  .   any payments made by or on behalf of Obligors which constitute amounts
      paid by an Obligor to the lessor or secured party under a Lease in
      respect of the maintenance of the related Equipment, and

  .   taxes paid by the Obligor and related to the applicable Lease or the
      Equipment related thereto (unless such payment is made directly by the
      Obligor to the applicable taxing authority or authorities, or Vendor
      Services has previously paid such taxes).

The Servicer may withdraw amounts from the Insurance, Maintenance and Tax
Accounts, when and if appropriate, to pay when due (or may pay from its own
funds and thereafter

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<PAGE>

reimburse itself from amounts in the Insurance, Maintenance and Tax Accounts)
(1) all insurance charges in the amounts received under clause (a) above, (2)
any amounts payable under any applicable maintenance contract or otherwise with
respect to the maintenance of the related Equipment in the amounts received
under clause (c) above, and (3) all taxes in the amounts received under clause
(d) above. Amounts on deposit in the Insurance, Maintenance and Tax Accounts
which represent amounts received by the Servicer pursuant to clause (b) above
shall be applied by the Servicer as follows: if equipment is purchased to
replace the Equipment that was damaged or destroyed, and such replacement
equipment is (in the reasonable opinion of the Servicer) of comparable use and
equivalent value to the Equipment that was damaged or destroyed, or if the
Equipment is to be repaired, the Servicer shall release such amount so received
from the insurance company or comparable third party in payment or
reimbursement for such replacement equipment or such repair; and if this
replacement option is not exercised and the Equipment is not to be repaired,
then the Servicer shall treat such amount as Liquidation Proceeds and transfer
that portion thereof which would be allocable to the Notes from the Insurance,
Maintenance and Tax Accounts to the Collection Account.

    On or before the first Business Day preceding each Payment Date (the
"Determination Date"), the Servicer is required to determine the amount of
Available Pledged Revenues for such Payment Date, the amount of interest
payable on the Notes on such Payment Date, the Monthly Principal Amount for
such Payment Date, the Cumulative Loss Amount (if any) for such Payment Date,
and the amount, if any, by which such Available Pledged Revenues plus any
Servicer Advances with respect to such Payment Date, when applied in accordance
with the priorities described under "Description of the Notes--Distributions,"
are insufficient to pay the interest and principal payable on the Notes on such
Payment Date (a "Payment Shortfall"). If there is a Payment Shortfall for such
Payment Date, amounts on deposit in the Residual Account and then amounts on
deposit in the Reserve Account will be applied to the payment of interest and
principal on the Notes to the extent necessary to cure such Payment Shortfall.
The Servicer shall further give notice to the Trustee of (1) any remaining
Payment Shortfall (after giving effect to the previous application of funds in
the Residual Account or Reserve Account as aforesaid), (2) the Cumulative Loss
Amount (if any), and (3) if such Payment Date is the Stated Maturity Date for
any Class of Notes, the remaining unpaid principal balance of such Class of
Notes (after giving effect to previous application of funds in the Residual
Account as aforesaid).

Servicing

    Pursuant to the Contribution and Servicing Agreement, Vendor Services will
be engaged to act as Servicer on behalf of the Issuer. The Servicer is
generally obligated under the Contribution and Servicing Agreement to service
the Leases in accordance with customary and usual procedures of institutions
which service equipment Leases, installment sale contracts, promissory notes,
loan and security agreements and other similar types of receivables comparable
to the Leases and, to the extent more exacting, the degree of skill and
attention that the Servicer exercises from time to time with respect to all
comparable such contracts that it services for itself or others. In performing
such duties, so long as

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<PAGE>

Vendor Services is the Servicer, it shall comply in all material respects with
its credit and collection policies and procedures in effect from time to time
(which credit and collection policies currently in effect are described under
"Green Tree Vendor Services Corporation"). The Servicer may delegate certain of
its servicing responsibilities with respect to the Leases to third parties,
provided that the Servicer will remain obligated to the Issuer for the proper
performance of all such servicing responsibilities.

    The Servicer will use its best efforts to sell or re-lease any Equipment
upon the termination of the Lease to which such Equipment is subject (whether
as a result of early termination following an Obligor default or upon scheduled
expiration of the Lease), 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. The Servicer may, in its discretion, choose to
dispose of Equipment through a new lease or in some other manner which provides
for payment for the Equipment over time. In any such event, the Servicer will
be required to pay from its own funds an amount which, in its reasonable
judgment, is equal to the fair market value of such Equipment (less any related
out-of-pocket liquidation expenses), and the Servicer will be entitled to all
payments received thereafter in respect of such Equipment. Any such amounts so
paid by the Servicer will be deemed to constitute additional Liquidation
Proceeds or Residual Realizations, depending on the reason for the disposition
of the Equipment, with respect to the related Lease and Equipment.

    Under the Contribution and Servicing Agreement, the Servicer is responsible
for, among other things: reviewing and certifying that the Lease Files are
complete; monitoring and tracking any property and sales taxes to be paid by
Obligors; billing, collection and recording of payments from Obligors;
communicating with and providing billing records to Obligors; deposit of funds
into the Collection Account; receiving payments as the Issuer's agent on the
insurance policies maintained by the Obligors and communicating with insurers
with respect thereto; issuance of reports to the Trustee specified in the
Indenture and in the Contribution and Servicing Agreement; repossession and
remarketing of Equipment following Obligor defaults or upon scheduled
termination or early termination of Leases; and paying the fees and ordinary
expenses of the Trustee.

    The Servicer shall, to the extent the proceeds of such liquidation are
sufficient therefor, be entitled to recover all reasonable out-of-pocket
expenses incurred by it in the course of liquidating a Lease and disposing of
the related Equipment, which amounts may be retained by the Servicer from such
proceeds to the extent of such expenses. The Servicer is entitled under the
Contribution and Servicing Agreement to retain, from liquidation proceeds, a
reserve for out-of-pocket liquidation expenses in an amount equal to such
expenses, in addition to those previously incurred, as it reasonably estimates
will be incurred. Upon completion of such liquidation, the remainder of any
such reserve, after reimbursement to the Servicer of all out-of-pocket
liquidation expenses, shall constitute Liquidation Proceeds and be deposited in
the Collection Account.

    Under the Contribution and Servicing Agreement, the Servicer, subject to
certain limitations, is permitted to grant payment extensions on a Lease in
accordance with its credit and collection policies and procedures if the
Servicer believes in good faith that such

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<PAGE>

extension is necessary to avoid a termination and liquidation of such Lease and
will maximize the amount to be received by the Issuer with respect to such
Lease. Under the Contribution and Servicing Agreement, the Servicer, subject to
certain limitations, is permitted to grant modifications or amendments to a
Lease in accordance with its credit and collection policies and procedures.
Following modifications or amendments to a Lease that exceed the limitations
imposed on the Servicer's ability to agree to such modifications or amendments
under the Contribution and Servicing Agreement, such a Lease will be deemed an
"Adjusted Lease" and must either be purchased by the Servicer for a price equal
to the Required Payoff Amount or substituted for in the manner described under
"The Leases--Substitution."

    Prepayments. The Servicer may in its discretion allow a Prepayment of any
Lease, but only if the amount paid by or on behalf of the Obligor (or, in the
case of a partial Prepayment, the sum of such amount and the remaining
Principal Balance of the Lease after application of such amount) is at least
equal to the Required Payoff Amount of such Lease. To the extent any Prepayment
exceeds the Required Payoff Amount of a Lease, such excess will be paid to the
Issuer.

    Evidence as to Compliance. On or before March 31 (or within 90 days after
the end of the Servicer's fiscal year, if other than December 31) of each year,
the Servicer must deliver to the Trustee a report of a nationally recognized
accounting firm stating that such firm has examined certain documents and
records relating to the servicing of equipment leases and loans serviced by the
Servicer and stating that, on the basis of such procedures, such servicing has
been conducted in compliance with the Contribution and Servicing Agreement,
except for any exceptions set forth in such report.

    Certain Matters Regarding the Servicer. The Servicer may not resign from
its obligations under the Contribution and Servicing Agreement except upon a
determination that its duties thereunder are no longer permissible under
applicable law. No such resignation will become effective until a successor
servicer has assumed the Servicer's obligations and duties under the
Contribution and Servicing Agreement. The Servicer can be removed as Servicer
only upon the occurrence of an Event of Termination as discussed below.

    The Servicer must keep in place throughout the term of the Contribution and
Servicing Agreement (i) a policy or policies of insurance covering errors and
omissions by the Servicer, and (ii) a fidelity bond. Such policy or policies
and such fidelity bond shall be in such form and amount as is generally
customary among persons that service a portfolio of equipment leases having an
unpaid balance of at least $100 million and which are generally regarded as
servicers acceptable to institutional investors.

    Servicing Compensation and Payment of Expenses. Compensation to the
Servicer will include a monthly fee (the "Servicing Fee"), which will be
payable to the Servicer from the Amount Available on each Payment Date, in an
amount equal to the product of one-twelfth of .75% per annum multiplied by the
Lease Pool Principal Balance as of the last day of the second preceding
Collection Period (or, in the case of the Servicing Fee with respect to the
Collection Period commencing on the Initial Cut-Off Date, the Initial Pool
Principal

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<PAGE>

Balance), plus any late fees, late payment interest, documentation fees,
insurance administration charges and other administrative fees and charges and
a portion of any extension fees (collectively, the "Administrative Fees")
collected with respect to the Leases during the prior Collection Period and any
investment earnings on collections prior to deposit thereof in the Collection
Account. The Servicer is authorized under the Contribution and Servicing
Agreement, in its discretion, to waive any Administrative Fees or extension
fees that may be collected in the ordinary course of servicing any Lease.

    Events of Termination. An Event of Termination under the Contribution and
Servicing Agreement will occur if (a) the Servicer fails to make any payment or
deposit required under the Contribution and Servicing Agreement and such
failure continues for five business days after notice from the Trustee or after
discovery by the Servicer; (b) the Servicer fails to deliver to the Trustee and
the Issuer the Servicer's Certificate (as defined in the Contribution and
Servicing Agreement) by the third Business Day prior to the related Payment
Date; (c) the Servicer fails to observe or perform in any material respect any
other covenants or agreements of the Servicer set forth in the Contribution and
Servicing Agreement (and, if Vendor Services is the Servicer, the Transfer
Agreement), and such failure (i) materially and adversely affects the rights of
the Issuer or Noteholders, and (ii) continues unremedied for 30 days after
written notice thereof has been given to the Servicer by the Issuer, the
Trustee or any Noteholder; (d) certain events of bankruptcy or insolvency occur
with respect to the Servicer; or (e) any representation, warranty or statement
of the Servicer made in the Contribution and Servicing Agreement or any
certificate, report or other writing delivered pursuant thereto proves to be
incorrect in any material respect, and such incorrectness (i) has a material
adverse effect on the Issuer or Noteholders, and (ii) continues uncured for 30
days after written notice thereof has been given to the Servicer by the Issuer,
the Trustee or any Noteholder. The Servicer is required under the Contribution
and Servicing Agreement to give the Trustee, the Issuer and each Rating Agency
notice of an Event of Termination promptly after having obtained knowledge of
such event.

    Federal bankruptcy laws limit the termination of contracts solely by reason
of the fact that the party obligated to provide such performance is subject to
federal bankruptcy proceedings. In such a circumstance, the Trustee may be
unable to terminate the Servicer unless it could demonstrate that independent
grounds (whether or not arising from the same facts causing the Servicer to be
subject to bankruptcy proceedings) exist to declare an Event of Termination and
the court supervising the bankruptcy proceeding determines that such grounds
warrant termination of the Servicer.

    Rights upon Event of Termination. So long as an Event of Termination
remains unremedied, the Trustee may, and at the written direction of a Note
Majority (as defined in the Indenture) shall, terminate all of the rights and
obligations of the Servicer under the Contribution and Servicing Agreement in
and to the Leases, whereupon a successor servicer (which, unless and until the
Trustee appoints a new servicer, will be the Trustee) will succeed to all the
responsibilities, duties and liabilities of the Servicer under the Contribution
and Servicing Agreement and will be entitled to similar compensation
arrangements; provided, however, that any successor servicer be liable for any
acts or omissions of the

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<PAGE>

prior Servicer occurring prior to a transfer of the Servicer's servicing and
related functions or for any breach by such Servicer of any of its obligations
contained in the Contribution and Servicing Agreement.

    A Note Majority may waive any default by the Servicer in the performance of
its obligations under the Contribution and Servicing Agreement and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Termination arising therefrom shall be deemed to
have been remedied. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

Amendment

    The Contribution and Servicing Agreement may be amended by the parties
thereto (i) to cure any ambiguity, (ii) to correct or supplement any provision
therein that may be inconsistent with any other provision therein, or (iii) to
make any other provisions with respect to matters or questions arising under
the Contribution and Servicing Agreement that are not inconsistent with the
provisions thereof, provided that such action will not adversely affect in any
material respect the interests of the Noteholders. The Contribution and
Servicing Agreement may also be amended by the parties thereto with the consent
of a Note Majority for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Contribution and
Servicing Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that no such amendment (a) that reduces in any
manner the amount of, or accelerates or delays the timing of, any payment
received on or with respect to Leases that are required to be distributed on
any Note or that reduces the aforesaid percentage required to consent to any
such amendment or any waiver under the Contribution and Servicing Agreement,
may be effective without the consent of the Holder of each such Note, or (b)
will be effective unless each Rating Agency confirms that such amendment will
not result in a reduction, qualification or withdrawal of the ratings on the
Notes.

Termination of the Contribution and Servicing Agreement

    The obligations created by the Contribution and Servicing Agreement will
terminate (after distribution of all interest and principal then due to
Noteholders) on the earlier of (i) the Payment Date next succeeding the later
of the final payment or other liquidation of the last Lease or the disposition
of all Equipment acquired upon termination of any Lease; or (b) the Payment
Date on which the SPC repurchases the Leases as described under "Description of
the Notes--Optional Purchase of Leases." However, Vendor Services's
representations, warranties and indemnities will survive any termination of the
Contribution and Servicing Agreement.


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<PAGE>

                      CERTAIN LEGAL ASPECTS OF THE LEASES

Enforcement of Security Interests in the Equipment

    Due to the administrative burden and expense, no assignments of the UCC
financing statements evidencing the security interest of Vendor Services in the
Equipment (to the extent that such financing statements have been filed against
the Obligor, as discussed under "Green Tree Vendor Services Corporation--
Documentation") will be filed to reflect the SPC's, the Issuer's or the
Trustee's interests therein, except to the extent described under "Risk
Factors--Risks Related to Bankruptcy--Risks Relating to Characterization of the
Transfer of the Leases and Equipment as a Borrowing by Vendor Services." While
failure to file such assignments does not affect the Issuer's interest in the
Leases (including Vendor Services's interest in the related Equipment), it does
expose the Issuer and the Noteholders to the risk that Vendor Services could
release its security interest in the Equipment of record, and it could
complicate the Issuer's enforcement, as assignee, of Vendor Services's security
interest in the Equipment. While these risks should not affect the perfection
or priority of the interest of the Trustee in the Leases or rights to payment
thereunder, they may adversely affect the right of the Trustee to receive
proceeds of disposition of the Equipment subject to a Liquidated Lease, which
are to be allocated to the payment of the Notes as described under "Description
of the Notes--Liquidated Leases." Additionally, statutory liens for repairs or
unpaid taxes and other liens arising by operation of law may have priority even
over prior perfected security interests assigned to the Trustee in the
Equipment.

    In the event of a default by the Obligor under a Lease intended for
security, the Servicer on behalf of the Issuer may take action to enforce
Vendor Services' interest in the related Equipment by repossession and resale
or re-lease of the Equipment. Under the UCC in most states, a creditor can,
without prior notice to the debtor, repossess assets securing a defaulted
contract by the Obligor's voluntary surrender, or by "self-help" repossession
that does not involve a breach of the peace and by judicial process. In the
event of bankruptcy or insolvency of the Obligor these remedies may require the
permission of a bankruptcy court or may otherwise not be immediately available.
See "--Insolvency Matters" below.

    In the event of a default by the Obligor under a Lease intended for
security, some jurisdictions require that the Obligor be notified of the
default and be given a time period within which it may cure the default prior
to repossession. Generally, this right of reinstatement may be exercised on a
limited number of occasions in any one-year period.

    The UCC and other state laws place restrictions on repossession sales,
including requirements that the secured party provide the debtor with
reasonable notice of the date, time and place of any public sale and/or the
date after which any private sale of the collateral may be held and that any
such sale be conducted in a commercially reasonable manner.

    Under most state laws, an Obligor under a Lease intended for security has
the right to redeem collateral for its obligations prior to actual sale by
paying the lessor or secured party the unpaid balance of the obligation plus
reasonable expenses for repossessing, holding and

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<PAGE>

preparing the collateral for disposition and arranging for its sale, plus, to
the extent provided for in the written agreement of the parties, reasonable
attorneys' fees.

    In addition, because the market value of equipment of the type subject to
the Leases generally declines with age, due to obsolescence, the net
disposition proceeds of Equipment at any time during the term of the Leases may
not equal or exceed the Principal Balance on the related Lease. Because of
this, and because other creditors may in certain cases have rights in the
related Equipment superior to those of the Issuer, the Servicer may not be able
to recover the entire amount due on a defaulted Lease in the event that the
Servicer elects to repossess and dispose of such Equipment at any time.

    Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from an Obligor under a Lease intended for
security for any deficiency on repossession and resale of the asset securing
the unpaid balance of such Obligor's Lease. However, some states impose
prohibitions or limitations on deficiency judgments. In most jurisdictions, the
courts, in interpreting the UCC, would impose upon a creditor an obligation to
repossess the equipment in a commercially reasonable manner and to "mitigate
damages" in the event of an Obligor's failure to cure a default. The creditor
would be required to exercise reasonable judgment and follow acceptable
commercial practice in seizing, selling or re-leasing the equipment and to
offset the net proceeds of such disposition against its claim. In addition, an
Obligor may successfully invoke an election of remedies defense to a deficiency
claim in the event that the Servicer's repossession and sale of the Equipment
is found to be a retention discharging the Obligor from all further obligations
under the UCC. If a deficiency judgment were granted, the judgment would be a
personal judgment against the Obligor for the shortfall, but a defaulting
Obligor may have limited assets or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount.

    Many states have adopted a version of Article 2A of the UCC ("Article 2A").
Article 2A purports to codify many provisions of existing common law. Although
there is little precedental authority regarding how Article 2A will be
interpreted, it may, among other things, limit enforceability of any
"unconscionable" provision in a Lease, provide an Obligor with remedies
including the right to cancel the Lease for any lessor breach or default, and
may add to or modify the terms of "consumer leases" and leases where the
Obligor is a "merchant lessee." However, each Lease contains an acknowledgement
by the Obligor that the Equipment was acquired for business purposes, and
Vendor Services will represent in the Contribution and Servicing Agreement that
no Lease (other than a de minimis number of Leases) is a "consumer lease" under
Article 2A. Article 2A, moreover, recognizes typical commercial lease "hell or
high water" rental payment clauses and validates reasonable liquidated damages
provisions in the event of lessor or Obligor defaults. Article 2A also
recognizes the concept of freedom of contract and permits the parties in a
commercial context a wide latitude to vary provisions of the law.


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<PAGE>

Insolvency Matters

    Certain statutory provisions, including federal and state bankruptcy and
insolvency laws, may also limit the ability of the Servicer to repossess and
resell or re-lease Equipment or obtain a deficiency judgment. In the event of
the bankruptcy or reorganization of an Obligor, various provisions of the
Bankruptcy Code of 1978 (the "Bankruptcy Code") and related laws may interfere
with or eliminate the ability of the Servicer to enforce the Issuer's rights
under the Leases. For example, although the bankruptcy or reorganization of an
Obligor would constitute an event of default under such Lease, the Bankruptcy
Code provides generally that rights and obligations under an unexpired lease or
an executory contract may not be terminated or modified solely because of a
provision in the lease or executory contract conditioned upon the commencement
of a case under the Bankruptcy Code. If bankruptcy proceedings were instituted
in respect of an Obligor under such a Lease, the Issuer could be prevented from
continuing to collect payments due from or on behalf of such Obligor or
exercising any remedies assigned to the Issuer without the approval of the
bankruptcy court, and, with respect to a Lease intended as security, the
bankruptcy court could permit the Obligor, as owner of the Equipment, to use or
dispose of the Equipment and provide the Issuer with a lien on substitute
collateral, so long as the court held that such substitute collateral
constituted "adequate protection" within the meaning of the Bankruptcy Code.

    In the case of a Lease that is deemed not to be intended as security, the
Bankruptcy Code grants to the bankruptcy trustee or the debtor-in-possession a
right to elect to assume or reject any executory contract or unexpired lease.
Any such rejection by the lessee would result in the return of the leased
equipment to the lessor. Any rejection of such a lease or contract constitutes
a breach of such lease or contract, entitling the non-breaching party to a
claim for breach of contract, which claim would be payable only from the assets
of the debtor's bankruptcy estate. The net proceeds from any resulting judgment
would be deposited into the Collection Account by the Servicer. See
"Description of the Notes--Liquidated Leases."

    In the event that, as a result of the bankruptcy or reorganization of an
Obligor, the related Lease becomes a defaulted Lease without breach of any
representation or warranty of Vendor Services, no recourse would be available
against Vendor Services and the Noteholders could suffer a loss with respect to
such Lease.

    These UCC and bankruptcy provisions, in addition to the possible decrease
in the value of a repossessed item of Equipment, may limit the amount realized
on the sale of Equipment securing the Leases to less than the amount due
thereunder.

                        FEDERAL INCOME TAX CONSEQUENCES

    The following discussion is a summary of certain United States federal
income tax considerations relevant to the purchase, ownership and disposition
of the Notes by the holders thereof. Dorsey & Whitney LLP, counsel to the
Issuer ("Counsel"), will deliver their opinion regarding the treatment of the
Notes and the treatment of the Issuer, as

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<PAGE>

discussed below. The opinion of Counsel addresses only those issues
specifically identified below as being covered by such opinion; however, the
opinion of Counsel also states that the additional discussion set forth below
accurately sets forth Counsel's advice with respect to material tax issues. The
opinion of Counsel is not binding on the Internal Revenue Service (the "IRS").
There can be no assurance that the IRS will take a similar view of such issues,
and no assurance can be given that the opinion of Counsel would be sustained if
challenged by the IRS. No ruling on any of the issues discussed below will be
sought from the IRS.

    This summary does not purport to be a complete analysis of all the
potential federal income tax consequences relating to the purchase, ownership
and disposition of the Notes. Moreover, the discussion does not address all
aspects of taxation that may be relevant to particular purchasers in light of
their individual circumstances (including the effect of any foreign, state or
local tax laws) or to certain types of purchasers (including dealers in
securities, insurance companies, financial institutions and tax-exempt
entities) subject to special treatment under United States federal income tax
laws. The discussion below assumes that the Notes are held as capital assets.

    The discussion of the United States federal income tax consequences set
forth below is based upon currently existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), judicial decisions and administrative
interpretations, all of which are subject to change, which changes may be
retroactive. Because individual circumstances may differ, each prospective
purchaser of the Notes is strongly urged to consult its own tax advisor with
respect to its particular tax situation and the tax effects of any state,
local, foreign, or other tax laws and possible changes in the tax laws.

    As used herein, the term "United States Holder" means a beneficial owner of
a Note who or which is for United States federal income tax purposes either (i)
a citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States,
including any state thereof and the District of Columbia, (iii) an estate the
income of which is subject to United States federal income taxation regardless
of its source, (iv) a trust with respect to which a court within the United
States is able to exercise primary supervision over its administration, and one
or more United States persons have the authority to control all of its
substantial decisions, or (v) certain trusts in existence on August 20, 1996
and treated as a United States person prior to such date that elect to continue
to be so treated. The term also includes certain former citizens of the United
States whose income and gain on the Notes will be subject to United States
taxation. As used herein, the term "United States Alien Holder" means a
beneficial owner of a Note that is not a United States Holder.

Opinion of Counsel Regarding Treatment of the Notes

    In the opinion of Counsel, the Notes will be treated as indebtedness for
United States federal income tax purposes. Under the terms of the Notes and the
Indenture, each Noteholder agrees and acknowledges upon its purchase of the
Notes and by acceptance of the Notes that it will also treat the Notes as
indebtedness for such purposes.


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<PAGE>

Opinion of Counsel Regarding Treatment of the Issuer

    In the opinion of Counsel, the Issuer will not be characterized as an
"association" taxable as a corporation for United States federal income tax
purposes. In addition, in the opinion of Counsel, the Issuer will not be
characterized as a "publicly traded partnership" taxable as a corporation for
United States federal income tax purposes, based on Counsel's opinion that the
Notes will be treated as indebtedness for federal income tax purposes. If the
Issuer were treated as either an association or a publicly traded partnership
taxable as a corporation, the resulting entity would be subject to federal
income taxes at corporate tax rates on its taxable income generated by
ownership of the Leases, and certain distributions by the entity would not be
deductible in computing the entity's taxable income. Such an entity-level tax
could result in reduced distributions to Noteholders.

Payments of Interest

    Interest paid on a Note will generally be taxable to a United States Holder
as ordinary interest income at the time it accrues or is received in accordance
with the United States Holder's method of accounting for federal income tax
purposes.

Original Issue Discount

    Under applicable regulations, a Note will be considered issued with
original issue discount ("OID") if the "stated redemption price at maturity" of
the Note (generally equal to its principal amount as of the date of issuance
plus all interest other than "qualified stated interest" payable prior to or at
maturity) exceeds the original issue price (in this case, the initial offering
price at which a substantial amount of the Notes are sold to the public). Any
OID would be considered de minimis under the regulations if it does not exceed
0.25% of the stated redemption price at maturity of a Note multiplied by the
number of full years until its maturity date or, in the case of the Notes which
have more than one principal payment, the weighted average maturity date. It is
anticipated that the Notes will not be considered issued with more than de
minimis OID. Under the OID regulations, a holder of a Note issued with a de
minimis amount of OID must include an allocable portion of such OID in income
as principal payments are made on the Note.

    While it is not anticipated that the Notes will be issued with more than de
minimis OID, it is possible that they will be so issued. If the Notes are
issued with more than de minimis OID, such OID would be includible in the
income of United States Holders as interest over the term of the Notes under a
constant yield method. Any amount included in income as OID would not, however,
be includible again when the amount is actually received. Noteholders would be
required to currently include accrued OID in gross income without regard to
their regular method of accounting. Each United States Holder should consult
its own tax advisor regarding the impact of the OID rules if the Notes are
issued with OID and the consequences to such holder as a result of special
rules in the Code which are applicable to debt instruments whose principal
payments may be accelerated by reason of prepayments of other obligations
securing such debt instruments.


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<PAGE>

Market Discount

    If a United States Holder purchases a Note at a price that is less than its
remaining principal amount or, in the case of a Note issued with OID, its
adjusted issue price, by 0.25% or more of its remaining redemption amount
multiplied by the number of whole years to maturity, the Note will be
considered to bear "market discount" in the hands of such United States Holder.
In such case, principal payments received by the United States Holder, or gain
realized by the United States Holder on the disposition of the Note, generally
will be treated as ordinary interest income to the extent of the market
discount that accrued on the Note while held by such United States Holder and
that has not previously been included in income. Market discount generally
accrues on a straight-line basis over the remaining term of a Note except that,
at the election of the United States Holder, market discount may accrue on a
constant yield basis. A United States Holder may not be allowed to deduct
immediately all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or to carry such Note. A United States Holder
may elect to include market discount in income currently as it accrues (either
on a straight-line basis or, if the United States Holder so elects, on a
constant yield basis), in which case the interest deferral rule set forth in
the preceding sentence will not apply. Such an election will apply to all bonds
acquired by the United States Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.

Amortizable Bond Premium

    If a United States Holder purchases a Note for an amount that is greater
than the amount payable at maturity, such holder will be considered to have
purchased such Note with "amortizable bond premium" equal in amount to such
excess, and may elect (in accordance with applicable Code provisions) to
amortize such premium using a constant yield method over the remaining term of
the Note. The amount amortized in any year will be treated as a reduction of
the United States Holder's interest income from the Note in such year. A United
States Holder that elects to amortize bond premium must reduce its tax basis in
the Note by the amount of the premium amortized in any year. An election to
amortize bond premium applies to all taxable debt obligations held on the first
day of the first taxable year to which the election applies or thereafter
acquired by the United States Holder and may be revoked only with the consent
of the IRS.

Sale, Exchange or Retirement of Notes

    Upon the sale, exchange or retirement of a Note, a United States Holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (not including any amount
attributable to accrued but unpaid interest) and such holder's adjusted tax
basis in the Note. To the extent attributable to accrued but unpaid interest,
the amount realized by a United States Holder would be treated as a payment of
interest. A United States Holder's adjusted tax basis in a Note will equal the
cost of the Note to such holder, increased by the amount of any OID and market
discount previously included in income by such holder with respect to such Note
and reduced by any amortized bond premium and any principal payments received
by such holder.

                                       81
<PAGE>

    Subject to the discussion of market discount above, gain or loss realized
on the sale, exchange or retirement of a Note by a United States Holder will be
capital gain or loss, and will be short-term or long-term capital gain or loss
depending upon whether, at the time of the sale, exchange or retirement, the
Note has been held for one year or less or more than one year. Long-term
capital gains are taxed at a lower rate than ordinary income for certain non-
corporate taxpayers, but not for corporate taxpayers. The distinction between
capital gain or loss and ordinary income or loss is also relevant for purposes
of, among other things, limitations on the deductibility of capital losses.

Tax Consequences to United States Alien Holders

    Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:

    (a) payments of principal of and interest on the Notes by the Trustee or
  any paying agent to a beneficial owner of a Note that is a United States
  Alien Holder, as defined above, will not be subject to United States
  federal withholding tax, provided that, in the case of interest, (i) such
  holder does not own, actually or constructively, 10 percent or more of the
  total combined voting power of all classes of stock of Green Tree entitled
  to vote, (ii) such holder is not, for United States federal income tax
  purposes, a controlled foreign corporation related, directly or
  indirectly, to Green Tree through stock ownership, (iii) such holder is
  not a bank receiving interest described in Section 881(c)(3)(A) of the
  Code, and (iv) the certification requirements under Section 871(h) or
  Section 881(c) of the Code and Treasury regulations thereunder (summarized
  below) are met:

    (b) a United States Alien Holder of a Note will not be subject to United
  States federal income tax on gain realized on the sale, exchange or other
  disposition of such Note, unless (i) such holder is an individual who is
  present in the United States for 183 days or more in the taxable year of
  sale, exchange or other disposition, and certain conditions are met or
  (ii) such gain is effectively connected with the conduct by such holder of
  a trade or business in the United States; and

    (c) a Note held by an individual who is not a citizen or resident of the
  United States at the time of his death will not be subject to United
  States federal estate tax as a result of such individual's death, provided
  that, at the time of such individual's death, the individual does not own,
  actually or constructively, 10 percent or more of the total combined
  voting power of all classes of stock of Green Tree entitled to vote and
  payments with respect to such Note would not have been effectively
  connected to the conduct by such individual of a trade or business in the
  United States.

    Sections 871(h) and 881(c) of the Code and Treasury Regulations thereunder
require that, in order to obtain the exemption from withholding tax described
in paragraph (a) above, either (i) the beneficial owner of a Note must certify
under penalties of perjury to the Trustee or the paying agent, as the case may
be, that such owner is a United States Alien Holder and must provide such
owner's name and address, and United States taxpayer identification number, if
any, or (ii) a securities clearing organization, bank or other financial
institution

                                       82
<PAGE>

that holds customers' securities in the ordinary course of its trade or
business (a "Financial Institution") and holds the Note on behalf of the
beneficial owner thereof must certify under penalties of perjury to the
Indenture Trustee or the paying agent, as the case may be, that such
certificate has been received from the beneficial owner by it or by a Financial
Institution between it and the beneficial owner and must furnish the payor with
copy thereof. A certificate described in this paragraph is effective only with
respect to payments of interest made to the certifying United States Alien
Holder after issuance of the Notes in the calendar year of its issuance and the
two immediately succeeding calendar years. Under temporary United States
Treasury Regulations, such requirement will be fulfilled if the beneficial
owner of a Note certifies on IRS Form W-8, under penalties of perjury, that it
is a United States Alien Holder and provides its name and address, and any
Financial Institution holding the Note on behalf of the beneficial owner files
a statement with the withholding agent to the effect that it has received such
a statement from the beneficial owner (and furnishes the withholding agent with
a copy thereof). If the information shown on IRS Form W-8 changes, a new IRS
Form W-8 must be filed within 30 days of such change. IRS Form W-8 is valid for
the calendar year in which filed and the two succeeding calendar years.

    A United States Alien Holder residing in a country that has a tax treaty
with the United States may be eligible for an exemption or reduced rate
(depending upon the terms of the treaty) with respect to U.S. withholding tax.
In order to secure this exemption or reduced rate, the United States Alien
Holder (or his agent) must certify the holder's residence in the treaty country
filing IRS Form 1001. If the treaty provides only for a reduced rate, U.S.
withholding tax will be imposed at the reduced rate unless the requirements set
forth in paragraph (a) above and the immediately preceding paragraph (including
filing of IRS Form W-8) are satisfied. IRS Form 1001 is valid for the calendar
year in which filed and the two succeeding calendar years.

    If the United States Alien Holder of a Note is engaged in a trade or
business in the United States, and if interest on the Note, or gain realized on
the sale, exchange or other disposition of the Note, is effectively connected
with the conduct of such trade or business, the United States Alien Holder,
although exempt from United States withholding tax, will generally be subject
to regular United States income tax on such interest or gain in the same manner
as if it were a United States Holder. In lieu of the certificate described in
the preceding paragraph, such a holder will be required to provide to the
Trustee or the paying agent, as the case may be, a properly executed IRS Form
4224 in order to claim an exemption from withholding tax. In addition, if such
United States Alien Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% (or such lower rate provided by an applicable
treaty) of its effectively connected earnings and profits for the taxable year,
subject to certain adjustments. For purposes of the branch profits tax,
interest on and any gain recognized on the sale, exchange or other disposition
of a Note will be included in the effectively connected earnings and profits of
such United States Alien Holder if such interest or gain is effectively
connected with the conduct by the United States Alien Holder of a trade or
business in the United States. IRS Form 4224 is valid solely for the calendar
year in which filed.

                                       83
<PAGE>

    New Withholding Rules in 2000. Effective January 1, 2000, new withholding
tax regulations will take effect with respect to interest payments and certain
other categories of payments made to United States Alien Holders. Among other
things, these regulations generally will require any United States Alien Holder
that seeks the protection of an income tax treaty with respect to the
imposition of U.S. withholding tax to obtain a taxpayer identification number
("TIN") from the IRS in advance and provide verification that such holder is
entitled to the protection of the relevant income tax treaty. Tax-exempt United
States Alien Holders will generally be required to provide verification of
their tax-exempt status. United States Alien Holders are urged to consult with
their tax advisors with respect to these new withholding rules.

Backup Withholding

    Under current United States federal income tax law, a 31% backup
withholding tax requirement applies to certain payments of interest on, and the
proceeds of a sale, exchange or redemption of, the Notes.

    Backup withholding will generally not apply with respect to payments made
to certain exempt recipients such as corporations or other tax-exempt entities.
In the case of a non-corporate United States Holder, backup withholding will
apply only if such holder (i) fails to furnish its TIN which, for an
individual, would be his social security number, (ii) furnishes an incorrect
TIN, (iii) is notified by the IRS that it has failed to report properly
payments of interest and dividends or (iv) under certain circumstances, fails
to certify under penalties of perjury that it has furnished a correct TIN and
has not been notified by the IRS that it is subject to backup withholding for
failure to report interest and dividend payments.

    In the case of a United States Alien Holder, under current Treasury
Regulations, backup withholding will not apply to payments made by the
Indenture Trustee or any paying agent thereof on a Note if such holder has
provided the required certificate under penalties of perjury that it is not a
United States Holder (as defined above) or has otherwise established an
exemption, provided in each case that the Trustee or such paying agent, as the
case may be, does not have actual knowledge that the payee is a United States
Holder.

    Under current Treasury Regulations, if payments on a Note are made to or
through a foreign office of a custodian, nominee or other agent acting on
behalf of a beneficial owner of a Note, such custodian, nominee or other agent
will not be required to apply backup withholding to such payments made to such
beneficial owner.

    Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. Payments to or through the United
States office of a broker will be subject to backup withholding and information
reporting unless the holder certifies under penalties of perjury that it is not
a United States Holder and that certain other conditions are met or otherwise
establishes an exemption.

    Holders of Notes should consult their tax advisors regarding the
application of backup withholding in their particular situations, the
availability of an exemption therefrom and the procedure for obtaining such an
exemption, if available. Any amounts withheld from

                                       84
<PAGE>

payment under the backup withholding rules will be allowed as a credit against
a holder's United States federal income tax liability and may entitle such
holder to a refund, provided that the required information is furnished to the
IRS.

Possible Alternative Treatment of the Notes

    If, contrary to the opinion of Counsel, the IRS successfully asserted that
one or more classes of Notes did not represent indebtedness for federal income
tax purposes, the Notes might be treated as equity interests in the Issuer. If
so treated, the Issuer might be characterized as a publicly traded partnership
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to reduce its taxable income by
deductions for interest expense on Notes recharacterized as equity). In
addition, treatment of the Notes as equity interests in such a partnership
could have adverse tax consequences to certain holders. For example, income to
foreign holders generally would be subject to federal tax and federal tax
return filing and withholding requirements at a rate as high as 30%, and
individual holders might be subject to certain limitations on their ability to
deduct their share of Issuer expenses.

    THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE NOTEHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE NOTEHOLDER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME TAX LAWS AND ANY
RECENT OR POSSIBLE CHANGES IN APPLICABLE TAX LAWS.

                              ERISA CONSIDERATIONS

    Section 406 of the Employee Retirement Income Security Act ("ERISA"),
and/or Section 4975 of the Code, prohibits a pension, profit-sharing or other
employee benefit plan, as well as an individual retirement account and a Keogh
Plan of certain types (each a "Benefit Plan") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax
or other penalties and liabilities under ERISA and the Code for such persons.
Title I of ERISA also requires that fiduciaries of a Benefit Plan subject to
ERISA make investments that are prudent, diversified (except if prudent not to
do so) and in accordance with governing plan documents.

    Certain transactions involving the purchase, holding or transfer of the
Notes might be deemed to constitute prohibited transactions under ERISA and the
Code if assets of the Issuer were deemed to be assets of a Benefit Plan. Under
a regulation issued by the United States Department of Labor (the "Plan Assets
Regulation"), the assets of the Issuer would be treated as plan assets of a
Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan
acquires an "equity interest" in the Issuer and none of the exceptions

                                       85
<PAGE>

contained in the Plan Assets Regulation is applicable. An equity interest is
defined under the Plan Assets Regulation as an interest in an entity other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. Although there can be no assurances
in this regard, it appears that the Notes should be treated as debt without
substantial equity features for purposes of the Plan Assets Regulation and that
the Notes do not constitute equity interests in the Issuer for purposes of the
Plan Assets Regulation. However, without regard to whether the Notes are
treated as an equity interest for such purposes, the acquisition or holding of
Notes by or on behalf of a Benefit Plan could be considered to give rise to a
prohibited transaction if the Issuer or the Trustee, or any of their respective
affiliates is or becomes a party in interest or a disqualified person with
respect to such Benefit Plan. In such case, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 96-23, regarding transactions effected by "in-house asset managers";
PTCE 90-1, regarding investments by insurance company pooled separate accounts;
PTCE 95-60, regarding transactions effected by insurance company general
accounts; PTCE 91-38, regarding investments by bank collective investment
funds; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers."

    Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.

    A PLAN FIDUCIARY CONSIDERING THE PURCHASE OF ANY OF THE NOTES SHOULD
CONSULT ITS TAX AND/OR LEGAL ADVISORS REGARDING WHETHER THE ASSETS OF THE
ISSUER WOULD BE CONSIDERED PLAN ASSETS, THE POSSIBILITY OF EXEMPTIVE RELIEF
FROM THE PROHIBITED TRANSACTION RULES AND OTHER ISSUES AND THEIR POTENTIAL
CONSEQUENCES.

                              RATINGS OF THE NOTES

    It is a condition of issuance that each of S&P and Fitch (i) rate the Class
A-1 Notes "A-1+" and "F1+/AAA," respectively, (ii) rate the Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes "AAA," (iii) rate the Class B Notes at
least "A," and (iv) rate the Class C Notes at least "BBB." The rating of each
Class of Notes addresses the likelihood of the timely receipt of interest and
payment of principal on such Class of Notes on or before the Stated Maturity
Date for such Class of Notes. The rating of the Class A and Class B Notes will
be based primarily upon the Pledged Revenues, the Residual Realizations, the
Reserve Account and the subordination provided by (1) the Class B Notes and the
Class C Notes, in the case of the Class A Notes and (2) the Class C Notes, in
the case of the Class B Notes. A variety of events subsequent to the issuance
of the Notes could cause a Rating Agency to qualify, reduce or withdraw its
ratings of some or all Classes of the Notes. These events may include
unexpected negative performance of the Leases, unexpected negative developments

                                       86
<PAGE>

at Green Tree Financial Corporation or Vendor Services, unexpected negative
performance of other pools of leases serviced by Vendor Services, or unexpected
changes in law. In the event that a rating or ratings with respect to the Notes
is qualified, reduced or withdrawn, no person or entity will be obligated to
provide any additional credit enhancement with respect to the Notes so
qualified, reduced or withdrawn.

    The rating of the Notes should be evaluated independently from similar
ratings on other types of securities. A rating is not a recommendation to buy,
sell or hold the Notes, inasmuch as such rating does not comment as to market
price or suitability for a particular investor. The ratings of the Notes do not
address the likelihood of payment of principal on any Class of Notes prior to
the Stated Maturity Date thereof, or the possibility of the imposition of
United States withholding tax with respect to non-United States Persons.

                                USE OF PROCEEDS

    The proceeds from the offering and sale of the Notes, after paying the
expenses of the Issuer and the funding of the Reserve Account, will be paid by
the Issuer to the SPC and by the SPC to Vendor Services in connection with the
transfer of the Leases and Vendor Services' interests in the Equipment.

                                    EXPERTS

    The financial statements of Green Tree Lease Finance 1999-1, LLC as of
     , 1999 included herein have been included in reliance upon the report of
PricewaterhouseCoopers LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

                                  UNDERWRITING

    Subject to the terms and conditions of the underwriting agreement (the
"Underwriting Agreement"), the underwriters named below (the "Underwriters"),
through their representative, (the "Representative"), have severally agreed to
purchase from the Issuer the following respective initial principal amount of
Notes at the initial public offering price less the underwriting discounts set
forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
                   Initial Principal Initial Principal Initial Principal Initial Principal Initial Principal Initial Principal
                       Amount of         Amount of         Amount of         Amount of         Amount of         Amount of
                       Class A-1         Class A-2         Class A-3         Class A-4          Class B           Class C
Underwriters             Notes             Notes             Notes             Notes             Notes             Notes
------------       ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S>                <C>               <C>               <C>               <C>               <C>               <C>
      ............      $                 $                 $                 $                 $                 $
      ............
      ............
                        ------            ------            ------            ------            ------            ------
  Total...........      $                 $                 $                 $                 $                 $
                        ======            ======            ======            ======            ======            ======
</TABLE>

    In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Notes offered
hereby if any of such Notes

                                       87
<PAGE>

are purchased. The Issuer has been advised by the Representative that the
Underwriters propose initially to offer the Notes to the public at the
respective public offering prices set forth on the cover page of this
Prospectus, and to certain dealers at such price, less a concession not in
excess of   % per Class A-1 Note,   % per Class A-2 Note,   % per Class A-3
Note,   % per Class A-4 Note,   % per Class B Note and   % per Class C Note.
The Underwriters may allow and such dealers may reallow to other dealers a
discount not in excess of   % per Class A-1 Note,   % per Class A-2 Note,   %
per Class A-3 Note,   % per Class A-4 Note,   % per Class B Note and   % per
Class C Note. After the initial public offering of the Notes, the offering
prices and such concessions and discounts may be varied by the Underwriters.

    Until the distribution of the Notes is completed, rules of the SEC may
limit the ability of the Underwriters and certain selling group members to bid
for and purchase the Notes. As an exception to these rules, the Underwriters
are permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes.

    In general, purchases of a security for the purpose of stabilization or 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 Issuer nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Notes. In addition, neither the
Issuer nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

    Green Tree Financial Corporation has agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. Vendor Services estimates that it will incur expenses of
$575,000 in connection with the offering.

    The Notes are new issues of securities with no established trading market.
The Issuer has been advised by the Representative that each Underwriter intends
to make a market in the United States in the Classes of Notes for which it is
acting as underwriter but is not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.

    Funds in the Trust Accounts may, from time to time, be invested in Eligible
Investments acquired from the Underwriters.

                                 LEGAL MATTERS

    Certain legal matters with respect to the Notes will be passed upon for the
Issuer by Dorsey & Whitney LLP. Brown & Wood LLP will act as counsel to the
Underwriters. The Indenture, the Contribution and Servicing Agreement, the
Transfer Agreement and the Notes will be governed by the laws of the State of
Minnesota.

                                       88
<PAGE>

                            INDEX OF PRINCIPAL TERMS

<TABLE>
<CAPTION>
Term                                                                      Page
----                                                                      ----
<S>                                                                      <C>
Additional Principal....................................................     41
Adjusted Lease.......................................................... 21, 56
Administrative Fees.....................................................     56
Amortizable Bond Premium................................................     62
Amount Available........................................................     38
Article 2A..............................................................     59
Available Pledged Revenues..............................................     38
Available Reserve Amount................................................     43
Bankruptcy Code.........................................................     59
Benefit Plan............................................................     65
Book-Entry Certificates.................................................     37
Book Value..............................................................     42
Business Day............................................................     37
Cedel...................................................................     47
Cedel/Euroclear Depositaries............................................     45
Cedel Participants......................................................     47
Class A Notes...........................................................     37
Class A Percentage......................................................     41
Class A Principal Payment...............................................     40
Class A Target Investor Principal Amount................................     41
Class B Floor...........................................................     41
Class B Percentage......................................................     41
Class B Principal Payment...............................................     40
Class B Target Investor Principal Amount................................     41
Class C Floor...........................................................     41
Class C Percentage......................................................     41
Class C Principal Payment...............................................     40
Class C Target Investor Principal Amount................................     41
Code....................................................................     60
Collection Account......................................................     44
Collection Period.......................................................     42
Company.................................................................    F-4
Contribution & Servicing Agreement......................................     12
Cooperative.............................................................     47
Counsel.................................................................     60
CPR.....................................................................     30
Cumulative Loss Amount..................................................     41
Cut-Off Date............................................................     12
Cut-Off Date Pool.......................................................     22
Definitive Notes........................................................     48
Delinquency............................................................. 24, 27
Deposit Date............................................................     38
Depository..............................................................     37
Determination Date......................................................     54
Discount Rate...........................................................  4, 22
DTC.....................................................................     43
Eligible Account........................................................     44
Eligible Institution....................................................     44
</TABLE>

                                       89
<PAGE>

<TABLE>
<CAPTION>
Term                                                                      Page
----                                                                      ----
<S>                                                                      <C>
Eligible Investments....................................................     44
Equipment...............................................................     12
ERISA...................................................................     65
Events of Default.......................................................     50
Exchange Act............................................................     45
Euroclear...............................................................     47
Euroclear Operator......................................................     47
Euroclear Participants..................................................     47
Financial Institution...................................................     63
Global Securities.......................................................    A-1
Green Tree..............................................................     13
Gross Losses............................................................     28
Hell-or-High-Water......................................................     18
Holders.................................................................     37
Indirect Participants...................................................     45
Industry................................................................     47
Initial Cut-Off Date....................................................     12
Initial Pool Principal Balance.......................................... 22, 42
Insurance, Maintenance and Tax Accounts.................................     54
IRS.....................................................................     60
Issuer..................................................................      1
Lease...................................................................  3, 12
Lease Pool..............................................................     12
Lease Pool Principal Balance............................................     22
Liquidated Lease........................................................     42
Market Discount.........................................................     63
Master Form Lease.......................................................     16
Monthly Principal Amount................................................     41
Net Losses..............................................................     28
Non-Accrual.............................................................     27
Non-Earning.............................................................     14
Nonrecoverable Servicer Advance.........................................     42
Note Distribution Account...............................................     44
Note Majority...........................................................     50
Note Owner..............................................................     45
Noteholders.............................................................     37
Notes...................................................................     37
Obligor.................................................................     12
OID.....................................................................     61
Outstanding Principal Amounts...........................................     40
Participants............................................................     45
Payment Date............................................................      1
Payment Shortfall.......................................................     54
Plan Assets Regulation..................................................     65
Pledged Revenues........................................................     38
Prepaid Leases..........................................................     21
Prepayments.............................................................     38
Principal Balance.......................................................     41
PTCE....................................................................     65
Representative..........................................................     67
Repurchase Event........................................................     21
Required Payoff Amount..................................................     21
Required Payment........................................................     43
</TABLE>

                                       90
<PAGE>

<TABLE>
<CAPTION>
Term                                                                     Page
----                                                                     ----
<S>                                                                   <C>
Required Reserve Amount..............................................         43
Reserve Account......................................................      5, 44
Residual Account.....................................................         44
Residual Event.......................................................         43
Residual Realizations................................................         42
Rules................................................................         46
Scheduled Payments...................................................         38
SEC..................................................................        iii
Servicer Advance.....................................................         42
Servicing Account....................................................         44
Servicing Fee........................................................         56
SPC.................................................................. 1, 11, F-4
Specific Lease Form..................................................         16
Statistical Discounted Present Value of the Leases...................         22
Substitute Lease.....................................................         21
Systems..............................................................         46
Terms and Conditions.................................................         48
TIN..................................................................         64
Transfer Agent and Registrar.........................................         48
Transfer Agreement...................................................         12
Trust Accounts.......................................................         44
Trustee..............................................................          1
UCC..................................................................          8
Underwriters.........................................................         66
Underwriting Agreement...............................................         66
United States Alien Holder...........................................         61
United States Holder.................................................         60
U.S. Person..........................................................        A-4
Vendor Services......................................................      1, 13
Warranty Leases......................................................         21
</TABLE>

                                       91
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S>                                                                          <C>
Independent Auditors' Report ............................................... F-2
Balance Sheet as of        , 1999........................................... F-3
Notes to Balance Sheet ..................................................... F-4
</TABLE>

                                      F-1
<PAGE>

                          Independent Auditors' Report

                                   [TO COME]


                                       F-2
<PAGE>

                      GREEN TREE LEASE FINANCE 1999-1, LLC

                                 BALANCE SHEET

                                        , 1999

<TABLE>
<CAPTION>
                                    Asset
     <S>                                                                  <C>
     Cash................................................................ $1,000
                                                                          ======
                               Member's Equity
     Member's Equity (authorized 10 Units; issued
      and outstanding 10 Units).......................................... $1,000
                                                                          ======
</TABLE>

       The accompanying notes are an integral part of the balance sheet.

                                      F-3
<PAGE>

                      GREEN TREE LEASE FINANCE 1999-1, LLC

                             Notes to Balance Sheet

                                        , 1999

(1) Organization

    Green Tree Lease Finance 1999-1, LLC (the "Company"), a wholly owned
subsidiary of Green Tree Lease Finance II, Inc., (the "SPC"), was formed as a
limited liability company in the State of Delaware on August 11, 1999. The
Company has been inactive since that date.

    The Company was organized to engage exclusively in the following business
and financial activities: to acquire leases and rights to residual realizations
on the underlying equipment from the SPC; to issue and sell notes
collateralized by any or all of its assets pursuant to one or more indentures
between the Company and an indenture trustee; and to engage in other
transactions, including entering into agreements that are incidental and
necessary, suitable or convenient to the foregoing and permitted under Delaware
law.

(2) Capital Contribution

    The SPC purchased 10 Units of the Company for $1,000 on August 12, 1999.

(3) Accounting Policies

    Generally all lease receivables are classified as direct financing leases
as defined in Statement of Financial Accounting Standards Boards No. 13. The
carrying value of lease receivables represents the present value of both the
future minimum lease payments and related residual value less an allowance for
expected losses. Revenue is recognized in interest income as a constant
percentage return on the asset carrying value.

                                      F-4
<PAGE>

                                                                         ANNEX 1

         GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

    Except in certain limited circumstances, the globally offered Notes (the
"Global Securities") will be available only in book-entry form. Investors in
the Global Securities may hold such Global Securities through any of DTC, Cedel
or Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.

    Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).

    Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.

    Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against-payment basis
through the respective Depositaries of Cedel and Euroclear (in such capacity)
and DTC Participants.

    Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.

Initial Settlement

    All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.

    Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to prior debt issues. Investors' securities
custody accounts will be credited with their holdings against payment in same-
day funds on the settlement date.

    Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payments in
same-day funds.

                                      A-1
<PAGE>

Secondary Market Trading

    Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.

    Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to book-entry
securities in same-day funds.

    Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.

    Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear, as applicable, will instruct its Depositary to receive the Global
Securities against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding the
settlement date. Payment will then be made by such Depositary to the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
applicable clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The Global Securities credit will appear the next day (European time)
and the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debit
will be valued instead as of the actual settlement date.

    Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day
funds settlement. The most direct means of doing so is to pre-position funds
for settlement, either from cash on hand or existing lines of credit, as they
would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.

    As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-
position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited to
their accounts. However, interest on the Global Securities would accrue from
the value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges,

                                      A-2
<PAGE>

although this result will depend on each Cedel Participant's or Euroclear
Participant's particular cost of funds.

    Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.

    Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing systems, through
their respective Depositaries, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
Cedel or Euroclear will instruct their respective Depositaries, as appropriate,
to deliver the bonds to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date. The payment will
then be reflected in the account of the Cedel Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its clearing system and elect to be in debit in anticipation of
receipt of the sale proceeds in its account, the back-valuation will extinguish
any overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date. Finally, day traders
that use Cedel or Euroclear and that purchase Global Securities from DTC
Participants for delivery to Cedel Participants or Euroclear Participants
should note that these trades would automatically fail on the sale side unless
affirmative action were taken. At least three techniques should be readily
available to eliminate this potential problem:

    (a) borrowing through Cedel or Euroclear for one day (until the purchase
  side of the day trade is reflected in their Cedel or Euroclear accounts)
  in accordance with the clearing system's customary procedures;

    (b) borrowing the Global Securities in the U.S. from a DTC Participant
  no later than one day prior to settlement, which would give the Global
  Securities sufficient time to be reflected in their Cedel or Euroclear
  account in order to settle the sale side of the trade; or

    (c) staggering the value dates for the buy and sell sides of the trade
  so that the value date for the purchase from the DTC Participant is at
  least one day prior to the value date for the sale to the Cedel
  Participant or Euroclear Participant.

                                      A-3
<PAGE>

          CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

    A beneficial owner of Global Securities holding securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:

    Exemption on non-U.S. Persons (Form W-8). Beneficial owners of Notes that
  are non-U.S. Persons generally can obtain a complete exemption from the
  withholding tax by filing a signed Form W-8 (Certificate of Foreign
  Status). If the information shown on Form W-8 changes, a new Form W-8 must
  be filed within 30 days of such change.

    Exemption for non-U.S. Person with effectively connected income (Form
  4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
  U.S. branch, for which the interest income is effectively connected with
  its conduct of a trade or business in the United States can obtain an
  exemption from the withholding tax by filing Form 4224 (Exemption from
  Withholding of Tax on Income Effectively Connected with the Conduct of a
  Trade or Business in the United States).

    Exemption or reduced rate for non-U.S. Persons resident in treaty
  countries (Form 1001). Non-U.S. Persons that are beneficial owners of Notes
  residing in a country that has a tax treaty with the United States can
  obtain an exemption or reduced tax rate (depending on the treaty terms) by
  filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
  treaty provides only for a reduced rate, withholding tax will be imposed at
  that rate unless the filer alternatively files Form W-8. Form 1001 may be
  filed by the beneficial owner of Notes or such owner's agent.

    Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
  exemption from the withholding tax by filing Form W-9 (Payer's request for
  Taxpayer Identification Number and Certification).

    U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
  Global Security or, in the case of a Form 1001 or a Form 4224 filer, such
  owner's agent, files by submitting the appropriate form to the person
  through whom it holds the security (the clearing agency, in the case of
  persons holding directly on the books of the clearing agency). Form W-8 and
  Form 1001 are effective for three calendar years and Form 4224 is effective
  for one calendar year.

    The term "U.S. Person" means a citizen or resident of the United States,
      a corporation or a partnership organized in or under the laws of the
      United States or any political subdivision thereof or an estate, the
      income of which from sources outside the United States is includible
      in gross income for federal income tax purposes regardless of its
      connection with the conduct of a trade or business within

                                      A-4
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------


    You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information.

    We are not offering the Notes in any state where the offer is not
permitted.

    We do not claim the accuracy of the information in this prospectus as of
any date other than the date of this document stated on the cover.

    Dealers will deliver a prospectus when acting as underwriters of the Notes
and with respect to their unsold allotments or subscriptions. In addition, all
dealers selling the Notes will deliver a prospectus until        , 1999.



[GreenTree Logo]



--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                    PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

  The following table sets forth the expenses to be incurred in connection
with the offering of the Lease-Backed Notes, other than underwriting discounts
and commissions, described in this Registration Statement:

<TABLE>
      <S>                                                           <C>
      Securities and Exchange Commission Registration Fee.......... $ 93,408
      Printing and Engraving.......................................  100,000  *
      Legal Fees and Expenses......................................  100,000  *
      Blue Sky Filing and Counsel Fees.............................    5,000  *
      Accounting Fees and Expenses.................................   30,000  *
      Trustee Fees and Expenses....................................   20,000  *
      Rating Agencies' Fees........................................  150,000  *
      Miscellaneous Expenses.......................................   76,592  *
                                                                    ----------
        Total...................................................... $575,000  *
                                                                    ==========
</TABLE>
--------
 * Other than the registration fee, all expense items are estimates.

Item 14. Indemnification of Directors and Officers.

  Green Tree Lease Finance 1999-1, LLC is a limited liability company formed
under the laws of Delaware. Section 18-108 of the Delaware Limited Liability
Company Act provides that a Delaware limited liability company may indemnify
any member or manager or other person from and against any and all claims and
demands whatsoever. The Limited Liability Company Agreement of Green Tree
Lease Finance 1999-1, LLC provides, in effect, that, subject to certain
limited exceptions, such company will indemnify its managers and named
officers to the extent permitted by the Delaware Limited Liability Company
Act.

  Green Tree Lease Finance II, Inc. is incorporated under the laws of
Minnesota. Section 302A.521 of the Minnesota Statutes provides that a
corporation shall indemnify any person made or threatened to be made a party
to a proceeding by reason of the former or present official capacity of such
person against judgments, penalties, fines (including, without limitation,
excise taxes assessed against such person with respect to any employee benefit
plan), settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan for the same judgments, penalties or
fines; (2) acted in good faith; (3) received no improper personal benefit and
Section 302A.255 (with respect to director conflicts of interest), if
applicable, has been satisfied; (4) in the case of a criminal proceeding, had
no reasonable cause to believe the conduct was unlawful; and (5) in the case
of acts or omissions in such person's official capacity for the corporation,
reasonably believed that the conduct was in the best interests of the
corporation, or in the case of acts or omissions in such person's official
capacity for other affiliated organizations, reasonably believed that the
conduct was not opposed to the best interests of the corporation. Section
302A.521 also requires payment by a corporation, upon written request, of
reasonable expenses in advance of final disposition of the proceeding in
certain instances. A decision as to required indemnification is made by a
disinterested majority of the Board of Directors present at a meeting at which
a disinterested quorum is present, or by a designated committee of the Board,
by special legal counsel, by the shareholders or by a court.

  The Bylaws of Green Tree Lease Finance II, Inc. provide, in effect, that,
subject to certain limited exceptions, such corporation will indemnify its
officers and directors to the extent permitted by the Minnesota Business
Corporation Act.

                                     II-1
<PAGE>

  Green Tree Financial Corporation is incorporated under the laws of Delaware.
Section 145 of the Delaware General Corporation Law provides that a Delaware
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of such corporation,
by reason of the fact that such person was an officer, director, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, employee or agent of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise). The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided such person acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was illegal. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation. Where and officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.

  The Certificate of Incorporation and Bylaws of Green Tree Financial
Corporation provide, in effect, that, subject to certain limited exceptions,
such corporation will indemnify its officers and directors to the extent
permitted by the Delaware General Corporation Law.

Item 15. Recent sales of Unregistered Securities.
  None.

Item 16. Exhibits and Financial Statement Schedules.
  The Exhibits filed as part of this Registration Statement are:

<TABLE>
   <C>    <S>
    1.1*  --Form of Underwriting Agreement.
    3.1*  --Certificate of Formation of Green Tree Lease Finance 1999-1, LLC.
    3.2*  --LLC Agreement of Green Tree Lease Finance 1999-1, LLC.
    3.3** --Articles of Incorporation of Green Tree Lease Finance II, Inc.
    3.4** --By-Laws of Green Tree Lease Finance II, Inc.
    4.1*  --Form of Transfer Agreement.
    4.2*  --Form of Contribution and Servicing Agreement.
    4.3*  --Form of Indenture.
    5.1*  --Opinion and consent of Dorsey & Whitney LLP with respect to
           legality.
    8.1*  --Opinion and consent of Dorsey & Whitney LLP with respect to tax
           matters.
   23.1*  --Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
   23.2*  --Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
   23.3*  --Consent of Dorsey & Whitney LLP (true sale and nonconsolidation
           opinions).
   23.4*  --Consent of PricewaterhouseCoopers LLP.
   24.1*  --Power of attorney from officers and directors of Green Tree Lease
           Finance II, Inc.
   25.1*  --Statement of eligibility of Trustee.
   99.1*  --Form of Opinion of Dorsey & Whitney LLP with respect to true sale
           of the Leases.
   99.2*  --Form of Opinion of Dorsey & Whitney LLP with respect to
           nonconsolidation.
</TABLE>
--------
 *  To be filed by amendment.
** Incorporated by reference to the corresponding exhibit number in
   Registration Statement on Form S-3 Amendment No. 3 filed December 9, 1997,
   Registration Statement Nos. 333-38687, 333-38687-01 and 333-38687-02.

                                     II-2
<PAGE>

Item 17. Undertakings.

  Each of the undersigned, Green Tree Lease Finance 1999-1, LLC, and Green
Tree Lease Finance II, Inc. (collectively, the "Registrants"), hereby
undertakes that, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrants pursuant to the foregoing provisions,
or otherwise, the Registrants have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

  The Registrants hereby undertake:

    (1) 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 Registrants pursuant to Rule 424(b)(1) or
  (4) or 497(h) under the Securities Act shall be deemed to be part of this
  Registration Statement as of the time it was declared effective.

    (2) For the purpose of determining any liability under the Securities Act
  of 1933, each post-effective amendment that contains a form of prospectus
  shall be deemed to be a new registration statement relating to the
  securities offered therein, and the offering of such securities at that
  time shall be deemed to be the initial bona fide offering thereof.

  The Registrants hereby undertake to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.

                                     II-3
<PAGE>

                                   SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Paul, State of
Minnesota, on the 23th day of August, 1999.

                                          Green Tree Lease Finance 1999-1, LLC

                                          By: Green Tree Lease Finance II,
                                           Inc.

                                            /s/ Joel H. Gottesman
                                          By: _________________________________
                                            Joel H. Gottesman
                                            Senior Vice President and
                                            Secretary

                                      II-4
<PAGE>

                                  SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Paul, State of
Minnesota, on the 23th day of August, 1999.

                                          Green Tree Lease Finance II, Inc.

                                            /s/ Joel H. Gottesman
                                          By: _________________________________
                                            Joel H. Gottesman
                                            Senior Vice President and
                                            Secretary

  Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 20, 1999. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Charles
M. Freeland and Phyllis A. Knight and each of them, as his/her true and lawful
attorney-in-fact and agent, with full power of substitution, to sign on his
behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement
or the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his/her substitutes,
shall do or cause to be done by virture hereof.

              Signature                        Title                 Date



       /s/ Bruce A. Crittenden         President (Principal    August 23, 1999
-------------------------------------   Executive Officer)
         Bruce A. Crittenden



        /s/ Phyllis A. Knight
-------------------------------------  Senior Vice             August 23, 1999
          Phyllis A. Knight             President and
                                        Treasurer
                                        (Principal
                                        Financial and
                                        Accounting Officer)



        /s/ Joel H. Gottesman
-------------------------------------  Director                August 23, 1999
          Joel H. Gottesman



          /s/ Paul A. Boyum
-------------------------------------  Director                August 23, 1999
            Paul A. Boyum


                                     II-5
[{"type": "S-1", "sequence": "1", "description": "FORM S-1", "secsgml_size_bytes": 347074}]
[{"company-data": {"conformed-name": "GREEN TREE LEASE FINANCE II INC", "cik": "0001048433", "assigned-sic": "6189", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-85811", "film-number": "99698340"}, "business-address": {"street1": "1100 LANDMARK TOWERS", "street2": "345 ST PETER ST", "city": "SAINT PAUL", "state": "MN", "zip": "55102-1639", "phone": "6122933400"}, "mail-address": {"street1": "1100 LANDMARK TOWERS", "street2": "345 ST PETER ST", "city": "SAINT PAUL", "state": "MN", "zip": "55102-1639"}}, {"company-data": {"conformed-name": "GREEN TREE LEASE FINANCE 1999-1 LLC", "cik": "0001092960", "assigned-sic": ""}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-85811-01", "film-number": "99698341"}, "business-address": {"street1": "1100 LANDMARK TOWERS", "street2": "345 ST PETER ST", "city": "ST PAUL", "state": "MN", "zip": "55102", "phone": "6122933400"}, "mail-address": {"street1": "1100 LANDMARK TOWERS", "street2": "345 ST PETER ST", "city": "ST PAUL", "state": "MN", "zip": "55102"}}]
As filed with the Securities and Exchange Commission on August 23, 1999

                                                 Registration Nos. 333-
                                                                   333-     -01
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     under
                          The Securities Act of 1933

                                ---------------

                       GREEN TREE LEASE FINANCE II, INC.
            (Exact name of registrant as specified in its charter)

               Minnesota                             41-1892359
    (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)             Identification Number)

                     GREEN TREE LEASE FINANCE 1999-1, LLC
            (Exact name of registrant as specified in its charter)

               Delaware                                 None
    (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)             Identification Number)

                                ---------------

                             1100 Landmark Towers
                             345 St. Peter Street
                        St. Paul, Minnesota 55102-1639
                                (651) 293-3400
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                               BRIAN COREY, ESQ.
                             1100 Landmark Towers
                             345 St. Peter Street
                        St. Paul, Minnesota 55102-1639
                                (651) 293-3400
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                ---------------

              COPIES TO:                             COPIES TO:
        CHARLES F. SAWYER, ESQ.               SIEGFRIED P. KNOPF, ESQ.
         Dorsey & Whitney LLP                     Brown & Wood LLP
        220 South Sixth Street                 One World Trade Center
     Minneapolis, Minnesota 55402             New York, New York 10048
            (612) 343-7986                         (212) 839-5300

                                ---------------

  Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [_]

  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]

  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

                                ---------------

                        CALCULATION OF REGISTRATION FEE

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Proposed
                                          Proposed       Maximum
   Title of each Class                     Maximum      Aggregate    Amount of
      of Securities       Amount to be Aggregate Price   Offering   registration
    to be Registered       registered    per Unit(1)     Price(1)       fee
--------------------------------------------------------------------------------
Lease-Backed Notes......  $336,000,000      100%       $336,000,000   $93,408
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(1) Estimated solely for the purposes of calculating the registration fee
    pursuant to Rule 457.

                                ---------------

  The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
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.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A         +
+registration statement relating to these securities has been filed with the   +
+Securities and Exchange Commission. These securities may not be sold nor may  +
+offers to buy be accepted prior to the time the registration statement        +
+becomes effective. This prospectus shall not constitute an offer to sell or   +
+the solicitation or an offer to buy nor shall there be any sale of these      +
+securities in any State in which such offer, solicitation or sale would be    +
+unlawful prior to registration or qualification under the securities laws of  +
+any such State.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

PROSPECTUS
                                     $

                     Green Tree Lease Finance 1999-1, LLC,
                                     Issuer
                    Green Tree Vendor Services Corporation,
                                    Servicer
                               Lease-Backed Notes

 We are offering the following classes of Notes:
Original   Price
                         Principal    to    Underwriting Proceeds to
  Class    Interest Rate   Amount   Public    Discount     Issuer
  -----    ------------- ---------- ------- ------------ -----------
A-1             %      $                %         %            %
  A-2             %                       %         %            %
  A-3             %                       %         %            %
  A-4             %                       %         %            %
  B               %                       %         %            %
  C               %                       %         %            %
                         ---------- -------   -------      -------
    Total                $          $         $            $
Consider carefully the Risk Factors beginning on page   .

    Neither the Securities and Exchange Commission nor any state securities
 commission has approved or disapproved of these securities or passed upon the
 accuracy or adequacy of this prospectus. Any representation to the contrary is
                              a criminal offense.

   The Notes are obligations only of the Issuer. The Notes will not represent
interests in or obligations of Green Tree Vendor Services Corporation, Green
Tree Financial Corporation or any of their affiliates other than the Issuer.

   These Notes will be delivered on or about        , 1999.

   The underwriters named below will offer these securities to the public at
the offering price listed on this cover page and they will receive the discount
listed above. See "Underwriting."

                       Underwriters of the Class A Notes
                                 [Underwriters]

               Underwriter of the Class B Notes and Class C Notes
                                 [Underwriter]

                  The date of this Prospectus is        , 1999
TABLE OF CONTENTS
Section                                                                   Page
-------                                                                   ----
REPORTS TO NOTEHOLDERS................................................... iii
WHERE YOU CAN FIND MORE INFORMATION...................................... iii
SUMMARY..................................................................   1
RISK FACTORS.............................................................   9
THE ISSUER AND THE SPC...................................................  15
GREEN TREE VENDOR SERVICES CORPORATION...................................  17
THE LEASES...............................................................  21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE
 ISSUER..................................................................  37
MANAGERS OF THE ISSUER...................................................  38
WEIGHTED AVERAGE LIFE OF THE NOTES.......................................  39
COLLATERAL CASHFLOWS AND RESIDUALS.......................................  44
DESCRIPTION OF THE NOTES.................................................  46
DESCRIPTION OF THE CONTRIBUTION AND SERVICING AGREEMENT..................  68
CERTAIN LEGAL ASPECTS OF THE LEASES......................................  75
FEDERAL INCOME TAX CONSEQUENCES..........................................  77
ERISA CONSIDERATIONS.....................................................  84
RATINGS OF THE NOTES.....................................................  85
USE OF PROCEEDS..........................................................  86
EXPERTS..................................................................  86
UNDERWRITING.............................................................  86
LEGAL MATTERS............................................................  87
INDEX OF PRINCIPAL TERMS.................................................  88
INDEX TO FINANCIAL STATEMENTS............................................ F-1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES............ A-1
The Underwriters may engage in transactions that stabilize, maintain, or in
some way affect the price of the Notes. These types of transactions may include
stabilizing, the purchase of Notes to cover syndicate short positions and the
imposition of penalty bids. For a description of these activities, please read
the section entitled "Underwriting."

    If you have received a copy of this prospectus in an electronic format, and
if the legal prospectus delivery period has not expired, you may obtain a paper
copy of this prospectus from Green Tree Financial Corporation or an underwriter
by asking for it.

    Certain capitalized terms used in this prospectus are defined on the pages
indicated in the section entitled "Index of Principal Terms."

                                       ii
REPORTS TO NOTEHOLDERS

    Unless the Notes are issued in physical, rather than book-entry, form,
unaudited monthly and annual reports, which contain information concerning the
Issuer prepared by the Servicer, will be sent by the Trustee on behalf of the
Issuer only to Cede & Co. You can find a more detailed description of this
under the heading "Description of the Notes--Book-Entry Registration."

    If you purchase a Note, you may receive these reports by making a written
request to the Trustee, together with a certification that you are a Note
Owner. You should send any such request to the Trustee at the following
address: 180 East Fifth Street, St. Paul, Minnesota 55102. These reports do not
constitute financial statements prepared in accordance with generally accepted
accounting principles. Neither Green Tree Financial Corporation nor Green Tree
Vendor Services Corporation intends to send any of its financial reports to
Note Owners. The Servicer, on behalf of the Issuer, will file with the
Securities and Exchange Commission periodic reports concerning the Issuer as
required by law.

                      WHERE YOU CAN FIND MORE INFORMATION

    The Issuer and the SPC have filed a registration statement relating to the
Notes with the Securities and Exchange Commission. This prospectus is part of
the registration statement, but the registration statement contains additional
information. Federal securities law requires the filing of certain information
with the SEC, including annual, quarterly and special reports, proxy statements
and other information. You can read and copy the registration statement and
these documents at the public reference facility maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You
can also read and copy the registration statement and such reports, proxy
statements and other information at the following regional offices of the SEC:
New York Regional
        Office              Chicago Regional Office
        Seven World Trade
        Center              Citicorp Center
        Suite 1300          500 West Madison Street, Suite 1400
        New York, NY 10048  Chicago, IL 60661
Please call the SEC at 1-800-SEC-0330 for more information about the public
reference rooms. SEC filings are also available to the public on the SEC's web
site at http://www.sec.gov.

                                      iii
SUMMARY

    This summary highlights selected information regarding the Notes, and does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of the Notes, read this
entire prospectus.

Securities Offered..........
                              We are offering six classes of Notes:
Original
                                                              Interest Principal
Class                                                           Rate    Amount
-----                                                         -------- ---------
A-1..........................................................      %     $
A-2..........................................................      %     $
A-3..........................................................      %     $
A-4..........................................................      %     $
B............................................................      %     $
C............................................................      %     $
The Class C Notes will be subordinate to the Class B Notes, and the Class B
Notes will be subordinate to the Class A Notes. For a further explanation of
this subordination, see "Subordination" below.

Issuer......................  Green Tree Lease Finance 1999-1, LLC, will issue
                              the Notes. It is referred to as the "Issuer" in
                              this prospectus. The sole member of the Issuer is
                              Green Tree Lease Finance II, Inc., a special-
                              purpose corporation that is a subsidiary of Green
                              Tree Vendor Services Corporation. Green Tree
                              Lease Finance II, Inc. is referred to as the
                              "SPC" in this prospectus.

Seller and Servicer.........  Green Tree Vendor Services Corporation will sell
                              the leases to the SPC, which will in turn sell
                              them to the Issuer. Vendor Services will service
                              the leases owned by the Issuer. As Servicer,
                              Vendor Services will collect payments on the
                              Leases and enforce defaulted leases when
                              necessary.

Trustee.....................  U.S. Bank Trust National Association will act as
                              Trustee under the Indenture that governs the
                              terms of the Notes.

Terms of the Notes

 . Payment Date............   The 20th day of each month, beginning on      ,
                              1999.

                                       1
.  Interest...............
                              Interest on the Notes will accrue at the
                              applicable interest rate from each payment date
                              to the day before the next payment date. For the
                              first payment date, interest begins to accrue on
                              the day the Notes are issued.

                              The interest rate for each class of Notes is
                              specified above.

                              Interest on the Class A-1 Notes will be computed
                              on the basis of the actual number of days elapsed
                              and a 360-day year. Interest on the other classes
                              of Notes will be computed on the basis of a 360-
                              day year comprised of twelve 30-day months.

 . Principal...............   Principal will be paid on the Notes on each
                              payment date. On each payment date, the Trustee
                              will pay principal to the Noteholders in the
                              following order of priority:

                                    ^  First, all principal payable on the
                                       Notes will be paid to the Class A-1
                                       Notes until they are paid in full;

                                    ^  After the Class A-1 Notes have been paid
                                       in full, a portion of the principal
                                       payable on the Notes will be paid to the
                                       Class A-2 Notes until paid in full, then
                                       to the Class A-3 Notes until paid in
                                       full, and then to the Class A-4 Notes
                                       until paid in full;

                                    ^  After the Class A-1 Notes have been paid
                                       in full, a portion of the principal
                                       payable on the Notes will be paid to the
                                       Class B Notes, but only if specified
                                       credit enhancement levels for the Class
                                       A Notes have been maintained;

                                    ^  After the Class A-1 Notes have been paid
                                       in full, a portion of the principal
                                       payable on the Notes will be paid to the
                                       Class C Notes until paid in full, but
                                       only if specified credit enhancement
                                       levels for the Class A and Class B Notes
                                       have been maintained.

                              See "Description of the Notes--Principal" for a
                              more complete description of the amount of
                              principal payable on each class of Notes on each
                              payment date.

                                       2
. Stated Maturity Dates...   Each class of Notes must be paid in full on or
                              before the stated maturity date of that class:
Stated
                                                                        Maturity
                   Class                                                  Date
                   -----                                                --------
A-1.................................................
                   A-2.................................................
                   A-3.................................................
                   A-4.................................................
                   B...................................................
                   C...................................................
. Closing Date............          , 1999.

 . Subordination...........   The Class C Notes will be subordinated to the
                              Class A and Class B Notes, and the Class B Notes
                              will be subordinated to the Class A Notes:

                                *  On each Payment Date, the Indenture Trustee
                                   will use the Amount Available to pay
                                   interest on the Class A Notes, then interest
                                   on the Class B Notes, and then interest on
                                   the Class C Notes, and

                                *  On each Payment Date, the Indenture Trustee
                                   will use the Amount Available, after paying
                                   interest on the Notes as described above, to
                                   pay the amount of principal due on the Class
                                   A Notes, then the amount of principal due on
                                   the Class B Notes, and then the amount of
                                   principal due on the Class C Notes.

                              This makes it more likely that the Class A Notes
                              will be paid all interest and principal due on
                              them, but less likely that the Class C Notes will
                              be paid all interest and principal due on them.
                              For a more complete description of the
                              subordination of the Class B and Class C Notes,
                              see "Description of the Notes."

 . Ratings.................   We will not issue the Notes unless Standard &
                              Poor's Rating Services and Fitch IBCA, Inc. have
                              assigned the following ratings to each class of
                              Notes:
Class            S&P   Fitch
                   -----            ---- --------
A-1............. A-1+ F-1+/AAA
                   A-2............. AAA  AAA
                   A-3............. AAA  AAA
                   A-4............. AAA  AAA
                   B............... A    A
                   C............... BBB  BBB
3
The rating of each class of Notes addresses the
                              likelihood of the timely receipt of interest and
                              the payment of principal on that class on or
                              before the stated maturity date for that class. A
                              rating is not a recommendation to buy, sell or
                              hold securities and may be subject to revision or
                              withdrawal at any time by the assigning rating
                              agency. The ratings of the Notes do not address
                              the likelihood of payment of principal on any
                              class of Notes prior to its stated maturity date.
                              For a more complete description of the ratings of
                              the Notes, see "Ratings of the Notes."

Issuer's Assets.............  Payments on the Notes will be made solely from
                              the Issuer's assets. The Issuer's assets will
                              consist of:

                                ^  a pool of equipment leases;

                                ^  limited rights to the proceeds from
                                   disposition of the leased equipment
                                   following expiration of each lease that is a
                                   lease rather than a loan; and

                                ^  amounts on deposit in the collection
                                   account, the reserve account, and several
                                   other incidental accounts.

The Leases..................  As of        , 1999, the pool of leases that the
                              SPC will transfer to the Issuer had the following
                              characteristics (unless otherwise noted, amounts
                              and percentages are calculated using a
                              statistical discount rate and all percentages are
                              expressed as percentages of the statistical
                              discounted present value of the leases):

                                ^  the statistical discounted present value of
                                   the leases was $      ;

                                ^  there were       leases;

                                ^  the average lease principal balance was
                                   approximately $     ;

                                ^  approximately   % of the leases related to
                                   data processing equipment; approximately   %
                                   of the leases related to office machines;
                                   approximately   % of the leases related to
                                   telecommunications; and no other equipment
                                   type represented more than   % of the
                                   leases;

                                       4
^  the obligors on approximately 11.52% of the
                                   leases were located in California;
                                   approximately 10.32% were located in New
                                   York; approximately 8.27% were located in
                                   Florida; approximately 7.35% were located in
                                   Texas; approximately 6.12% were located in
                                   New Jersey; and no other state represented
                                   more than 5.0% of the leases;

                                ^  approximately   % of the leases were
                                   originated by Vendor Services, and the
                                   remaining   % of the leases were originated
                                   by third parties and purchased by Vendor
                                   Services;

                                ^  the remaining term of the leases ranged from
                                     months to    months; and

                                ^  the weighted average remaining term of the
                                   leases was approximately    months and the
                                   weighted average age of the leases was
                                   approximately    months.

                              All the percentages shown above are based on an
                              assumed principal balance for the leases. In
                              preparing these statistics, we calculated the
                              principal balance of each lease by computing the
                              present value of all future scheduled payments on
                              that lease (and not including delinquent
                              amounts), using a discount rate of   %. Based on
                              this assumed discount rate, which we refer to as
                              the statistical discount rate, the aggregate
                              principal balance of the leases as of        ,
                              1999 was calculated to be $       . For more
                              information about the leases, see "The Leases--
                              Certain Statistics Relating to the Cut-Off Date
                              Pool".

                              The aggregate principal balance of the leases as
                              of each payment date will be calculated using a
                              discount rate of   %. As of the initial cut-off
                              date, the aggregate principal balance of the
                              leases calculated using the discount rate was
                              $     .

                              As described under "The Leases--Substitution,"
                              under certain circumstances Vendor Services or
                              the SPC may substitute new leases for leases to
                              be removed from the Issuer.

                                       5
Servicer Advances...........  For any payment date, the servicer may, but will
                              not be required to, advance to the Trustee an
                              amount to cover delinquencies in scheduled
                              payments on the leases. If the servicer makes
                              such an advance, it will be entitled to recover
                              that advance from late payments made on that
                              delinquent lease or, if necessary, from payments
                              made on other leases.

Leased Equipment and
 Residual Realizations......
                              Because many of the leases are "true leases," the
                              equipment subject to those leases will belong to
                              the SPC, and the SPC will sell or re-lease the
                              equipment following the expiration of the lease.
                              The SPC will not transfer to the Issuer its
                              interest in the equipment subject to the leases,
                              but it will make the cash flows realized from the
                              sale or re-lease of equipment during any month
                              available to the Issuer on the next payment date,
                              to be used to make payments on the Notes if
                              collections on the leases are insufficient. As of
                                     , 1999, Vendor Services estimated the
                              residual value of the equipment subject to the
                              leases to be $      . The amounts the SPC
                              actually realizes from the disposition of the
                              equipment could be less.

Reserve Account.............
                              The SPC will establish a reserve account and
                              deposit an amount equal to   % of the initial
                              pool principal balance, or approximately $     .
                              The Trustee will use amounts on deposit in the
                              reserve account to pay the following amounts if
                              payments received on the leases are insufficient:

                                ^  amounts owed to the servicer, if Vendor
                                   Services or an affiliate is no longer the
                                   servicer;

                                ^  interest due on the Notes; and

                                ^  principal due on the Notes.

                              For more information about the reserve account,
                              see "Description of the Notes--Reserve Account."

                                       6
Mandatory Purchase or
 Replacement of Certain
 Leases.....................
                              Vendor Services will make representations and
                              warranties with respect to each lease and the
                              related equipment, as more fully described in
                              "The Leases--Representations and Warranties Made
                              by Vendor Services." If there is a serious breach
                              of any such representation or warranty and it is
                              not cured within a specified period, the Trustee
                              can require Vendor Services to purchase that
                              lease. In lieu of purchasing a lease, Vendor
                              Services may, at its option, replace that lease
                              with a substitute lease. See "The Leases--
                              Substitution."

Priority of Payments........
                              On each payment date, the Trustee will use
                              payments collected on the leases in the following
                              order of priority:

                                    ^  if Vendor Services is no longer the
                                       servicer, to pay the servicing fee to
                                       the successor servicer;

                                    ^  to repay the servicer for any advances
                                       it made in prior months but has not
                                       recovered;

                                    ^  to pay interest on the Notes in the
                                       priority described under "Interest"
                                       above;

                                    ^  to pay principal on the Notes in the
                                       priority described under "Principal"
                                       above;

                                    ^  to deposit in the reserve account the
                                       amount, if any, necessary to increase
                                       the balance therein to its requisite
                                       amount;

                                    ^  if Vendor Services is the servicer, to
                                       pay the servicing fee to Vendor
                                       Services; and

                                    ^  to pay the remainder, if any, to the
                                       SPC.

Optional Purchase of          Once the unpaid principal balance of the Notes is
 Leases.....................  less than 10% of the initial principal balance of
                              the lease pool, the SPC may repurchase all the
                              leases. That would result in a prepayment of the
                              outstanding Notes. For a more complete
                              description of this repurchase right, see
                              "Description of the Notes -- Optional Purchase of
                              Leases."

                                       7
U.S. Taxation...............
                              In the opinion of Dorsey & Whitney LLP, counsel
                              to the Issuer, the Notes will be characterized as
                              indebtedness and the Issuer will not be
                              characterized as an "association" or "publicly
                              traded partnership" taxable as a corporation for
                              federal income tax purposes. By purchasing a
                              Note, you will agree to treat your Note as
                              indebtedness for federal, state and local income
                              tax purposes. You should consult your own tax
                              advisor regarding the federal income tax
                              consequences of the purchase, ownership and
                              disposition of Notes, and the tax consequences
                              arising under the laws of any state or other
                              taxing jurisdiction. See "United States
                              Taxation."

ERISA Considerations........  Subject to the considerations described in "ERISA
                              Considerations," employee benefit plans that are
                              subject to the Employee Retirement Income
                              Security Act of 1974, as amended, may purchase
                              Notes. A fiduciary of an employee benefit plan
                              must determine that the purchase of a Note is
                              consistent with its fiduciary duties under
                              applicable law and does not result in a non-
                              exempt prohibited transaction under applicable
                              law.

Legal Investment............
                              The Class A-1 Notes will be eligible securities
                              for purchase by money market funds under Rule 2a-
                              7 under the Investment Company Act of 1940.

                                       8
RISK FACTORS

    You should consider the following factors in deciding whether to purchase
Notes.

The Issuer has limited assets to make payments on the Notes.

    The Issuer will have no assets other than the leases, rights to residual
realizations on the related equipment, amounts on deposit from time to time in
the collection account, the residual account, the reserve account and the
accounts established pursuant to the Contribution and Servicing Agreement. The
Notes will represent obligations solely of the Issuer, and will not be insured
or guaranteed by Vendor Services, the SPC, or the Trustee. As a result, you may
be subject to delays in payment and may incur losses on your investment as a
result of defaults or delinquencies on the leases, or because of depreciation
in the value of the related equipment or because of some other inability to
realize on the equipment. See "--Some leases may not be enforceable" below.

The Class B and Class C Notes have a greater risk of loss from delinquencies
and defaults on the leases.

    Delinquencies and defaults on the leases will result in a smaller amount of
cash available for distribution on a payment date. Because the available cash
is distributed in a specified order of priority, there is a risk that Notes
that are lower in that order of priority may not receive some or even any of
the amount due to them on that payment date. The only protection against
delinquencies and liquidation losses for the Class C Notes will be any residual
realizations each month, and the amounts, if any, on deposit in the residual
account and the reserve account that are not used to make payments on the Class
A or Class B Notes.

The more senior classes of Notes have limited protection from delinquencies and
defaults.

    The only protection against delinquencies and liquidation losses for the
more senior classes of Notes is the subordination of the more subordinate
classes, plus the amounts, if any, on deposit in the residual account and the
reserve account. High delinquencies and losses on the leases could eliminate
the protection afforded the Class B Notes by the subordination of the Class C
Notes, and the Class B Noteholders could incur losses on their investment as a
result. Higher delinquencies and losses on the leases could eliminate the
protection offered to the Class A Noteholders by the subordination of the Class
B and Class C Notes, and the Class A Noteholders could incur a loss on their
investment as a result.

If Vendor Services became insolvent, there may be delays or reductions in
distributions to holders of Notes.

  .   The transfer of the leases and equipment might be characterized as a
      borrowing by Vendor Services.

     Dorsey & Whitney LLP, counsel to the Issuer, will deliver a legal
     opinion to the effect that the transfer of the leases and the related
     equipment from Vendor Services to the SPC constitutes a sale or
     absolute assignment, rather than a pledge to secure indebtedness of
     Vendor Services; and that in the event that Vendor

                                       9
Services were to become a debtor under the federal bankruptcy code,
     the leases, payments thereunder and the equipment would not be
     property of the bankruptcy estate of Vendor Services. However, if
     Vendor Services were to become a debtor under the federal bankruptcy
     code or similar applicable state laws, a creditor or trustee in
     bankruptcy of Vendor Services, or Vendor Services as debtor-in-
     possession, might argue that the transfer of the Leases and the
     equipment from Vendor Services to the SPC should be characterized as a
     pledge of such assets rather than a sale or absolute assignment. If
     this position were accepted by a court, any leases considered to be
     "true" leases under the applicable insolvency laws, as described under
     "The Leases-- Description of the Leases," and any other lease
     considered to be executory under these insolvency laws, could be
     rejected by the trustee in bankruptcy or by Vendor Services as debtor-
     in-possession, which would result in the termination of scheduled
     payments under those leases 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 SPC will file UCC financing
     statements perfecting a security interest for the benefit of the SPC
     in Vendor Services' interests in the equipment, and assignments of
     such perfected security interest to the Issuer and the Trustee,
     against Vendor Services in those states where equipment subject to
     leases constituting at least 75% of the initial pool principal balance
     and at least 75% of the aggregate book value of the equipment is
     located. Even if these leases were not ultimately rejected in the
     event of an insolvency of Vendor Services, the Issuer and the Trustee
     could experience a delay in or reduction of collections on all of the
     leases, and you could incur a loss on your investment as a result.

  .   The SPC might be consolidated with Vendor Services.

     Dorsey & Whitney LLP will deliver a legal opinion to the effect that,
     if Vendor Services were to become a debtor in a bankruptcy case, the
     bankruptcy court would not order that the assets and liabilities of
     the SPC be consolidated with those of Vendor Services. The SPC has
     taken steps to prevent an insolvency of Vendor Services resulting in
     the consolidation of the assets and liabilities of the SPC with those
     of Vendor Services. These steps include the maintenance of separate
     books and records and the insistence on arm's-length terms in all
     agreements with Vendor Services and affiliates thereof. Nevertheless,
     there can be no assurance that, in the event of a bankruptcy or
     insolvency of Vendor Services, a court would not order that the
     Issuer's or the SPC's assets and liabilities be consolidated with
     those of Vendor Services. Any such order would reduce or delay the
     Issuer's receipt of payments on the leases, and you could incur a loss
     on your investment as a result.

  .   The transfer of the leases to the SPC might be deemed a fraudulent
      transfer.

     If Vendor Services were to become bankrupt or insolvent, then the
     bankruptcy court could rule that the transfer of the leases and the
     equipment to the SPC was a fraudulent transfer if Vendor Services
     received less than reasonably equivalent value or fair consideration
     for the leases and the equipment and was insolvent

                                       10
when it made the transfer or was rendered insolvent as a result of the
     transfer. In that case, the court could subordinate the rights of the
     Noteholders to payments on the leases to the rights of Vendor
     Services' creditors, and you could incur a loss on your investment as
     a result.

  .   Vendor Services will be allowed to commingle the collections on the
      leases with its own assets.

     While Vendor Services is the servicer, cash collections held by Vendor
     Services will be commingled and used for its benefit prior to the date
     on which those collections must be deposited in a separate collection
     account. In the event of the insolvency of the servicer or, in certain
     circumstances, the lapse of certain time periods, the Issuer may not
     have a perfected ownership or security interest in those collections,
     and you could suffer delays or reductions in payments on the Notes as
     a result.

  .   You are relying on representations and warranties made by Vendor
      Services.

     Vendor Services will make representations and warranties regarding the
     leases, the equipment and other matters. See "The Leases--
     Representations and Warranties Made by Vendor Services." In the event
     that any representation or warranty with regard to a specific lease is
     breached, is not cured within a specified period of time, and the
     value of that lease is materially and adversely affected by the
     breach, Vendor Services will be required to purchase the lease from
     the Issuer, or may be allowed to deliver a substitute lease therefor.
     In the event of a bankruptcy or insolvency of Vendor Services, the
     Trustee may be unable to compel Vender Services to repurchase leases,
     and you could incur a loss on your investment as a result.

The SPC or the Issuer might become insolvent.

    If the SPC or the Issuer were to become insolvent under any insolvency law,
delays in the amount of distributions to Noteholders would be likely and
Noteholders could incur a loss on their investment as a result. The SPC and the
Issuer have each taken steps to minimize the likelihood that it will become
bankrupt or otherwise insolvent. The SPC is prohibited by its organizational
documents and the agreements related to this transaction from engaging in
activities--including the incurrence or guaranty of debt--other than
specifically permitted activities. See "The Issuer and the SPC."

A financial intermediary might become insolvent.

    As described under "Green Tree Vendor Services Corporation--Equipment Lease
Business," Vendor Services from time to time acquires leases from financial
intermediaries. Similar to the risks described above related to any insolvency
of Vendor Services, in the event that a financial intermediary were to become
insolvent, the sale of the related leases from that financial intermediary to
Vendor Services could be characterized as a fraudulent transfer or as a pledge
to secure indebtedness rather than a sale. In this event, the Issuer and the
Trustee could experience a delay in or reduction of collections on such leases,
and you could incur a loss on your investment as a result.

                                       11
The leases may be prepaid or terminated before their scheduled maturity.

    The weighted average life of the Notes may be reduced by prepayments and
early terminations of the leases. Prepayments and early terminations may result
from voluntary prepayments by obligors, defaults, physical damage to the
related equipment, purchases by Vendor Services of leases as a result of
uncured breaches of the representations and warranties made by it with respect
thereto, as described in "The Leases--Representations and Warranties Made by
Vendor Services," or purchases by Vendor Services of leases because, as
servicer, it agreed to modifications of the terms of the lease. In addition,
the Notes may be prepaid in full if the SPC exercises its option to purchase
all of the remaining leases, See "Description of the Notes--Optional Purchase
of Leases." The servicer may allow a voluntary prepayment of a lease by an
obligor at any time so long as the amount paid by or on behalf of the obligor
is at least equal to the required payoff amount of that lease. The rate of
prepayments and early terminations on the leases, including those due to
obligors seeking early termination and those due to defaults, may be influenced
by a wide variety of economic and other factors, including, among others,
changes in the reimbursement policies of governmental or third party payors,
obsolescence of the equipment, changes in interest rates, changes in local,
regional or national economies or changes in federal income tax laws.
Therefore, you must not assume the leases will prepay at a certain rate, or
when any prepayments will occur. As the rate of payment of principal of the
Notes will depend on the rate of payment, including prepayments, on the leases,
the rate at which such principal will be paid cannot be predicted and the final
payment of a class of Notes could occur significantly earlier than the stated
maturity date of that class of Notes. You may not be able to reinvest principal
paid on any Notes at an interest rate equal to the interest rate for those
Notes, and you will bear all reinvestment risk resulting from the timing of
payments of principal on your Notes. See "Weighted Average Life of the Notes."

Vendor Services may substitute leases.

    Vendor Services may, but is not obligated to, substitute one or more leases
in exchange for

  .liquidated leases,

  .leases that it is required to repurchase,

  .leases that have been modified, and

  .leases that have been prepaid in full.

Although any substitute lease must satisfy certain criteria, we cannot assure
you that the delinquency and default experience of the Issuer with respect to
substitute leases will be comparable to that of the leases so replaced. The
servicer's monthly report to Noteholders will disclose all substitute leases
delivered to the Issuer during the related monthly period, and Vendor Services
will make representations and warranties regarding any substitute leases
described under "The Leases--Representations and Warranties Made by Vendor
Services," but the characteristics of such substitute leases will not be
verified by independent accountants or any other third party.

                                       12
Residual realizations may be less than we expect, and will provide only limited
support for the Notes.

    The availability of residual realizations will depend on various factors,
including the timing of lease 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 lease to which such equipment is subject, whether as a result of early
termination or upon scheduled expiration of the lease, 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 the equipment. However, 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 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 lease 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 leases is zero or
insignificant. Vendor Services may, but is not obligated to, substitute one or
more leases in exchange for liquidated leases, leases that it is required to
repurchase, leases that have been modified, and leases that have been prepaid
in full. If Vendor Services exercises this option, the residual realizations,
if any, from the lease being substituted for would belong to Vendor Services
and would not be available to make payments on the Notes.

    Moreover, any month's residual realizations not used to pay interest or
principal on the related payment date generally will be

    (1) deposited into the reserve account to the extent that the amount on
  deposit in the reserve account is less than the required reserve amount,
  or

    (2) released to the SPC, and, upon such release to the SPC, will not
  thereafter be available to make payments on the Notes.

Accordingly, we cannot assure you that residual realizations will be available
on a payment date when the collections on the leases are insufficient to pay
interest and principal on the Notes.

Some leases may not be enforceable.

    UCC financing statements were not filed to perfect Vendor Services'
security interest in some of the equipment. It has been the general policy of
Vendor Services, depending on the dollar amount of the particular lease, not to
file UCC financing statements with respect to the equipment relating to some
leases. See "Green Tree Vendor Services Corporation--Documentation." Vender
Services will make no representation and warranty about the perfection or
priority of any security interest in the related equipment. See "The Leases--
Representations and Warranties Made by Vendor Services." With respect to some
of the leases, that means a purchaser from the applicable obligor of the
related equipment would acquire the equipment free and clear of the interest of
Vendor Services in the equipment, and

                                       13
a creditor of the obligor which has taken a security interest in the equipment
and filed a UCC financing statement with respect thereto or a trustee in the
bankruptcy of such obligor would have priority over the interest of Vendor
Services in the equipment. Any such purchaser, creditor or trustee would have
an interest superior to the interest of the Issuer in that equipment. All of
the leases prohibit the obligor from selling or pledging the related equipment
to third parties.

    Due to the administrative burden and expense, we will not file assignments
of the UCC financing statements perfecting the security interest of Vendor
Services in the equipment--to the extent that such financing statements have
been filed against the obligor, as discussed above--to reflect the SPC's, the
Issuer's or the Trustee's interests therein. While not filing such assignments
does not affect the Issuer's interest in the leases or perfection of the
Trustee's interest in such leases, it does expose the Issuer, and thus
Noteholders, to the risk that Vendor Services could release its security
interest in the equipment of record, and it could complicate the Issuer's
enforcement, as assignee, of Vendor Services's security interest in the
equipment. While these risks should not affect the perfection or priority of
the interest of the Trustee in the leases or rights to payment thereunder, they
may adversely affect the right of the Trustee to receive proceeds of
disposition of the equipment subject to a liquidated lease. Additionally,
statutory liens for repairs or unpaid taxes and other liens arising by
operation of law may have priority even over prior perfected security interests
in the equipment assigned to the Trustee.

Vendor Services will hold the lease documents.

    The Servicer will hold the leases and certain related documents on behalf
of the Issuer and the Trustee. To facilitate servicing and save administrative
costs, the documents will not be physically segregated from other similar
documents that are in the Servicer's possession. UCC financing statements will
be filed in the appropriate jurisdictions reflecting

  .   the sale and assignment of the leases and Vendor Services' interests
      in the equipment to the SPC, provided that filings with respect to
      Vendor Services' interests in the equipment will be made only in some
      states, as described above under "The transfer of the leases and
      equipment might be characterized as a borrowing by Vendor Services,"

  .   the transfer and assignment of the leases and rights to residual
      realizations by the SPC to the Issuer, and

  .   the pledge of the leases and the residual realizations by the Issuer
      to the Trustee.

The Servicer's accounting records and computer systems will also reflect these
transfers. The leases will not, however, be stamped or otherwise marked to
reflect that they have been sold to the SPC, transferred to the Issuer or
pledged to the Trustee. If, through inadvertence or otherwise, Vendor Services
were to sell any of the leases to another party, or grant a security interest
to another party that purchased or took a security interest in any of such
leases in the ordinary course of business and took possession of such leases,
that purchaser or secured party might acquire an interest in the leases
superior to the interest of the Issuer and the

                                       14
Trustee. Such superior interest may include an ownership interest, which would
cut off all rights of the Issuer to such leases and payments thereunder, or a
security interest, which would be senior to the security interest held by the
Issuer; in either case, you could incur a loss on your investment as a result.

The Notes may have limited liquidity.

    There is currently no market for the Notes. Each Underwriter expects, but
will not be obligated, to make a market for the classes of Notes for which it
is acting as underwriter. We cannot assure you that a secondary market for the
Notes will develop or, if it does develop, that it will provide you with
liquidity of investment or will continue for the life of such Notes. As a
result, you must be prepared to bear the risk of holding the Notes for as long
as the Notes are outstanding.

                                       15
THE ISSUER AND THE SPC

The Issuer

    The Issuer is a Delaware limited liability company. Green Tree Lease
Finance II, Inc. ("SPC"), a Minnesota corporation, is the sole and managing
member of the Issuer. The SPC is wholly owned by Vendor Services.

    The Issuer has been formed solely for the purposes of the transactions
described in this Prospectus. Under its LLC Agreement and the Indenture, the
Issuer is not permitted to engage in any activity other than:

      (1) acquiring the leases and rights to the residual realizations from
  the SPC,

      (2) pledging the leases and its rights to the residual realizations to
  the Trustee,

      (3) performing its obligations under the Contribution and Servicing
  Agreement and the Indenture, and

      (4) engaging in other transactions, including entering into
  agreements, that are necessary, suitable or convenient to accomplish the
  foregoing or are incidental thereto or connected therewith.

The Issuer is prohibited from incurring any debt, issuing any obligations,
incurring any liabilities, except in connection with the issuance of the Notes,
and is prohibited from filing for bankruptcy without the approval of all of the
SPC's directors, including the independent director.

The SPC

    The SPC, as sole and managing member of the Issuer, does not intend to
engage in any business or activities other than

      (1) becoming a member or shareholder of, making capital contributions
  to, and acting as the managing member of, the Issuer and other similar
  special purpose entities;

      (2) acquiring, owning, leasing, transferring, receiving and pledging
  the Leases and related equipment, other similar leases and related
  equipment, and related activities set forth in the SPC's Articles of
  Incorporation; and

      (3) engaging in any lawful act or activity and exercising any powers
  permitted to Minnesota corporations that are incidental to and necessary
  or convenient for the accomplishment of the above mentioned business and
  purposes, all as more specifically set forth in its Articles of
  Incorporation, provided that none of the actions referenced in clauses (2)
  and (3) for other leases and equipment and related activities above, may
  result in a downgrade of a rating issued by a rating agency for the Notes.

The SPC is not liable, responsible or obligated, directly or indirectly, for
payment of any principal, interest or any other amount in respect of any of the
Notes. Pursuant to its Articles of Incorporation, the SPC must at all times
have at least one director who is "independent" of Green Tree and its
affiliates, as defined in its articles.

                                       16
Transfer of Leases and Equipment

    On the closing date, Vendor Services will contribute the leases and the
related equipment to the SPC pursuant to the Transfer Agreement, dated as of
      , 1999, between Vendor Services, as seller and the SPC, as purchaser.
Immediately thereafter, the SPC will, pursuant to the Contribution and
Servicing Agreement, among the Issuer, the SPC, Vendor Services, as Servicer
and the Trustee, contribute to the Issuer all of the leases and certain rights
to the residual realizations and the reserve account, and Vendor Services will
agree to service the leases on behalf of the Issuer.

    The Issuer will pledge substantially all of its assets to the Trustee and
issue the Notes pursuant to the Indenture. The Issuer's assets that will be
pledged to secure payment of the Notes will consist of:

    (1) a pool of equipment lease contracts (each, a "Lease" and in the
  aggregate, the "Lease Pool") with various lessees, borrowers or other
  obligors thereunder, including all monies at any time paid or payable
  thereon or in respect thereof from and after       , 1999 (the "Initial
  Cut-Off Date") or, in the case of Substitute Leases, the first day of the
  month of transfer to the Issuer (each such date, or the Initial Cut-Off
  Date, as applicable to each Lease, a "Cut-Off Date") (in the form of (i)
  Scheduled Payments (including all Scheduled Payments due prior to, but not
  received as of, the Cut-Off Date, but excluding any Scheduled Payments due
  on or after, but received prior to, the Cut-Off Date), (ii) Prepayments,
  and (iii) Liquidation Proceeds (including all net proceeds from the
  disposition of the related Equipment) received with respect to defaulted
  Leases;

    (2) certain rights to Residual Realizations and amounts, if any, on
  deposit in the Residual Account, to the extent necessary to make payments
  of interest and principal then due on the Notes;

    (3) amounts on deposit in (and Eligible Investments allocated to)
  certain accounts established pursuant to the Indenture and the
  Contribution and Servicing Agreement, including the Collection Account;

    (4) funds on deposit in the Reserve Account; and

    (5) the Issuer's rights under the Contribution and Servicing Agreement
  and the SPC's rights under the Transfer Agreement.

                                       17
GREEN TREE VENDOR SERVICES CORPORATION

General

    The Leases comprising the Trust Assets have been originated by Green Tree
Vendor Services Corporation ("Vendor Services") or, in some cases, purchased
from third parties by Vendor Services. Vendor Services is a leading independent
provider of vendor/manufacturer-oriented equipment finance programs, with
headquarters in Bloomington, Minnesota, additional operations in Paramus, New
Jersey, and twelve regional sales offices located throughout the United States.
Vendor Services, a wholly-owned subsidiary of Green Tree Financial Corporation
("Green Tree"), was acquired from FINOVA Corporation in November 1996. Vendor
Services' original predecessor, TriContinental Leasing Corporation, was
established in 1968, although its equipment leasing business has undergone
several restructurings and changes of ownership since that time.

    Vendor Services offers "small-ticket" equipment leasing programs, for
assets with a purchase price generally less than $100,000, to manufacturers,
dealers and distributors, and to a select group of financial intermediaries
nationwide, facilitating the sale of their products to end-user customers.

Equipment Lease Business

  Market Position

    Vendor Services establishes customized financing programs for the end-user
customers of equipment vendors and select financial intermediaries that focus
on end-user customers who meet Vendor Services's general customer profiles. The
equipment vendor segment has been the primary focus of Vendor Services's
activities. In total, as of [      ,] Vendor Services had in its portfolio a
total of [    ] individual end-user customers with active accounts. Vendor
Services attempts to maintain geographical diversity and a broad cross-section
of commercial account types in its lease portfolio.

  Equipment Vendors

    The primary sales focus of Vendor Services is on providing point-of-sale
financing for the customers of equipment vendors, including equipment
manufacturers, dealers and distributors that sell their products regionally or
nationally. While Vendor Services primarily finances office equipment such as
copy machines, fax machines, personal computers and related peripherals, office
furniture and telephone systems, its vendor base also consists of sellers of
commercial laundry equipment, automotive diagnostic equipment and health-care
related products.

  Financial Intermediaries

    With respect to financial intermediaries, Vendor Services focuses its
activities on those that have industry recognition, proven track records in
generating new business through end-user contracts or through low-end equipment
dealers and a customer base consistent with Vendor Services's general customer
profiles. Each lease acquired from financial

                                       18
intermediaries is individually approved by Vendor Services using Vendor
Services' own credit underwriting criteria.

Credit Underwriting Standards

    Vendor Services has established policies, controls, systems and procedures
designed to manage and limit credit risk. These policies, controls, systems and
procedures are subject to periodic review by management.

    Vendor Services seeks to minimize credit risk through diversification of
the portfolio by customer, industry segment, equipment type, geography and
transaction maturity. Vendor Services's financing activities are spread across
a wide range of equipment types, including general equipment, office equipment,
information technology and light commercial equipment, with end-users located
throughout the United States.

    Underwriting procedures are divided into three main categories: Equipment
Dealers and Manufacturers, Financial Intermediaries and Lessees. Listed below
is an overview of each underwriting process.

  Equipment Dealers and Manufacturers

    Vendor Services requires that all leased equipment be sold by authorized
sellers that have sufficient experience with each brand they sell. Credit
requirements vary depending on the degree to which Vendor Services relies on
the dealer or manufacturer to support and service the equipment.

  Financial Intermediaries

    Financial intermediaries are required to have well-established histories
and conform to Vendor Services's approved equipment Dealer/Manufacturers
business line. Although standard industry representations and warranties are
required, Vendor Services's credit decision will not depend on an financial
intermediary's ability to honor these obligations.

  Lessees

    Vendor Services's underwriting standards are intended to evaluate a
prospective customer's credit standing and repayment ability. Credit decisions
are based on the credit characteristics of the applicant, loss experience with
comparable customers, the amount, terms and conditions of the proposed
transaction and the type of equipment to be leased or financed. Vendor Services
uses a proprietary automated credit scoring system, which is a statistically
based scoring system that quantifies information obtained from customers'
credit applications and credit reports.

Documentation

    Prior to funding a leasing and financing transaction, a complete
documentation package must be completed. Generally, such a package includes a
credit application, signed

                                       19
lease/installment sale or financing agreement, vendor invoice, initial
lease/advance payment, proof of insurance (where relevant), delivery and
acceptance acknowledgments and appropriate UCC financing statements. UCC
filings are generally required if the underlying equipment cost is over
$25,000.

Collections

    Invoices are generated 21 days prior to the due date with a 10-day grace
period before late charges accrue. Identified payments are electronically
posted according to an established hierarchy.

    The collection processes begin after 15 days with an automatic late notice.
Collection calls are placed between 15 and 30 days after the due date. A
contract is classified as delinquent when it reaches 31 days past due.
Automated "work to be done screens" are updated daily, allowing individual
collectors to customize their follow-up procedures. Management approval is
required for contract rewrites or extensions.

Charge-off Policy

    Vendor Services works closely with vendors to manage delinquencies by
maintaining and closely monitoring non-accrual and write-off policies. Vendor
Services requires that accounts 90-plus days past due (or less, if in the
judgment of the collection manager the account is impaired) are deemed "non-
earning" and are placed on non-accrual status. Non-accrual accounts are
assigned to the legal administration department. This department is responsible
for ensuring collection costs are reasonable in relation to exposure and
ability to collect from a lessee or guarantor, and for negotiating and
processing settlements and write-offs within authorized levels. A write-off is
recommended by the legal administration department if it has been determined
that the lease is uncollectible even through litigation. A legal administrator
may refer a delinquent account to a pre-approved collection agency or to an
attorney, based upon dollar amount and the likelihood of collection.

    Before an account is written-off or settled, its disposition must be
approved at a level of management commensurate with the size of the account.
Similarly, re-writes and extensions must be approved at a level of management
commensurate with the size of the account.

Portfolio Monitoring

  Portfolio Performance Tracking

    Vendor Services uses a number of tools to monitor portfolio performance.
Monthly vendor performance reports are prepared for all active accounts,
indicating the dollar amount of delinquent accounts, the percentage of accounts
delinquent, the dollar amount of accounts on non-accrual status, the percentage
of accounts on non-accrual status and the dollar amount of any accounts written
off. Accounts that fall outside standard Vendor Services guidelines are subject
to further analysis.

                                       20
Each vendor relationship with a portfolio balance in excess of $1,000,000
is given an annual in-depth review covering portfolio performance, an analysis
of management, the quality of the business sent to Vendor Services and the
financial condition of the vendor. Any vendors whose portfolio performance
falls outside the standard guidelines are assigned to a more senior analyst or
manager for further review.

  Ongoing Credit Review

    In addition to the initial credit review, Vendor Services conducts ongoing
credit review procedures to identify at an early stage those customers who may
be experiencing financial difficulty. These customers are monitored by credit
personnel, who periodically summarize for the credit committee the possible
remedial actions, what portion, if any, of total credit exposures should be
written off, and whether a specific allocation of Vendor Services's loss
reserves is appropriate.

    In establishing allowances for credit losses, Vendor Services' management
reviews, among other things, the maturity of Vendor Services' portfolio, the
status of all non-performing leases and receivables, prior collection
experience and Vendor Services' overall exposure and changes in credit risk.

Year 2000 Compliance

    Many existing computer programs had been designed and developed to use only
two digits to identify a year in the date field. If not corrected, these
computer programs could cause system failures in the year 2000, with possible
adverse effects on Vendor Services' operations. In 1997, Vendor Services
initiated a comprehensive program designed to ensure that its computer programs
function properly in the year 2000. A number of Vendor Services' employees
(including several officers), as well as external consultants and contract
programmers, are working on various year-2000 projects.

    Vendor Services also has been working with vendors and other external
business relations to help avoid year-2000 problems related to the software or
services they provide to Vendor Services. Under the program, Vendor Services is
analyzing its application systems, operating systems, hardware, networks,
electronic data interfaces and infrastructure devices (such as facsimile
machines and telephone systems).

    Vendor Services' year-2000 projects are currently on schedule. It is
conducting its year-2000 projects in three phases:

    (1) an audit and assessment phase, designed to identify year-2000
  issues;

    (2) a modification phase, designed to correct year-2000 issues; and

    (3) a testing phase, designed to test the modifications after they have
  been installed.

Vendor Services has completed the audit and assessment phase for all critical
systems. It expects to substantially complete the second phase of its program
by the end of the second quarter of 1999. The testing phase of its program will
be conducted throughout 1999. Vendor Services has provided for significant
contingency time in order to complete any additional modifications before
December 31, 1999.

                                       21
THE LEASES

Description of the Leases

  General

    Substantially all of the Leases are commercial leases rather than consumer
leases. The following description of the Leases generally describes the
material terms of the Leases to be included in the Lease Pool, although an
immaterial number of Leases may differ in one or more provisions from the
following description.

    Vendor Services offers a variety of lease and financing plans based on

  .   the type of equipment sold by the vendor,

  .   the average transaction size,

  .   the vendor's monthly lease volume,

  .   the general credit characteristics of the vendor's end-user customers,
      and

  .   the end-of-lease purchase option.

    The Leases include both true leases and leases intended for security. Under
a true lease the lessor bears the risk of ownership and takes any federal tax
benefits associated with the lease, and no title is conferred upon the lessee.
The lessee under a true lease has the right to the temporary use of equipment
for a term shorter than the economic life of the equipment in exchange for
payments at scheduled intervals during the lease term and the lessor retains a
significant "residual" economic interest in the leased equipment. End of lease
options for true leases include purchase of the equipment at fair market value
or renewal of the lease at fair market value. Under leases intended for
security, the lessor in effect finances the "purchase" of the leased assets by
the lessee and retains a security interest in the leased assets. The lessee
retains the leased property for substantially all its economic life and the
lessor retains no significant residual interest. These leases are considered
conditional sales type leases for federal tax purposes, and, accordingly, the
lessor may not claim any federal tax benefits of ownership of the leased
equipment. End of lease options for such leases depend on the terms of the
related Lease, although generally these terms provide for purchase of the
equipment at a prestated price. The inclusion of true leases in the Lease Pool
will have no income tax impact on Noteholders since the Notes are treated as
debt for income tax purposes. See "Federal Income Tax Consequences." However,
true leases are treated differently under the Bankruptcy Code from leases
intended for security. See "Risk Factors--If Vendor Services become insolvent,
there may be delays or reductions in distributions to holders of Notes" and
"Certain Legal Aspects of the Leases--Insolvency Matters" for a discussion of
these differences.

  Lease Forms

    The Leases are generally in one of two forms: (a) a master lease agreement
containing all of the general terms and conditions of the lease transaction or
transactions, with schedules setting forth the specific terms of each lease
transaction with that particular obligor (a "Master Form Lease") or (b) a
specific lease agreement form containing all of the terms

                                       22
and conditions of the lease transaction (a "Specific Lease Form"). In some
cases, the Lease may be written on another form which was created by Vendor
Services, by a customer or by a financial intermediary.

  Payments

    All of the Leases require that the obligor make periodic payments on a
monthly basis. The payments under all of the Leases are required to be made in
United States dollars and are fixed and specified payments, rather than
payments which are tied to a formula or are determined by a floating rate.
Payments under the Leases are ordinarily payable in advance, although a small
percentage provide for payments in arrears. Many Leases also require security
deposits which are held until all contractual obligations are met.

  Expenses Relating to Equipment

    The Leases require the obligors to assume the responsibility for payment of
all expenses of the related Equipment including (without limitation) any
expenses in connection with the maintenance and repair of the related
Equipment, the payment of any and all premiums for casualty and liability
insurance and the payment of all taxes relating to the Equipment.

  Insurance; Repair and Replacement

    The Leases (except for a small number of Leases which, in relation to the
Initial Pool Principal Balance, is not material) require the obligors to
maintain liability insurance which must name the lessor as additional insured.
Each Lease requires the obligor to procure property insurance against the loss,
theft or destruction of, or damage to, the Equipment for its full replacement
value, naming the lessor (or lender) as loss payee. This requirement is, from
time to time, waived by the originator for a small number of transactions and,
for some Leases, the obligor is permitted to self-insure the Equipment under
the obligor's already existing self-insurance program.

    For most transactions involving Equipment with a cost of $200,000 or less,
the obligor is provided with written information concerning its property
insurance obligations under the Lease and the originator's own property
insurance coverage that will be provided at the expense of the obligor if the
obligor does not provide the originator with satisfactory evidence of its own
insurance coverage. The obligor is given a specified time period in which to
provide such evidence. Proper evidence of coverage is verified independently
and tracked by a third party tracking company and licensed broker. If the
originator provides the insurance coverage, the obligor is charged a monthly
fee covering the insurance charges and other related administrative charges.
The obligor has the ability to "opt out" of the program by providing evidence
of its own coverage, at which time such monthly charges cease.

    For transactions involving Equipment with a cost of more than $200,000,
insurance coverage generally is verified and traced by the respective
originator, and the failure to maintain such insurance constitutes an event of
default under the applicable Lease. Generally, either pursuant to the Specific
Lease Form or the Master Form Lease, the obligor also agrees to indemnify the
originator for all liability and expenses arising from the use, condition or
ownership of the Equipment.

                                       23
Under each Lease, if the Equipment is damaged or destroyed, the obligor is
required

  .   to repair such Equipment,

  .   to make a termination payment to the lessor in an amount not less than
      the Required Payoff Amount, or

  .   in some cases, to replace such damaged or destroyed Equipment with
      other equipment of comparable use and value.

Under the Contribution and Servicing Agreement, the Servicer is permitted (in
the case of the destruction of the Equipment related to a particular Lease)
either to allow the obligor to replace such Equipment (provided that the
replacement equipment is, in the judgment of the Servicer, of comparable use
and at least equivalent value to the value of the Equipment which was
destroyed) or to accept the termination payment referred to above.

  Assignment of Leases

    Most of the Leases permit the assignment thereof by the lessor or secured
party without the consent of the obligor. A small number of Leases require
notification of the assignment to, or the consent of, the obligor.

    The Leases do not permit the assignment thereof (or the Equipment related
thereto) by the obligor without the prior consent of the lessor or secured
party, other than Leases which:

      (1) may permit assignments to a parent, subsidiary or affiliate,

      (2) permit the assignment to a third party, provided the Obligor
  remains liable under the Lease or

      (3) permit assignment to a third party with a credit standing
  determined by Vendor Services in accordance with its underwriting policy
  and practice at the time for an equivalent contract type, term and amount
  equal to or better than the original obligor.

    Under the Contribution and Servicing Agreement, the Servicer may permit an
assignment of a particular Lease from an obligor to a third party only if the
Servicer utilizing the current underwriting criteria for its contract
origination activities generally determines that such third party is of
sufficient credit quality that the Servicer would permit such third party to
become an obligor with respect to a Lease originated by the Servicer
generally.

  Hell-or-High-Water Leases

    The Leases are "hell-or-high-water" contracts which require any payments
thereunder to be made regardless of the condition or suitability of the
related Equipment and notwithstanding any defense, set-off or counterclaim
that the obligor may have against the lessor.

  Events of Default and Remedies

    Events of default under the Leases generally include the failure to pay
all amounts required by the Lease when due, the failure of the obligor to
perform its agreements and covenants under the applicable Lease, material
misrepresentations made by the obligor, the

                                      24
bankruptcy or insolvency of the obligor or the appointment of a receiver for
the obligor and, in some cases, default by the obligor under other contracts or
agreements. Some of these default provisions are subject to notice provisions
and cure periods. Remedies available to the lessor or secured party upon the
occurrence of an event of default by the obligor include the right to cancel or
terminate the Lease, to recover possession of the related Equipment, and to
receive an amount intended to make the lessor or secured party (as the case may
be) whole plus costs and expenses (including legal fees) incurred by the lessor
or secured party as a result of such default. Notwithstanding such events of
default and remedies, under the Contribution and Servicing Agreement, the
Servicer is permitted to take such actions, with respect to delinquent and
defaulted Leases, as a reasonably prudent creditor would do under similar
circumstances. See "Description of the Contribution and Servicing Agreement--
Servicing." Vendor Services may occasionally provide payment extensions
(generally of three months or less, although longer extensions are occasionally
granted) to customers experiencing delays in payment due to cash flow shortages
or other reasons. However, it is not intended that extensions be used to
provide a temporary solution for a delinquent account. Rather, extensions are
intended to be used when, in the judgment of the relevant credit authority, it
will permit the permanent resolution of the delinquency.

  Prepayments and Early Termination

    None of the Leases permit the prepayment or early termination of the Lease
(except for a de minimis number of Leases which allow for a prepayment or early
termination upon payment of an amount which is not less than the Required
Payoff Amount). Nevertheless, the Servicer is permitted under the Contribution
and Servicing Agreement to accept prepayments of any of the Leases, but only if
the amount paid by or on behalf of the obligor (or, in the case of a partial
prepayment, the sum of such amount and the remaining Principal Balance of the
Lease after application of such amount) is at least equal to the Required
Payoff Amount for such Lease.

  Disclaimer of Warranties

    The Leases contain provisions whereby the lessor (or Vendor Services, as
assignee of the lessor) disclaims all warranties with respect to the Equipment
and, in the majority of cases, the lessor assigns the manufacturer's warranties
to the obligor for the term of the Lease. Under the Leases, the obligor
"accepts" the Equipment under the applicable Lease following delivery and an
opportunity to inspect the related Equipment.

Representations and Warranties Made by Vendor Services

    Under the Transfer Agreement, Vendor Services will make the following
representations and warranties regarding each lease (and the related Equipment)
as of the Initial Cut-Off Date, and regarding each substitute lease as of the
applicable Cut-Off Date:

    (A) Each lease

         (1) constitutes a valid, binding and enforceable payment
     obligation of the Obligor in accordance with its terms, except as may
     be limited by applicable bankruptcy, insolvency or other similar laws
     affecting the enforceability of creditors' rights generally and the
     availability of equitable remedies,

                                       25
(2) has been duly and properly sold, assigned and conveyed by
     Vendor Services under the Transfer Agreement to the SPC and has been
     duly and properly transferred and conveyed by the SPC to the Issuer
     pursuant to the Contribution and Servicing Agreement,

         (3) was originated by Vendor Services in the ordinary course of
     its business, or in the case of any Lease purchased by Vendor Services
     was acquired by Vendor Services for proper consideration and was
     validly assigned to Vendor Services by the originator of such Lease,
     and

         (4) contains customary and enforceable provisions adequate to
     enable realization against the Obligor and/or the related Equipment
     although no representation or warranty is made with respect to the
     perfection or priority of any security interest in such related
     Equipment;

    (B) No selection procedures adverse to the Noteholders were utilized in
  selecting the Leases from those leases owned by Vendor Services on the
  Cut-Off Date;

    (C) All requirements of applicable Federal, state and local laws, and
  regulations thereunder, in respect of all of the Leases, have been
  complied with in all material respects;

    (D) There is no known default, breach, violation or event permitting
  cancellation or termination of the Lease by the lessor under the terms of
  any Lease (other than Scheduled Payment delinquencies (in excess of 10% of
  the Scheduled Payment due) of not more than 59 days), and (except for
  payment extensions and waivers of Administrative Fees in accordance with
  Vendor Services's servicing and collection policies and procedures) there
  has been no waiver of any of the foregoing; and as of the Cut-Off Date, no
  related Equipment had been repossessed;

    (E) Immediately prior to the sale, assignment and conveyance of each
  Lease by Vendor Services to the SPC, Vendor Services had good title to
  such Lease and Vendor Services' interest in the related Equipment (subject
  to the terms of such Lease) and was the sole owner thereof, free of any
  lien; and immediately prior to the transfer and conveyance of the Leases
  by the SPC to the Issuer, the SPC had good title to such Leases and such
  interest in the related Equipment and was the sole owner thereof, free of
  any lien (other than the rights of the Obligor under the related Lease);

    (F) No person has a participation in or other right to receive Scheduled
  Payments under any Lease, and neither the SPC nor Vendor Services has
  taken any action to convey any right to any person that would result in
  such person having a right to Scheduled Payments received with respect to
  any Lease;

    (G) Each Lease was originated by Vendor Services or acquired by Vendor
  Services and was sold and assigned by Vendor Services to the SPC without
  any fraud or misrepresentation on the part of Vendor Services;

    (H) Each Obligor

         (1) is located in the United States, and

                                       26
(2) is not (a) the United States of America or any state or local
     government or any agency, department, subdivision, or instrumentality
     thereof except for Leases representing no more than 1% of the Initial
     Pool Principal Balance or (b) Vendor Services or an affiliate thereof;

    (I) The sale, transfer and assignment of such Lease and Vendor Services'
  interest in the related Equipment to the SPC under the Transfer Agreement,
  and the transfer and conveyance of such Lease from, and the grant of
  rights to the related Residual Realizations by, the SPC to the Issuer
  under the Contribution and Servicing Agreement, are not unlawful, void or
  voidable under the laws of the jurisdiction applicable to such Lease;

    (J) All filings and other actions required to be made, taken or
  performed by any person in any jurisdiction to give the Issuer a first
  priority perfected lien or ownership interest in the Leases and a first
  priority perfected security interest in Vendor Services' interest in the
  Equipment have been made, taken or performed;

    (K) There exists a Lease File pertaining to each Lease, and such Lease
  File contains the Lease or a facsimile copy thereof;

    (L) There is only one original executed copy of each Lease;

    (M) The Leases constitute chattel paper within the meaning of the UCC as
  in effect in the States of Minnesota and Delaware (other than those Leases
  in which the lessor is financing exclusively the Obligor's software
  license or maintenance contract for Equipment, which Leases, in proportion
  to the Initial Pool Principal Balance, are not material);

    (N) Each Lease was entered into by an Obligor who, at the Cut-Off Date,
  had not been identified on the records of Vendor Services as being the
  subject of a current bankruptcy proceeding;

    (O) The computer tape containing information with respect to the Leases
  that was made available by Vendor Services to the Trustee on the Closing
  Date and was used to select the Leases was complete and accurate in all
  material respects as of the Cut-Off Date and includes a description of the
  same Leases that are described in the Schedule of Leases to the
  Contribution and Servicing Agreement;

    (P) By the Closing Date, the portions of the electronic master record of
  Vendor Services relating to the Leases will have been clearly and
  unambiguously marked to show that the Leases constitute part of the Trust
  Assets and are owned by the Issuer in accordance with the terms of the
  Contribution and Servicing Agreement;

    (Q) No Lease has a Scheduled Payment delinquency in excess of 10% of the
  Scheduled Payment due of more than 59 days past due as of the Cut-Off
  Date;

    (R) Each Lease may be sold, assigned and transferred by Vendor Services
  to the SPC, and may be assigned and transferred by the SPC to the Issuer,
  without the consent of, or prior approval from, or any notification to,
  the applicable Obligor, other than (1) certain Leases (which, in
  proportion to the aggregate of all of the Leases, are not material) that
  require notification of the assignment to the Obligor, which notification
  will be given by the Servicer not later than 10 days following the Closing
  Date, and

                                       27
(2) Leases (which, in proportion to the aggregate of all of the Leases,
  are not material) that require the consent of the Obligor, which consent
  will be obtained by the Servicer not later than 10 days following the
  Closing Date;

    (S) Each Lease prohibits the sale, assignment or transfer of the
  Obligor's interest therein, the assumption of the Lease by another person
  in a manner that would release the Obligor thereof from the Obligor's
  obligation, or any sale, assignment or transfer of the related Equipment,
  without the prior consent of the lessor, other than Leases which may (1)
  permit assignment to a subsidiary, corporate parent or other affiliate,
  (2) permit the assignment to a third party, provided the Obligor remains
  liable under the Lease, or (3) permit assignment to a third party with a
  credit standing (determined by Vendor Services in accordance with its
  underwriting policy and practice at the time for an equivalent contract
  type, term and amount) equal to or better than the original Obligor;

    (T) The Obligor under each Lease is required to make payments thereunder
  (1) in United States dollars, and (2) in fixed amounts and on fixed and
  predetermined dates;

    (U) Each Lease requires the Obligor to assume responsibility for payment
  of all expenses in connection with the maintenance and repair of the
  related Equipment, the payment of all premiums for insurance of such
  Equipment and the payment of all taxes (including sales and property
  taxes) relating to such Equipment;

    (V) Each Lease requires the Obligor thereunder to make all Scheduled
  Payments thereon under all circumstances and regardless of the condition
  or suitability of the related Equipment and notwithstanding any defense,
  set-off or counterclaim that the Obligor may have against the
  manufacturer, lessor or lender (as the case may be);

    (W) Under each Lease, if the Equipment is damaged or destroyed, the
  Obligor is required either (1) to repair such Equipment, (2) to make a
  termination payment to the lessor in an amount not less than the Required
  Payoff Amount, or (3) in some cases, to replace such damaged or destroyed
  Equipment with other equipment of comparable use and value;

    (X) None of the Leases permit the Obligor to terminate the Lease prior
  to the latest Stated Maturity Date or to otherwise prepay the amounts due
  and payable thereunder, except for a de minimis number of Leases which
  allow for an early termination or prepayment upon payment of an amount
  which is not less than the Required Payoff Amount;

    (Y) It is not a precondition to the valid transfer or assignment of
  Vendor Services' interest in any of the Equipment related to any Lease
  that title to such Equipment be transferred on the records of any
  governmental or quasi-governmental agency, body or authority;

    (Z) The information with respect to the Leases listed on the Schedule of
  Leases attached to the Contribution and Servicing Agreement is true,
  correct and complete in all material respects;

    (AA) No provisions of any Lease have been waived, altered or modified in
  any material respect, except as indicated in the Lease File;

                                       28
(BB) No Lease is a "consumer lease" as defined in Article 2A of the
  Uniform Commercial Code, except for a de minimis number of Leases;

    (CC) To the best of Vendor Services' knowledge, each Obligor has
  accepted the related Equipment and has had reasonable opportunity to
  inspect and test such Equipment; and

    (DD) The Obligor has made at least one payment under the Lease.

    The above-described representations and warranties of Vendor Services will
survive the transfer and assignment of the related Leases and other Trust
Assets to the Issuer.

    In the event of a breach of any such representation or warranty with
respect to a Lease that materially and adversely affects the value of such
Lease (any such breach being a "Repurchase Event"), Vendor Services, unless it
cures the breach by the end of the second Collection Period after the date on
which Vendor Services becomes aware of or receives written notice from the
Trustee or the Servicer of such breach, will be obligated to repurchase (or
substitute another lease for) the Lease and the related Equipment. Any such
repurchase shall be made on the Deposit Date immediately following the end of
such second Collection Period at a price equal to the Required Payoff Amount
applicable to such Lease plus the Book Value of the related Equipment. The
"Required Payoff Amount," with respect to any Collection Period for any Lease,
is equal to the sum of: (1) the Scheduled Payment due in such Collection
Period, together with any Scheduled Payments due in prior Collection Periods
and not yet received, plus (2) the Principal Balance of such Lease as of the
last day of such Collection Period (after taking into account the Scheduled
Payment due in such Collection Period). This repurchase or substitution
obligation may be enforced by the Trustee on behalf of the holders of the
Notes, and will constitute the sole remedy available to the Noteholders against
Vendor Services for any such uncured breach, except that pursuant to the
Transfer Agreement, Vendor Services will indemnify the Trustee, the Issuer and
the Noteholders against losses, damages, liabilities and claims which may be
asserted against any of them as a result of third-party claims arising out of
the facts giving rise to such breach.

    Upon the repurchase or substitution by Vendor Services of a Lease and any
related Equipment, such Lease and related Equipment will be released to Vendor
Services.

Substitution

    Vendor Services will have the option to substitute one or more Leases
having similar characteristics (each, a "Substitute Lease") for

  .   Liquidated Leases,

  .   Leases that have been prepaid in full, whether pursuant to their terms
      or with the Servicer's consent ("Prepaid Leases"),

  .   Leases subject to repurchase as a result of a breach or representation
      or warranty ("Warranty Leases"), and

                                       29
.   Leases following a material modification or adjustment to the terms of
      such Lease ("Adjusted Leases").

The aggregate Principal Balance of the Liquidated Leases, Warranty Leases or
Adjusted Leases for which Vendor Services may substitute Substitute Leases
cannot exceed 10% of the Initial Pool Principal Balance.

    In no event will the Lease Pool Principal Balance after the inclusion of
the Substitute Leases be less than the Lease Pool Principal Balance prior to
such substitution. In addition, after giving effect to such substitutions, the
aggregate Book Value of the Equipment subject to the Leases cannot be
materially less than the aggregate Book Value of the Equipment subject to the
Leases immediately prior to such substitutions. Additionally, the final payment
on each Substitute Lease must be on or prior to         or, to the extent the
final payment on such Lease is due subsequent to         only scheduled
payments due on or prior to such date may be included in calculating the
Principal Balance of such Lease.

Certain Statistics Relating to the Cut-Off Date Pool

  General

    Vendor Services has prepared certain statistics relating to the Lease Pool
as of the Initial Cut-Off Date (the "Cut-Off Date Pool"). All statistical
information concerning the Leases set forth herein, insofar as it involves
calculations of the Principal Balances of the Leases, are made using the
Statistical Discount Rate of    %.

    The aggregate Principal Balance of the Leases calculated using the
Statistical Discount Rate, and not including delinquent amounts (the
"Statistical Discounted Present Value of the Leases") is equal to $      . The
aggregate Principal Balance of each Lease (the "Lease Pool Principal Balance")
as of the Initial Cut-Off Date (the "Initial Pool Principal Balance") and as of
each Payment Date will be calculated at the "Discount Rate" of    %.

    The total number of Leases in the Cut-Off Date Pool is    . The average
Principal Balance of the Leases, as of the Initial Cut-Off Date, was
approximately $    .

                      Composition of the Cut-Off Date Pool
Average
           Statistical Discounted    Weighted Average      Weighted Average       Principal
 Number     Present Value of the      Original Term         Remaining Term         Balance
of Leases          Leases                (Range)                (Range)            (Range)
---------  ---------------------- ---------------------- ---------------------  -------------
$                                               months            $
                                  (  months to   months) (  months to   months) ($   to $    )
Geographical Diversity

    The following table shows the geographical diversity of the Cut-Off Date
Pool, by indicating the number of Leases, the aggregate Statistical Discounted
Present Value of the Leases and the percentage (by number of Leases and by
aggregate Statistical Discounted

                                       30
Present Value) of such Leases relative to all of the Leases in the Cut-Off Date
Pool by reference to the State in which the Obligors on such Leases are
(according to the Servicer's records) located:
Aggregate         % of Statistical
                                                             Statistical Discounted Discounted Present
                                           % of Total Number     Present Value         Value of the
State                     Number of Leases     of Leases         of the Leases            Leases
-----                     ---------------- ----------------- ---------------------- ------------------
Alabama.................          358             1.04%         $  2,250,707.40             0.67%
Alaska..................           63             0.18               589,990.66             0.18
Arizona.................          718             2.10             6,581,977.29             1.95
Arkansas................          140             0.41               977,658.86             0.29
California..............        3,431            10.01            38,831,372.58            11.52
Colorado................          744             2.17             5,674,469.43             1.68
Connecticut.............          617             1.80             6,731,665.65             2.00
Delaware................          165             0.48             1,425,931.71             0.42
District of Columbia....          106             0.31             1,224,097.75             0.36
Florida.................        3,036             8.86            27,878,054.61             8.27
Georgia.................          907             2.65             7,081,389.15             2.10
Hawaii..................           83             0.24               475,272.38             0.14
Idaho...................           73             0.21               574,894.88             0.17
Illinois................        1,225             3.57            11,625,858.43             3.45
Indiana.................          684             2.00             5,653,392.98             1.68
Iowa....................          316             0.92             1,696,204.05             0.50
Kansas..................          292             0.85             2,868,215.27             0.85
Kentucky................          296             0.86             2,051,212.96             0.61
Louisiana...............          412             1.20             2,783,370.69             0.83
Maine...................          150             0.44               984,550.98             0.29
Maryland................          553             1.61             5,077,069.21             1.51
Massachusetts...........        1,079             3.15            10,576,022.53             3.14
Michigan................          786             2.29             7,819,594.21             2.32
Minnesota...............        1,029             3.00             9,976,461.01             2.96
Mississippi.............          204             0.60             1,495,196.65             0.44
Missouri................          655             1.91             6,915,099.85             2.05
Montana.................           90             0.26               379,305.18             0.11
Nebraska................          109             0.32               564,979.16             0.17
Nevada..................          426             1.24             5,038,238.37             1.50
New Hampshire...........          226             0.66             2,067,469.19             0.61
New Jersey..............        1,793             5.23            20,631,042.47             6.12
New Mexico..............          148             0.43             1,011,001.63             0.30
New York................        3,018             8.81            34,790,999.37            10.32
North Carolina..........        1,507             4.40            16,331,263.15             4.85
North Dakota............           55             0.16               215,712.48             0.06
Ohio....................        1,128             3.29             9,462,524.46             2.81
Oklahoma................          325             0.95             3,316,676.21             0.98
Oregon..................          326             0.95             3,109,953.30             0.92
Pennsylvania............        1,583             4.62            16,164,407.65             4.80
Rhode Island............          142             0.41             2,198,314.14             0.65
South Carolina..........          493             1.44             3,758,635.67             1.12
South Dakota............           61             0.18               352,451.70             0.10
Tennessee...............          430             1.25             4,298,727.81             1.28
Texas...................        2,078             6.06            24,783,198.87             7.35
Utah....................          170             0.50             1,758,367.80             0.52
Vermont.................           79             0.23               339,823.47             0.10
Virginia................          906             2.64             9,061,253.25             2.69
Washington..............          518             1.51             4,000,729.06             1.19
West Virginia...........          109             0.32               574,012.04             0.17
Wisconsin...............          359             1.05             2,673,972.64             0.79
Wyoming.................           66             0.19               267,638.90             0.08
                               ------           ------          ---------------           ------
 Total..................       34,267           100.00%         $336,970,429.14           100.00%
                               ======           ======          ===============           ======
31
Adverse economic conditions in states where a substantial number of
Obligors are located, such as New York, California and Florida, may adversely
affect such Obligors' ability to make payments on the related Leases, and the
Noteholders could suffer a loss on their investment as a result.

  Payment Status

    The following table shows the payment status of the Cut-Off Date Pool, by
indicating the number of Leases, the aggregate Statistical Discounted Present
Value of such Leases and the percentage (by number of Leases and by aggregate
Statistical Discounted Present Value) of such Leases relative to all of the
Leases in the Cut-Off Date Pool by reference to whether such Leases were
current as of the Initial Cut-Off Date or were 31-60 days delinquent. For these
purposes, a "delinquency" means that the Obligor on the Lease has failed to
make a required Scheduled Payment in an amount equal to at least 90% of the
required Scheduled Payment within 30 days of the due date.
Aggregate
                                                     Statistical
                                                     Discounted  % of Statistical
                                          % of Total   Present      Discounted
                                          Number of   Value of   Present Value of
Payment Status           Number of Leases   Leases   the Leases     the Leases
--------------           ---------------- ---------- ----------- ----------------
Current.................                          %    $                    %
31-60 Days Delinquent...
                               ---          ------     -------        ------
  Total.................                    100.00%    $              100.00%
                               ===          ======     =======        ======
32
Leases by Equipment Type

    The following table shows the type of Equipment securing or otherwise
related to the Leases, by the number of Leases, the aggregate Statistical
Discounted Present Value of such Leases, and the percentage (by number of
Leases and by aggregate Statistical Discounted Present Value) of such Leases
relative to all of the Leases:
Aggregate
                                                       Statistical   % of Statistical
                                          % of Total   Discounted       Discounted
                                          Number of   Present Value  Present Value of
Type of Equipment        Number of Leases   Leases    of the Leases     the Leases
-----------------        ---------------- ---------- --------------- ----------------
Data Processing
 Equipment..............      19,804         57.79%  $134,460,878.54       39.90%
Office Machines.........       6,676         19.48     77,304,744.81       22.94
Telecommunications......       4,216         12.30     55,473,008.26       16.46
Auto Services...........       1,056          3.08     10,035,108.34        2.98
Healthcare Related......         342          1.00     10,123,907.02        3.00
Laundry & Cleaning......         472          1.38     12,036,671.59        3.57
Furniture...............         431          1.26      8,849,179.05        2.63
Machine Tool............         286          0.83      7,906,619.07        2.35
Other...................          22          0.06        509,139.64        0.15
Recreation..............         102          0.30      2,052,419.47        0.61
Secured Loans...........          44          0.13      4,390,863.06        1.30
Food & Lodging..........         217          0.63      2,984,691.57        0.89
Printing................         116          0.34      2,121,493.27        0.63
HVAC....................          87          0.25      1,138,820.97        0.34
Imaging.................         119          0.35      1,273,253.11        0.38
Construction............          31          0.09        667,299.16        0.20
Material Handling.......          47          0.14        655,516.41        0.19
Maintenance.............          21          0.06        249,529.58        0.07
Unclassified............         156          0.46      4,378,114.92        1.30
Waste Management........          17          0.05        269,423.75        0.08
Manufacturing...........           2          0.01         37,035.49        0.01
Transportation..........           3          0.01         52,712.05        0.02
                              ------        ------   ---------------      ------
  Total.................      34,267        100.00%  $336,970,429.14      100.00%
                              ======        ======   ===============      ======
33
Principal Balances

    The following table shows the distribution of the Cut-Off Date Pool by
Principal Balance by indicating the number of Leases which have a Principal
Balance within a defined range and the aggregate Statistical Discounted Present
Value of the Leases, and the percentage (by number of Leases and by aggregate
Statistical Discounted Present Value) of such Leases relative to all of the
Leases:
Aggregate
                                                       Statistical   % of Statistical
                                          % of Total   Discounted       Discounted
                                          Number of   Present Value  Present Value of
Principal Balance        Number of Leases   Leases    of the Leases     the Leases
-----------------        ---------------- ---------- --------------- ----------------
$      0.01 to
 $   10,000.00..........      26,020         75.93%   $98,738,005.52       29.30%
$ 10,000.01 to
 $   25,000.00..........       5,468         15.96     83,258,946.31       24.71
$ 25,000.01 to
 $   40,000.00..........       1,497          4.37     47,158,128.11       13.99
$ 40,000.01 to
 $   60,000.00..........         630          1.84     30,228,653.79        8.97
$ 60,000.01 to
 $   80,000.00..........         250          0.73     17,139,910.47        5.09
$ 80,000.01 to
 $  100,000.00..........         119          0.35     10,602,333.65        3.15
$100,000.01 to
 $  150,000.00..........         153          0.45     18,663,991.21        5.54
$150,000.01 to
 $  200,000.00..........          63          0.18     10,842,908.82        3.22
$200,000.01 to
 $  300,000.00..........          44          0.13     10,455,393.87        3.10
$300,000.01 to
 $  400,000.00..........          12          0.04      4,116,492.19        1.22
$400,000.01 to
 $  500,000.00..........           5          0.01      2,210,418.88        0.66
$500,000.01 to
 $1,000,000.00..........           6          0.02      3,555,246.33        1.06
                              ------        ------   ---------------      ------
  Total.................      34,267        100.00%  $336,970,429.14      100.00%
                              ======        ======   ===============      ======
Original Equipment Costs

    The following table shows the distribution of the Cut-Off Date Pool by
original equipment costs by indicating the number of Leases, the aggregate
Statistical Discounted Present Value of such Leases, and the percentage (by
number of Leases and by aggregate Statistical Discounted Present Value) of such
Leases relative to all of the Leases:
Aggregate      % of Statistical
                                           % of Total     Statistical        Discounted
                                           Number of  Discounted Present  Present Value of
Original Equipment Costs  Number of Leases   Leases   Value of the Leases    the Leases
------------------------  ---------------- ---------- ------------------- ----------------
$      0.01 to
 $   10,000.00..........       25,239         73.65%    $ 92,031,028.31         27.31%
$ 10,000.01 to
 $   25,000.00..........        5,923         17.28       82,837,707.24         24.58
$ 25,000.01 to
 $   40,000.00..........        1,582          4.62       45,733,630.17         13.57
$ 40,000.01 to
 $   60,000.00..........          796          2.32       34,841,690.43         10.34
$ 60,000.01 to
 $   80,000.00..........          266          0.78       16,882,396.85          5.01
$ 80,000.01 to
 $  100,000.00..........          139          0.41       11,273,809.34          3.35
$100,000.01 to
 $  150,000.00..........          171          0.50       19,344,670.90          5.74
$150,000.01 to
 $  200,000.00..........           72          0.21       11,576,721.43          3.44
$200,000.01 to
 $  300,000.00..........           53          0.15       11,720,586.47          3.48
$300,000.01 to
 $  400,000.00..........           12          0.04        3,927,245.28          1.17
$400,000.01 to
 $  500,000.00..........            6          0.02        2,301,502.73          0.68
$500,000.01 to
 $1,000,000.00..........            8          0.02        4,499,440.00          1.34
                               ------        ------     ---------------        ------
  Total.................       34,267        100.00%    $336,970,429.14        100.00%
                               ======        ======     ===============        ======
34
Remaining Terms of Leases

    The following table shows the remaining term of the Leases from the Initial
Cut-Off Date to the scheduled expiration date of such Leases, by indicating the
number of Leases, the aggregate Statistical Discounted Present Value of such
Leases, and the percentage (by number of Leases and by aggregate Statistical
Discounted Present Value) of such Leases relative to all of the Leases:
Aggregate
                                                         Statistical   % of Statistical
                                            % of Total   Discounted       Discounted
                                            Number of   Present Value  Present Value of
Remaining Terms of Leases  Number of Leases   Leases    of the Leases     the Leases
-------------------------  ---------------- ---------- --------------- ----------------
One Month to 12 Months...        1,030          3.01%    $2,999,357.17        0.89%
13 Months to 24 Months...        5,124         14.95     21,476,267.39        6.37
25 Months to 36 Months...       18,740         54.69    133,065,684.68       39.49
37 Months to 48 Months...        3,084          9.00     34,090,526.98       10.12
49 Months to 60 Months...        6,040         17.63    134,065,113.46       39.79
Over 60 Months...........          249          0.73     11,273,479.46        3.35
                                ------        ------   ---------------      ------
  Total..................       34,267        100.00%  $336,970,429.14      100.00%
                                ======        ======   ===============      ======
Original Terms of Leases

    The following table shows the original term of the Leases from the date of
origination to the scheduled expiration date of such leases, by indicating the
number of Leases, the aggregate Statistical Discounted Present Value of such
Leases, and the percentage (by number of Leases and by aggregate Statistical
Discounted Present Value) of such Leases relative to all of the Leases:
Aggregate
                                                        Statistical   % of Statistical
                                           % of Total   Discounted       Discounted
                                           Number of   Present Value  Present Value of
Original Terms of Leases  Number of Leases   Leases    of the Leases     the Leases
------------------------  ---------------- ---------- --------------- ----------------
One Month to 12 Months..          833          2.43%  $  2,445,207.48        0.73%
13 Months to 24 Months..        4,851         14.16     19,904,255.61        5.91
25 Months to 36 Months..       18,871         55.07    132,087,241.55       39.20
37 Months to 48 Months..        3,262          9.52     35,537,418.15       10.55
49 Months to 60 Months..        5,871         17.13    130,358,499.84       38.69
61 Months to 72 Months..          569          1.66     14,271,646.52        4.24
73 Months to 84 Months..           10          0.03      2,366,159.99        0.70
                               ------        ------   ---------------      ------
  Total.................       34,267        100.00%  $336,970,429.14      100.00%
                               ======        ======   ===============      ======
Leases by Purchase Options

    The following table shows the types of equipment purchase options related
to the Leases, by the number of Leases, the aggregate Statistical Discounted
Present Value of such Leases, and the percentage (by number of Leases and by
aggregate Statistical Present Value) of such Leases relative to all of the
Leases. The purchase option types listed below indicate Leases for which the
purchase price of the related Equipment at the scheduled lease termination date
is set at

      (1) $1.00 or another nominal amount ("Nominal Buyout"),

                                       35
(2) 10% or a similar fixed percentage of the original equipment cost
  ("Fixed Purchase Option"),

      (3) the fair market value of the Equipment at Lease termination, as
  determined pursuant to the Lease terms ("Fair Market Value") or

      (4) a predetermined amount which the Obligor is required to pay
  ("Guaranteed Purchase"):
Aggregate
                                                     Statistical
                                                     Discounted  % of Statistical
                                          % of Total   Present      Discounted
                                          Number of   Value of   Present Value of
Type                     Number of Leases   Leases   the Leases     the Leases
----                     ---------------- ---------- ----------- ----------------
Nominal Buyout..........                          %   $                     %
Fixed Purchase Option...
Fair Market Value.......
Guaranteed Purchase.....
                               ---          ------    --------        ------
  Totals................                    100.00%   $               100.00%
                               ===          ======    ========        ======
Certain Statistics Relating to Delinquencies and Defaults

  Delinquencies

    The following table sets forth statistics relating to delinquencies on
leases within Vendor Services' owned and managed portfolio of receivables
similar to the Leases as of December 31, 1996, December 31, 1997, December 31,
1998 and      , 1999. Vendor Services was acquired by Green Tree in November
1996, and current management accordingly cannot certify delinquency and default
experience for prior periods. However, current management does not believe that
Vendor Services' delinquency and default experience in prior periods was
substantially different from the experience presented here. For these purposes,
a "Delinquency" means that the obligor on the lease has failed to make a
required Scheduled Payment in an amount equal to at least 90% of the required
Scheduled Payment within 30 days of the due date. For these purposes, any
payment made by the obligor on a lease subsequent to the required payment date
is applied to the earliest payment which was unpaid. The following table is
based, where indicated, on the gross receivable balance of the leases, as it
appears on the accounting records of Vendor Services as of the date set forth
below and not solely the overdue payments.
Percentage of Gross Receivable
                                                 Balance of Leases Which Were
                                      Gross               Delinquent
                                    Receivable  -------------------------------
                                    Balance of  31 to 60 61 to 90 Over 90
   Date of Calculation                Leases      Days     Days    Days   Total
   -------------------             ------------ -------- -------- ------- -----
12/31/96....................... $618,075,465   2.20%    0.36%   0.13%  2.69%
   12/31/97....................... $735,621,630   2.07%    0.39%   0.15%  2.61%
   12/31/98....................... $893,014,108       %        %       %      %
    / /99......................... $                  %        %       %      %
Non-Accruals

    The following table sets forth statistics relating to Non-Accruals on
leases within Vendor Services' owned and managed portfolio of receivables
similar to the Leases as of December 31, 1996, December 31, 1997, December 31,
1998 and as of      , 1999. Vendor Services was acquired by Green Tree in
November 1996, and current management,

                                       36
accordingly, cannot certify non-accrual experience for prior periods. However,
current management does not believe that Vendor Services' non-accrual
experience in prior periods was substantially different from the experience
presented here. For these purposes, a "Non-Accrual" means that, as of the date
indicated, the obligor on the relevant lease had failed to make payments in an
amount at least equal to 90% of the required Scheduled Payment for at least 90
days beyond the date required (or less, if in the judgment of the collection
manager the account is impaired), or commenced a bankruptcy or insolvency
proceeding. The following table is based, where indicated, on the net
investment of the leases (gross of any allowance for losses) as it appears on
the records of Vendor Services as of the date specified below:
Percentage of
                                          Aggregate Net Aggregate Net Investment
                                          Investment of   of Leases Which Were
     Date of Calculation                     Leases          on Non-Accrual
     -------------------                  ------------- ------------------------
12/31/96............................ $558,040,000            3.42%
     12/31/97............................ $672,210,148            3.58%
     12/31/98............................ $                           %
      / /99.............................. $                           %
Losses and Recoveries

    The following table sets forth statistics relating to gross losses and
losses net of recoveries on defaulted leases within Vendor Services' owned and
managed portfolio of receivables similar to the Leases during the twelve-month
periods ending December 31, 1996 and December 31, 1997, December 31, 1998 and
during the period ending      , 1999. Vendor Services was acquired by Green
Tree in November 1996, and current management, accordingly, cannot certify loss
and recovery experience for prior periods. However, current management does not
believe that Vendor Services' loss and recovery experience in prior periods was
substantially different from the experience presented here. For these purposes,
"gross losses" means total losses before recoveries measured against the net
investment of the leases (gross of any allowance for losses), and "net losses"
means losses after recoveries measured against the net investment of the leases
(gross of any allowance for losses).
Aggregate
                                    Net      Gross Losses as a  Net Losses as a
                                 Investment  Percentage of Net Percentage of Net
   Date of Calculation           of Leases      Investment        Investment
   -------------------          ------------ ----------------- -----------------
12/31/96.................... $558,040,000       2.96%             1.83%
   12/31/97....................  672,210,148       2.40%             1.51%
   12/31/98....................                        %                 %
    / /99......................                        %                 %
Vendor Services' delinquency, non-accrual and net loss experience has
historically been affected by prevailing economic conditions, 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, non-accrual and net loss
experience on the Leases will be comparable to that set forth above.

                                       37
It has been Vendor Services' experience that collections from the obligors
constitute a significant portion of recoveries on defaulted equipment lease
receivables, in addition to the proceeds from liquidation of the related
equipment. The resale value of individual items of Equipment, which would be
collected by the Servicer in the event of a default under the related Lease,
will vary substantially, depending on such factors as the expected remaining
useful life of the Equipment at the time of the default and the obsolescence of
the Equipment, it is possible that the resale values for some Equipment would
be negligible or insufficient to justify repossession and resale. See "Risk
Factors--Residual realizations may be less than we expect, and will provide
only limited support for the Notes."

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE ISSUER

    As of the date of this Prospectus, the Issuer has had no operating history.
The net proceeds of the sale of the Notes will be employed to purchase the
Leases. See "Use of Proceeds." The Issuer is prohibited by its LLC Agreement
from engaging in business other than

  .   acquiring the Leases and rights to the Residual Realizations from the
      SPC,

  .   pledging the Leases and its rights to the Residual Realizations to the
      Trustee,

  .   executing and performing its obligations under the Contribution and
      Servicing Agreement and the Indenture, and

  .   engaging in other transactions, including entering into agreements,
      that are necessary, suitable or convenient to accomplish the foregoing
      or are incidental thereto or connected therewith.

                                       38
MANAGERS OF THE ISSUER

    The following table sets forth the managers of the Issuer and their ages
and positions as of the date of this Prospectus. Because the Issuer is
organized as a special purpose company and will be largely passive, it is
expected that the managers 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 the Servicer.
Name                             Age                Position
     ----                             --- --------------------------------------
Joel H. Gottesman............... 50  Manager and Chair of Board of Managers
     Phyllis A. Knight............... 37  Manager
Joel H. Gottesman was named to the Board of Managers of the Issuer in
November 1998. Mr. Gottesman has been Senior Vice President of Green Tree
Financial Corporation since September 1995. From 1983 to 1995, Mr. Gottesman
was an attorney at Briggs & Morgan, Professional Association, Minneapolis,
Minnesota.

    Phyllis A. Knight is Senior Vice President and Treasurer of Green Tree
Financial Corporation. She joined Green Tree in September 1994. Prior to
joining Green Tree, she was a Senior Manager at KPMG Peat Marwick.

    None of the above-listed managers of the Issuer will be compensated
directly by the Issuer nor with any funds or assets of the Issuer nor will any
such managers receive compensation in the capacities in which they act for the
Issuer.

    Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to managers and controlling persons of the Issuer pursuant to
its LLC Agreement, or otherwise, the Issuer has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Issuer of expenses incurred or paid by a manager, officer or
controlling person of the Issuer in the successful defense of any action, suit
or proceeding) is asserted by such manager or controlling person in connection
with the Notes, the Issuer 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 Securities Act and will be governed
by the final adjudication of such issue.

                                       39
WEIGHTED AVERAGE LIFE OF THE NOTES

    The following information is given solely to illustrate the effect of
prepayments on the Leases on the weighted average life of the Notes under the
assumptions stated below and is not a prediction of the prepayment rate that
might actually be experienced by the Leases.

    Weighted average life refers to the average amount of time from the date of
issuance of a security until each dollar of principal of such security will be
repaid to the investor. The weighted average life of the Notes will be
primarily a function of the rate at which payments are made on the Leases.
Payments on the Leases may be in the form of Scheduled Payments or prepayments
(including, for this purpose, liquidations due to default). See "Risk Factors--
Prepayment and Early Termination of Leases and Related Reinvestment Risks."

    The Constant Prepayment Rate prepayment model ("CPR") represents an assumed
constant rate of prepayment of Leases outstanding as of the beginning of each
month expressed as a per annum percentage. There can be no assurance that
Leases will experience prepayments at a constant prepayment rate or otherwise
in the manner assumed by the prepayment model. See "Risk Factors--Prepayment
and Early Termination of Leases and Related Reinvestment Risk."

    The weighted average lives in the following tables were created using the
Discount Rate, assuming that: (i) Scheduled Payments on the Leases are received
in a timely manner and prepayments are made at the percentages of the
prepayment model set forth in the table; (ii) with respect to the caption
"Weighted Average Life to Call" the SPC will exercise its right to purchase the
Leases on the Payment Date following the date on which the unpaid principal
balance of all of the outstanding Notes is less than 10% of the Initial Pool
Principal Balance, and with respect to the caption "Weighted Average Life to
Maturity," the SPC will not exercise that right at any time; (iii) payments are
made on the Notes on the 20th day of each month commencing         ,   ; (iv)
the Notes are issued on       , 1999; (v) the SPC does not substitute new
leases for Leases that are prepaid in full and (vi) there are no investment
earnings on funds in the Collection Account, Reserve Account or Residual
Account. On the Closing Date the Issuer will issue $      aggregate principal
amount of   % Class A-1 Notes, $     aggregate principal amount of   % Class A-
2 Notes, $     aggregate principal amount of   % Class A-3 Notes, $
aggregate principal amount of   % Class A-4 Notes, $     aggregate principal
amount of   % Class B Notes, and $     aggregate principal amount of   % Class
C Notes. No representation is made that these assumptions will be correct,
including the assumption that the Leases will not experience delinquencies or
losses.

                                       40
In making an investment decision with respect to the Notes, investors
should consider a variety of possible prepayment scenarios, including the
limited scenarios described in the tables below.
Percentage of the               Percentage of the
                           Initial Principal Balance       Initial Principal Balance
                                    of the                          of the
                                Class A-1 Notes                 Class A-2 Notes
                          ------------------------------  ------------------------------
                                      CPR                             CPR
                          ------------------------------  ------------------------------
      Payment Date          0%      7%     12%     18%      0%      7%     12%     18%
      ------------        ------  ------  ------  ------  ------  ------  ------  ------
Closing Date............  100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 20, 1999.......   91.99   90.10   88.67   86.85  100.00  100.00  100.00  100.00
December 20, 1999.......   83.95   80.27   77.51   74.01  100.00  100.00  100.00  100.00
January 20, 2000........   75.85   70.51   66.50   61.46  100.00  100.00  100.00  100.00
February 20, 2000.......   67.74   60.82   55.67   49.22  100.00  100.00  100.00  100.00
March 20, 2000..........   59.61   51.23   45.02   37.29  100.00  100.00  100.00  100.00
April 20, 2000..........   51.48   41.75   34.58   25.69  100.00  100.00  100.00  100.00
May 20, 2000............   43.36   32.38   24.33   14.41  100.00  100.00  100.00  100.00
June 20, 2000...........   35.25   23.13   14.28    3.43  100.00  100.00  100.00  100.00
July 20, 2000...........   27.13   13.96    4.40    0.00  100.00  100.00  100.00   85.27
August 20, 2000.........   19.00    4.89    0.00    0.00  100.00  100.00   89.23   64.15
September 20, 2000......   10.88    0.00    0.00    0.00  100.00   91.73   69.93   43.63
October 20, 2000........    2.76    0.00    0.00    0.00  100.00   73.73   50.97   23.66
November 20, 2000.......    0.00    0.00    0.00    0.00   89.06   55.89   32.33    4.20
December 20, 2000.......    0.00    0.00    0.00    0.00   72.46   38.20   13.98    0.00
January 20, 2001........    0.00    0.00    0.00    0.00   55.89   20.72    0.00    0.00
February 20, 2001.......    0.00    0.00    0.00    0.00   39.44    3.55    0.00    0.00
March 20, 2001..........    0.00    0.00    0.00    0.00   23.21    0.00    0.00    0.00
April 20, 2001..........    0.00    0.00    0.00    0.00    7.18    0.00    0.00    0.00
May 20, 2001............    0.00    0.00    0.00    0.00    0.00    0.00    0.00    0.00
Weighted Average Life to
 Call (in years)........    0.55    0.47    0.42    0.37    1.31    1.14    1.04    0.93
Weighted Average Life To
 Maturity (in years)....    0.55    0.47    0.42    0.37    1.31    1.14    1.04    0.93
41
Percentage of the               Percentage of the
                           Initial Principal Balance       Initial Principal Balance
                                    of the                          of the
                                Class A-3 Notes                 Class A-4 Notes
                          ------------------------------  ------------------------------
                                      CPR                             CPR
                          ------------------------------  ------------------------------
      Payment Date          0%      7%     12%     18%      0%      7%     12%     18%
      ------------        ------  ------  ------  ------  ------  ------  ------  ------
Closing Date............  100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 20, 1999.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
December 20, 1999.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
January 20, 2000........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
February 20, 2000.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
March 20, 2000..........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
April 20, 2000..........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
May 20, 2000............  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
June 20, 2000...........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
July 20, 2000...........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
August 20, 2000.........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
September 20, 2000......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
October 20, 2000........  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
November 20, 2000.......  100.00  100.00  100.00  100.00  100.00  100.00  100.00  100.00
December 20, 2000.......  100.00  100.00  100.00   93.76  100.00  100.00  100.00  100.00
January 20, 2001........  100.00  100.00   98.31   85.97  100.00  100.00  100.00  100.00
February 20, 2001.......  100.00  100.00   90.90   78.44  100.00  100.00  100.00  100.00
March 20, 2001..........  100.00   94.41   83.71   71.20  100.00  100.00  100.00  100.00
April 20, 2001..........  100.00   87.48   76.72   64.21  100.00  100.00  100.00  100.00
May 20, 2001............   96.33   80.69   69.93   57.48  100.00  100.00  100.00  100.00
June 20, 2001...........   89.69   74.04   63.32   50.99  100.00  100.00  100.00  100.00
July 20, 2001...........   83.12   67.51   56.89   44.73  100.00  100.00  100.00  100.00
August 20, 2001.........   76.60   61.11   50.62   38.67  100.00  100.00  100.00  100.00
September 20, 2001......   70.12   54.81   44.51   32.83  100.00  100.00  100.00  100.00
October 20, 2001........   63.66   48.61   38.53   27.16  100.00  100.00  100.00  100.00
November 20, 2001.......   57.22   42.49   32.68   21.68  100.00  100.00  100.00  100.00
December 20, 2001.......   50.79   36.46   26.95   16.36  100.00  100.00  100.00  100.00
January 20, 2002........   44.44   30.55   21.40   11.24  100.00  100.00  100.00  100.00
February 20, 2002.......   38.37   24.95   16.16    6.45  100.00  100.00  100.00  100.00
March 20, 2002..........   32.66   19.72   11.29    2.03  100.00  100.00  100.00  100.00
April 20, 2002..........   27.35   14.89    6.81    0.00  100.00  100.00  100.00   95.77
May 20, 2002............   22.53   10.52    2.77    0.00  100.00  100.00  100.00   88.15
June 20, 2002...........   18.15    6.55    0.00    0.00  100.00  100.00   98.14   81.30
July 20, 2002...........   14.17    2.97    0.00    0.00  100.00  100.00   91.24   75.14
August 20, 2002.........   10.56    0.00    0.00    0.00  100.00   99.43   85.02   69.60
September 20, 2002......    7.33    0.00    0.00    0.00  100.00   93.34   79.45   63.82
October 20, 2002........    4.21    0.00    0.00    0.00  100.00   87.54   74.16   58.37
November 20, 2002.......    1.29    0.00    0.00    0.00  100.00   82.10   69.24   53.33
December 20, 2002.......    0.00    0.00    0.00    0.00   96.56   76.73   63.60    0.00
January 20, 2003........    0.00    0.00    0.00    0.00   90.44   71.44   58.07    0.00
February 20, 2003.......    0.00    0.00    0.00    0.00   84.43   65.72   52.75    0.00
March 20, 2003..........    0.00    0.00    0.00    0.00   78.55   59.89    0.00    0.00
April 20, 2003..........    0.00    0.00    0.00    0.00   72.80   54.24    0.00    0.00
May 20, 2003............    0.00    0.00    0.00    0.00   66.77    0.00    0.00    0.00
June 20, 2003...........    0.00    0.00    0.00    0.00   60.36    0.00    0.00    0.00
July 20, 2003...........    0.00    0.00    0.00    0.00   54.11    0.00    0.00    0.00
August 20, 2003.........    0.00    0.00    0.00    0.00    0.00    0.00    0.00    0.00
Weighted Average Life to
 Call (in years)........    2.25    2.04    1.90    1.74    3.66    3.40    3.22    2.98
Weighted Average Life to
 Maturity (in years)....    2.25    2.04    1.90    1.74    3.85    3.63    3.46    3.24
42
Percentage of the
                                                 Initial Principal Balance
                                                          of the
                                                       Class B Notes
                                                ------------------------------
                                                            CPR
                                                ------------------------------
                 Payment Date                     0%      7%     12%     18%
                 ------------                   ------  ------  ------  ------
Closing Date................................... 100.00% 100.00% 100.00% 100.00%
November 20, 1999.............................. 100.00  100.00  100.00  100.00
December 20, 1999.............................. 100.00  100.00  100.00  100.00
January 20, 2000............................... 100.00  100.00  100.00  100.00
February 20, 2000.............................. 100.00  100.00  100.00  100.00
March 20, 2000................................. 100.00  100.00  100.00  100.00
April 20, 2000................................. 100.00  100.00  100.00  100.00
May 20, 2000................................... 100.00  100.00  100.00  100.00
June 20, 2000.................................. 100.00  100.00  100.00  100.00
July 20, 2000.................................. 100.00  100.00  100.00   96.72
August 20, 2000................................ 100.00  100.00   97.61   92.03
September 20, 2000............................. 100.00   98.16   93.31   87.46
October 20, 2000............................... 100.00   94.16   89.10   83.02
November 20, 2000..............................  97.57   90.19   84.95   78.69
December 20, 2000..............................  93.88   86.25   80.87   74.47
January 20, 2001...............................  90.19   82.37   76.87   70.38
February 20, 2001..............................  86.53   78.55   72.97   66.41
March 20, 2001.................................  82.92   74.82   69.18   62.60
April 20, 2001.................................  79.36   71.17   65.51   58.92
May 20, 2001...................................  75.83   67.59   61.93   55.38
June 20, 2001..................................  72.33   64.09   58.45   51.96
July 20, 2001..................................  68.88   60.66   55.07   48.67
August 20, 2001................................  65.44   57.29   51.77   45.48
September 20, 2001.............................  62.03   53.98   48.55   42.41
October 20, 2001...............................  58.63   50.71   45.40   39.42
November 20, 2001..............................  55.24   47.49   42.33   36.54
December 20, 2001..............................  51.86   44.31   39.31   33.74
January 20, 2002...............................  48.52   41.21   36.39   31.04
February 20, 2002..............................  45.32   38.26   33.63   28.52
March 20, 2002.................................  42.32   35.51   31.07   26.19
April 20, 2002.................................  39.52   32.97   28.71   24.06
May 20, 2002...................................  36.99   30.66   26.58   22.15
June 20, 2002..................................  34.68   28.58   24.66   20.43
July 20, 2002..................................  32.59   26.69   22.93   18.88
August 20, 2002................................  30.69   24.98   21.36   17.49
September 20, 2002.............................  28.98   23.45   19.96   17.49
October 20, 2002...............................  27.35   22.00   18.64   17.49
November 20, 2002..............................  25.80   20.63   17.40   17.49
December 20, 2002..............................  24.26   19.28   17.40    0.00
January 20, 2003...............................  22.73   17.95   17.40    0.00
February 20, 2003..............................  21.22   17.26   17.40    0.00
March 20, 2003.................................  19.74   17.26    0.00    0.00
April 20, 2003.................................  18.29   17.26    0.00    0.00
May 20, 2003...................................  17.07    0.00    0.00    0.00
June 20, 2003..................................  17.07    0.00    0.00    0.00
July 20, 2003..................................  17.07    0.00    0.00    0.00
August 20, 2003................................   0.00    0.00    0.00    0.00
Weighted Average Life To Call (in years).......   2.40    2.19    2.05    1.88
Weighted Average Life To Maturity (in years)...   2.56    2.38    2.25    2.11
43
Percentage of the
                                                 Initial Principal Balance
                                                          of the
                                                       Class C Notes
                                                ------------------------------
                                                            CPR
                                                ------------------------------
                 Payment Date                     0%      7%     12%     18%
                 ------------                   ------  ------  ------  ------
Closing Date................................... 100.00% 100.00% 100.00% 100.00%
November 20, 1999.............................. 100.00  100.00  100.00  100.00
December 20, 1999.............................. 100.00  100.00  100.00  100.00
January 20, 2000............................... 100.00  100.00  100.00  100.00
February 20, 2000.............................. 100.00  100.00  100.00  100.00
March 20, 2000................................. 100.00  100.00  100.00  100.00
April 20, 2000................................. 100.00  100.00  100.00  100.00
May 20, 2000................................... 100.00  100.00  100.00  100.00
June 20, 2000.................................. 100.00  100.00  100.00  100.00
July 20, 2000.................................. 100.00  100.00  100.00   96.72
August 20, 2000................................ 100.00  100.00   97.61   92.03
September 20, 2000............................. 100.00   98.16   93.31   87.46
October 20, 2000............................... 100.00   94.16   89.10   83.02
November 20, 2000..............................  97.57   90.19   84.95   78.69
December 20, 2000..............................  93.88   86.25   80.87   74.47
January 20, 2001...............................  90.19   82.37   76.87   70.38
February 20, 2001..............................  86.53   78.55   72.97   66.41
March 20, 2001.................................  82.92   74.82   69.18   62.60
April 20, 2001.................................  79.36   71.17   65.51   58.92
May 20, 2001...................................  75.83   67.59   61.93   55.38
June 20, 2001..................................  72.33   64.09   58.45   51.96
July 20, 2001..................................  68.88   60.66   55.07   48.67
August 20, 2001................................  65.44   57.29   51.77   45.48
September 20, 2001.............................  62.03   53.98   48.55   42.41
October 20, 2001...............................  58.63   50.71   45.40   39.42
November 20, 2001..............................  55.24   47.49   42.33   36.54
December 20, 2001..............................  51.86   44.31   39.31   33.74
January 20, 2002...............................  48.52   41.21   36.39   31.04
February 20, 2002..............................  45.32   38.26   33.63   28.52
March 20, 2002.................................  42.32   35.51   31.07   26.19
April 20, 2002.................................  39.52   32.97   28.71   24.06
May 20, 2002...................................  36.99   30.66   26.58   22.15
June 20, 2002..................................  34.68   28.58   24.66   20.43
July 20, 2002..................................  32.59   26.69   22.93   18.88
August 20, 2002................................  30.69   24.98   21.36   17.49
September 20, 2002.............................  28.98   23.45   19.96   17.49
October 20, 2002...............................  27.35   22.00   18.64   17.49
November 20, 2002..............................  25.80   20.63   17.40   17.49
December 20, 2002..............................  24.26   19.28   17.40    0.00
January 20, 2003...............................  22.73   17.95   17.40    0.00
February 20, 2003..............................  21.22   17.95   17.40    0.00
March 20, 2003.................................  19.74   17.95    0.00    0.00
April 20, 2003.................................  18.29   17.95    0.00    0.00
May 20, 2003...................................  18.29    0.00    0.00    0.00
June 20, 2003..................................  18.29    0.00    0.00    0.00
July 20, 2003..................................  18.29    0.00    0.00    0.00
August 20, 2003................................   0.00    0.00    0.00    0.00
Weighted Average Life To Call (in years).......   2.40    2.19    2.05    1.88
Weighted Average Life To Maturity (in years)...   2.69    2.48    2.34    2.20
44
COLLATERAL CASHFLOWS AND RESIDUALS

    The following table sets forth the Scheduled Payments and the scheduled
Book Value (as described under "Description of the Notes--Residual
Realizations") of the Leases comprising the Cut-Off Date Pool. For the purposes
of this table, we have assumed there are no delinquencies, losses or
prepayments on the Leases. In addition, we have assumed that an amount equal to
the Book Value of a Lease 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 Lease is due. The information set
forth below is not a prediction of the actual payments that will be received.
The information regarding delinquencies, non-accruals and net losses set forth
under the caption "The Leases--Certain Statistics Relating to Delinquencies and
Defaults," as well as the information under "Risk Factors--Risks Relating to
Reliance on Residual Realizations," should be reviewed together with the
information set forth below.
Scheduled   Scheduled
                   Collection Period                     Payments    Book Value
                   -----------------                    ----------- ------------
September 1999....................................... $           $   1,938.20
  October 1999.........................................                 2,799.23
  November 1999........................................                 3,133.59
  December 1999........................................                10,023.44
  January 2000.........................................                11,928.13
  February 2000........................................                31,337.00
  March 2000...........................................                24,935.09
  April 2000...........................................                15,483.77
  May 2000.............................................                30,463.79
  June 2000............................................                23,076.66
  July 2000............................................                24,485.81
  August 2000..........................................                13,716.69
  September 2000.......................................                15,009.09
  October 2000.........................................                26,727.73
  November 2000........................................                91,478.50
  December 2000........................................               215,319.13
  January 2001.........................................               216,371.81
  February 2001........................................               234,554.74
  March 2001...........................................               270,209.38
  April 2001...........................................               209,054.18
  May 2001.............................................               178,270.78
  June 2001............................................               248,037.28
  July 2001............................................               205,214.36
  August 2001..........................................               102,072.15
  September 2001.......................................               113,013.11
  October 2001.........................................               359,520.66
  November 2001........................................               825,915.30
  December 2001........................................             1,634,080.04
  January 2002.........................................             1,590,982.71
  February 2002........................................             1,693,705.24
  March 2002...........................................             2,101,292.04
  April 2002...........................................             1,780,113.53
  May 2002.............................................             1,480,712.48
45
Scheduled   Scheduled
                   Collection Period                     Payments   Book Value
                   -----------------                     --------- -------------
June 2002.............................................  $        $1,421,907.97
  July 2002.............................................            1,295,104.58
  August 2002...........................................               93,839.20
  September 2002........................................               95,631.62
  October 2002..........................................              122,068.00
  November 2002.........................................              182,151.06
  December 2002.........................................              376,300.23
  January 2003..........................................              248,841.78
  February 2003.........................................              201,273.56
  March 2003............................................              432,952.61
  April 2003............................................              301,490.88
  May 2003..............................................              215,127.40
  June 2003.............................................              236,118.31
  July 2003.............................................              236,229.30
  August 2003...........................................               32,187.94
  September 2003........................................               66,629.47
  October 2003..........................................              273,752.73
  November 2003.........................................              689,935.89
  December 2003.........................................            1,130,527.32
  January 2004..........................................              924,667.52
  February 2004.........................................              897,842.30
  March 2004............................................            1,562,632.41
  April 2004............................................            1,252,155.82
  May 2004..............................................            1,055,534.10
  June 2004.............................................            1,516,880.65
  July 2004.............................................            1,229,507.16
  August 2004...........................................               77,738.71
  September 2004........................................              131,552.31
  October 2004..........................................              173,771.52
  November 2004.........................................                1,285.45
  December 2004.........................................                    7.00
  January 2005..........................................               50,299.27
  February 2005.........................................                    7.00
  March 2005............................................                    3.00
  April 2005............................................                    4.00
  May 2005..............................................                    2.00
  June 2005.............................................                     --
  July 2005.............................................                9,716.40
  August 2005...........................................                     --
  September 2005........................................                     --
  October 2005..........................................                    1.00
  November 2005.........................................                     --
  December 2005.........................................               25,001.00
  January 2006..........................................                     --
  February 2006.........................................                    2.00
  March 2006............................................                     --
  April 2006............................................                     --
  May 2006..............................................                    2.00
  June 2006.............................................                     --
  July 2006.............................................                    1.00
46
DESCRIPTION OF THE NOTES

General

    The Notes will be issued pursuant to the terms of the Indenture. The
following summary describes certain terms of the Notes and the Indenture. A
copy of the form of the Indenture has been filed with the Commission as an
Exhibit to the Registration Statement of which this Prospectus is a part. U.S.
Bank Trust National Association, a national banking association headquartered
in St. Paul, Minnesota, will be the Trustee.

    Pursuant to the Indenture, the Issuer will issue six classes of notes (the
"Notes"), consisting of    classes of senior notes, designated as the   %
Lease-Backed Notes, Class A-1, in the original principal amount of $    , the
  % Lease-Backed Notes, Class A-2, in the original principal amount of $    ,
the   % Lease-Backed Notes, Class A-3, in the original principal amount of
$     and the   % Lease-Backed Notes, Class A-4, in the original principal
amount of $     (together, the "Class A Notes") and two classes of subordinated
notes, designated as the   % Lease-Backed Notes, Class B, in the original
principal amount of $     and the   % Lease-Backed Notes, Class C, in the
original principal amount of $    .

    Payments on the Notes will be made by the Trustee on each Payment Date to
persons in whose names the Notes are registered as of the related Record Date
(the "Holders" or "Noteholders"). The Payment Date for the Notes will be the
20th day of each month (or if such 20th day is not a Business Day, the next
succeeding Business Day), commencing in     , 1999. If the Class A-1 Notes have
not been paid in full on or before the       2000 Payment Date, the Payment
Date for the Class A-1 Notes in      2000 will be     , 2000. The Record Date
for any Payment Date will be the Business Day immediately preceding the Payment
Date (so long as the Notes are held in the book-entry form), or the last day of
the prior calendar month (if Definitive Notes have been issued).

    A "Business Day" is any day (other than a Saturday, Sunday or legal
holiday) on which commercial banks in New York City, or any other location of a
successor Servicer or Trustee, are open for regular business.

      Each Class of Notes initially will be represented by one or more
certificates (the "Book-Entry Certificates") registered in the name of the
nominee of DTC (together with any successor depository selected by the Trustee,
the "Depository"), except as set forth below. Beneficial interests in each
Class of Notes will be available for purchase in minimum denominations of
$10,000 and integral multiples of $1,000 in excess thereof, except that one
Class C Note may be issued in another denomination in book-entry form only. The
Issuer has been informed by DTC that DTC's nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the Holder of record of the Notes.
Unless and until Definitive Notes are issued under the limited circumstances
described herein, no Note Owner acquiring an interest in any Class of Notes
will be entitled to receive a certificate representing such Note Owner's
interest in such Notes. Until such time, all references herein to actions by
Noteholders of any Class of Notes will refer to actions taken by the Depository
upon instructions from its participating

                                       47
organizations and all references herein to distributions, notices, reports and
statements to Noteholders of any Class of Notes will refer to distributions,
notices, reports and statements to the Depository or its nominee, as the
registered Holder of the Notes of such Class, for distribution to Note Owners
of such Class in accordance with the Depository's procedures. See "--Book-Entry
Registration" and "--Definitive Notes."

    Subject to applicable laws with respect to escheat of funds, any money held
by the Trustee or any paying agent in trust under the Indenture for the payment
of any amount due with respect to any Note and remaining unclaimed for two
years after such amount has become due and payable shall be discharged from
such trust and, upon request of the Issuer, shall be deposited by the Trustee
in the Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and
all liability of the Trustee or such paying agent with respect to such money
shall thereupon cease.

Distributions

    Principal of and interest on the Notes will be paid on each Payment Date,
solely from, and secured by, the "Amount Available" for such Payment Date,
which is equal to the sum of:

      (a) Pledged Revenues on deposit in the Collection Account as of the
  last Business Day preceding the related Determination Date (the "Deposit
  Date") which were received by the Servicer during the related Collection
  Period or which represent amounts paid by Vendor Services to repurchase
  Leases as of the end of such Collection Period and investment earnings on
  funds on deposit in the Collection Account (the "Available Pledged
  Revenues") plus

      (b) Servicer Advances made by the Servicer, plus

      (c) funds, if any, on deposit in the Residual Account and investment
  earnings thereon, as described under "--Residual Realizations" below, plus

      (d) funds on deposit in the Reserve Account and investment earnings
  thereon. See "--The Reserve Account" below.

    "Pledged Revenues" will consist of

      (1) "Scheduled Payments" on the Leases (which will consist of all
  required payments under the Leases other than those portions of such
  payments which, under the Leases, are to be (A) applied by the Servicer to
  the payment of insurance charges, maintenance, taxes and other similar
  obligations, or (B) under the Contribution and Servicing Agreement, are to
  be retained by the Servicer in payment of Administrative Fees or are late
  payments as to which Servicer Advances were made on a Payment Date)
  received on or after the Cut-Off Date and due during the term of the
  Leases, without giving effect to end-of-term extensions or renewals
  thereof (including all Scheduled Payments due prior to, but not received
  as of, the Cut-Off Date, but excluding any Scheduled Payments due on or
  after, but received prior to, the Cut-Off Date);

                                       48
(2) any voluntary prepayments ("Prepayments") of Scheduled Payments
  received on or after the Cut-Off Date under the Leases (unless Vendor
  Services has delivered a Substitute Lease for that Prepaid Lease);

      (3) any amounts paid by Vendor Services to repurchase Leases (to the
  extent Vendor Services has not delivered a Substitute Lease) due to a
  breach of representations and warranties with respect thereto, as
  described under "The Leases--Representations and Warranties Made by Vendor
  Services" or as a result of a Lease becoming an Adjusted Lease, as
  described under "Description of the Contribution and Servicing Agreement--
  Servicing";

      (4) any amounts paid by the SPC to repurchase the Leases as described
  under "--Optional Repurchase of Leases";

      (5) Liquidation Proceeds derived from the liquidation of the Leases
  and the disposition of the related Equipment, as described under "--
  Liquidated Leases" below (unless Vendor Services has substituted a
  Substitute Lease therefor); and

      (6) any earnings on the investment of amounts credited to the
  Collection Account.

    On each Payment Date, the Trustee will be required to make the following
payments, first, from Available Pledged Revenues plus any Servicer Advances,
second, from amounts on deposit in the Residual Account as described under "--
Residual Realizations" below, and third, from amounts on deposit in the
Reserve Account, in the following order of priority (except as otherwise
described under "--Events of Default; Rights Upon Event of Default" below):

    (1) the Servicing Fee if Vendor Services or an affiliate is no longer
  the Servicer;

    (2) to reimburse the Servicer for unreimbursed Nonrecoverable Servicer
  Advances made with respect to a prior Payment Date;

    (3) interest on the Notes in the following order of priority:

       (a) interest on the Class A Notes,

       (b) interest on the Class B Notes, and

       (c) interest on the Class C Notes;

    (4) an amount equal to the Monthly Principal Amount as of such Payment
  Date, in respect of principal on the Notes in the amounts and in the
  priority described under "--Principal" below;

    (5) from Available Pledged Revenues and amounts (if any) on deposit in
  the Residual Account, to the Reserve Account, an amount equal to the
  excess of the Required Reserve Amount over the Available Reserve Amount;

    (6) from Available Pledged Revenues only, for so long as Vendor Services
  or an affiliate is the Servicer, the Servicing Fee; and

    (7) the remainder of Available Pledged Revenues, if any, to the SPC.

Class A Interest

    Interest will be paid to the Holders of each Class of the Class A Notes on
each Payment Date, to the extent the Amount Available (after taking into
account any prior applications

                                      49
described under "--Distributions" above) is sufficient therefor, at the
Interest Rate for such Class on the Outstanding Principal Amount of such Class.
Interest on the Class A-1 Notes will be calculated on the basis of actual days
elapsed in a year of 360 days, and interest on the Class A-2 Notes, Class A-3
Notes and Class A-4 Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Such interest so payable on such Payment
Date will be equal to the product of (1) the Interest Rate for such Class
(calculated in the manner described above) and (2) the Outstanding Principal
Amount of such Class as of such Payment Date. Interest on each Class of the
Class A Notes will accrue from and including the Closing Date to but excluding
    , 1999 (in the case of the first interest period), and thereafter for each
successive Payment Date from and including the most recent prior Payment Date
to which interest has been paid, to but excluding such Payment Date.

    In the event that, on a given Payment Date, the Amount Available is not
sufficient to make a full payment of interest to the Holders of Class A Notes,
the amount of interest to be paid on the Class A Notes will be allocated among
the Notes of each Class of Class A Notes pro rata in accordance with their
respective entitlements to interest (and within each such Class pro rata among
the holders of such Class), and the amount of such shortfall will be carried
forward and, together with interest thereon at the applicable Interest Rate,
added to the amount of interest such Holders will be entitled to receive on the
next Payment Date.

Class B Interest

    Interest will be paid to the Holders of the Class B Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
all prior applications described under "--Distributions" above) is sufficient
therefor, at the Class B Interest Rate on the Outstanding Principal Amount of
the Class B Notes, and will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Such interest so paid on such Payment Date
will be equal to one-twelfth of the product of ( 1) the Class B Interest Rate
and (2) the Outstanding Principal Amount of the Class B Notes as of such
Payment Date. Interest on the Class B Notes will accrue from and including the
Closing Date to but excluding      , 1999 (in the case of the first interest
period), and thereafter for each successive Payment Date from and including the
most recent prior Payment Date to which interest has been paid, to but
excluding such Payment Date.

    In the event that, on a given Payment Date, the Amount Available, after
payment of interest on the Class A Notes, is not sufficient to make a full
payment of interest to the Holders of Class B Notes, the amount of interest to
be paid on the Class B Notes will be allocated among the Class B Notes pro
rata, and the amount of such shortfall will be carried forward and, together
with interest thereon at the Class B Interest Rate, added to the amount of
interest such Holders will be entitled to receive on the next Payment Date.

Class C Interest

    Interest will be paid to the Holders of the Class C Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
all prior applications described under "--Distributions" above) is sufficient
therefor, at the Class C Interest Rate

                                       50
on the Outstanding Principal Amount of the Class C Notes, and will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Such interest so paid on such Payment Date will be equal to one-twelfth of the
product of (1) the Class C Interest Rate and (2) the Outstanding Principal
Amount of the Class C Notes as of such Payment Date. Interest on the Class C
Notes will accrue from and including the Closing Date to but excluding     ,
1999 (in the case of the first interest period), and thereafter for each
successive Payment Date from and including the most recent prior Payment Date
to which interest has been paid, to but excluding such Payment Date.

    In the event that, on a given Payment Date, the Amount Available, after
payment of interest on the Class A and Class B Notes, is not sufficient to make
a full payment of interest to the Holders of Class C Notes, the amount of
interest to be paid on the Class C Notes will be allocated among the Class C
Notes pro rata, and the amount of such shortfall will be carried forward and,
together with interest thereon at the Class C Interest Rate, added to the
amount of interest such Holders will be entitled to receive on the next Payment
Date.

Principal

    For each Payment Date, each of the Class A Noteholders, the Class B
Noteholders and the Class C Noteholders will be entitled to receive payments of
principal, to the extent funds are available therefor, in the priorities set
forth in the Indenture and described herein below and under "--Distributions."
On each Payment Date, to the extent funds are available therefor, principal
will be paid to the Noteholders in the following priority:

    (a) (i) to the Class A-1 Noteholders only, until the Outstanding
  Principal Amount on the Class A-1 Notes has been reduced to zero, the
  Class A Principal Payment, then (ii) to the Class A-2 Noteholders,
  Class A-3 Noteholders and Class A-4 Noteholders, sequentially, the Class A
  Principal Payment in that order, until the Outstanding Principal Amount of
  each such Class has been reduced to zero,

    (b) to the Class B Noteholders, the Class B Principal Payment,

    (c) to the Class C Noteholders, the Class C Principal Payment,

    (d) to the extent that the Class B Floor exceeds the Class B Target
  Investor Principal Amount and the Class C Floor exceeds the Class C Target
  Investor Principal Amount, Additional Principal (defined below) shall be
  distributed, sequentially, as an additional principal payment on the Class
  A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes and
  the Class C Notes, in that order, until the Outstanding Principal Amount
  of each such Class has been reduced to zero, and

    (e) to the extent the Class C Floor exceeds the Class C Target Investor
  Principal Amount, but the Class B Floor does not exceed the Class B Target
  Investor Principal Amount, Additional Principal shall be distributed as an
  additional principal payment on the Class A and Class B Notes, pro rata
  (and among the Class A Notes, sequentially on the Class A-2, Class A-3 and
  Class A-4 Notes, in that order), until the Outstanding Principal Amount of
  each such Class has been reduced to zero.

                                       51
The "Outstanding Principal Amount" as of a Payment Date shall mean the then
unpaid principal amounts of the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes and the Class C Notes, as
applicable (determined prior to payment of any principal in respect thereof on
such Payment Date).

    The "Class A Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, (i) on all Payment Dates prior to the       Payment Date, the
lesser of (1) the amount necessary to reduce the Outstanding Principal Amount
on the Class A-1 Notes to zero and (2) the Monthly Principal Amount, and (ii)
on the      2000 Payment Date, the entire Outstanding Principal Amount on the
Class A-1 Notes and (b) after the Class A-1 Notes have been paid in full, the
amount necessary to reduce the aggregate Outstanding Principal Amount of the
Class A Notes to the Class A Target Investor Principal Amount.

    The "Class B Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount on the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class B
Target Investor Principal Amount and the Class B Floor.

    The "Class C Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount of the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class C Notes to the greater of the Class C
Target Investor Principal Amount and the Class C Floor.

    "Additional Principal" with respect to each Payment Date is an amount equal
to (a) the Monthly Principal Amount, less (b) the Class A Principal Payment,
the Class B Principal Payment and the Class C Principal Payment to be paid on
such Payment Date.

    The "Class A Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class A Percentage and (b)
the Lease Pool Principal Balance as of the last day of the Collection Period
related to such Payment Date.

    The "Class B Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class B Percentage and (b)
the Lease Pool Principal Balance as of the last day of the Collection Period
related to such Payment Date.

    The "Class C Target Investor Principal Amount" with respect to each Payment
Date is an amount equal to the product of (a) the Class C Percentage and (b)
the Lease Pool Principal Balance as of the last day of the Collection Period
related to such Payment Date.

    The "Class A Percentage" will be approximately     %. The "Class B
Percentage" will be approximately    %. The "Class C Percentage" will be
approximately    %.

                                       52
The "Class B Floor" with respect to each Payment Date means (a)   % of the
Initial Pool Principal Balance, plus (b) the Cumulative Loss Amount with
respect to such Payment Date, minus (c) the sum of the Outstanding Principal
Amount of the Class C Notes as of such Payment Date and the amount on deposit
in the Reserve Account after giving effect to withdrawals to be made on such
Payment Date.

    The "Class C Floor" with respect to each Payment Date means (a)   % of the
Initial Pool Principal Balance, plus (b) the Cumulative Loss Amount with
respect to such Payment Date minus (c) the amount on deposit in the Reserve
Account after giving effect to withdrawals to be made on such Payment Date;
provided that if the Outstanding Principal Amount on the Class B Notes is
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 as of such Payment Date.

    The "Monthly Principal Amount" for any Payment Date will equal the excess,
if any, of (a) the sum of the Outstanding Principal Amount of the Notes for
such Payment Date, over (b) the Lease Pool Principal Balance as of the last
day of the Collection Period relating to such Payment Date.

    The "Cumulative Loss Amount" with respect to each Payment Date is an
amount equal to the excess, if any, of

    (a) the total of (1) the Outstanding Principal Amount of the Notes for
  such Payment Date, minus (2) the lesser of (A) the Monthly Principal
  Amount and (B) the Amount Available remaining after the payment of amounts
  owing to the Servicer (other than the Servicing Fee to the extent that
  Vendor Services is the Servicer) and in respect of interest on the Notes
  on such Payment Date, over

    (b) the Lease Pool Principal Balance as of the last day of the
  Collection Period related to such Payment Date.

    The "Principal Balance" of any Lease as of the last day of any Collection
Period is:

    (1) in the case of any Lease that does not by its terms permit
  prepayment or early termination, the present value of the unpaid Scheduled
  Payments due on such Lease after such last day of the Collection Period
  (excluding all Scheduled Payments due on or prior to, but not received as
  of, such last day, as well as any Scheduled Payments due after such last
  day and received on or prior thereto), after giving effect to any
  Prepayments received on or prior to such last day, discounted monthly
  (assuming, for purposes of such calculation, that each Scheduled Payment
  is due on the last day of the applicable Collection Period) at the
  Discount Rate;

    (2) in the case of any Lease that permits prepayment or early
  termination only upon payment of a premium that is at least equal to the
  present value (calculated in the manner described in clause (1) above) of
  the unpaid Scheduled Payments due on such Lease after the date of such
  prepayment, the amount specified in clause (1) above; and

    (3) in the case of any Lease that permits prepayment or early
  termination without payment of a premium at least equal to the amount
  specified in clause (2) above, the

                                      53
lesser of (a) the outstanding principal balance of such Lease after giving
  effect to Scheduled Payments due on or prior to such last day of the
  Collection Period, whether or not received, as well as any Prepayments,
  and any Scheduled Payments due after such last day, received on or prior
  to such last day, and (b) the amount specified in clause (1) above.

    The "Initial Pool Principal Balance," which is the aggregate Principal
Balance of the Leases as of the Initial Cut-Off Date, calculated at the
Discount Rate, is $     .

    The Principal Balance of any Lease which became a Liquidated Lease during a
given Collection Period or which Vendor Services was obligated to purchase as
of the end of a given Collection Period due to a breach of representations and
warranties, will be deemed to be zero on and after the last day of such
Collection Period.

    A "Liquidated Lease" is any Lease (a) which the Servicer has charged off as
uncollectible in accordance with its credit and collection policies and
procedures (which shall be no later than the date as of which the Servicer has
repossessed and disposed of the related Equipment, or otherwise collected all
proceeds which, in the Servicer's reasonable judgment, can be collected under
such Lease), or (b) as to which 10% or more of a Scheduled Payment is
delinquent 180 days or more.

    The "Collection Period" for any Payment Date will be the calendar month
preceding the month in which such Payment Date occurs.

Servicer Advances

    Prior to any Payment Date, the Servicer may, but will not be required to,
advance to the Trustee an amount sufficient to cover delinquencies in Scheduled
Payments on the Leases with respect to the prior Collection Period (a "Servicer
Advance"). The Servicer will be reimbursed for Servicer Advances from late
payments on the delinquent Leases with respect to which such advances were made
and, if the Servicer later determines that such Servicer Advance will not be
reimbursed from the recovery on the delinquent Lease (a "Nonrecoverable
Servicer Advance"), from the Amount Available on the next Payment Date.

Residual Realizations

    Cash flows realized from the sale or re-lease of the Equipment following
the scheduled expiration dates or voluntary early termination of the Leases,
other than Equipment subject to Liquidated Leases or Leases for which Vendor
Services delivers a Substitute Lease (the "Residual Realizations"), will
provide additional credit support for the Notes. Historically Vendor Services
has realized amounts greater than book value through sale or re-lease of
equipment similar to the Equipment, but there can be no assurance as to the
amount or timing of Residual Realizations. See "Risk Factors--Risks Relating to
Reliance on Residual Realizations." The Residual Realizations will be deposited
in the Residual Account. As provided in the Indenture, funds on deposit in the
Residual Account will be available to cover shortfalls in the Available Pledged
Revenues to pay interest and principal payments

                                       54
then due on the Notes. As of the Initial Cut-Off Date, the aggregate residual
value of the Equipment recorded on the accounting books of Vendor Services (the
"Book Value") of the Leases was $      . Actual Residual Realizations may be
more or less than Book Value. The Residual Realizations for a Collection Period
not distributed to Noteholders, paid to the Servicer or deposited into the
Reserve Account on the related Payment Date will be released to the SPC on such
Payment Date, except during the continuation of certain limited circumstances
specified in the Indenture (a "Residual Event"). Amounts released to the SPC
will not be available to the Noteholders under any circumstances. During the
continuation of a Residual Event, amounts in the Residual Account that
otherwise would be released to the SPC will be retained in the Residual Account
for application on future Payment Dates.

    Upon the termination of a Residual Event, any amounts on deposit in the
Residual Account will be (i) deposited into the Reserve Account, to the extent
that the amount on deposit in the Reserve Account is less than the Required
Reserve Amount, or (ii) released to the SPC, and thereafter will not be
available to Noteholders under any circumstance. The Residual Events will be
established prior to the Closing Date based on criteria prescribed by the
Rating Agencies. Such criteria may be amended or otherwise altered after the
Closing Date, without the consent of Noteholders, to alter the performance
parameters that must occur to cause a Residual Event, so long as doing so would
not cause either Rating Agency to reduce, withdraw or qualify any of its
ratings on the Notes.

Reserve Account

    On the Closing Date, the SPC will make an initial deposit in an amount
equal to   % of the Initial Pool Principal Balance into the Reserve Account. In
the event that Available Pledged Revenues are insufficient to pay the amounts
owing the Servicer, interest payments on the Notes and the Class A Principal
Payment, the Class B Principal Payment, the Class C Principal Payment and any
Additional Principal for the related Payment Date (such payments, the "Required
Payments"), and amounts on deposit in the Residual Account are insufficient to
make up such shorfall, the Trustee will withdraw from the Reserve Account an
amount equal to the lesser of the funds on deposit in the Reserve Account (the
"Available Reserve Amount") and such deficiency. In addition, on each Payment
Date, the Amount Available remaining after the payment of the Required Payments
will be deposited into the Reserve Account to the extent that the Required
Reserve Amount exceeds the Available Reserve Amount. The "Required Reserve
Amount" equals the lesser of (a)   % of the Initial Pool Principal Balance and
(b) the Outstanding Principal Amount of the Notes. Any amounts on deposit in
the Reserve Account in excess of the Required Reserve Amount will be released
to the SPC, and thereafter will not be available to Noteholders under any
circumstance.

Subordination of Class B Notes and Class C Notes

    The likelihood of payment of interest on each Class of Notes will be
enhanced by the application of the Amount Available to the payment of such
interest prior to the payment of principal on any of the Notes, as well as by
the preferential right of the Holders of Class A and Class B Notes to receive
such interest (1) in the case of the Class A Notes, prior to the

                                       55
payment of any interest on the Class B Notes or the Class C Notes, and (2) in
the case of the Class B Notes, prior to the payment of any interest on the
Class C Notes. Likewise, the likelihood of payment of principal, to the extent
of the Class A Principal Payment and the Class B Principal Payment on a Payment
Date on the Class A and Class B Notes, respectively, will be enhanced by the
preferential right of the Holders of Notes of each such Class to receive such
principal, to the extent of the Amount Available, after payment of interest on
the Notes as aforesaid, (i) in the case of the Class A Notes, prior to the
payment of any principal on the Class B Notes or the Class C Notes and (ii) in
the case of the Class B Notes, prior to the payment of any principal on the
Class C Notes.

Liquidated Leases

    Liquidation Proceeds (which will consist generally of all amounts received
by the Servicer in connection with the liquidation of a Liquidated Lease and
disposition of the related Equipment, net of any related out-of-pocket
liquidation expenses) will be deposited in the Collection Account and
constitute Pledged Revenues to be applied to the payment of interest and
principal on the Notes in accordance with the priorities described under "--
Distributions" above (except that, to the extent that Vendor Services elects to
substitute one or more Substitute Leases for all or a portion of the unpaid
Principal Balance of the Liquidated Lease, Liquidation Proceeds will be
remitted to Vendor Services and will not be available to Noteholders).

Optional Repurchase of Leases

    The SPC may purchase all of the Leases on any Payment Date following the
date on which the unpaid principal balance of the Notes is less than 10% of the
Initial Pool Principal Balance. The purchase price to be paid in connection
with such purchase shall be at least equal to the unpaid principal balance of
the Notes as of such Payment Date plus interest to be paid on the Notes on such
Payment Date. The proceeds of such purchase shall be applied on such Payment
Date to the payment of the remaining principal balance of the Notes, together
with accrued interest thereon.

Trust Accounts

    The Trustee will establish and maintain under the Indenture segregated
trust accounts (which need not be deposit accounts, but which shall constitute
"Eligible Accounts"), consisting of the "Collection Account," the "Servicing
Account," the "Residual Account," the "Reserve Account" and the "Note
Distribution Account" (collectively, the "Trust Accounts"). An "Eligible
Account" means any account which is

      (1) an account maintained with an Eligible Institution (as defined
  below);

      (2) an account or accounts the deposits in which are fully insured by
  either the Bank Insurance Fund or the Savings Association Insurance Fund
  of the FDIC;

      (3) a "segregated trust account" maintained with the corporate trust
  department of a federal or state chartered depository institution or trust
  company with trust powers and acting in its fiduciary capacity for the
  benefit of the Trustee, which depository institution or trust company has
  capital and surplus or, if depository institution or trust company is a
  subsidiary of a bank holding company system, the bank holding company

                                       56
has capital and surplus, of not less than $50,000,000 and the securities
  of such depository institution or trust company or, if such depository
  institution or trust company is a subsidiary of a bank holding company
  system and such depository institution's or trust company's securities are
  not rated, the securities of the bank holding company, have a credit
  rating from each of the Rating Agencies if rated by such Rating Agency
  which signifies "investment grade"; or

      (4) an account that will not cause any Rating Agency to reduce,
  qualify or withdraw its then-current rating assigned to the Notes, as
  confirmed in writing by such Rating Agency.

"Eligible Institution" means any depository institution organized under the
laws of the United States or any state, the deposits of which are insured to
the full extent permitted by law by the Bank Insurance Fund (currently
administered by the Federal Deposit Insurance Corporation), whose short-term
deposits or unsecured long-term debt have a credit rating that is acceptable to
each of the Rating Agencies, and which is subject to supervision and
examination by federal or state authorities.

    The Servicer, as agent for the Trustee, may designate, or otherwise arrange
for the purchase by the Trustee of, investments to be made with funds in the
Trust Accounts, which investments shall be Eligible Investments (as defined in
the Indenture) that will mature not later than the business day preceding the
applicable monthly Payment Date. "Eligible Investments" include, among other
investments, obligations of the United States or of any agency thereof backed
by the full faith and credit of the United States; federal funds, certificates
of deposit, time deposits and bankers' acceptances sold by eligible financial
institutions; certain repurchase agreements with eligible institutions and
other investments which would not result in the reduction, qualification or
withdrawal of any rating of the Notes by any Rating Agency.

Reports to Noteholders

    The Servicer will furnish to the Trustee, and the Trustee will include with
each distribution to a Noteholder, a statement in respect of the related
Payment Date setting forth, among other things:

    (1) the amount of interest paid on each Class of Class A Notes,
  including any unpaid interest from the prior Payment Date, and any
  remaining unpaid interest on each Class of Class A Notes;

    (2) the amount of interest paid on the Class B Notes, including any
  unpaid interest from the prior Payment Date, and any remaining unpaid
  interest on the Class B Notes;

    (3) the amount of interest paid on the Class C Notes, including any
  unpaid interest from the prior Payment Date, and any remaining unpaid
  interest on the Class C Notes;

    (4) the amount of principal paid on each Class of Class A Notes;

    (5) the amount of principal paid on the Class B Notes;

    (6) an amount of principal paid on the Class C Notes;

    (7) the Cumulative Loss Amount, if any, for such Payment Date;

    (8) all Substitute Leases delivered by Vendor Services;

                                       57
(9) the balance in the Reserve Account and the Required Reserve Amount;
  and

     (10) the balance in the Residual Account.

    The Notes will be registered in the name of a nominee of DTC and will not
be registered in the names of the beneficial owners or their nominees. As a
result, unless and until Definitive Notes are issued in the limited
circumstances described under "--Definitive Notes" below, beneficial owners
will not be recognized by the Trustee as Noteholders, as that term is used in
the Indenture. Hence, until such time, beneficial owners will receive reports
and other information provided for under the Indenture only if, when and to the
extent provided by DTC and its participating organizations.

Book-Entry Registration

    Notes may only be held through the Depository Trust Company (in the United
States) or, Cedel or Euroclear (in Europe) if they are participants of such
systems, or indirectly through organizations that are participants in such
systems. Cede & Co., as nominee for DTC, will hold the Notes. Cedel and
Euroclear will hold omnibus positions in the Notes on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the "Cedel/Euroclear Depositaries"),
which in turn will hold such positions in customers' securities accounts in the
Cedel/Euroclear Depositaries' names on the books of DTC. All references in this
Prospectus to "Holders" or "Noteholders" shall reflect the right of beneficial
owners of the Notes (the "Note Owners") as they may indirectly exercise such
rights through DTC, Cedel and Euroclear and their respective Participants
(except as otherwise specified herein).

    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 UCC and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934. DTC
was created to hold securities for its Participants and to facilitate the
clearance and settlement of securities transactions between Participants
through electronic book-entries, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations. Indirect access to the DTC
system also is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").

    Transfers between DTC's participating organizations (the "Participants")
will occur in accordance with DTC rules. Transfers between Cedel Participants
and Euroclear Participants will occur in the ordinary way in accordance with
their applicable rules and operating procedures.

    Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant

                                       58
European international clearing system by 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 in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.

    Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Cedel Participant or Euroclear Participant on such business day. Cash received
in Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.

    Note Owners that are not Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
Notes may do so only through Participants and Indirect Participants. In
addition, Note Owners will receive all distributions of principal and interest
from the Trustee, only through Participants. Under a book-entry format, Note
Owners may therefore experience some delay in their receipt of payments, since
such payments will be forwarded by the Trustee to DTC's nominee. DTC will
forward such payments to its Participants, which thereafter will forward them
to Indirect Participants or Note Owners. The only "Noteholder" will be DTC's
nominee. Note Owners will not be recognized by the Trustee as Noteholders, as
such term is used in the Indenture, and Note Owners will be permitted to
exercise the rights of Noteholders only indirectly through DTC and its
Participants.

    Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
securities among Participants on whose behalf it acts with respect to the Notes
and to receive and transmit distributions of principal of, and interest on, the
Notes. Participants and Indirect Participants with which Note Owners have
accounts with respect to the Notes similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their owners.
Accordingly, although Note Owners will not possess Notes, the Rules provide a
mechanism by which Participants will receive payments and will be able to
transfer their interests.

    Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Note Owner
to pledge 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 lack of a physical certificate for such Notes.

                                       59
DTC has advised the Issuer that it will take any action permitted to be
taken by a Note Owner under the Indenture only at the direction of one or more
Participants to whose accounts with DTC the Notes are credited. DTC may take
conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of Participants whose holdings include
such undivided interests.

    Except as required by law, Vendor Services, the SPC, the Issuer, and the
Trustee will not have any liability for any aspect of the records relating to
or payments made on account of beneficial ownership interest of the Notes held
by DTC's nominee, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

    DTC has advised the Issuer that DTC management is aware that some computer
applications, systems, and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 Problems." DTC has informed its Participants and
other members of the financial community (the "Industry") that it has developed
and is implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC,
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames.

    However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information of the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to:
(i) impress upon them the importance of such services being Year 2000
compliant; and (ii) determine the extent of their efforts for Year 2000
remediation (and, as appropriate, testing) of their services. In addition, DTC
is in the process of developing such contingency plans as it deems appropriate.

    According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.

    Cedelbank ("Cedel") is incorporated under the laws of Luxembourg as a
professional depository. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars.
Cedel provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is

                                       60
subject to regulation by the Luxembourg Monetary Institute. Cedel Participants
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters for the Notes.
Indirect access to Cedel is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.

    The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in Euroclear
in any of 32 currencies, including United States dollars. The Euroclear System
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. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "Euroclear Operator" or "Euroclear"), under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters of the Notes. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.

    The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.

    Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear Operator
acts under the Terms and Conditions only on behalf of Euroclear Participants
and has no record of or relationship with persons holding through Euroclear
Participants.

    Distributions with respect to Notes held through Cedel or Euroclear will be
credited to the cash accounts of Cedel Participants or Euroclear Participants
in accordance with the relevant system's rules and procedures, to the extent
received by its Depositary. Such

                                       61
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Federal Income Tax Consequences"
in this Prospectus and "Global Clearance, Settlement and Tax Documentation
Procedures" in Annex I to this Prospectus. Cedel or the Euroclear Operator, as
the case may be, will take any other action permitted to be taken by a
Noteholder under the Indenture on behalf of a Cedel Participant or Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Depositary's ability to effect such actions on its behalf
through DTC.

    Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.

    In the event that any of DTC, Cedel or Euroclear should discontinue its
services, the Trustee would seek an alternative depository (if available) or
cause the issuance of Definitive Notes to the owners thereof or their nominees
in the manner described below under "--Definitive Notes".

Definitive Notes

    The Notes of each Class will be issued in registered, certificated form to
the Note Owners of such Class or their nominees ("Definitive Notes"), rather
than to the Depository or its nominee, only if (i) the Depository advises the
Trustee in writing that it is no longer willing or able to discharge properly
its responsibilities as Depository with respect to the Notes of such Class, and
the Trustee is unable to locate a qualified successor, or (ii) an Event of
Default has occurred, and Note Owners representing not less than 50% of the
principal balance of such Class advise the Trustee and the Depository through
Participants in writing that the continuation of a book-entry system through
the Depository is no longer in the best interest of the Note Owners of such
Class.

    Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Notes. Upon surrender by
the Depository of the definitive certificate representing the Notes of the
affected Class and instructions for registration, the Trustee will issue the
Notes of such Class as Definitive Notes, and thereafter the Trustee will
recognize the Note Owners of such Definitive Notes as Noteholders under the
Indenture.

    Distributions of principal and interest on the Notes will be made by the
Trustee directly to Noteholders in accordance with the procedures set forth
herein and in the Indenture. Interest payments and any principal payments on
each Payment Date will be made to Noteholders in whose names the Definitive
Notes were registered at the close of business on the related Record Date.
Distributions will be made by check mailed to the address of such Noteholder as
it appears on the register maintained by the Trustee. The final payment on any
Note, however, 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 Trustee will

                                       62
provide such notice to registered Noteholders mailed not later than the fifth
day of the month of such final distributions.

    Definitive Notes will be transferable and exchangeable at the offices of
the transfer agent and registrar, which initially will be the Trustee (in such
capacity, the "Transfer Agent and Registrar"). No service charge will be
imposed for any registration of transfer or exchange, but the Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith. The Transfer Agent and
Registrar will not be required to register the transfer or exchange of
Definitive Notes for the period from the Record Date preceding the due date for
any payment to the Payment Date with respect to such Definitive Notes.

Modification of Indenture Without Noteholder Consent

    The Issuer and the Trustee may, when authorized by an Issuer Order, without
consent of the Noteholders, enter into one or more supplemental indentures for
any of the following purposes:

  .   to correct or amplify the description of the collateral or add
      additional collateral;

  .   to provide for the assumption of the Notes and the Indenture
      obligations by a permitted successor to the Issuer (as described under
      "--Certain Covenants");

  .   to add additional covenants for the benefit of the Noteholders, or to
      surrender any rights or power conferred upon the Issuer;

  .   to convey, transfer, assign, mortgage or pledge any property to or
      with the Trustee;

  .   to cure any ambiguity or correct or supplement any provision in the
      Indenture or in any supplemental indenture which may be inconsistent
      with any other provision of the Indenture;

  .   to provide for the acceptance of the appointment of a successor
      Trustee or to add to or change any of the provisions of the Indenture
      or in any supplemental indenture as shall be necessary and permitted
      to facilitate the administration by more than one trustee;

  .   to modify, eliminate or add to the provisions of the Indenture in
      order to comply with the Trust Indenture Act of 1939, as amended;

  .   to avoid a reduction, qualification or withdrawal of any rating of the
      Notes; or

  .   to add any provisions to, or change in any manner or eliminate any of
      the provisions of, the Indenture or to modify in any manner the rights
      of the Holders of the Notes under the Indenture,

provided that such action shall not (a) result in a reduction, qualification or
withdrawal of the then-current ratings of the Notes, or (b) as evidenced by an
opinion of counsel, adversely affect in any material respect the interests of
any Noteholder.

                                       63
Modification of Indenture With Noteholder Consent

    With the consent of the Holders representing a majority of the principal
balance of each Class of the Notes affected thereby, the Issuer and the Trustee
may, when authorized by an Issuer Order, execute a supplemental indenture to
add provisions to change in any manner or eliminate any provisions of, the
Indenture, or modify in any manner the rights of the Noteholders.

    Without the consent of the Holder of each outstanding Note affected
thereby, however, no supplemental indenture may:

  .   change the date, timing or method of determination of any installment
      of principal of or interest on any Note or reduce the principal amount
      thereof, the interest rate specified thereon or the redemption price
      with respect thereto or change the manner of calculating any such
      payment or any place of payment where, or the coin or currency in
      which, any Note or any interest thereon is payable;

  .   impair the right to institute suit for the enforcement of certain
      provisions of the Indenture regarding payment;

  .   reduce the percentage of each Class of the Notes then outstanding the
      consent of the Holders of which is required for any such supplemental
      indenture or for any waiver of compliance with certain provisions of
      the Indenture or of certain defaults thereunder and their
      consequences;

  .   modify or alter the provisions of the Indenture regarding the voting
      of Notes held by the Issuer, any other obligor on the Notes, the
      Issuer or an affiliate of any of them;

  .   reduce the percentage of the Notes the consent of the Holders of which
      is required to direct the Trustee to sell or liquidate the Trust
      Assets if the proceeds of such sale would be insufficient to pay the
      principal amount and accrued but unpaid interest on the outstanding
      Notes;

  .   reduce the percentage of each Class of the Notes then outstanding
      required to amend the sections of the Indenture which specify the
      applicable percentage of each Class of the Notes then outstanding
      necessary to amend the Indenture or certain other related agreements;

  .   permit the creation of any lien ranking prior to or on a parity with
      the lien of the Indenture with respect to any of the collateral for
      the Notes or, except as otherwise permitted or contemplated in the
      Indenture, terminate the lien of the Indenture on any such collateral
      or deprive the Holder of any Note of the security afforded by the lien
      of the Indenture; or

  .   result in a reduction, qualification or withdrawal of the rating of
      any Class of Notes by a Rating Agency, as confirmed in writing by each
      Rating Agency.

                                       64
Events of Default; Rights Upon Event of Default

    "Events of Default" under the Indenture will consist of:

  .   a default for five calendar days or more in the payment of interest
      due on any Note;

  .   failure to pay the unpaid principal amount of any Class of Notes on
      the Stated Maturity Date or any redemption date for such Class;

  .   a default in the observance or performance in any material respect of
      any covenant or agreement of the Issuer made in the Indenture, or any
      representation or warranty made by the Issuer in the Indenture or in
      any certificate delivered pursuant thereto or in connection therewith
      having been incorrect as of the time made, and the continuation of any
      such default or the failure to cure such breach of a representation or
      warranty for a period of 30 calendar days after notice thereof is
      given to the Issuer by the Trustee or to the Issuer and the Trustee by
      the Holders of at least 25% in principal amount of the Notes then
      outstanding; or

  .   certain events of bankruptcy, insolvency, receivership or liquidation
      of the Issuer.

    If an Event of Default should occur and be continuing with respect to the
Notes, the Trustee or a Note Majority may declare the principal of the Notes to
be immediately due and payable. Such declaration may, under certain
circumstances, be rescinded by a majority of the Principal Balance of each
Class of the Notes then outstanding (a "Note Majority").

    If the Notes have been declared due and payable following an Event of
Default, the Trustee may institute proceedings to collect amounts due or
foreclose on Trust Assets or any portion thereof, exercise remedies as a
secured party, sell the Trust Assets or any portion thereof or elect to have
the Issuer maintain possession of the Trust Assets and continue to apply
collections on the Trust Assets as if there had been no declaration of
acceleration. The Trustee, however, will be prohibited from selling the Trust
Assets following an Event of Default, unless

      (1) the Holders of all the outstanding Notes consent to such sale;

      (2) the proceeds of such sale distributable to Holders of the Notes
  are sufficient to pay in full the principal of and the accrued interest on
  all the outstanding Notes at the date of such sale; or

      (3) the Trustee determines that the Trust Assets would not be
  sufficient on an ongoing basis to make all payments on the Notes as such
  payments would have become due if such obligations had not been declared
  due and payable, and the Trustee obtains the consent of the Holders of 66
  2/3% of the aggregate outstanding amount of the Notes.

Following a declaration upon an Event of Default that the Notes are immediately
due and payable, any proceeds of liquidation of the Trust Assets, will be
applied in the following order of priority:

    (1) to the Servicer, the Servicing Fee (if Vendor Services or an
  affiliate is no longer the Servicer);

    (2) to the reimbursement of the Trustee for its expenses;

                                       65
(3) to the payment of interest, sequentially, on the Class A Notes until
  paid in full (and among the Class A Notes, pro rata), then on the Class B
  Notes until paid in full, and then on the Class C Notes until paid in
  full;

    (4) to the payment of principal, sequentially, on the Class A Notes, the
  Class B Notes and the Class C Notes;

    (5) to the Servicer, the Servicing Fee (if Vendor Services or an
  affiliate is the Servicer); and

    (6) the remainder, if any, to the Issuer.

    Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders of the Notes, if the Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain limitations
contained in the Indenture, a Note Majority will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the Trustee, and a Note Majority may, in certain cases, waive any default with
respect thereto, except a default in the payment of principal or interest or a
default in respect of a covenant or provision of the Indenture that cannot be
modified without the waiver or consent of all of the Holders of such
outstanding Notes.

    No Holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless

    (1) such Holder previously has given to the Trustee written notice of a
  continuing Event of Default,

    (2) the Holders of not less than 25% in principal amount of the
  outstanding Notes have made written request of the Trustee to institute
  such proceeding in its own name as Trustee,

    (3) such Holder or Holders have offered the Trustee reasonable
  indemnity,

    (4) the Trustee has for 60 days failed to institute such proceeding, and

    (5) no direction inconsistent with such written request has been given
  to the Trustee during such 60-day period by the Holders of a majority in
  principal amount of such outstanding Notes.

    If an Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee will mail to each Noteholder notice of the Event of
Default within 90 days after it occurs. Except in the case of a failure to pay
principal of or interest on any Note, the Trustee may withhold the notice if
and so long as it determines in good faith that withholding the notice is in
the interests of the Noteholders.

    In addition, the Trustee and the Noteholders, by accepting the Notes, will
covenant that they will not at any time institute against the Issuer any
bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.

                                       66
Neither the Trustee nor the Issuer in its individual capacity, nor any
Holder of a Note including, without limitation, the SPC, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
affiliates, successors or assigns will, in the absence of an express agreement
to the contrary, be personally liable for the payment of the Notes or for any
agreement or covenant of the Issuer contained in the Indenture.

Certain Covenants

    The Indenture will provide that the Issuer may not consolidate with or
merge into any other entity, unless

  .   the entity formed by or surviving such consolidation or merger is
      organized under the laws of the United States or any state,

  .   such entity expressly assumes the Issuer's obligation to make due and
      punctual payments upon the Notes and the performance or observance of
      every agreement and covenant of the Issuer under the Indenture,

  .   no Event of Default shall have occurred and be continuing immediately
      after such merger or consolidation,

  .   the Issuer has been advised that the rating of the Notes then in
      effect would not be reduced, qualified or withdrawn by the Rating
      Agencies as a result of such merger or consolidation, (v) the Issuer
      has received an opinion of counsel to the effect that such
      consolidation or merger would have no material adverse tax consequence
      to the Issuer or to any Noteholder, and (vi) the Issuer or the Person
      (if other than the Issuer) formed by or surviving such consolidation
      or merger has a net worth, immediately after such consolidation or
      merger, that is (a) greater than zero and (b) not less than the net
      worth of the Issuer immediately prior to giving effect to such
      consolidation or merger.

    The Issuer will not, among other things,

  .   except as expressly permitted by the Indenture, sell, transfer,
      exchange or otherwise dispose of any of the Trust Assets,

  .   claim any credit on or make any deduction from the principal and
      interest payable in respect of the related Notes (other than amounts
      withheld under the Code or applicable state law) or assert any claim
      against any present or former Holder of such Notes because of the
      payment of taxes levied or assessed upon the Issuer,

  .   dissolve or liquidate in whole or in part,

  .   permit the validity or effectiveness of the Indenture to be impaired
      or permit any person to be released from any covenants or obligations
      with respect to the Notes under the indenture except as may be
      expressly permitted thereby, or

  .   except as expressly permitted by the Indenture or the Contribution and
      Servicing Agreement, permit any lien, charge, excise, claim, security
      interest, mortgage or other encumbrance to be created on or extend to
      or otherwise arise upon or burden

                                       67
the assets of the Issuer or any part thereof, or any interest therein
      or proceeds thereof.

    The Issuer may not engage in any activity other than as specified under
"The Issuer and the SPC." The Issuer will not incur, assume or guarantee any
indebtedness other than indebtedness incurred pursuant to the Notes and the
Indenture or otherwise in accordance with the Indenture and the Contribution
and Servicing Agreement.

Annual Compliance Statement

    The Issuer will be required to file annually with the Trustee a written
statement as to the fulfillment of its obligations under the Indenture.

Trustee's Annual Report

    The Trustee will be required to mail each year to all Noteholders a brief
report relating to its eligibility and qualification to continue as Trustee
under the related Indenture, any amounts advanced by it under the Indenture,
the amount, interest rate and maturity date of certain indebtedness owing by
the Issuer to the Trustee in its individual capacity, the property and funds
physically held by the Trustee as such and any action taken by it that
materially affects the Notes and that has not been previously reported.

Satisfaction and Discharge of Indenture

    The Indenture will be discharged with respect to the collateral securing
the Notes upon the delivery to the related Trustee for cancellation of all such
Notes or, with certain limitations, upon deposit with the Trustee of funds
sufficient for the payment in full of all of such Notes.

The Trustee

    U.S. Bank Trust National Association will be the Trustee. The Trustee may
resign at any time, in which event the Issuer will be obligated to appoint a
successor trustee. The Issuer may also remove the Trustee if the Trustee ceases
to be eligible to continue as such under the Indenture, if the Trustee becomes
insolvent or if the rating assigned to the long-term unsecured debt obligations
of the Trustee (or the holding company thereof) by the Rating Agencies shall be
lowered below an investment grade rating or be withdrawn by any Rating Agency.
In such circumstances and others set forth in the Indenture, the Issuer will be
obligated to appoint a successor trustee. Any resignation or removal of the
Trustee and appointment of a successor trustee will not become effective until
acceptance of the appointment by a successor trustee.

                                       68
DESCRIPTION OF THE CONTRIBUTION AND SERVICING AGREEMENT

Transfer and Assignment of Leases and Equipment

    On the Closing Date, Vendor Services will transfer to the SPC pursuant to
the Transfer Agreement all of its right, title and interest in the Leases and
the related Equipment, including all security interests created thereby and
therein, the right to receive all Scheduled Payments and Prepayments received
on the Leases on or after the Cut-Off Date (including all Scheduled Payments
due prior to, but not received as of, the Cut-Off Date, but excluding any
Scheduled Payments due on or after, but received prior to, the Cut-Off Date),
all rights under insurance policies maintained on the Equipment pursuant to the
Leases, all documents contained in the Lease Files and all proceeds derived
from any of the foregoing. Pursuant to the Contribution and Servicing
Agreement, on the Closing Date, the SPC will transfer all of its rights in the
Leases and certain rights to Residual Realizations, together with all its
rights under the Transfer Agreement, to the Issuer.

    The Contribution and Servicing Agreement will designate the Servicer as
custodian to maintain possession, as the Issuer's agent, of the Leases and all
documents related thereto. To facilitate servicing and save administrative
costs, the documents will not be physically segregated from other similar
documents that are in the Servicer's possession. UCC financing statements will
be filed on the Closing Date in the applicable jurisdictions reflecting the
transfer of the Leases by Vendor Services to the SPC, by the SPC to the Issuer,
and the pledge of the Leases by the Issuer to the Trustee, and Vendor
Services's accounting records and computer systems will also reflect such
assignments and pledge. The Leases will not, however, be stamped or otherwise
physically marked to reflect their assignment to the Issuer. If, through fraud,
negligence or otherwise, a subsequent purchaser were able to take physical
possession of the Leases without knowledge of the assignment, the Issuer's
interest in the Leases could be defeated. See "Risk Factors--Some leases may
not be enforceable" and "Certain Legal Aspects of the Leases."

Collections on Leases

    The Trustee will establish and maintain a Servicing Account, into which the
Servicer will deposit, no later than the second Business Day after receipt
thereof, all Scheduled Payments, Prepayments, Liquidation Proceeds, Residual
Realizations and other amounts received by the Servicer in respect of the
Leases on and after the Cut-Off Date. The Servicer will thereafter transfer to
the Collection Account, no later than the third Business Day after deposit
thereof in the Servicing Account, the following amounts:

    (1) all Scheduled Payments made by or on behalf of Obligors under the
  Leases;

    (2) all Prepayments (unless Vendor Services has delivered a Substitute
  Lease for such Lease);

    (3) all amounts constituting Liquidation Proceeds on Liquidated Leases
  (unless Vendor Services has delivered a Substitute Lease for such Lease);

                                       69
(4) any and all payments made by Vendor Services pursuant to the
  Transfer Agreement in connection with the purchase of any Leases as a
  result of a breach of a representation or warranty with respect thereto,
  as described under "The Leases--Representations and Warranties Made by
  Vendor Services," or pursuant to the Contribution and Servicing Agreement
  as a result of the Lease becoming an Adjusted Lease as described below
  under "--Servicing"; and

    (5) the amount paid by the SPC to purchase the Leases, as described
  under "Description of the Notes--Optional Purchase of Leases."

    The Servicer will transfer all Residual Realizations from the Servicing
Account to the Residual Account no later than the third Business Day after
deposit thereof in the Servicing Account.

    So long as no Event of Termination shall have occurred and be continuing
with respect to the Servicer, the Servicer, if Vendor Services or an affiliate
is no longer the Servicer, may make the remittances to be made by it to the
Collection Account net of amounts (which amounts may be netted prior to any
such remittance for a Collection Period) otherwise to be distributed to it in
payment of its Servicing Fee.

    The Servicer will be entitled to withdraw from the Collection Account any
amounts deposited therein in error or required to be repaid to an Obligor,
based on the Servicer's good-faith determination that such amount was deposited
in error or must be returned to the Obligor.

    Under the Contribution and Servicing Agreement, the Servicer is required to
establish in its own name one or more "Insurance, Maintenance and Tax
Accounts," into which are to be deposited any payments made by or on behalf of
Obligors which constitute

  .   insurance charges paid by an Obligor to the lessor or secured party
      under a Lease (unless such payments are made directly by the Obligor
      to the applicable insurance company, or Vendor Services has previously
      paid such charges),

  .   any insurance payments or recoveries paid by an insurance company or
      comparable third party and related to the damage to, or destruction
      of, the Equipment related to such Lease (unless paid directly by such
      insurance company or comparable third party directly to the Obligor),

  .   any payments made by or on behalf of Obligors which constitute amounts
      paid by an Obligor to the lessor or secured party under a Lease in
      respect of the maintenance of the related Equipment, and

  .   taxes paid by the Obligor and related to the applicable Lease or the
      Equipment related thereto (unless such payment is made directly by the
      Obligor to the applicable taxing authority or authorities, or Vendor
      Services has previously paid such taxes).

The Servicer may withdraw amounts from the Insurance, Maintenance and Tax
Accounts, when and if appropriate, to pay when due (or may pay from its own
funds and thereafter

                                       70
reimburse itself from amounts in the Insurance, Maintenance and Tax Accounts)
(1) all insurance charges in the amounts received under clause (a) above, (2)
any amounts payable under any applicable maintenance contract or otherwise with
respect to the maintenance of the related Equipment in the amounts received
under clause (c) above, and (3) all taxes in the amounts received under clause
(d) above. Amounts on deposit in the Insurance, Maintenance and Tax Accounts
which represent amounts received by the Servicer pursuant to clause (b) above
shall be applied by the Servicer as follows: if equipment is purchased to
replace the Equipment that was damaged or destroyed, and such replacement
equipment is (in the reasonable opinion of the Servicer) of comparable use and
equivalent value to the Equipment that was damaged or destroyed, or if the
Equipment is to be repaired, the Servicer shall release such amount so received
from the insurance company or comparable third party in payment or
reimbursement for such replacement equipment or such repair; and if this
replacement option is not exercised and the Equipment is not to be repaired,
then the Servicer shall treat such amount as Liquidation Proceeds and transfer
that portion thereof which would be allocable to the Notes from the Insurance,
Maintenance and Tax Accounts to the Collection Account.

    On or before the first Business Day preceding each Payment Date (the
"Determination Date"), the Servicer is required to determine the amount of
Available Pledged Revenues for such Payment Date, the amount of interest
payable on the Notes on such Payment Date, the Monthly Principal Amount for
such Payment Date, the Cumulative Loss Amount (if any) for such Payment Date,
and the amount, if any, by which such Available Pledged Revenues plus any
Servicer Advances with respect to such Payment Date, when applied in accordance
with the priorities described under "Description of the Notes--Distributions,"
are insufficient to pay the interest and principal payable on the Notes on such
Payment Date (a "Payment Shortfall"). If there is a Payment Shortfall for such
Payment Date, amounts on deposit in the Residual Account and then amounts on
deposit in the Reserve Account will be applied to the payment of interest and
principal on the Notes to the extent necessary to cure such Payment Shortfall.
The Servicer shall further give notice to the Trustee of (1) any remaining
Payment Shortfall (after giving effect to the previous application of funds in
the Residual Account or Reserve Account as aforesaid), (2) the Cumulative Loss
Amount (if any), and (3) if such Payment Date is the Stated Maturity Date for
any Class of Notes, the remaining unpaid principal balance of such Class of
Notes (after giving effect to previous application of funds in the Residual
Account as aforesaid).

Servicing

    Pursuant to the Contribution and Servicing Agreement, Vendor Services will
be engaged to act as Servicer on behalf of the Issuer. The Servicer is
generally obligated under the Contribution and Servicing Agreement to service
the Leases in accordance with customary and usual procedures of institutions
which service equipment Leases, installment sale contracts, promissory notes,
loan and security agreements and other similar types of receivables comparable
to the Leases and, to the extent more exacting, the degree of skill and
attention that the Servicer exercises from time to time with respect to all
comparable such contracts that it services for itself or others. In performing
such duties, so long as

                                       71
Vendor Services is the Servicer, it shall comply in all material respects with
its credit and collection policies and procedures in effect from time to time
(which credit and collection policies currently in effect are described under
"Green Tree Vendor Services Corporation"). The Servicer may delegate certain of
its servicing responsibilities with respect to the Leases to third parties,
provided that the Servicer will remain obligated to the Issuer for the proper
performance of all such servicing responsibilities.

    The Servicer will use its best efforts to sell or re-lease any Equipment
upon the termination of the Lease to which such Equipment is subject (whether
as a result of early termination following an Obligor default or upon scheduled
expiration of the Lease), 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. The Servicer may, in its discretion, choose to
dispose of Equipment through a new lease or in some other manner which provides
for payment for the Equipment over time. In any such event, the Servicer will
be required to pay from its own funds an amount which, in its reasonable
judgment, is equal to the fair market value of such Equipment (less any related
out-of-pocket liquidation expenses), and the Servicer will be entitled to all
payments received thereafter in respect of such Equipment. Any such amounts so
paid by the Servicer will be deemed to constitute additional Liquidation
Proceeds or Residual Realizations, depending on the reason for the disposition
of the Equipment, with respect to the related Lease and Equipment.

    Under the Contribution and Servicing Agreement, the Servicer is responsible
for, among other things: reviewing and certifying that the Lease Files are
complete; monitoring and tracking any property and sales taxes to be paid by
Obligors; billing, collection and recording of payments from Obligors;
communicating with and providing billing records to Obligors; deposit of funds
into the Collection Account; receiving payments as the Issuer's agent on the
insurance policies maintained by the Obligors and communicating with insurers
with respect thereto; issuance of reports to the Trustee specified in the
Indenture and in the Contribution and Servicing Agreement; repossession and
remarketing of Equipment following Obligor defaults or upon scheduled
termination or early termination of Leases; and paying the fees and ordinary
expenses of the Trustee.

    The Servicer shall, to the extent the proceeds of such liquidation are
sufficient therefor, be entitled to recover all reasonable out-of-pocket
expenses incurred by it in the course of liquidating a Lease and disposing of
the related Equipment, which amounts may be retained by the Servicer from such
proceeds to the extent of such expenses. The Servicer is entitled under the
Contribution and Servicing Agreement to retain, from liquidation proceeds, a
reserve for out-of-pocket liquidation expenses in an amount equal to such
expenses, in addition to those previously incurred, as it reasonably estimates
will be incurred. Upon completion of such liquidation, the remainder of any
such reserve, after reimbursement to the Servicer of all out-of-pocket
liquidation expenses, shall constitute Liquidation Proceeds and be deposited in
the Collection Account.

    Under the Contribution and Servicing Agreement, the Servicer, subject to
certain limitations, is permitted to grant payment extensions on a Lease in
accordance with its credit and collection policies and procedures if the
Servicer believes in good faith that such

                                       72
extension is necessary to avoid a termination and liquidation of such Lease and
will maximize the amount to be received by the Issuer with respect to such
Lease. Under the Contribution and Servicing Agreement, the Servicer, subject to
certain limitations, is permitted to grant modifications or amendments to a
Lease in accordance with its credit and collection policies and procedures.
Following modifications or amendments to a Lease that exceed the limitations
imposed on the Servicer's ability to agree to such modifications or amendments
under the Contribution and Servicing Agreement, such a Lease will be deemed an
"Adjusted Lease" and must either be purchased by the Servicer for a price equal
to the Required Payoff Amount or substituted for in the manner described under
"The Leases--Substitution."

    Prepayments. The Servicer may in its discretion allow a Prepayment of any
Lease, but only if the amount paid by or on behalf of the Obligor (or, in the
case of a partial Prepayment, the sum of such amount and the remaining
Principal Balance of the Lease after application of such amount) is at least
equal to the Required Payoff Amount of such Lease. To the extent any Prepayment
exceeds the Required Payoff Amount of a Lease, such excess will be paid to the
Issuer.

    Evidence as to Compliance. On or before March 31 (or within 90 days after
the end of the Servicer's fiscal year, if other than December 31) of each year,
the Servicer must deliver to the Trustee a report of a nationally recognized
accounting firm stating that such firm has examined certain documents and
records relating to the servicing of equipment leases and loans serviced by the
Servicer and stating that, on the basis of such procedures, such servicing has
been conducted in compliance with the Contribution and Servicing Agreement,
except for any exceptions set forth in such report.

    Certain Matters Regarding the Servicer. The Servicer may not resign from
its obligations under the Contribution and Servicing Agreement except upon a
determination that its duties thereunder are no longer permissible under
applicable law. No such resignation will become effective until a successor
servicer has assumed the Servicer's obligations and duties under the
Contribution and Servicing Agreement. The Servicer can be removed as Servicer
only upon the occurrence of an Event of Termination as discussed below.

    The Servicer must keep in place throughout the term of the Contribution and
Servicing Agreement (i) a policy or policies of insurance covering errors and
omissions by the Servicer, and (ii) a fidelity bond. Such policy or policies
and such fidelity bond shall be in such form and amount as is generally
customary among persons that service a portfolio of equipment leases having an
unpaid balance of at least $100 million and which are generally regarded as
servicers acceptable to institutional investors.

    Servicing Compensation and Payment of Expenses. Compensation to the
Servicer will include a monthly fee (the "Servicing Fee"), which will be
payable to the Servicer from the Amount Available on each Payment Date, in an
amount equal to the product of one-twelfth of .75% per annum multiplied by the
Lease Pool Principal Balance as of the last day of the second preceding
Collection Period (or, in the case of the Servicing Fee with respect to the
Collection Period commencing on the Initial Cut-Off Date, the Initial Pool
Principal

                                       73
Balance), plus any late fees, late payment interest, documentation fees,
insurance administration charges and other administrative fees and charges and
a portion of any extension fees (collectively, the "Administrative Fees")
collected with respect to the Leases during the prior Collection Period and any
investment earnings on collections prior to deposit thereof in the Collection
Account. The Servicer is authorized under the Contribution and Servicing
Agreement, in its discretion, to waive any Administrative Fees or extension
fees that may be collected in the ordinary course of servicing any Lease.

    Events of Termination. An Event of Termination under the Contribution and
Servicing Agreement will occur if (a) the Servicer fails to make any payment or
deposit required under the Contribution and Servicing Agreement and such
failure continues for five business days after notice from the Trustee or after
discovery by the Servicer; (b) the Servicer fails to deliver to the Trustee and
the Issuer the Servicer's Certificate (as defined in the Contribution and
Servicing Agreement) by the third Business Day prior to the related Payment
Date; (c) the Servicer fails to observe or perform in any material respect any
other covenants or agreements of the Servicer set forth in the Contribution and
Servicing Agreement (and, if Vendor Services is the Servicer, the Transfer
Agreement), and such failure (i) materially and adversely affects the rights of
the Issuer or Noteholders, and (ii) continues unremedied for 30 days after
written notice thereof has been given to the Servicer by the Issuer, the
Trustee or any Noteholder; (d) certain events of bankruptcy or insolvency occur
with respect to the Servicer; or (e) any representation, warranty or statement
of the Servicer made in the Contribution and Servicing Agreement or any
certificate, report or other writing delivered pursuant thereto proves to be
incorrect in any material respect, and such incorrectness (i) has a material
adverse effect on the Issuer or Noteholders, and (ii) continues uncured for 30
days after written notice thereof has been given to the Servicer by the Issuer,
the Trustee or any Noteholder. The Servicer is required under the Contribution
and Servicing Agreement to give the Trustee, the Issuer and each Rating Agency
notice of an Event of Termination promptly after having obtained knowledge of
such event.

    Federal bankruptcy laws limit the termination of contracts solely by reason
of the fact that the party obligated to provide such performance is subject to
federal bankruptcy proceedings. In such a circumstance, the Trustee may be
unable to terminate the Servicer unless it could demonstrate that independent
grounds (whether or not arising from the same facts causing the Servicer to be
subject to bankruptcy proceedings) exist to declare an Event of Termination and
the court supervising the bankruptcy proceeding determines that such grounds
warrant termination of the Servicer.

    Rights upon Event of Termination. So long as an Event of Termination
remains unremedied, the Trustee may, and at the written direction of a Note
Majority (as defined in the Indenture) shall, terminate all of the rights and
obligations of the Servicer under the Contribution and Servicing Agreement in
and to the Leases, whereupon a successor servicer (which, unless and until the
Trustee appoints a new servicer, will be the Trustee) will succeed to all the
responsibilities, duties and liabilities of the Servicer under the Contribution
and Servicing Agreement and will be entitled to similar compensation
arrangements; provided, however, that any successor servicer be liable for any
acts or omissions of the

                                       74
prior Servicer occurring prior to a transfer of the Servicer's servicing and
related functions or for any breach by such Servicer of any of its obligations
contained in the Contribution and Servicing Agreement.

    A Note Majority may waive any default by the Servicer in the performance of
its obligations under the Contribution and Servicing Agreement and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Termination arising therefrom shall be deemed to
have been remedied. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

Amendment

    The Contribution and Servicing Agreement may be amended by the parties
thereto (i) to cure any ambiguity, (ii) to correct or supplement any provision
therein that may be inconsistent with any other provision therein, or (iii) to
make any other provisions with respect to matters or questions arising under
the Contribution and Servicing Agreement that are not inconsistent with the
provisions thereof, provided that such action will not adversely affect in any
material respect the interests of the Noteholders. The Contribution and
Servicing Agreement may also be amended by the parties thereto with the consent
of a Note Majority for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Contribution and
Servicing Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that no such amendment (a) that reduces in any
manner the amount of, or accelerates or delays the timing of, any payment
received on or with respect to Leases that are required to be distributed on
any Note or that reduces the aforesaid percentage required to consent to any
such amendment or any waiver under the Contribution and Servicing Agreement,
may be effective without the consent of the Holder of each such Note, or (b)
will be effective unless each Rating Agency confirms that such amendment will
not result in a reduction, qualification or withdrawal of the ratings on the
Notes.

Termination of the Contribution and Servicing Agreement

    The obligations created by the Contribution and Servicing Agreement will
terminate (after distribution of all interest and principal then due to
Noteholders) on the earlier of (i) the Payment Date next succeeding the later
of the final payment or other liquidation of the last Lease or the disposition
of all Equipment acquired upon termination of any Lease; or (b) the Payment
Date on which the SPC repurchases the Leases as described under "Description of
the Notes--Optional Purchase of Leases." However, Vendor Services's
representations, warranties and indemnities will survive any termination of the
Contribution and Servicing Agreement.

                                       75
CERTAIN LEGAL ASPECTS OF THE LEASES

Enforcement of Security Interests in the Equipment

    Due to the administrative burden and expense, no assignments of the UCC
financing statements evidencing the security interest of Vendor Services in the
Equipment (to the extent that such financing statements have been filed against
the Obligor, as discussed under "Green Tree Vendor Services Corporation--
Documentation") will be filed to reflect the SPC's, the Issuer's or the
Trustee's interests therein, except to the extent described under "Risk
Factors--Risks Related to Bankruptcy--Risks Relating to Characterization of the
Transfer of the Leases and Equipment as a Borrowing by Vendor Services." While
failure to file such assignments does not affect the Issuer's interest in the
Leases (including Vendor Services's interest in the related Equipment), it does
expose the Issuer and the Noteholders to the risk that Vendor Services could
release its security interest in the Equipment of record, and it could
complicate the Issuer's enforcement, as assignee, of Vendor Services's security
interest in the Equipment. While these risks should not affect the perfection
or priority of the interest of the Trustee in the Leases or rights to payment
thereunder, they may adversely affect the right of the Trustee to receive
proceeds of disposition of the Equipment subject to a Liquidated Lease, which
are to be allocated to the payment of the Notes as described under "Description
of the Notes--Liquidated Leases." Additionally, statutory liens for repairs or
unpaid taxes and other liens arising by operation of law may have priority even
over prior perfected security interests assigned to the Trustee in the
Equipment.

    In the event of a default by the Obligor under a Lease intended for
security, the Servicer on behalf of the Issuer may take action to enforce
Vendor Services' interest in the related Equipment by repossession and resale
or re-lease of the Equipment. Under the UCC in most states, a creditor can,
without prior notice to the debtor, repossess assets securing a defaulted
contract by the Obligor's voluntary surrender, or by "self-help" repossession
that does not involve a breach of the peace and by judicial process. In the
event of bankruptcy or insolvency of the Obligor these remedies may require the
permission of a bankruptcy court or may otherwise not be immediately available.
See "--Insolvency Matters" below.

    In the event of a default by the Obligor under a Lease intended for
security, some jurisdictions require that the Obligor be notified of the
default and be given a time period within which it may cure the default prior
to repossession. Generally, this right of reinstatement may be exercised on a
limited number of occasions in any one-year period.

    The UCC and other state laws place restrictions on repossession sales,
including requirements that the secured party provide the debtor with
reasonable notice of the date, time and place of any public sale and/or the
date after which any private sale of the collateral may be held and that any
such sale be conducted in a commercially reasonable manner.

    Under most state laws, an Obligor under a Lease intended for security has
the right to redeem collateral for its obligations prior to actual sale by
paying the lessor or secured party the unpaid balance of the obligation plus
reasonable expenses for repossessing, holding and

                                       76
preparing the collateral for disposition and arranging for its sale, plus, to
the extent provided for in the written agreement of the parties, reasonable
attorneys' fees.

    In addition, because the market value of equipment of the type subject to
the Leases generally declines with age, due to obsolescence, the net
disposition proceeds of Equipment at any time during the term of the Leases may
not equal or exceed the Principal Balance on the related Lease. Because of
this, and because other creditors may in certain cases have rights in the
related Equipment superior to those of the Issuer, the Servicer may not be able
to recover the entire amount due on a defaulted Lease in the event that the
Servicer elects to repossess and dispose of such Equipment at any time.

    Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from an Obligor under a Lease intended for
security for any deficiency on repossession and resale of the asset securing
the unpaid balance of such Obligor's Lease. However, some states impose
prohibitions or limitations on deficiency judgments. In most jurisdictions, the
courts, in interpreting the UCC, would impose upon a creditor an obligation to
repossess the equipment in a commercially reasonable manner and to "mitigate
damages" in the event of an Obligor's failure to cure a default. The creditor
would be required to exercise reasonable judgment and follow acceptable
commercial practice in seizing, selling or re-leasing the equipment and to
offset the net proceeds of such disposition against its claim. In addition, an
Obligor may successfully invoke an election of remedies defense to a deficiency
claim in the event that the Servicer's repossession and sale of the Equipment
is found to be a retention discharging the Obligor from all further obligations
under the UCC. If a deficiency judgment were granted, the judgment would be a
personal judgment against the Obligor for the shortfall, but a defaulting
Obligor may have limited assets or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount.

    Many states have adopted a version of Article 2A of the UCC ("Article 2A").
Article 2A purports to codify many provisions of existing common law. Although
there is little precedental authority regarding how Article 2A will be
interpreted, it may, among other things, limit enforceability of any
"unconscionable" provision in a Lease, provide an Obligor with remedies
including the right to cancel the Lease for any lessor breach or default, and
may add to or modify the terms of "consumer leases" and leases where the
Obligor is a "merchant lessee." However, each Lease contains an acknowledgement
by the Obligor that the Equipment was acquired for business purposes, and
Vendor Services will represent in the Contribution and Servicing Agreement that
no Lease (other than a de minimis number of Leases) is a "consumer lease" under
Article 2A. Article 2A, moreover, recognizes typical commercial lease "hell or
high water" rental payment clauses and validates reasonable liquidated damages
provisions in the event of lessor or Obligor defaults. Article 2A also
recognizes the concept of freedom of contract and permits the parties in a
commercial context a wide latitude to vary provisions of the law.

                                       77
Insolvency Matters

    Certain statutory provisions, including federal and state bankruptcy and
insolvency laws, may also limit the ability of the Servicer to repossess and
resell or re-lease Equipment or obtain a deficiency judgment. In the event of
the bankruptcy or reorganization of an Obligor, various provisions of the
Bankruptcy Code of 1978 (the "Bankruptcy Code") and related laws may interfere
with or eliminate the ability of the Servicer to enforce the Issuer's rights
under the Leases. For example, although the bankruptcy or reorganization of an
Obligor would constitute an event of default under such Lease, the Bankruptcy
Code provides generally that rights and obligations under an unexpired lease or
an executory contract may not be terminated or modified solely because of a
provision in the lease or executory contract conditioned upon the commencement
of a case under the Bankruptcy Code. If bankruptcy proceedings were instituted
in respect of an Obligor under such a Lease, the Issuer could be prevented from
continuing to collect payments due from or on behalf of such Obligor or
exercising any remedies assigned to the Issuer without the approval of the
bankruptcy court, and, with respect to a Lease intended as security, the
bankruptcy court could permit the Obligor, as owner of the Equipment, to use or
dispose of the Equipment and provide the Issuer with a lien on substitute
collateral, so long as the court held that such substitute collateral
constituted "adequate protection" within the meaning of the Bankruptcy Code.

    In the case of a Lease that is deemed not to be intended as security, the
Bankruptcy Code grants to the bankruptcy trustee or the debtor-in-possession a
right to elect to assume or reject any executory contract or unexpired lease.
Any such rejection by the lessee would result in the return of the leased
equipment to the lessor. Any rejection of such a lease or contract constitutes
a breach of such lease or contract, entitling the non-breaching party to a
claim for breach of contract, which claim would be payable only from the assets
of the debtor's bankruptcy estate. The net proceeds from any resulting judgment
would be deposited into the Collection Account by the Servicer. See
"Description of the Notes--Liquidated Leases."

    In the event that, as a result of the bankruptcy or reorganization of an
Obligor, the related Lease becomes a defaulted Lease without breach of any
representation or warranty of Vendor Services, no recourse would be available
against Vendor Services and the Noteholders could suffer a loss with respect to
such Lease.

    These UCC and bankruptcy provisions, in addition to the possible decrease
in the value of a repossessed item of Equipment, may limit the amount realized
on the sale of Equipment securing the Leases to less than the amount due
thereunder.

                        FEDERAL INCOME TAX CONSEQUENCES

    The following discussion is a summary of certain United States federal
income tax considerations relevant to the purchase, ownership and disposition
of the Notes by the holders thereof. Dorsey & Whitney LLP, counsel to the
Issuer ("Counsel"), will deliver their opinion regarding the treatment of the
Notes and the treatment of the Issuer, as

                                       78
discussed below. The opinion of Counsel addresses only those issues
specifically identified below as being covered by such opinion; however, the
opinion of Counsel also states that the additional discussion set forth below
accurately sets forth Counsel's advice with respect to material tax issues. The
opinion of Counsel is not binding on the Internal Revenue Service (the "IRS").
There can be no assurance that the IRS will take a similar view of such issues,
and no assurance can be given that the opinion of Counsel would be sustained if
challenged by the IRS. No ruling on any of the issues discussed below will be
sought from the IRS.

    This summary does not purport to be a complete analysis of all the
potential federal income tax consequences relating to the purchase, ownership
and disposition of the Notes. Moreover, the discussion does not address all
aspects of taxation that may be relevant to particular purchasers in light of
their individual circumstances (including the effect of any foreign, state or
local tax laws) or to certain types of purchasers (including dealers in
securities, insurance companies, financial institutions and tax-exempt
entities) subject to special treatment under United States federal income tax
laws. The discussion below assumes that the Notes are held as capital assets.

    The discussion of the United States federal income tax consequences set
forth below is based upon currently existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), judicial decisions and administrative
interpretations, all of which are subject to change, which changes may be
retroactive. Because individual circumstances may differ, each prospective
purchaser of the Notes is strongly urged to consult its own tax advisor with
respect to its particular tax situation and the tax effects of any state,
local, foreign, or other tax laws and possible changes in the tax laws.

    As used herein, the term "United States Holder" means a beneficial owner of
a Note who or which is for United States federal income tax purposes either (i)
a citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States,
including any state thereof and the District of Columbia, (iii) an estate the
income of which is subject to United States federal income taxation regardless
of its source, (iv) a trust with respect to which a court within the United
States is able to exercise primary supervision over its administration, and one
or more United States persons have the authority to control all of its
substantial decisions, or (v) certain trusts in existence on August 20, 1996
and treated as a United States person prior to such date that elect to continue
to be so treated. The term also includes certain former citizens of the United
States whose income and gain on the Notes will be subject to United States
taxation. As used herein, the term "United States Alien Holder" means a
beneficial owner of a Note that is not a United States Holder.

Opinion of Counsel Regarding Treatment of the Notes

    In the opinion of Counsel, the Notes will be treated as indebtedness for
United States federal income tax purposes. Under the terms of the Notes and the
Indenture, each Noteholder agrees and acknowledges upon its purchase of the
Notes and by acceptance of the Notes that it will also treat the Notes as
indebtedness for such purposes.

                                       79
Opinion of Counsel Regarding Treatment of the Issuer

    In the opinion of Counsel, the Issuer will not be characterized as an
"association" taxable as a corporation for United States federal income tax
purposes. In addition, in the opinion of Counsel, the Issuer will not be
characterized as a "publicly traded partnership" taxable as a corporation for
United States federal income tax purposes, based on Counsel's opinion that the
Notes will be treated as indebtedness for federal income tax purposes. If the
Issuer were treated as either an association or a publicly traded partnership
taxable as a corporation, the resulting entity would be subject to federal
income taxes at corporate tax rates on its taxable income generated by
ownership of the Leases, and certain distributions by the entity would not be
deductible in computing the entity's taxable income. Such an entity-level tax
could result in reduced distributions to Noteholders.

Payments of Interest

    Interest paid on a Note will generally be taxable to a United States Holder
as ordinary interest income at the time it accrues or is received in accordance
with the United States Holder's method of accounting for federal income tax
purposes.

Original Issue Discount

    Under applicable regulations, a Note will be considered issued with
original issue discount ("OID") if the "stated redemption price at maturity" of
the Note (generally equal to its principal amount as of the date of issuance
plus all interest other than "qualified stated interest" payable prior to or at
maturity) exceeds the original issue price (in this case, the initial offering
price at which a substantial amount of the Notes are sold to the public). Any
OID would be considered de minimis under the regulations if it does not exceed
0.25% of the stated redemption price at maturity of a Note multiplied by the
number of full years until its maturity date or, in the case of the Notes which
have more than one principal payment, the weighted average maturity date. It is
anticipated that the Notes will not be considered issued with more than de
minimis OID. Under the OID regulations, a holder of a Note issued with a de
minimis amount of OID must include an allocable portion of such OID in income
as principal payments are made on the Note.

    While it is not anticipated that the Notes will be issued with more than de
minimis OID, it is possible that they will be so issued. If the Notes are
issued with more than de minimis OID, such OID would be includible in the
income of United States Holders as interest over the term of the Notes under a
constant yield method. Any amount included in income as OID would not, however,
be includible again when the amount is actually received. Noteholders would be
required to currently include accrued OID in gross income without regard to
their regular method of accounting. Each United States Holder should consult
its own tax advisor regarding the impact of the OID rules if the Notes are
issued with OID and the consequences to such holder as a result of special
rules in the Code which are applicable to debt instruments whose principal
payments may be accelerated by reason of prepayments of other obligations
securing such debt instruments.

                                       80
Market Discount

    If a United States Holder purchases a Note at a price that is less than its
remaining principal amount or, in the case of a Note issued with OID, its
adjusted issue price, by 0.25% or more of its remaining redemption amount
multiplied by the number of whole years to maturity, the Note will be
considered to bear "market discount" in the hands of such United States Holder.
In such case, principal payments received by the United States Holder, or gain
realized by the United States Holder on the disposition of the Note, generally
will be treated as ordinary interest income to the extent of the market
discount that accrued on the Note while held by such United States Holder and
that has not previously been included in income. Market discount generally
accrues on a straight-line basis over the remaining term of a Note except that,
at the election of the United States Holder, market discount may accrue on a
constant yield basis. A United States Holder may not be allowed to deduct
immediately all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or to carry such Note. A United States Holder
may elect to include market discount in income currently as it accrues (either
on a straight-line basis or, if the United States Holder so elects, on a
constant yield basis), in which case the interest deferral rule set forth in
the preceding sentence will not apply. Such an election will apply to all bonds
acquired by the United States Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.

Amortizable Bond Premium

    If a United States Holder purchases a Note for an amount that is greater
than the amount payable at maturity, such holder will be considered to have
purchased such Note with "amortizable bond premium" equal in amount to such
excess, and may elect (in accordance with applicable Code provisions) to
amortize such premium using a constant yield method over the remaining term of
the Note. The amount amortized in any year will be treated as a reduction of
the United States Holder's interest income from the Note in such year. A United
States Holder that elects to amortize bond premium must reduce its tax basis in
the Note by the amount of the premium amortized in any year. An election to
amortize bond premium applies to all taxable debt obligations held on the first
day of the first taxable year to which the election applies or thereafter
acquired by the United States Holder and may be revoked only with the consent
of the IRS.

Sale, Exchange or Retirement of Notes

    Upon the sale, exchange or retirement of a Note, a United States Holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (not including any amount
attributable to accrued but unpaid interest) and such holder's adjusted tax
basis in the Note. To the extent attributable to accrued but unpaid interest,
the amount realized by a United States Holder would be treated as a payment of
interest. A United States Holder's adjusted tax basis in a Note will equal the
cost of the Note to such holder, increased by the amount of any OID and market
discount previously included in income by such holder with respect to such Note
and reduced by any amortized bond premium and any principal payments received
by such holder.

                                       81
Subject to the discussion of market discount above, gain or loss realized
on the sale, exchange or retirement of a Note by a United States Holder will be
capital gain or loss, and will be short-term or long-term capital gain or loss
depending upon whether, at the time of the sale, exchange or retirement, the
Note has been held for one year or less or more than one year. Long-term
capital gains are taxed at a lower rate than ordinary income for certain non-
corporate taxpayers, but not for corporate taxpayers. The distinction between
capital gain or loss and ordinary income or loss is also relevant for purposes
of, among other things, limitations on the deductibility of capital losses.

Tax Consequences to United States Alien Holders

    Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:

    (a) payments of principal of and interest on the Notes by the Trustee or
  any paying agent to a beneficial owner of a Note that is a United States
  Alien Holder, as defined above, will not be subject to United States
  federal withholding tax, provided that, in the case of interest, (i) such
  holder does not own, actually or constructively, 10 percent or more of the
  total combined voting power of all classes of stock of Green Tree entitled
  to vote, (ii) such holder is not, for United States federal income tax
  purposes, a controlled foreign corporation related, directly or
  indirectly, to Green Tree through stock ownership, (iii) such holder is
  not a bank receiving interest described in Section 881(c)(3)(A) of the
  Code, and (iv) the certification requirements under Section 871(h) or
  Section 881(c) of the Code and Treasury regulations thereunder (summarized
  below) are met:

    (b) a United States Alien Holder of a Note will not be subject to United
  States federal income tax on gain realized on the sale, exchange or other
  disposition of such Note, unless (i) such holder is an individual who is
  present in the United States for 183 days or more in the taxable year of
  sale, exchange or other disposition, and certain conditions are met or
  (ii) such gain is effectively connected with the conduct by such holder of
  a trade or business in the United States; and

    (c) a Note held by an individual who is not a citizen or resident of the
  United States at the time of his death will not be subject to United
  States federal estate tax as a result of such individual's death, provided
  that, at the time of such individual's death, the individual does not own,
  actually or constructively, 10 percent or more of the total combined
  voting power of all classes of stock of Green Tree entitled to vote and
  payments with respect to such Note would not have been effectively
  connected to the conduct by such individual of a trade or business in the
  United States.

    Sections 871(h) and 881(c) of the Code and Treasury Regulations thereunder
require that, in order to obtain the exemption from withholding tax described
in paragraph (a) above, either (i) the beneficial owner of a Note must certify
under penalties of perjury to the Trustee or the paying agent, as the case may
be, that such owner is a United States Alien Holder and must provide such
owner's name and address, and United States taxpayer identification number, if
any, or (ii) a securities clearing organization, bank or other financial
institution

                                       82
that holds customers' securities in the ordinary course of its trade or
business (a "Financial Institution") and holds the Note on behalf of the
beneficial owner thereof must certify under penalties of perjury to the
Indenture Trustee or the paying agent, as the case may be, that such
certificate has been received from the beneficial owner by it or by a Financial
Institution between it and the beneficial owner and must furnish the payor with
copy thereof. A certificate described in this paragraph is effective only with
respect to payments of interest made to the certifying United States Alien
Holder after issuance of the Notes in the calendar year of its issuance and the
two immediately succeeding calendar years. Under temporary United States
Treasury Regulations, such requirement will be fulfilled if the beneficial
owner of a Note certifies on IRS Form W-8, under penalties of perjury, that it
is a United States Alien Holder and provides its name and address, and any
Financial Institution holding the Note on behalf of the beneficial owner files
a statement with the withholding agent to the effect that it has received such
a statement from the beneficial owner (and furnishes the withholding agent with
a copy thereof). If the information shown on IRS Form W-8 changes, a new IRS
Form W-8 must be filed within 30 days of such change. IRS Form W-8 is valid for
the calendar year in which filed and the two succeeding calendar years.

    A United States Alien Holder residing in a country that has a tax treaty
with the United States may be eligible for an exemption or reduced rate
(depending upon the terms of the treaty) with respect to U.S. withholding tax.
In order to secure this exemption or reduced rate, the United States Alien
Holder (or his agent) must certify the holder's residence in the treaty country
filing IRS Form 1001. If the treaty provides only for a reduced rate, U.S.
withholding tax will be imposed at the reduced rate unless the requirements set
forth in paragraph (a) above and the immediately preceding paragraph (including
filing of IRS Form W-8) are satisfied. IRS Form 1001 is valid for the calendar
year in which filed and the two succeeding calendar years.

    If the United States Alien Holder of a Note is engaged in a trade or
business in the United States, and if interest on the Note, or gain realized on
the sale, exchange or other disposition of the Note, is effectively connected
with the conduct of such trade or business, the United States Alien Holder,
although exempt from United States withholding tax, will generally be subject
to regular United States income tax on such interest or gain in the same manner
as if it were a United States Holder. In lieu of the certificate described in
the preceding paragraph, such a holder will be required to provide to the
Trustee or the paying agent, as the case may be, a properly executed IRS Form
4224 in order to claim an exemption from withholding tax. In addition, if such
United States Alien Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% (or such lower rate provided by an applicable
treaty) of its effectively connected earnings and profits for the taxable year,
subject to certain adjustments. For purposes of the branch profits tax,
interest on and any gain recognized on the sale, exchange or other disposition
of a Note will be included in the effectively connected earnings and profits of
such United States Alien Holder if such interest or gain is effectively
connected with the conduct by the United States Alien Holder of a trade or
business in the United States. IRS Form 4224 is valid solely for the calendar
year in which filed.

                                       83
New Withholding Rules in 2000. Effective January 1, 2000, new withholding
tax regulations will take effect with respect to interest payments and certain
other categories of payments made to United States Alien Holders. Among other
things, these regulations generally will require any United States Alien Holder
that seeks the protection of an income tax treaty with respect to the
imposition of U.S. withholding tax to obtain a taxpayer identification number
("TIN") from the IRS in advance and provide verification that such holder is
entitled to the protection of the relevant income tax treaty. Tax-exempt United
States Alien Holders will generally be required to provide verification of
their tax-exempt status. United States Alien Holders are urged to consult with
their tax advisors with respect to these new withholding rules.

Backup Withholding

    Under current United States federal income tax law, a 31% backup
withholding tax requirement applies to certain payments of interest on, and the
proceeds of a sale, exchange or redemption of, the Notes.

    Backup withholding will generally not apply with respect to payments made
to certain exempt recipients such as corporations or other tax-exempt entities.
In the case of a non-corporate United States Holder, backup withholding will
apply only if such holder (i) fails to furnish its TIN which, for an
individual, would be his social security number, (ii) furnishes an incorrect
TIN, (iii) is notified by the IRS that it has failed to report properly
payments of interest and dividends or (iv) under certain circumstances, fails
to certify under penalties of perjury that it has furnished a correct TIN and
has not been notified by the IRS that it is subject to backup withholding for
failure to report interest and dividend payments.

    In the case of a United States Alien Holder, under current Treasury
Regulations, backup withholding will not apply to payments made by the
Indenture Trustee or any paying agent thereof on a Note if such holder has
provided the required certificate under penalties of perjury that it is not a
United States Holder (as defined above) or has otherwise established an
exemption, provided in each case that the Trustee or such paying agent, as the
case may be, does not have actual knowledge that the payee is a United States
Holder.

    Under current Treasury Regulations, if payments on a Note are made to or
through a foreign office of a custodian, nominee or other agent acting on
behalf of a beneficial owner of a Note, such custodian, nominee or other agent
will not be required to apply backup withholding to such payments made to such
beneficial owner.

    Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. Payments to or through the United
States office of a broker will be subject to backup withholding and information
reporting unless the holder certifies under penalties of perjury that it is not
a United States Holder and that certain other conditions are met or otherwise
establishes an exemption.

    Holders of Notes should consult their tax advisors regarding the
application of backup withholding in their particular situations, the
availability of an exemption therefrom and the procedure for obtaining such an
exemption, if available. Any amounts withheld from

                                       84
payment under the backup withholding rules will be allowed as a credit against
a holder's United States federal income tax liability and may entitle such
holder to a refund, provided that the required information is furnished to the
IRS.

Possible Alternative Treatment of the Notes

    If, contrary to the opinion of Counsel, the IRS successfully asserted that
one or more classes of Notes did not represent indebtedness for federal income
tax purposes, the Notes might be treated as equity interests in the Issuer. If
so treated, the Issuer might be characterized as a publicly traded partnership
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to reduce its taxable income by
deductions for interest expense on Notes recharacterized as equity). In
addition, treatment of the Notes as equity interests in such a partnership
could have adverse tax consequences to certain holders. For example, income to
foreign holders generally would be subject to federal tax and federal tax
return filing and withholding requirements at a rate as high as 30%, and
individual holders might be subject to certain limitations on their ability to
deduct their share of Issuer expenses.

    THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE NOTEHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE NOTEHOLDER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME TAX LAWS AND ANY
RECENT OR POSSIBLE CHANGES IN APPLICABLE TAX LAWS.

                              ERISA CONSIDERATIONS

    Section 406 of the Employee Retirement Income Security Act ("ERISA"),
and/or Section 4975 of the Code, prohibits a pension, profit-sharing or other
employee benefit plan, as well as an individual retirement account and a Keogh
Plan of certain types (each a "Benefit Plan") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax
or other penalties and liabilities under ERISA and the Code for such persons.
Title I of ERISA also requires that fiduciaries of a Benefit Plan subject to
ERISA make investments that are prudent, diversified (except if prudent not to
do so) and in accordance with governing plan documents.

    Certain transactions involving the purchase, holding or transfer of the
Notes might be deemed to constitute prohibited transactions under ERISA and the
Code if assets of the Issuer were deemed to be assets of a Benefit Plan. Under
a regulation issued by the United States Department of Labor (the "Plan Assets
Regulation"), the assets of the Issuer would be treated as plan assets of a
Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan
acquires an "equity interest" in the Issuer and none of the exceptions

                                       85
contained in the Plan Assets Regulation is applicable. An equity interest is
defined under the Plan Assets Regulation as an interest in an entity other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. Although there can be no assurances
in this regard, it appears that the Notes should be treated as debt without
substantial equity features for purposes of the Plan Assets Regulation and that
the Notes do not constitute equity interests in the Issuer for purposes of the
Plan Assets Regulation. However, without regard to whether the Notes are
treated as an equity interest for such purposes, the acquisition or holding of
Notes by or on behalf of a Benefit Plan could be considered to give rise to a
prohibited transaction if the Issuer or the Trustee, or any of their respective
affiliates is or becomes a party in interest or a disqualified person with
respect to such Benefit Plan. In such case, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 96-23, regarding transactions effected by "in-house asset managers";
PTCE 90-1, regarding investments by insurance company pooled separate accounts;
PTCE 95-60, regarding transactions effected by insurance company general
accounts; PTCE 91-38, regarding investments by bank collective investment
funds; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers."

    Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.

    A PLAN FIDUCIARY CONSIDERING THE PURCHASE OF ANY OF THE NOTES SHOULD
CONSULT ITS TAX AND/OR LEGAL ADVISORS REGARDING WHETHER THE ASSETS OF THE
ISSUER WOULD BE CONSIDERED PLAN ASSETS, THE POSSIBILITY OF EXEMPTIVE RELIEF
FROM THE PROHIBITED TRANSACTION RULES AND OTHER ISSUES AND THEIR POTENTIAL
CONSEQUENCES.

                              RATINGS OF THE NOTES

    It is a condition of issuance that each of S&P and Fitch (i) rate the Class
A-1 Notes "A-1+" and "F1+/AAA," respectively, (ii) rate the Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes "AAA," (iii) rate the Class B Notes at
least "A," and (iv) rate the Class C Notes at least "BBB." The rating of each
Class of Notes addresses the likelihood of the timely receipt of interest and
payment of principal on such Class of Notes on or before the Stated Maturity
Date for such Class of Notes. The rating of the Class A and Class B Notes will
be based primarily upon the Pledged Revenues, the Residual Realizations, the
Reserve Account and the subordination provided by (1) the Class B Notes and the
Class C Notes, in the case of the Class A Notes and (2) the Class C Notes, in
the case of the Class B Notes. A variety of events subsequent to the issuance
of the Notes could cause a Rating Agency to qualify, reduce or withdraw its
ratings of some or all Classes of the Notes. These events may include
unexpected negative performance of the Leases, unexpected negative developments

                                       86
at Green Tree Financial Corporation or Vendor Services, unexpected negative
performance of other pools of leases serviced by Vendor Services, or unexpected
changes in law. In the event that a rating or ratings with respect to the Notes
is qualified, reduced or withdrawn, no person or entity will be obligated to
provide any additional credit enhancement with respect to the Notes so
qualified, reduced or withdrawn.

    The rating of the Notes should be evaluated independently from similar
ratings on other types of securities. A rating is not a recommendation to buy,
sell or hold the Notes, inasmuch as such rating does not comment as to market
price or suitability for a particular investor. The ratings of the Notes do not
address the likelihood of payment of principal on any Class of Notes prior to
the Stated Maturity Date thereof, or the possibility of the imposition of
United States withholding tax with respect to non-United States Persons.

                                USE OF PROCEEDS

    The proceeds from the offering and sale of the Notes, after paying the
expenses of the Issuer and the funding of the Reserve Account, will be paid by
the Issuer to the SPC and by the SPC to Vendor Services in connection with the
transfer of the Leases and Vendor Services' interests in the Equipment.

                                    EXPERTS

    The financial statements of Green Tree Lease Finance 1999-1, LLC as of
     , 1999 included herein have been included in reliance upon the report of
PricewaterhouseCoopers LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

                                  UNDERWRITING

    Subject to the terms and conditions of the underwriting agreement (the
"Underwriting Agreement"), the underwriters named below (the "Underwriters"),
through their representative, (the "Representative"), have severally agreed to
purchase from the Issuer the following respective initial principal amount of
Notes at the initial public offering price less the underwriting discounts set
forth on the cover page of this Prospectus:
Initial Principal Initial Principal Initial Principal Initial Principal Initial Principal Initial Principal
                       Amount of         Amount of         Amount of         Amount of         Amount of         Amount of
                       Class A-1         Class A-2         Class A-3         Class A-4          Class B           Class C
Underwriters             Notes             Notes             Notes             Notes             Notes             Notes
------------       ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
............      $                 $                 $                 $                 $                 $
      ............
      ............
                        ------            ------            ------            ------            ------            ------
  Total...........      $                 $                 $                 $                 $                 $
                        ======            ======            ======            ======            ======            ======
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Notes offered
hereby if any of such Notes

                                       87
are purchased. The Issuer has been advised by the Representative that the
Underwriters propose initially to offer the Notes to the public at the
respective public offering prices set forth on the cover page of this
Prospectus, and to certain dealers at such price, less a concession not in
excess of   % per Class A-1 Note,   % per Class A-2 Note,   % per Class A-3
Note,   % per Class A-4 Note,   % per Class B Note and   % per Class C Note.
The Underwriters may allow and such dealers may reallow to other dealers a
discount not in excess of   % per Class A-1 Note,   % per Class A-2 Note,   %
per Class A-3 Note,   % per Class A-4 Note,   % per Class B Note and   % per
Class C Note. After the initial public offering of the Notes, the offering
prices and such concessions and discounts may be varied by the Underwriters.

    Until the distribution of the Notes is completed, rules of the SEC may
limit the ability of the Underwriters and certain selling group members to bid
for and purchase the Notes. As an exception to these rules, the Underwriters
are permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes.

    In general, purchases of a security for the purpose of stabilization or 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 Issuer nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Notes. In addition, neither the
Issuer nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

    Green Tree Financial Corporation has agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. Vendor Services estimates that it will incur expenses of
$575,000 in connection with the offering.

    The Notes are new issues of securities with no established trading market.
The Issuer has been advised by the Representative that each Underwriter intends
to make a market in the United States in the Classes of Notes for which it is
acting as underwriter but is not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.

    Funds in the Trust Accounts may, from time to time, be invested in Eligible
Investments acquired from the Underwriters.

                                 LEGAL MATTERS

    Certain legal matters with respect to the Notes will be passed upon for the
Issuer by Dorsey & Whitney LLP. Brown & Wood LLP will act as counsel to the
Underwriters. The Indenture, the Contribution and Servicing Agreement, the
Transfer Agreement and the Notes will be governed by the laws of the State of
Minnesota.

                                       88
INDEX OF PRINCIPAL TERMS
Term                                                                      Page
----                                                                      ----
Additional Principal....................................................     41
Adjusted Lease.......................................................... 21, 56
Administrative Fees.....................................................     56
Amortizable Bond Premium................................................     62
Amount Available........................................................     38
Article 2A..............................................................     59
Available Pledged Revenues..............................................     38
Available Reserve Amount................................................     43
Bankruptcy Code.........................................................     59
Benefit Plan............................................................     65
Book-Entry Certificates.................................................     37
Book Value..............................................................     42
Business Day............................................................     37
Cedel...................................................................     47
Cedel/Euroclear Depositaries............................................     45
Cedel Participants......................................................     47
Class A Notes...........................................................     37
Class A Percentage......................................................     41
Class A Principal Payment...............................................     40
Class A Target Investor Principal Amount................................     41
Class B Floor...........................................................     41
Class B Percentage......................................................     41
Class B Principal Payment...............................................     40
Class B Target Investor Principal Amount................................     41
Class C Floor...........................................................     41
Class C Percentage......................................................     41
Class C Principal Payment...............................................     40
Class C Target Investor Principal Amount................................     41
Code....................................................................     60
Collection Account......................................................     44
Collection Period.......................................................     42
Company.................................................................    F-4
Contribution & Servicing Agreement......................................     12
Cooperative.............................................................     47
Counsel.................................................................     60
CPR.....................................................................     30
Cumulative Loss Amount..................................................     41
Cut-Off Date............................................................     12
Cut-Off Date Pool.......................................................     22
Definitive Notes........................................................     48
Delinquency............................................................. 24, 27
Deposit Date............................................................     38
Depository..............................................................     37
Determination Date......................................................     54
Discount Rate...........................................................  4, 22
DTC.....................................................................     43
Eligible Account........................................................     44
Eligible Institution....................................................     44
89
Term                                                                      Page
----                                                                      ----
Eligible Investments....................................................     44
Equipment...............................................................     12
ERISA...................................................................     65
Events of Default.......................................................     50
Exchange Act............................................................     45
Euroclear...............................................................     47
Euroclear Operator......................................................     47
Euroclear Participants..................................................     47
Financial Institution...................................................     63
Global Securities.......................................................    A-1
Green Tree..............................................................     13
Gross Losses............................................................     28
Hell-or-High-Water......................................................     18
Holders.................................................................     37
Indirect Participants...................................................     45
Industry................................................................     47
Initial Cut-Off Date....................................................     12
Initial Pool Principal Balance.......................................... 22, 42
Insurance, Maintenance and Tax Accounts.................................     54
IRS.....................................................................     60
Issuer..................................................................      1
Lease...................................................................  3, 12
Lease Pool..............................................................     12
Lease Pool Principal Balance............................................     22
Liquidated Lease........................................................     42
Market Discount.........................................................     63
Master Form Lease.......................................................     16
Monthly Principal Amount................................................     41
Net Losses..............................................................     28
Non-Accrual.............................................................     27
Non-Earning.............................................................     14
Nonrecoverable Servicer Advance.........................................     42
Note Distribution Account...............................................     44
Note Majority...........................................................     50
Note Owner..............................................................     45
Noteholders.............................................................     37
Notes...................................................................     37
Obligor.................................................................     12
OID.....................................................................     61
Outstanding Principal Amounts...........................................     40
Participants............................................................     45
Payment Date............................................................      1
Payment Shortfall.......................................................     54
Plan Assets Regulation..................................................     65
Pledged Revenues........................................................     38
Prepaid Leases..........................................................     21
Prepayments.............................................................     38
Principal Balance.......................................................     41
PTCE....................................................................     65
Representative..........................................................     67
Repurchase Event........................................................     21
Required Payoff Amount..................................................     21
Required Payment........................................................     43
90
Term                                                                     Page
----                                                                     ----
Required Reserve Amount..............................................         43
Reserve Account......................................................      5, 44
Residual Account.....................................................         44
Residual Event.......................................................         43
Residual Realizations................................................         42
Rules................................................................         46
Scheduled Payments...................................................         38
SEC..................................................................        iii
Servicer Advance.....................................................         42
Servicing Account....................................................         44
Servicing Fee........................................................         56
SPC.................................................................. 1, 11, F-4
Specific Lease Form..................................................         16
Statistical Discounted Present Value of the Leases...................         22
Substitute Lease.....................................................         21
Systems..............................................................         46
Terms and Conditions.................................................         48
TIN..................................................................         64
Transfer Agent and Registrar.........................................         48
Transfer Agreement...................................................         12
Trust Accounts.......................................................         44
Trustee..............................................................          1
UCC..................................................................          8
Underwriters.........................................................         66
Underwriting Agreement...............................................         66
United States Alien Holder...........................................         61
United States Holder.................................................         60
U.S. Person..........................................................        A-4
Vendor Services......................................................      1, 13
Warranty Leases......................................................         21
91
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report ............................................... F-2
Balance Sheet as of        , 1999........................................... F-3
Notes to Balance Sheet ..................................................... F-4
F-1
Independent Auditors' Report

                                   [TO COME]

                                       F-2
GREEN TREE LEASE FINANCE 1999-1, LLC

                                 BALANCE SHEET

                                        , 1999
Asset
Cash................................................................ $1,000
                                                                          ======
                               Member's Equity
     Member's Equity (authorized 10 Units; issued
      and outstanding 10 Units).......................................... $1,000
                                                                          ======
The accompanying notes are an integral part of the balance sheet.

                                      F-3
GREEN TREE LEASE FINANCE 1999-1, LLC

                             Notes to Balance Sheet

                                        , 1999

(1) Organization

    Green Tree Lease Finance 1999-1, LLC (the "Company"), a wholly owned
subsidiary of Green Tree Lease Finance II, Inc., (the "SPC"), was formed as a
limited liability company in the State of Delaware on August 11, 1999. The
Company has been inactive since that date.

    The Company was organized to engage exclusively in the following business
and financial activities: to acquire leases and rights to residual realizations
on the underlying equipment from the SPC; to issue and sell notes
collateralized by any or all of its assets pursuant to one or more indentures
between the Company and an indenture trustee; and to engage in other
transactions, including entering into agreements that are incidental and
necessary, suitable or convenient to the foregoing and permitted under Delaware
law.

(2) Capital Contribution

    The SPC purchased 10 Units of the Company for $1,000 on August 12, 1999.

(3) Accounting Policies

    Generally all lease receivables are classified as direct financing leases
as defined in Statement of Financial Accounting Standards Boards No. 13. The
carrying value of lease receivables represents the present value of both the
future minimum lease payments and related residual value less an allowance for
expected losses. Revenue is recognized in interest income as a constant
percentage return on the asset carrying value.

                                      F-4
ANNEX 1

         GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

    Except in certain limited circumstances, the globally offered Notes (the
"Global Securities") will be available only in book-entry form. Investors in
the Global Securities may hold such Global Securities through any of DTC, Cedel
or Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.

    Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).

    Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.

    Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against-payment basis
through the respective Depositaries of Cedel and Euroclear (in such capacity)
and DTC Participants.

    Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.

Initial Settlement

    All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.

    Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to prior debt issues. Investors' securities
custody accounts will be credited with their holdings against payment in same-
day funds on the settlement date.

    Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payments in
same-day funds.

                                      A-1
Secondary Market Trading

    Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.

    Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to book-entry
securities in same-day funds.

    Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.

    Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear, as applicable, will instruct its Depositary to receive the Global
Securities against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding the
settlement date. Payment will then be made by such Depositary to the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
applicable clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The Global Securities credit will appear the next day (European time)
and the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debit
will be valued instead as of the actual settlement date.

    Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day
funds settlement. The most direct means of doing so is to pre-position funds
for settlement, either from cash on hand or existing lines of credit, as they
would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.

    As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-
position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited to
their accounts. However, interest on the Global Securities would accrue from
the value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges,

                                      A-2
although this result will depend on each Cedel Participant's or Euroclear
Participant's particular cost of funds.

    Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.

    Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing systems, through
their respective Depositaries, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
Cedel or Euroclear will instruct their respective Depositaries, as appropriate,
to deliver the bonds to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date. The payment will
then be reflected in the account of the Cedel Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its clearing system and elect to be in debit in anticipation of
receipt of the sale proceeds in its account, the back-valuation will extinguish
any overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date. Finally, day traders
that use Cedel or Euroclear and that purchase Global Securities from DTC
Participants for delivery to Cedel Participants or Euroclear Participants
should note that these trades would automatically fail on the sale side unless
affirmative action were taken. At least three techniques should be readily
available to eliminate this potential problem:

    (a) borrowing through Cedel or Euroclear for one day (until the purchase
  side of the day trade is reflected in their Cedel or Euroclear accounts)
  in accordance with the clearing system's customary procedures;

    (b) borrowing the Global Securities in the U.S. from a DTC Participant
  no later than one day prior to settlement, which would give the Global
  Securities sufficient time to be reflected in their Cedel or Euroclear
  account in order to settle the sale side of the trade; or

    (c) staggering the value dates for the buy and sell sides of the trade
  so that the value date for the purchase from the DTC Participant is at
  least one day prior to the value date for the sale to the Cedel
  Participant or Euroclear Participant.

                                      A-3
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

    A beneficial owner of Global Securities holding securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:

    Exemption on non-U.S. Persons (Form W-8). Beneficial owners of Notes that
  are non-U.S. Persons generally can obtain a complete exemption from the
  withholding tax by filing a signed Form W-8 (Certificate of Foreign
  Status). If the information shown on Form W-8 changes, a new Form W-8 must
  be filed within 30 days of such change.

    Exemption for non-U.S. Person with effectively connected income (Form
  4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
  U.S. branch, for which the interest income is effectively connected with
  its conduct of a trade or business in the United States can obtain an
  exemption from the withholding tax by filing Form 4224 (Exemption from
  Withholding of Tax on Income Effectively Connected with the Conduct of a
  Trade or Business in the United States).

    Exemption or reduced rate for non-U.S. Persons resident in treaty
  countries (Form 1001). Non-U.S. Persons that are beneficial owners of Notes
  residing in a country that has a tax treaty with the United States can
  obtain an exemption or reduced tax rate (depending on the treaty terms) by
  filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
  treaty provides only for a reduced rate, withholding tax will be imposed at
  that rate unless the filer alternatively files Form W-8. Form 1001 may be
  filed by the beneficial owner of Notes or such owner's agent.

    Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
  exemption from the withholding tax by filing Form W-9 (Payer's request for
  Taxpayer Identification Number and Certification).

    U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
  Global Security or, in the case of a Form 1001 or a Form 4224 filer, such
  owner's agent, files by submitting the appropriate form to the person
  through whom it holds the security (the clearing agency, in the case of
  persons holding directly on the books of the clearing agency). Form W-8 and
  Form 1001 are effective for three calendar years and Form 4224 is effective
  for one calendar year.

    The term "U.S. Person" means a citizen or resident of the United States,
      a corporation or a partnership organized in or under the laws of the
      United States or any political subdivision thereof or an estate, the
      income of which from sources outside the United States is includible
      in gross income for federal income tax purposes regardless of its
      connection with the conduct of a trade or business within

                                      A-4
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    You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information.

    We are not offering the Notes in any state where the offer is not
permitted.

    We do not claim the accuracy of the information in this prospectus as of
any date other than the date of this document stated on the cover.

    Dealers will deliver a prospectus when acting as underwriters of the Notes
and with respect to their unsold allotments or subscriptions. In addition, all
dealers selling the Notes will deliver a prospectus until        , 1999.

[GreenTree Logo]

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PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

  The following table sets forth the expenses to be incurred in connection
with the offering of the Lease-Backed Notes, other than underwriting discounts
and commissions, described in this Registration Statement:
Securities and Exchange Commission Registration Fee.......... $ 93,408
      Printing and Engraving.......................................  100,000  *
      Legal Fees and Expenses......................................  100,000  *
      Blue Sky Filing and Counsel Fees.............................    5,000  *
      Accounting Fees and Expenses.................................   30,000  *
      Trustee Fees and Expenses....................................   20,000  *
      Rating Agencies' Fees........................................  150,000  *
      Miscellaneous Expenses.......................................   76,592  *
                                                                    ----------
        Total...................................................... $575,000  *
                                                                    ==========
--------
 * Other than the registration fee, all expense items are estimates.

Item 14. Indemnification of Directors and Officers.

  Green Tree Lease Finance 1999-1, LLC is a limited liability company formed
under the laws of Delaware. Section 18-108 of the Delaware Limited Liability
Company Act provides that a Delaware limited liability company may indemnify
any member or manager or other person from and against any and all claims and
demands whatsoever. The Limited Liability Company Agreement of Green Tree
Lease Finance 1999-1, LLC provides, in effect, that, subject to certain
limited exceptions, such company will indemnify its managers and named
officers to the extent permitted by the Delaware Limited Liability Company
Act.

  Green Tree Lease Finance II, Inc. is incorporated under the laws of
Minnesota. Section 302A.521 of the Minnesota Statutes provides that a
corporation shall indemnify any person made or threatened to be made a party
to a proceeding by reason of the former or present official capacity of such
person against judgments, penalties, fines (including, without limitation,
excise taxes assessed against such person with respect to any employee benefit
plan), settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan for the same judgments, penalties or
fines; (2) acted in good faith; (3) received no improper personal benefit and
Section 302A.255 (with respect to director conflicts of interest), if
applicable, has been satisfied; (4) in the case of a criminal proceeding, had
no reasonable cause to believe the conduct was unlawful; and (5) in the case
of acts or omissions in such person's official capacity for the corporation,
reasonably believed that the conduct was in the best interests of the
corporation, or in the case of acts or omissions in such person's official
capacity for other affiliated organizations, reasonably believed that the
conduct was not opposed to the best interests of the corporation. Section
302A.521 also requires payment by a corporation, upon written request, of
reasonable expenses in advance of final disposition of the proceeding in
certain instances. A decision as to required indemnification is made by a
disinterested majority of the Board of Directors present at a meeting at which
a disinterested quorum is present, or by a designated committee of the Board,
by special legal counsel, by the shareholders or by a court.

  The Bylaws of Green Tree Lease Finance II, Inc. provide, in effect, that,
subject to certain limited exceptions, such corporation will indemnify its
officers and directors to the extent permitted by the Minnesota Business
Corporation Act.

                                     II-1
Green Tree Financial Corporation is incorporated under the laws of Delaware.
Section 145 of the Delaware General Corporation Law provides that a Delaware
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of such corporation,
by reason of the fact that such person was an officer, director, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, employee or agent of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise). The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided such person acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was illegal. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation. Where and officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.

  The Certificate of Incorporation and Bylaws of Green Tree Financial
Corporation provide, in effect, that, subject to certain limited exceptions,
such corporation will indemnify its officers and directors to the extent
permitted by the Delaware General Corporation Law.

Item 15. Recent sales of Unregistered Securities.
  None.

Item 16. Exhibits and Financial Statement Schedules.
  The Exhibits filed as part of this Registration Statement are:
1.1*  --Form of Underwriting Agreement.
    3.1*  --Certificate of Formation of Green Tree Lease Finance 1999-1, LLC.
    3.2*  --LLC Agreement of Green Tree Lease Finance 1999-1, LLC.
    3.3** --Articles of Incorporation of Green Tree Lease Finance II, Inc.
    3.4** --By-Laws of Green Tree Lease Finance II, Inc.
    4.1*  --Form of Transfer Agreement.
    4.2*  --Form of Contribution and Servicing Agreement.
    4.3*  --Form of Indenture.
    5.1*  --Opinion and consent of Dorsey & Whitney LLP with respect to
           legality.
    8.1*  --Opinion and consent of Dorsey & Whitney LLP with respect to tax
           matters.
   23.1*  --Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
   23.2*  --Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
   23.3*  --Consent of Dorsey & Whitney LLP (true sale and nonconsolidation
           opinions).
   23.4*  --Consent of PricewaterhouseCoopers LLP.
   24.1*  --Power of attorney from officers and directors of Green Tree Lease
           Finance II, Inc.
   25.1*  --Statement of eligibility of Trustee.
   99.1*  --Form of Opinion of Dorsey & Whitney LLP with respect to true sale
           of the Leases.
   99.2*  --Form of Opinion of Dorsey & Whitney LLP with respect to
           nonconsolidation.
--------
 *  To be filed by amendment.
** Incorporated by reference to the corresponding exhibit number in
   Registration Statement on Form S-3 Amendment No. 3 filed December 9, 1997,
   Registration Statement Nos. 333-38687, 333-38687-01 and 333-38687-02.

                                     II-2
Item 17. Undertakings.

  Each of the undersigned, Green Tree Lease Finance 1999-1, LLC, and Green
Tree Lease Finance II, Inc. (collectively, the "Registrants"), hereby
undertakes that, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrants pursuant to the foregoing provisions,
or otherwise, the Registrants have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

  The Registrants hereby undertake:

    (1) 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 Registrants pursuant to Rule 424(b)(1) or
  (4) or 497(h) under the Securities Act shall be deemed to be part of this
  Registration Statement as of the time it was declared effective.

    (2) For the purpose of determining any liability under the Securities Act
  of 1933, each post-effective amendment that contains a form of prospectus
  shall be deemed to be a new registration statement relating to the
  securities offered therein, and the offering of such securities at that
  time shall be deemed to be the initial bona fide offering thereof.

  The Registrants hereby undertake to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.

                                     II-3
SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Paul, State of
Minnesota, on the 23th day of August, 1999.

                                          Green Tree Lease Finance 1999-1, LLC

                                          By: Green Tree Lease Finance II,
                                           Inc.

                                            /s/ Joel H. Gottesman
                                          By: _________________________________
                                            Joel H. Gottesman
                                            Senior Vice President and
                                            Secretary

                                      II-4
SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Paul, State of
Minnesota, on the 23th day of August, 1999.

                                          Green Tree Lease Finance II, Inc.

                                            /s/ Joel H. Gottesman
                                          By: _________________________________
                                            Joel H. Gottesman
                                            Senior Vice President and
                                            Secretary

  Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 20, 1999. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Charles
M. Freeland and Phyllis A. Knight and each of them, as his/her true and lawful
attorney-in-fact and agent, with full power of substitution, to sign on his
behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement
or the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his/her substitutes,
shall do or cause to be done by virture hereof.

              Signature                        Title                 Date

       /s/ Bruce A. Crittenden         President (Principal    August 23, 1999
-------------------------------------   Executive Officer)
         Bruce A. Crittenden

        /s/ Phyllis A. Knight
-------------------------------------  Senior Vice             August 23, 1999
          Phyllis A. Knight             President and
                                        Treasurer
                                        (Principal
                                        Financial and
                                        Accounting Officer)

        /s/ Joel H. Gottesman
-------------------------------------  Director                August 23, 1999
          Joel H. Gottesman

          /s/ Paul A. Boyum
-------------------------------------  Director                August 23, 1999
            Paul A. Boyum

                                     II-5