<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1999
REGISTRATION NO. 333-81455
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RYDER VEHICLE LEASE TRUST 1999-A
(Issuer with respect to the Notes)
RYDER FUNDING LP
(Originator of the Trust described herein and Transferor of the 99% Vehicle
SUBI Certificate to the Trust)
RYDER TRUCK RENTAL LT
(Issuer with respect to the SUBI and the 99% SUBI Certificates)
RYDER TRUCK RENTAL I LP
(Originator of Ryder Truck Rental LT and transferor of the
SUBI and the 99% SUBI Certificates to the Transferor)
(Exact name as specified in Originator's charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 7513 52-7000600
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
3600 NW 82ND AVENUE
MIAMI, FLORIDA 33166
(305) 500-3254
(Address, including zip code, and telephone number, including area
code, of principal executive offices of Ryder Funding LP,
Ryder Truck Rental LT and Ryder Truck Rental I LP)
-----------------
SERGE G. MARTIN, ESQ.
STEEL HECTOR & DAVIS LLP
200 SOUTH BISCAYNE BOULEVARD
MIAMI, FLORIDA 33131-2398
(305) 577-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
DALE W. LUM, ESQ.
BROWN & WOOD LLP
555 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 772-1200
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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
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<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
PROPOSED TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) FEE(1)(4)
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<S> <C> <C> <C> <C>
Asset Backed Notes, Class A-1.................... $250,000 100% $250,000 $69.50
Asset Backed Notes, Class A-2.................... $250,000 100% $250,000 $69.50
Asset Backed Notes, Class A-3.................... $250,000 100% $250,000 $69.50
Asset Backed Notes, Class A-4.................... $250,000 100% $250,000 $69.50
99% 1999-A Special Unit of Beneficial Interest (3) (3) (3) (3)
Certificate(2)..........................
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) The 1999-A Special Unit of Beneficial Interest (the "Lease SUBI")
issued by Ryder Truck Rental LT will constitute a beneficial interest
in a specified portion of the assets of Ryder Truck Rental LT,
including certain lease contracts. The 1999-A2 Special Unit of
Beneficial Interest (the "Vehicle SUBI") issued by Ryder Truck Rental
LT will constitute a beneficial interest in a specified portion of the
assets of Ryder Truck Rental LT, including certain vehicles relating to
such lease contracts. The Lease SUBI and the Vehicle SUBI
(collectively, the "SUBI," and each, a "1999-A SUBI") will not be
offered to investors hereunder. A 99% Special Unit of Beneficial
Interest Certificate will be issued for each 1999-A SUBI (the "SUBI
Certificates") representing a 99% undivided interest in each 1999-A
SUBI. The SUBI Certificate for the Lease SUBI will be pledged and the
SUBI Certificate for the Vehicle SUBI will be transferred to the Owner
Trustee for the Ryder Vehicle Lease Trust 1999-A issuing the Asset
Backed Notes, Class A-1, Class A-2, Class A-3 and Class A-4. The SUBI
Certificates will not be offered to investors hereunder.
(3) Not applicable.
(4) Previously paid.
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT.SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
Subject to Completion, Preliminary
Prospectus dated September 17, 1999
$
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(RYDER LOGO)
ASSET BACKED SENIOR NOTES
RYDER VEHICLE LEASE TRUST 1999-A
ISSUER
RYDER FUNDING LP
TRANSFEROR
RYDER TRUCK RENTAL, INC.
ADMINISTRATIVE AGENT
The trust's main sources for payment of the senior notes will be lease
payments generated by a portfolio of commercial full service lease contracts and
the proceeds from the future sale of the trucks, highway tractors and trailers
currently leased under those contracts.
Interest and principal will be payable quarterly and the first
scheduled payment date is ____________ 15, 1999.
Before you decide to invest, read this prospectus carefully, especially
the risk factors beginning on page __.
THE SENIOR NOTES ARE OBLIGATIONS OF THE TRUST ONLY. THE SENIOR NOTES
ARE NOT OBLIGATIONS OF RYDER FUNDING LP, RYDER TRUCK RENTAL, INC. OR ANY OF
THEIR AFFILIATES.
THE TRUST WILL ISSUE THE FOLLOWING CLASSES OF SENIOR NOTES--
<TABLE>
<CAPTION>
Original
Principal Interest Rate Final Payment Underwriting Proceeds to
Amount (per annum) Date Price to Public Discount the Transferor
<S> <C> <C> <C> <C> <C> <C>
Per Class A-1 Note $__________ _____% __________ _____ __________% _____% ________%
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Per Class A-2 Note $__________ _____% __________ _____ __________% _____% ________%
--------------------
Per Class A-3 Note $__________ _____% __________ _____ __________% _____% ________%
--------------------
Per Class A-4 Note $__________ _____% __________ _____ __________% _____% ________%
--------------------
Total ............. $__________ __________% _____% ________%
</TABLE>
o The price to the public and proceeds to the transferor do not include
interest accrued from __________, 1999, the date the notes will be
issued.
o The proceeds to the transferor excludes expenses, estimated at
approximately $__________.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS
ILLEGAL FOR ANYONE TO TELL YOU OTHERWISE.
----------------
MERRILL LYNCH & CO.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed
with the SEC is effective. This prospectus is not an offer to sell
these securities, and it is not soliciting an offer to buy them, in any
state where an offer or sale is not permitted.
<PAGE> 3
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
CONTENT OF PROSPECTUS
You should rely only on the information contained in this document. We
have not authorized anyone to provide you with different information.
We include cross-references in this prospectus to the captions under
which you can find additional related information. The following table of
contents lists the pages on which these captions are located.
You can find a listing of the pages where capitalized terms used in
this prospectus are defined under the caption "INDEX OF CAPITALIZED TERMS"
beginning on page ____.
LIMITATIONS ON OFFERS OR SOLICITATIONS
We do not intend this document to be an offer or solicitation:
o if used in a jurisdiction in which an offer or solicitation is not
authorized;
o if the person making an offer or solicitation is not qualified to do
so; or
o if an offer or solicitation is made to anyone to whom it is unlawful
to make an offer or solicitation.
DEALER PROSPECTUS DELIVERY REQUIREMENTS
Until ______________, ____ all dealers that effect transactions in the
senior notes, whether or not participating in this offering, may be required to
deliver a prospectus. This requirement is in addition to the dealers' obligation
to deliver a prospectus when acting as underwriters with respect to their unsold
allotments or subscriptions.
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TABLE OF CONTENTS
OVERVIEW OF TRANSACTION.............................4
SUMMARY.............................................5
RISK FACTORS.......................................10
OVERVIEW OF THE TRANSACTION........................16
THE TRUST..........................................17
Formation.......................................17
Capitalization..................................17
The Owner Trustee...............................18
Property of the Trust...........................18
USE OF PROCEEDS....................................19
THE ORIGINATION TRUST..............................19
General.........................................19
The UTI Beneficiaries...........................20
The Origination Trustee.........................20
Property of the Origination Trust...............20
Lease Origination and the Titling of Vehicles...20
THE SUBIs..........................................21
General.........................................21
Transfers of the SUBI Certificates..............22
THE TRANSFEROR.....................................22
RYDER..............................................23
General.........................................23
Shared Services Center..........................23
The Leases......................................24
Lease Underwriting Procedures...................27
Insurance.......................................27
Collection, Repossession and Disposition
Procedures....................................28
Servicing.......................................29
Lease Payments..................................29
Historical Data.................................32
Delinquency Experience..........................32
Write-off Experience............................32
Residual Value Performance......................32
Year 2000 Preparation...........................33
THE SPECIFIED LEASES...............................35
General.........................................35
Characteristics of the Specified Leases.........35
Representations, Warranties and Covenants.......40
MATURITY, PAYMENT AND YIELD CONSIDERATIONS.........42
NOTE FACTORS AND TRADING INFORMATION...............46
DESCRIPTION OF THE SENIOR NOTES....................46
General.........................................46
Interest........................................46
Principal.......................................47
Optional Purchase...............................48
The Indenture Trustee...........................48
Book-Entry Registration.........................48
CERTAIN INFORMATION REGARDING THE SECURITIES.......52
Payments on the Securities......................52
Optional Purchase...............................54
Statements to Senior Noteholders................54
Definitive Notes................................55
SECURITY FOR THE SECURITIES........................56
General.........................................56
The Program Operating Lease.....................56
The Subordinated Notes..........................57
The Certificates................................57
The Accounts....................................57
The Contingent and Excess Liability Insurance...60
ADDITIONAL DOCUMENT PROVISIONS.....................61
The Indenture...................................61
The Trust Agreement.............................64
The SUBI Trust Agreement........................66
The Administration Agreement....................68
Miscellaneous Provisions........................76
CERTAIN LEGAL ASPECTS OF THE ORIGINATION TRUST AND
THE SUBIs........................................80
The Origination Trust...........................80
The SUBIs.......................................81
Insolvency-Related Matters......................82
CERTAIN LEGAL ASPECTS OF THE SPECIFIED LEASES AND
THE SPECIFIED VEHICLES...........................84
Back-up Security Interests......................84
Titling Grade Period--Lack of Perfected
Ownership Interest............................85
Vicarious Tort Liability........................85
Repossession of Specified Vehicles..............86
Deficiency Judgments............................86
Other Limitations...............................86
MATERIAL FEDERAL INCOME TAX CONSEQUENCES...........87
General.........................................87
Senior Notes....................................87
CERTAIN STATE TAX CONSEQUENCES.....................92
General.........................................92
Delaware........................................92
Florida.........................................92
Miscellaneous...................................92
ERISA CONSIDERATIONS...............................93
General.........................................93
Prohibited Transactions.........................93
RATINGS OF THE SECURITIES..........................94
UNDERWRITING.......................................95
LEGAL MATTERS......................................96
EXPERTS............................................96
AVAILABLE INFORMATION..............................96
INDEX OF PRINCIPAL TERMS...........................97
INDEX TO FINANCIAL STATEMENTS.....................F-1
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES..........................A-1
3
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OVERVIEW OF TRANSACTION
(Graphic Omitted)
o The above special units of beneficial interest, or SUBIs, represent specific
assets that produce income for the issuer.
o The vehicle SUBI represents the specified vehicles and the lease SUBI
represents the specified leases.
o The UTI represents other origination trust assets and the issuer has neither
any rights in those assets nor in the income they produce.
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SUMMARY
o This summary highlights selected information from this prospectus 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 offering of
the senior notes, you should carefully read this entire prospectus.
o This summary provides an overview of some calculations, cash flows and
other information to aid your understanding and is qualified by the full
description of these calculations, cash flows and other information in this
prospectus.
BASIC TERMS OF THE SENIOR NOTES
ISSUER/TRUST: Ryder Vehicle Lease Trust
1999-A
TRANSFEROR: Ryder Funding LP
ADMINISTRATIVE AGENT: Ryder Truck Rental, Inc.
MAINTENANCE PROVIDER: Ryder Truck Rental, Inc.
OWNER TRUSTEE: Chase Manhattan Bank Delaware
INDENTURE TRUSTEE: U.S. Bank National Association
ORIGINATION TRUST: Ryder Truck Rental LT
ORIGINATION TRUSTEE: RTRT, Inc.
TRUST ASSETS: Beneficial and security
interests in leased vehicles
and lease contracts, and
related proceeds
LEASES: Commercial leases of
trucks, highway tractors
and trailers
CUTOFF DATE: Opening of business on
_____________ 1, 1999
CREDIT ENHANCEMENT: A reserve fund, a residual
value surplus account, the
subordinated notes
retained by the transferor
and the certificates
NOTES TO BE OFFERRED:
Class A-1 notes: $ ___,000,000
Class A-2 notes: $ ___,000,000
Class A-3 notes: $ ___,000,000
Class A-4 notes: $ ___,000,000
INTEREST RATES:
Class A-1 notes: _.___%
Class A-2 notes: _.___%
Class A-3 notes: _.___%
Class A-4 notes: _.___%
INTEREST BASIS:
Class A-1 notes: Actual number of days
elapsed and assuming a
360-day year
Other senior notes: A 360-day year of twelve
30-day months
PAYMENT DATES: The 15th day of each
February, May, August
and November, or, if not a
business day, the next
business day
RECORD DATE: Holders of record are
determined one business
day prior to a payment
date
FIRST PAYMENT DATE: __________ 15, ____
FINAL PAYMENT DATES:
Class A-1 notes: __________ 15, ____
Class A-2 notes: __________ 15, ____
Class A-3 notes: __________ 15, ____
Class A-4 notes: __________ 15, ____
CLEARANCE/SETTLEMENT: The Depository Trust
Company, Cedelbank and
Euroclear
CLOSING DATE: Expected to be ______
___, 1999
5
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THE STRUCTURE OF THIS TRANSACTION
GENERAL
Ryder Truck Rental, Inc. has assigned commercial lease contracts and the related
leased vehicles to Ryder Truck Rental LT. The leased vehicles include trucks,
highway tractors and trailers. Some of these lease contracts and the related
leased vehicles have been allocated to a separate pool of assets. Beneficial and
security interests - but not direct ownership - in the vehicles and contracts in
that pool will be transferred to the trust. Neither the trust nor holders of the
trust's securities will receive any interest in assets other than those in that
pool. Payment of the senior notes will be backed by those beneficial and
security interests in the vehicles and contracts in the pool.
The trust will apply the net proceeds from the issuance and sale of the senior
notes to purchase those interests in the pool. In addition to the senior notes,
the trust is also issuing $_________ in aggregate principal amount of asset
backed subordinated notes and $_________ in aggregate principal amount of asset
backed certificates. The trust is not offering the subordinated notes or the
certificates under this prospectus.
The trust will rely upon collections from the pool's lease contracts, sales
proceeds from the disposition of the related vehicles and funds on deposit in
specified accounts, to make payments on the senior notes. The trust will be
solely liable for payments made on the senior notes.
REPAYMENT OF THE NOTES
The timing of payments of principal on the senior notes is largely dependent on
the timing of collections of cash flows generated by the underlying assets.
Principal will be paid on your senior notes on each payment date in an amount
generally equal to the available principal distribution amount generated by the
underlying pool of vehicle lease contracts and proceeds from the sale of the
leased vehicles.
Principal payments on the senior notes generally will be made to the holders of
the senior notes sequentially, so that no principal will be paid on any class of
senior notes until each class of senior notes with a lower numerical designation
has been paid in full. For example, no principal will be paid on the Class A-2
Notes until the Class A-1 Notes have been paid in full.
Until all principal due to the senior notes is paid, no principal will be paid
to the subordinated notes and the certificates. Principal will then be paid to
the subordinated notes until they have been paid in full, and then to the asset
backed certificates.
An exception to the sequential payment rule is that allocable principal from the
sale of the trust's assets following a default under the indenture and the
acceleration of the senior notes or the transferor's insolvency will be paid
first, on a pro rata basis, to all classes of the senior notes until they have
been paid in full, and second, ratably, to the subordinated notes (which amounts
will be paid to the reserve fund) and the certificates pro rata until they have
been paid in full.
The unpaid principal amount of each class of senior notes will be payable in
full on the final payment dates listed on the cover page of this prospectus.
FOR INFORMATION ON THE CALCULATION OF THE AVAILABLE PRINCIPAL DISTRIBUTION
AMOUNT, SEE "DESCRIPTION OF THE SENIOR NOTES -- PRINCIPAL".
SEE "DESCRIPTION OF THE SENIOR NOTES -- PRINCIPAL" AND "CERTAIN INFORMATION
REGARDING THE SECURITIES -- PAYMENTS ON THE SECURITIES -- DEPOSITS TO THE
DISTRIBUTION ACCOUNTS; PRIORITY OF PAYMENTS" FOR ADDITIONAL DETAIL REGARDING THE
ALLOCATION OF ANY PRINCIPAL LOSSES OR SHORTFALLS IN AMOUNTS REQUIRED TO BE
DISTRIBUTED TO HOLDERS OF SENIOR NOTES AND THE REIMBURSEMENT OF THOSE LOSSES.
OPTIONAL REDEMPTION OF THE NOTES
The transferor has the option to purchase all of the assets of the trust on any
payment date when the unpaid principal balance of the senior notes is less than
or equal to 10% of the total initial balance of the senior notes, subordinated
notes and asset backed certificates. If the transferor exercises this option,
any senior notes that are outstanding at that time will be prepaid in whole at a
redemption price equal to their unpaid principal amount, plus accrued and unpaid
interest.
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THE PROPERTY OF THE TRUST
GENERAL
The primary property of the trust will be:
o the program operating lease under which the trust will lease the vehicle
SUBI certificate, which is described below, to the transferor;
o the right under the program operating lease to receive an amount equal to
99% of the payments made in respect of the financial component of specified
vehicle leases;
o the lease SUBI certificate, which is pledged by the transferor as security
for the making of payments due under the program operating lease;
o the right to receive 99% of the amounts realized from sales of specified
vehicles; and
o the right to certain payments from amounts deposited in the reserve fund
and the residual value surplus account.
THE PROGRAM OPERATING LEASE
When the senior notes are issued, the trust and the transferor will enter into a
program operating lease, under which the trust will lease the vehicle SUBI
certificate to the transferor, subject to the lien of the indenture. Pursuant to
the program operating lease and a pledge of the lease SUBI certificate, the
transferor will be obligated to make payments during the period that each
underlying vehicle is represented by the vehicle SUBI and covered by the program
operating lease.
The transferor will make payments on the program operating lease before each
payment date in an amount generally equal to certain payments made on or for the
specified leases and specified vehicles during the three-month collection period
immediately before the month in which the related payment date occurs. These
payments consist of:
o the financial component of the fixed charge portion of the total monthly
payment paid under each specified lease, and
o termination value payments made upon the exercise of any annual termination
option included in a specified lease.
The trust will apply these collected payments, together with certain proceeds
received for the related collection period from the sale or other disposition of
specified vehicles either:
o after the scheduled maturity or other termination of the related specified
leases, or
o as a result of an exercise of the annual termination option when the lessee
does not make a termination value payment,
to pay interest on and principal of the senior notes, the subordinated notes and
the certificates in accordance with their terms.
THE SPECIFIED LEASES AND THE SPECIFIED VEHICLES
The specified vehicles are commercial trucks, highway tractors and trailers
titled in the name of the origination trust or, in some cases, that will be
titled in the name of the origination trust during the 60 days after the
closing. The specified leases are full-service leases of specified vehicles.
Ryder Truck Rental, Inc. originated the specified leases in [26] states and
services the specified leases, as well as many other leases in which the trust
does not have an interest. The initial securitization value of the specified
leases and specified vehicles will be their net book value on the administrative
agent's books and the residual value of the specified vehicles will be their
currently estimated sales proceeds upon the scheduled maturity of their
specified leases. As of __________ __, 1999:
o the aggregate securitization value of the specified leases and specified
vehicles was $__________;
o the aggregate estimated sales proceeds of the specified vehicles at
scheduled maturity was $__________;
o the weighted average original term of the specified leases was ____ months;
and
o the weighted average remaining term to scheduled maturity of the specified
leases was _____ months.
THE SUBI CERTIFICATES
The origination trust will issue two special units of beneficial interest, which
are also called SUBIs:
o a lease SUBI that will constitute a beneficial interest in the specified
portfolio of lease contracts, and
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<PAGE> 9
o a vehicle SUBI that will constitute a beneficial interest in vehicles that
are leased under those lease contracts.
The SUBIs relating to the trust thus consists of the lease SUBI and the vehicle
SUBI. The SUBIs will not be offered to you under this prospectus.
A 99% SUBI certificate will be issued for each of the lease SUBI and the vehicle
SUBI. One SUBI certificate will represent a 99% undivided interest in the lease
SUBI and the other SUBI certificate will represent a 99% undivided interest in
the vehicle SUBI. The SUBI certificate for the lease SUBI will be pledged and
the SUBI certificate for the vehicle SUBI will be transferred to the trust at
the time it issues the senior notes. The SUBI certificates will not be offered
to you under this prospectus.
The SUBI certificates will evidence a 99% beneficial interest in the SUBI
assets, not a direct ownership interest in the SUBI assets. The SUBI assets are
a portfolio of specified leases and specified vehicles having an aggregate
securitization value as of a cutoff date of $__________. By holding the SUBI
certificates and the program operating lease, the trust will receive an amount
equal to 99% of all payments made on or in respect of the SUBI assets. Payments
made on or in respect of the 1% beneficial interest in the SUBI assets not
evidenced by the SUBI certificates will not be available to make payments on the
senior notes, the subordinated notes or the certificates.
The SUBI certificates will not evidence an interest in any origination trust
assets other than the SUBI assets, and payments made on or for all other
origination trust assets will not be available to make payments on the senior
notes.
FOR MORE INFORMATION REGARDING THE TRUST'S PROPERTY SEE "THE SUBIS" AND "THE
SPECIFIED LEASES".
CREDIT ENHANCEMENT
The credit enhancement for the senior notes will consist primarily of the
following:
o subordination of the subordinated notes;
o subordination of the certificates;
o the reserve fund; and
o the residual value surplus account.
SUBORDINATION OF THE SUBORDINATED NOTES
The subordinated notes will be subordinated to the senior notes to provide
credit enhancement for the senior notes.
SUBORDINATION OF THE CERTIFICATES
The certificates will be subordinated to the senior notes to provide additional
credit enhancement for the senior notes.
THE RESERVE FUND
As an additional source of credit enhancement, the administrative agent will
establish a reserve fund. The reserve fund will be funded as follows:
o On the closing date, the transferor will make an initial deposit into the
reserve fund of $__________, which is ___% of the aggregate initial
securitization value of the specified leases and specified vehicles.
o Interest paid on the subordinated notes will be deposited into the reserve
fund.
o On each payment date, any excess interest collections remaining after
interest on the senior notes, subordinated notes and asset backed
certificates and various other obligations and expenses of the trust have
been paid will be deposited into the reserve fund.
Deposits will be made to the reserve fund after the closing date only to the
extent needed to maintain a balance in the reserve fund equal to its initial
deposit. Any further excess interest collections will be paid to the transferor.
Available amounts in the reserve fund on each payment date will be available to
cover shortfalls in distributions of interest and principal on the senior notes
and the certificates.
THE RESIDUAL VALUE SURPLUS ACCOUNT
As an additional source of credit enhancement, a residual value surplus account
will provide funds for the benefit of the senior notes and the certificates in
the event any residual value losses are incurred on the sale of specified
vehicles.
Residual value losses will be any amount by which the net proceeds from the sale
of specified vehicles are less than the aggregate securitization values of those
specified vehicles and their specified leases.
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<PAGE> 10
The residual value surplus account will not be funded with an initial balance,
but before each payment date it will be funded with the amount by which the
sales proceeds for each specified vehicle sold during the preceding collection
period exceeded its securitization value.
After all distributions required on a given payment date have been made, any
funds remaining in the residual value surplus account will be paid to the
transferor.
FOR MORE INFORMATION REGARDING THE RESIDUAL VALUE SURPLUS ACCOUNT, SEE "SECURITY
FOR THE SECURITIES--THE ACCOUNTS--THE RESIDUAL VALUE SURPLUS ACCOUNT".
ADMINISTRATION AND MAINTENANCE
Ryder Truck Rental, Inc. will act as administrative agent to service the
origination trust assets, including the SUBI assets, and will also act as
maintenance provider to provide certain supplies, maintenance and other services
for the specified vehicles and to the lessees under the specified leases.
FOR MORE INFORMATION REGARDING THE ADMINISTRATIVE AGENT AND THE MAINTENANCE
PROVIDER, SEE "ADDITIONAL DOCUMENT PROVISIONS--THE ADMINISTRATION AGREEMENT" AND
"RYDER".
TAX STATUS
Steel Hector & Davis LLP, as special tax counsel to the transferor, is of the
opinion that:
o the senior notes will be characterized as indebtedness for federal income
tax purposes, and
o the trust will not be a separately taxable entity for federal income tax
purposes.
By accepting a senior note, each holder or beneficial owner will agree to treat
the senior notes as indebtedness. You should consult your own tax advisor
regarding the federal income tax consequences of the purchase, ownership and
disposition of the senior notes, and the tax consequences arising under the laws
of any state or other taxing jurisdiction.
FOR MORE INFORMATION, SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES".
ERISA CONSIDERATIONS
It is expected that the senior notes will be eligible for purchase by employee
benefit plans. However, plans contemplating a purchase of senior notes should
consult their counsel before making a purchase.
FOR MORE INFORMATION, SEE "ERISA CONSIDERATIONS".
SENIOR NOTE RATINGS
The senior notes will be issued only if the Class A-1 Notes are rated in the
highest short-term rating category and the other senior notes are rated in the
highest long-term category by Moody's Investors Service, Inc. and Duff & Phelps
Credit Rating Co. There can be no assurance that a rating will not be lowered or
withdrawn by an assigning rating agency.
MONEY MARKET INVESTMENT
The Class A-1 Notes have been structured to be eligible securities for purchase
by money market funds under Rule 2a-7 under the Investment Company Act of 1940.
However, money market funds contemplating a purchase of Class A-1 Notes should
consult their counsel before making a purchase.
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RISK FACTORS
You should consider the following risk factors in deciding whether to purchase
the senior notes:
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YOU MAY HAVE DIFFICULTY SELLING YOUR
SENIOR NOTES OR OBTAINING YOUR DESIRED
SALES PRICE. o The senior notes will not be listed on any securities exchange. The
underwriters intend to make a secondary market for the senior notes.
The underwriters will do so by offering to buy the senior notes from
investors that wish to sell. However, the underwriters will not be
obligated to make offers to buy the senior notes and may stop making
offers at any time. In addition, the prices offered, if any, may not
reflect prices that other potential purchasers would be willing to
pay, were they to be given the opportunity. There have been times in
the past where there have been very few buyers of asset backed
securities and thus there has been a lack of liquidity. There may be
a similar lack of liquidity at times in the future. As a result, you
may not be able to sell your senior notes when you want to do so, or
you may not be able to obtain the price that you wish to receive.
YOU WILL EXPERIENCE A LOSS ON YOUR
INVESTMENT IF DEFAULTS ON THE LEASE
CONTRACTS OR RESIDUAL VALUE LOSSES
EXCEED THE AVAILABLE CREDIT
ENHANCEMENT. o The trust does not have, nor is it expected to have, any significant
assets or sources of funds other than the SUBI certificates and
payments under the program operating lease, together with available
funds in the reserve fund, the residual value surplus account and
the distribution and collection accounts. The senior notes represent
obligations solely of the trust and will not be insured or
guaranteed by any entity. Accordingly, you will rely primarily upon
payments on the program operating lease - which are based on
collections on the specified leases and specified vehicles -
together with monies on deposit in the reserve fund and the residual
value surplus account for payments on the senior notes. The reserve
fund and the residual value surplus account, together with the
credit enhancement provided by subordination of the subordinated
notes and the certificates, will cover delinquencies on the
specified leases and losses on the specified leases and specified
vehicles up to some level. However, if the level of delinquencies
and losses exceeds the available credit enhancement, you will suffer
a loss. You will have no claim to any amounts properly distributed
to others from time to time.
YOUR SHARE OF POSSIBLE LOSSES MAY
NOT BE PROPORTIONATE. o Principal payments on the senior notes generally will be made to the
holders of the senior notes sequentially, so that no principal will
be paid on any class of senior notes until each class of senior
notes with a lower numerical designation has been paid in full.
Losses in excess of the available credit enhancement relating to the
specified leases and specified vehicles will be allocated to each
class of senior notes based on a fraction equal to the unpaid
principal amount of that class divided by the unpaid principal
amount of all classes. As a result, a class of senior notes with a
later maturity may be allocated more losses than a class of senior
notes with an earlier maturity as a relative percentage of their
initial principal amounts.
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THE TIMING OF PRINCIPAL PAYMENTS IS
UNCERTAIN. o The amount of distributions of principal on the senior notes and the
time when you receive those distributions depends on the rate of
payments and losses relating to the specified leases and the
specified vehicles, which cannot be predicted with certainty. Those
principal payments may be regularly scheduled payments or unscheduled
payments like those resulting from prepayments or liquidations of
defaulted specified leases. Additionally, the administrative agent
may be required to make payments relating to specified leases and
specified vehicles under some circumstances, and the transferor will
have the right to purchase all assets of the trust pursuant to a
clean-up call. Each of these payments will have the effect of
shortening the average life of the senior notes. You will bear any
reinvestment risks resulting from a faster or slower rate of payments
of the specified leases and the specified vehicles.
DURING A TITLING GRACE PERIOD THE
ORIGINATION TRUST WILL LACK A o During the a titling grace period, vehicles having an aggregate
PERFECTED OWNERSHIP INTEREST IN securitization value on the cutoff date not to exceed $__________,
SOME VEHICLES. representing ____% of the aggregate securitization value of all the
assets in the trust pool, will be titled in the name of Ryder Truck
Rental, Inc. rather than in the name of the origination trust or the
origination trustee on behalf of the origination trust. During this
grace period, the administrative agent will title these vehicles in
the name of the origination trust or the origination trustee on
behalf of the origination trust but no action will be taken to note
a lien in favor of the transferor on the applicable certificates of
title. An ownership interest or security interest in a motor vehicle
registered in most states may be perfected against creditors and
subsequent purchasers without notice for valuable consideration only
by one or more of the following:
o depositing with the state's department of motor vehicles a
properly endorsed certificate of title for the vehicle showing
the transferee or secured party as legal owner or lienholder
thereon,
o filing a sworn notation of lien with the state's department of
motor vehicles and noticing such lien on the certificate of
title, or
o if the vehicle has not been previously registered, filing an
application for an original registration together with an
application for registration of the secured party as legal
owner or lienholder, as the case may be, with the state's
department of motor vehicles.
The origination trust and the transferor may thus not have a validly
perfected ownership interest and security interest, respectively, in
some vehicles during the grace period. As a result, the origination
trust's and the transferor's ownership or security interest in these
vehicles will not be perfected and the transferor's interest could
be inferior to interests of other creditors or purchasers who have
taken the steps described above. If such creditors or purchasers
successfully did so, the affected vehicles would not be available to
generate their expected cash flow and you could suffer a loss on
your investment.
FOR A DISCUSSION OF THE POSSIBLE LIABILITY OF THE TRUST IN
CONNECTION WITH THE NEGLIGENT USE OR OPERATION OF THE LEASED
VEHICLES, SEE "CERTAIN LEGAL ASPECTS OF THE SPECIFIED LEASES AND THE
SPECIFIED VEHICLES --TITLING GRACE PERIOD -- LACK OF PERFECTED
OWNERSHiP INTEREST".
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THE GEOGRAPHIC CONCENTRATION OF THE
LEASES, ECONOMIC FACTORS AND THE
COMMERCIAL TRUCK, TRACTOR AND TRAILER
MARKET COULD NEGATIVELY
TRUST'S ASSETS. o The specified leases were originated in [30] states, with [___]% - the
largest percentage of specified leases in any state - originated in
[_____________]. Less than [___]% of the total number of specified
leases were originated in any states other than [_____________],
[_____________] and [_____________]. Adverse economic conditions in
one of more of these states or in the market for commercial trucks,
tractors and trailers may have a disproportionate impact on the
performance of the specified leases and the specified vehicles.
Economic factors like unemployment, interest rates, the rate of
inflation and consumer perceptions of the economy may affect the
rate of prepayment and defaults on the specified leases and the
ability to sell or dispose of the related specified vehicles for an
amount at least equal to their residual values.
THE ADMINISTRATIVE AGENT AND THE
MAINTENANCE PROVIDER HAVE INTERESTS o Ryder Truck Rental, Inc., in addition to serving as administrative
BEYOND SERVICING THE ASSETS OF THE TRUST agent and maintenance provider, also is and will be engaged in
AND THEREFORE MAY HAVE COMPETING OR leasing and providing maintenance services in connection with its own
CONFLICTING INTERESTS. vehicles and servicing its own leases. It therefore may from time to
time have competing interests or conflicts of interest in performing its
obligations with respect to the maintenance and sale of specified
vehicles and the servicing of specified leases. Ryder has
contractually agreed that when serving as administrative agent and
maintenance provider it will use the same degree of skill, care and
attention and the same customary and usual procedures it employs in
connection with vehicles it leases and maintains for its own
account.
A DEFAULT, REPLACEMENT OR DECLINE IN THE
QUALITY OF THE SERVICE OF THE o Because the specified leases and specified vehicles will be serviced
ADMINISTRATIVE AGENT OR THE MAINTENANCE and maintained by the administrative agent and the maintenance
PROVIDER COULD DELAY OR LIMIT PAYMENTS provider, a default by or the replacement of either could reduce or
TO YOU. delay payments made under the specified leases. Ryder Truck Rental,
Inc. will serve as both the administrative agent and the maintenance
provider. Any reduction or delay in the payments made under the
specified leases could cause delays in payments due to you or limit
the amount of principal and interest paid to you. A decline in the
quality of service provided by the administrative agent or the
maintenance provider could also cause delays in payments due to you
or limit the amount of principal and interest paid to you.
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VICARIOUS TORT LIABILITY MAY RESULT IN A
LOSS ON YOUR INVESTMENT. o Some states allow a party that incurs an injury involving a leased
vehicle to sue the owner of the vehicle merely because of that
ownership. Most states, however, either prohibit these vicarious
liability suits or limit the lessor's liability to the amount of
liability insurance that the lessee was required to carry under
applicable law but failed to maintain. If vicarious liability
imposed on the origination trust exceeds the coverage provided by its
primary and excess liability insurance policies, you could experience
delays in payments due to you or may ultimately suffer a loss.
FOR A DISCUSSION OF THE POSSIBLE LIABILITY OF THE TRUST IN CONNECTION
WITH THE USE OR OPERATION OF THE LEASED VEHICLES, SEE "CERTAIN LEGAL
ASPECTS OF THE SPECIFIED LEASES AND THE SPECIFIED VEHICLES
--VICARIOUS TORT LIABILITY".
A BANKRUPTCY OF THE TRANSFEROR OR THE
ADMINISTRATIVE AGENT COULD DELAY OR o Following a bankruptcy or insolvency of the administrative agent or
LIMIT PAYMENTS TO YOU. the transferor, a court could conclude that the vehicle SUBI
certificate is owned by the administrative agent or the transferor,
instead of the trust. This conclusion could be either because the
transfer of the vehicle SUBI certificate from the transferor to the
trust was not a TRUE SALE or because the court concluded that the
transferor or the trust should be treated as the same entity as
administrative agent or the transferor for bankruptcy purposes. If
this were to occur, you could experience delays in payments due to
you or may not ultimately receive all interest and principal due to
you as a result of:
o the AUTOMATIC STAY which prevents a secured creditor from
exercising remedies against a debtor in bankruptcy without
permission from the court; and
o the fact that neither the trust nor the indenture trustee has a
perfected security interest in the specified vehicles and may
not have a perfected security interest in any cash collections
of the specified leases and specified vehicles held by the
administrative agent at the time that a bankruptcy proceeding
begins.
FOR A DISCUSSION OF HOW A BANKRUPTCY PROCEEDING OF THE
ADMINISTRATIVE AGENT, THE TRANSFEROR OR CERTAIN RELATED ENTITIES MAY
AFFECT THE TRUST AND THE SENIOR NOTES, SEE "CERTAIN LEGAL ASPECTS OF
THE ORIGINATION TRUST AND THE SUBIS--INSOLVENCY RELATED MATTERS".
IF ERISA LIENS ARE PLACED ON THE ASSETS
OF THE TRUST, YOU COULD SUFFER A LOSS ON o Liens in favor of the Pension Benefit Guaranty Corporation could
YOUR INVESTMENT. attach to the specified leases and specified vehicles and be used to
satisfy unpaid ERISA obligations of any member of a CONTROLLED GROUP
that includes Ryder Truck Rental, Inc. and its affiliates. These
liens could have priority over the interest of security holders in
SUBI assets, like the specified vehicles, that are not covered by a
prior perfected security interest in favor of the indenture trustee.
The transferor believes that the likelihood of this liability being
asserted against the assets of the trust or, if so asserted, being
successfully pursued, is remote. However, you cannot be sure the
lease contracts and leased vehicles will not become subject to an
ERISA liability.
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YEAR 2000 COMPUTER PROBLEMS COULD DELAY
OR LIMIT PAYMENTS TO YOU. o Many computers and computer chips were not programmed to recognize
more than two digits in the year of a given date. As a result, in the
year 2000, those computers will not know whether an "00" refers to
the year 1900 or the year 2000. To the extent that computer systems
of the administrative agent, maintenance provider, indenture trustee
or any parties that they rely on continue to have these problems in
the year 2000 and later, you could experience delays in payments due
to you or may not ultimately receive all interest and principal due
to you. In addition, if lessees under the specified leases
experience computer problems in the year 2000 or later, they may
default or make late payments under the specified leases. As a
result, you could experience delays in payments due to you or may not
ultimately receive all principal and interest due to you.
FOR A DISCUSSION OF RYDER'S YEAR 2000 PREPARATIONS BY AND HOW THEY
MAY AFFECT THE TRUST AND THE SENIOR NOTES, SEE "RYDER--YEAR 2000
PREPARATIONS".
A CHANGE OR WITHDRAWAL BY THE RATING
AGENCIES OF THEIR INITIAL RATINGS MAY
REDUCE THE MARKET VALUE OF THE SENIOR o A security rating is not a recommendation by a rating agency that you
NOTES. buy, sell or hold securities. Similar ratings on different types of
securities do not necessarily mean the same thing. You are
encouraged to analyze the significance of each rating independently
from any other rating. Any rating agency may change its rating of
the senior notes after the senior notes are issued if that rating
agency believes that circumstances have changed. A rating downgrade
may reduce the price that a subsequent purchaser will be willing to
pay for the senior notes.
IF THE TRUST IS REQUIRED TO SELL ITS
ASSETS, YOU MAY SUFFER A LOSS ON YOUR
INVESTMENT. o If the transferor becomes bankrupt or insolvent, the trust will be
dissolved and the indenture trustee will be required to sell the
assets of the trust, including the SUBI certificates, on commercially
reasonable terms. Because the bankruptcy of the transferor will also
require the origination trust to be terminated with respect to
holding the SUBI assets, the SUBI assets will be distributed to the
purchaser of the trust's assets and the specified vehicles will be
retitled at the direction of that purchaser. The indenture trustee
will distribute the proceeds from the sale of the trust's assets and
monies on deposit in the reserve fund, after the payment of certain
unpaid fees and reimbursement of outstanding advances, first to the
senior note holders for interest due, second to the reserve fund for
interest due on the subordinated notes, third to the certificate
holders for interest due, fourth pro rata to each class of senior
note holders based on their class' note balances until the senior
notes have been paid in full, and fifth to the certificate holders
and the subordinated note holders ratably - with amounts due on the
subordinated notes being paid to the reserve fund. If these proceeds
and amounts are not sufficient to pay the senior notes in full, you
would incur a loss on your investment.
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THE FAILURE TO MAKE PRINCIPAL
PAYMENTS ON THE NOTES WILL GENERALLY o You should be aware that the amount of principal required to be paid
NOT RESULT IN AN EVENT OF DEFAULT. to you prior to the final scheduled payment date for a class of
senior notes generally will be limited to amounts available for
those purposes. Therefore, the failure to repay principal of a class
of senior notes generally will not result in the occurrence of an
event of default under the indenture until the final scheduled
payment date for the class of notes.
THE SENIOR NOTES ARE NOT SUITABLE
INVESTMENTS FOR ALL INVESTORS. o The senior notes are not a suitable investment if you require a
regular predictable schedule of payments. The senior notes are
complex investments that should be considered only by investors who,
either alone or with their financial, tax and legal advisors, have
the expertise to analyze prepayment, reinvestment, default and market
risk, the tax consequences of an investment, and the interaction of
these factors.
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OVERVIEW OF THE TRANSACTION
PLEASE REFER TO PAGE 4 FOR A DIAGRAM PROVIDING AN OVERVIEW OF THE
TRANSACTION DESCRIBED IN THIS PROSPECTUS.
Ryder Truck Rental, Inc. ("Ryder") has assigned, and will assign,
full-service commercial truck, tractor and trailer leases and the related
vehicles to Ryder Truck Rental LT, a Delaware business trust (the "Origination
Trust"). The Origination Trust was created in July 1997 to facilitate the
titling of trucks, tractors and trailers in connection with the securitization
of truck, tractor and trailer leases. The Origination Trust has issued to Ryder
Truck Rental I LP ("RTR I LP") and Ryder Truck Rental II LP ("RTR II LP" and,
together with RTR I LP, the "UTI Beneficiaries") a 99% and a 1% beneficial
interest, respectively, in the undivided trust interest (the "UTI"). The UTI
represents the entire beneficial interest in assets of the Origination Trust
that have not been allocated to special units of beneficial interest such as the
one described in this prospectus. The trustee of the Origination Trust will be
directed by the UTI Beneficiaries:
o to establish two special units of beneficial interest (each a
"1999-A SUBI," and collectively, the "SUBIs");
o to allocate a separate portfolio of leases and some related assets
of the Origination Trust (the "Specified Leases") to one 1999-A SUBI
(the "Lease SUBI"); and
o to allocate the vehicles that are leased under the Specified Leases
and some other related assets of the Origination Trust (the
"Specified Vehicles") to the other 1999-A SUBI (the "Vehicle SUBI").
The SUBIs will represent the entire beneficial interest in the Specified Leases
and Specified Vehicles (collectively, the "SUBI Assets"). RTR I LP and RTR II LP
will respectively be issued 99% and 1% interests in each 1999-A SUBI. Upon
creation of each 1999-A SUBI, the related SUBI Assets will no longer be a part
of the Origination Trust Assets represented by the UTI, and the interest in the
Origination Trust Assets represented by the UTI will be reduced accordingly.
Each 1999-A SUBI will evidence an indirect beneficial interest, rather than a
direct legal interest, in the related SUBI Assets. Each 1999-A SUBI will not
represent a beneficial interest in any Origination Trust Assets other than the
related SUBI Assets. Payments made on or in respect of any Origination Trust
Assets other than the SUBI Assets will not be available to make payments on the
Senior Notes. The UTI Beneficiaries may from time to time cause special units of
beneficial interest other than the SUBIs (each, an "Other SUBI") to be created
out of the UTI. The Trust (and, accordingly, the Senior Noteholders) will have
no interest in the UTI, any Other SUBI or any assets of the Origination Trust
Assets evidenced by the UTI or any Other SUBI. See "The SUBIs" and "The
Origination Trust".
RTR I LP will sell, transfer and assign its 99% interest each 1999-A
SUBI (collectively, the "SUBI Interest") to Ryder Funding LP (the "Transferor").
The Transferor will in turn (a) transfer and assign the certificate representing
its 99% interest in the Vehicle SUBI (the "Vehicle SUBI Certificate") to Ryder
Vehicle Lease Trust 1999-A (the "Trust"), and (b) pledge the certificate
representing its 99% interest in the Lease SUBI (the "Lease SUBI Certificate",
and together with the Vehicle SUBI Certificate, the "SUBI Certificates") to the
Trust. RTR II LP will permanently retain the 1% beneficial interest in the SUBI
Assets not represented by the SUBI Certificates (the "Retained SUBI Interest").
The Trust will issue four classes of senior notes (the "Senior Notes") in an
aggregate principal amount of $__________ (the "Initial Senior Note Balance")
and will pledge the Vehicle SUBI Certificate and its interest in the Lease SUBI
Certificate to the Indenture Trustee as security therefor. The Trust will also
issue one class of ___% asset backed subordinated notes (the "Subordinated
Notes," and together with the Senior Notes, the "Notes") in an aggregate
principal amount of $________ (the "Initial Subordinated Note Balance") and one
class of asset backed certificates (the "Certificates") in an aggregate
principal amount of $__________ (the "Initial Certificate Balance"). The Senior
Notes, the Subordinated Notes and the Certificates are collectively referred to
in this prospectus as the "Securities" and the holders of those Securities are
referred to as "Securityholders". Each Note will represent an obligation of, and
for some non-tax purposes, each Certificate will represent a fractional
undivided interest in, the Trust. Payments in respect of the Subordinated Notes
and the Certificates will be subordinated to payments in respect of the Senior
Notes to the extent described in this prospectus. The Subordinated Notes and the
Certificates are not being offered to you in this offering.
On the date of initial issuance of the Securities (the "Closing Date"),
the Trust and the Transferor will enter into a program operating lease (the
"Program Operating Lease") under which the Trust will lease the Vehicle SUBI
Certificate, subject to the lien of the Indenture, to the Transferor in exchange
for the obligation of the Transferor to make certain payments during the period
that each underlying Specified Vehicle is covered by the Program
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Operating Lease. The Trust will apply these payments, together with proceeds
received from certain sales of Specified Vehicles, to pay interest on and
principal of the Securities.
As a condition to the issuance of the Senior Notes, Moody's Investors
Service, Inc. and Duff & Phelps Credit Rating Co. (each, a "Rating Agency"),
must each rate the Senior Notes in their highest rating category. See "Ratings
of the Securities" for further information concerning the ratings assigned to
the Senior Notes, including the limitations of such ratings.
THE TRUST
FORMATION
The Trust will be formed under the laws of the State of Delaware solely
for the purposes of the transactions described in this prospectus. The trust
will be governed by an amended and restated trust agreement, dated as of
________ 1, 1999 (the "Trust Agreement") between the Transferor and Chase
Manhattan Bank Delaware, as Owner Trustee.
The Trust will issue the Senior Notes under an indenture dated as of
_____________ 1, 1999, between the Trust and U.S. Bank National Association, as
trustee (in that capacity, the "Indenture Trustee"). The Subordinated Notes and
the Certificates will be issued under the Trust Agreement.
The Trust will not engage in any activity other than as duly authorized
in accordance with the terms of the Trust Agreement. On the Closing Date, the
authorized purposes of the Trust will be limited to:
o issuing the Securities;
o acquiring the Vehicle SUBI Certificate and the other property of the
Trust Estate with the proceeds from the sale of the Securities;
o assigning and pledging the Trust Estate to the Indenture Trustee
o leasing the Vehicle SUBI Certificate to the Transferor;
o making payments on the Securities;
o entering into and performing its obligations under the Basic
Documents to which it is a party; and
o engaging in other transactions, including entering into agreements,
that are necessary, suitable or convenient to accomplish, or that
are incidental to or connected with, any of the foregoing
activities.
Approval of additional Trust activities and purposes may be requested by holders
of at least 75% of the outstanding balance of the Certificates and will require
(a) that each Rating Agency have delivered a letter to the effect that the
activities and purposes would not cause its then-current ratings of the Senior
Notes or the Certificates to be qualified, reduced or withdrawn, and (b)
approval by holders of at least 75% of the outstanding balance of the Senior
Notes, or if the Senior Notes are no longer outstanding, by the Subordinated
Noteholder.
Under an administration agreement (the "Trust Administration
Agreement"), Ryder, as administrator (the "Administrator"), will perform the
Trust's administrative obligations under the Trust Agreement and the Indenture.
The Trust's principal offices will be in Wilmington, Delaware, in care
of the Owner Trustee, at the address listed below under "The Owner Trustee".
CAPITALIZATION
On the Closing Date, the Trust will be capitalized with $____________
aggregate principal amount of Securities. The Trust will sell the Senior Notes
and the Certificates other than the Transferor Certificate to third party
investors that are expected to be unaffiliated with the Transferor, the
Administrative Agent or their respective affiliates. In exchange for the
transfer of the Vehicle SUBI Certificate, the Trust will pay the Transferor the
net proceeds from the sale of the Senior Notes and the Certificates, and will
issue to the Transferor the Subordinated Notes and a Certificate with a
$________ principal balance, which will approximately equal to 1% of the Initial
Certificate Balance (the "Transferor Certificate"). The following table
illustrates the capitalization of the Trust as of the Closing Date, as if the
issuance and sale of the Securities had taken place on that date:
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Senior Notes................................................. $
Subordinated Notes...........................................
Certificates.................................................
Transferor Certificate.......................................
-----------------
Total..................................................... $
=================
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware will be the trustee (the "Owner Trustee")
under the Trust Agreement. Chase Manhattan Bank Delaware is a Delaware banking
corporation, and its Corporate Trust Office is located at 1201 Market Street,
Wilmington, Delaware 19801. The Transferor, the Administrative Agent and their
affiliates may maintain normal commercial banking relationships with the Owner
Trustee and its affiliates. The fees and expenses of the Owner Trustee will be
paid by the Administrator. See "Additional Document Provisions--Miscellaneous
Provisions--Fees and Expenses".
PROPERTY OF THE TRUST
On the Closing Date, the Transferor will transfer the Vehicle SUBI
Certificate to the Trust pursuant to the Issuer SUBI Certificate Transfer
Agreement and will pledge the Lease SUBI Certificate to the Trust pursuant to
the Program Operating Lease. The Trust will then pledge its interest in each
SUBI Certificate to the Indenture Trustee under the Indenture and then, subject
to that pledge, will lease the Vehicle SUBI Certificate to the Transferor
pursuant to the Program Operating Lease. See "The SUBIs--Transfers of the SUBI
Certificates".
After giving effect to the transactions described in this prospectus,
the property of the Trust (the "Trust Estate") generally will include:
o the Vehicle SUBI Certificate, evidencing a 99% beneficial interest
in the assets allocated to
o the Vehicle SUBI (the "Vehicle SUBI Assets"), including the right to
payments thereunder from certain Sales Proceeds on deposit in the
SUBI Collection Account and the Residual Value Surplus Account and
investment earnings, net of losses and investment expenses, on
amounts on deposit in the SUBI Collection Account and the Residual
Value Surplus Account;
o the rights of the Trust under the Program Operating Lease;
o the rights of the Trust as pledgee of the Lease SUBI Certificate;
o the rights of the Trust as secured party under a back-up security
agreement with respect to the SUBI Certificates and the 99%
undivided interest in other SUBI Assets;
o the rights of the Trust to funds on deposit from time to time in the
Note Distribution Account and any other account or accounts
established pursuant to the Indenture;
o the rights of the Transferor, as transferee, under the SUBI
Certificate Transfer Agreement;
o the rights of the Trust, as transferee, under the Issuer SUBI
Certificate Transfer Agreement;
o the rights of the Trust as a third-party beneficiary under the
Administration Agreement, including rights to certain Advances, and
the SUBI Trust Agreement;
o the security interest of the Trust in the Subordinated Notes and the
Reserve Fund (including investment earnings, net of losses and
investment expenses, on amounts on deposit therein); and
o all proceeds of the foregoing.
The Indenture will require the Trust Estate to be pledged by the Trust to the
Indenture Trustee.
Because the SUBI will represent a beneficial interest in the SUBI
Assets, Senior Noteholders will be dependent on payments made on the Specified
Leases and proceeds received in connection with the sale or other disposition of
Specified Vehicles for the payment of interest on and principal of the Senior
Notes. The Trust will not have a direct ownership interest in the Specified
Leases or a direct ownership interest or perfected security interest in the
Specified Vehicles - which will be titled in the name of the Origination Trust
or the Origination Trustee on behalf of the Origination Trust - and it is
therefore possible that a claim or lien in respect of the Specified Vehicles or
the Origination Trust could limit the amounts payable in respect of the SUBI
Certificates to less than the amounts received from the lessees of the Specified
Vehicles (each, an "Obligor") or received from the sale or other
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disposition of Specified Vehicles. To the extent that a claim or lien were to
delay the disposition of the Specified Vehicles or reduce the amount paid to the
holders of the SUBI Certificates in respect of their beneficial interests in the
SUBI Assets, Senior Noteholders could experience delays in payment or losses on
their investment. See "Risk Factors--A bankruptcy of the transferor or the
administrative agent could delay or limit payments on the senior notes", "The
SUBIs", "Certain Legal Aspects of the Origination Trust and the SUBIs--The
SUBIs" and "Certain Legal Aspects of the Specified Leases and the Specified
Vehicles--Back-up Security Interests".
USE OF PROCEEDS
The net proceeds from the sale of the Senior Notes - the proceeds of
the public offering minus expenses relating thereto - together with the proceeds
from the issuance of the Subordinated Notes and the Certificates, will be
applied by the Trust to acquire the Vehicle SUBI Certificate and the pledge of
the Lease SUBI Certificate.
THE ORIGINATION TRUST
GENERAL
The Origination Trust is a Delaware business trust and is governed by
an amended and restated trust agreement dated as of February 1, 1998 (the
"Origination Trust Agreement"), among the UTI Beneficiaries, the Administrative
Agent, RTRT, Inc., as Trustee (the "Origination Trustee"), Delaware Trust
Capital Management, Inc. and U.S. Bank National Association ("U.S. Bank"), as
trust agent (in that capacity, the "Trust Agent"). The assets of the Origination
Trust (the "Origination Trust Assets") consist of:
o full service operating leases (the "Leases") assigned to the
Origination Trust by Ryder;
o the commercial trucks, tractors and trailers leased under those
Leases (the "Vehicles"); and
o certain payments under the Leases, proceeds from sales of the
Vehicles, and other assets more fully described below.
The primary business purpose of the Origination Trust is to take assignments of,
and serve as record holder of title to, the Leases and Vehicles, in order to
facilitate the titling of the Vehicles in connection with asset backed
securities issuance transactions.
Under an administration agreement dated as of February 1, 1998, as
amended by a supplement to be dated as of ____________, 1999 (as amended or
supplemented from time to time, the "Administration Agreement") among the
Origination Trust, RTR I LP and RTR II LP, as UTI Beneficiaries and, Ryder, as
administrative agent (in that capacity, the "Administrative Agent"), Ryder will
service the Leases, including the Specified Leases, and, as maintenance provider
(in that capacity, the "Maintenance Provider"), will provide specified services
and maintenance in respect of the Vehicles, including the Specified Vehicles.
Except as otherwise described under "Additional Document
Provisions--The SUBI Trust Agreement," under the Origination Trust Agreement,
the Origination Trust has not and will not:
o issue interests or securities other than the SUBI Interest and the
Retained SUBI Interest, the SUBI Certificates, the Retained SUBI
Certificates, Other SUBIs, one or more certificates representing
each Other SUBI (the "Other SUBI Certificates"), the UTI and one or
more certificates representing the UTI (the "UTI Certificates");
o borrow money, except from Ryder or the UTI Beneficiaries in
connection with funds used to acquire Leases and Vehicles;
o make loans;
o invest in or underwrite securities;
o offer securities in exchange for Origination Trust Assets, with the
exception of the SUBI Certificates, the Retained SUBI Certificates,
Other SUBI Certificates and the UTI Certificates;
o repurchase or otherwise reacquire its securities, other than for
purposes of cancellation, except as permitted by or in connection
with financing or refinancing the acquisition of Leases and Vehicles
or as otherwise permitted by each such financing or refinancing; or
o grant any security interest in or lien on any Origination Trust
Assets.
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For further information regarding the Origination Trust, the servicing of the
Leases and the provision of services and maintenance in respect of the Vehicles,
see "Additional Document Provisions--The SUBI Trust Agreement" and "--The
Administration Agreement".
THE UTI BENEFICIARIES
RTR I LP and RTR II LP are the UTI Beneficiaries under the Origination
Trust Agreement. The sole general partners of RTR I LP and RTR II LP are Ryder
Truck Rental I LLC ("RTR I LLC") and Ryder Truck Rental II LLC ("RTR II LLC"),
respectively, each a Delaware limited liability company. Ryder is the sole
limited partner of each of the UTI Beneficiaries. The UTI Beneficiaries were
formed as limited partnerships under the laws of Delaware in June 1997 for the
sole purpose of being initial beneficiaries of the Origination Trust, holding
the UTI and the UTI Certificates, acquiring interests in the SUBI and Other
SUBIs and engaging in related transactions. The limited liability company
operating agreements of each of RTR I LLC and RTR II LLC and the limited
partnership agreements of each UTI Beneficiary limit their respective activities
to the foregoing purposes and to any activities incidental thereto or necessary
therefor. So long as any financings involving interests in the Origination
Trust, including the transaction described in this prospectus, are outstanding,
neither RTR I LLC nor RTR II LLC may transfer its general partnership interest
in the related UTI Beneficiary. The principal offices of RTR I LP and RTR II LP
are located at 3600 N.W. 82nd Avenue, Miami, Florida 33166 and their telephone
number is (305) 500-3726.
THE ORIGINATION TRUSTEE
The Origination Trustee is a wholly owned special purpose subsidiary of
U.S. Bank and was incorporated in June 1997 for the sole purpose of acting as
Origination Trustee. The Origination Trustee is not affiliated with Ryder or any
of its affiliates. U.S. Bank, as Trust Agent, serves as agent for the
Origination Trustee to perform some functions of the Origination Trustee under
the Origination Trust Agreement. Under the Origination Trust Agreement, if U.S.
Bank can no longer act as the Trust Agent, the designees of the UTI
Beneficiaries which may not be either UTI Beneficiary or any of their affiliates
- - will have the option to purchase the stock of the Origination Trustee for a
nominal amount. If the UTI Beneficiaries do not timely exercise that option, the
Origination Trustee will appoint a new trust agent which will have the option to
purchase the stock of the Origination Trustee. If none of these options is
timely exercised, U.S. Bank may sell the stock of the Origination Trustee to
another party.
PROPERTY OF THE ORIGINATION TRUST
The Origination Trust Assets generally consist of:
o Leases originated by Ryder and all monies due from Obligors
thereunder;
o Vehicles and all proceeds of those Vehicles;
o all of Ryder's rights with respect to those Leases and Vehicles;
o the rights to proceeds from any physical damage, liability or other
insurance policies, if any, covering the Leases or the related
Obligors or the Vehicles, including but not limited to the
Contingent and Excess Liability Insurance; and
o all proceeds of the foregoing.
From time to time after the date of this prospectus, Ryder will assign
additional Leases to the Origination Trust and, as described below, title the
related Vehicles in the name of the Origination Trust or the Origination Trustee
on behalf of the Origination Trust.
LEASE ORIGINATION AND THE TITLING OF VEHICLES
All Leases have been or will be underwritten using the underwriting
criteria described under "Ryder--Lease Underwriting Procedures". Under each
Lease, the Origination Trust, or the Origination Trustee on behalf of the
Origination Trust, will be listed as the owner of the related Vehicle on the
Vehicle's certificate of title. Liens will not be placed on the certificates of
title, nor will new certificates of title be issued, to reflect the interest of
the Trust, as holder of the Vehicle SUBI Certificate, in the Specified Vehicles.
After the sale of the Vehicle SUBI Certificate to the Trust, the
Administrative Agent will be obligated to repurchase any Vehicles covered by
Leases not meeting certain representations and warranties of the Administrative
Agent by making Reallocation Payments in respect thereof. Those representations
and warranties relate primarily to
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the origination of the Leases, and do not typically relate to the
creditworthiness of the related Obligors or the collectibility of the Leases.
All of the Specified Vehicles will either be titled in the name of the
Origination Trust or the Origination Trustee on behalf of the Origination Trust
by the Closing Date, or will be titled in the name of Ryder but will be
re-titled into the name of the Origination Trust or the Origination Trustee on
behalf of the Origination Trust within 60 days after the Closing Date (the
"Titling Grace Period"). Specified Vehicles relating to Specified Leases having
an aggregate Cutoff Date Securitization Value (i) of $____________ will be
titled in the name of the Origination Trust or the Origination Trustee on behalf
of the Origination Trust by the Closing Date and (ii) not to exceed
$____________ will be titled in the name of the Origination Trust or the
Origination Trustee on behalf of the Origination Trust during the Titling Grace
Period. If the Administrative Agent fails to properly retitle any Titling Grace
Period Vehicle, it will be required to make a payment equal to the
Securitization Value of the related Specified Lease as of the last day of the
Titling Grace Period. See "Risk Factors--During a titling grace period the
origination trust will lack a perfected ownership interest in some vehicles".
Other Leases and Vehicles will also to be assigned to the Origination Trust
after the Closing Date but will not constitute Specified Leases or Specified
Vehicles.
All Vehicles owned by the Origination Trust will be held for the
benefit of entities that from time to time hold beneficial interests in the
Origination Trust. Those interests will be evidenced with respect to (a) Leases
and Vehicles not allocated to the 1999-A SUBIs or an Other SUBI, by the UTI, (b)
the Specified Leases and the Specified Vehicles, by the 1999-A SUBIs or (c)
Leases and Vehicles financed in another transaction, by an Other SUBI. Entities
holding beneficial interests in the Origination Trust will not have a direct
ownership in the related Leases or a direct ownership or perfected security
interest in the related Vehicles.
The certificates of title for the Specified Vehicles will not reflect
the indirect interest of the Trust in the Specified Vehicles by virtue of its
beneficial interest in the Vehicle SUBI Assets. Therefore, if the Senior Notes
were recharacterized as secured loans, the Trust would not have a perfected lien
in the Specified Vehicles, but will have filed a financing statement to perfect
the security interest in the Vehicle SUBI Assets, but only to the extent that
the security interest may be perfected by filing under the UCC. For further
information regarding the titling of the Specified Vehicles and the interest of
the Trust therein, see "Certain Legal Aspects of the Specified Leases and the
Specified Vehicles--Back-up Security Interests".
THE SUBIS
GENERAL
Each 1999-A SUBI will be issued by the Origination Trust under a
supplement to be dated as of _________ 1, 1999 (the "SUBI Supplement" and,
together with the Origination Trust Agreement, the "SUBI Trust Agreement") to
the Origination Trust Agreement. The 1999-A SUBIs will not represent a direct
interest in the SUBI Assets or an interest in any Origination Trust Assets other
than the related SUBI Assets. The Trust and the Senior Noteholders will have no
interest in the UTI, any Other SUBI or any assets of the Origination Trust
evidenced by the UTI or any Other SUBI. Payments made on or in respect of
Origination Trust Assets not represented by the SUBIs will not be available to
make payments on the Senior Notes. For further information regarding the
Origination Trust, see "The Origination Trust".
The Lease SUBI Certificate will evidence a beneficial interest in the
assets allocated to the Lease SUBI (the "Lease SUBI Assets"), which will
generally consist of the Specified Leases and all proceeds of or payments on
those leases received or due on or after ___________ 1, 1999 (the "Cutoff Date")
and all other related Lease SUBI Assets, including (a) amounts in the SUBI
Collection Account received in respect of the Specified Leases, (b) certain
monies due under or payable in respect of the Specified Leases on or after the
Cutoff Date, including the right to receive payments made to Ryder, the
Transferor, the Origination Trust, the Origination Trustee or the Administrative
Agent under any insurance policy relating to the Specified Leases or the related
Obligors and (c) all proceeds of the foregoing.
The Vehicle SUBI Certificate will evidence a beneficial interest in the
Vehicle SUBI Assets, which will generally consist of the Specified Vehicles and
all proceeds of or payments on those vehicles received or due on or after the
Cutoff Date and all other related Vehicle SUBI Assets, including (a) amounts in
the SUBI Collection Account received in respect of the sale of the Specified
Vehicles and the Residual Value Surplus Account, (b) certain monies due under or
payable in respect of the Specified Vehicles on or after the Cutoff Date,
including the
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right to receive payments made to Ryder, the Transferor, the Origination Trust,
the Origination Trustee or the Administrative Agent under any insurance policies
related to the Specified Vehicles, and (c) all proceeds of the foregoing.
On the Closing Date the Origination Trust will issue (a) the SUBI
Certificates, evidencing the SUBI Interest, to RTR I LP and (b) certificates
evidencing the Retained SUBI Interest (the "Retained SUBI Certificates"), to RTR
II LP. RTR II LP will permanently retain the Retained SUBI Certificates and will
be entitled to receive 1% of all payments made on or in respect of the SUBI
Assets and will share in 1% of all losses and liabilities incurred with respect
to the SUBI Assets. Accordingly, payments made in respect of the Retained SUBI
Certificates will not be available to make payments on the Senior Notes.
TRANSFERS OF THE SUBI CERTIFICATES
Simultaneously with the issuance of the SUBI Certificates to RTR I LP,
RTR I LP will convey the SUBI Certificates to the Transferor pursuant to a
transfer agreement to be dated as of ____________ 1, 1999 (the "SUBI Certificate
Transfer Agreement"). RTR I LP will covenant to treat the conveyance of the SUBI
Certificates to the Transferor as an absolute sale, transfer and assignment for
all purposes.
Immediately after the transfer of the SUBI Certificates to the Transferor, the
Transferor will:
o transfer to the Trust, without recourse, all of its right, title and
interest in and to the Vehicle SUBI Certificate and the SUBI
Interest it represents under a transfer agreement dated as of
___________ 1, 1999 (the "Issuer SUBI Certificate Transfer
Agreement");
o deliver the Vehicle SUBI Certificate to the Trust;
o pledge the Lease SUBI Certificate, and the SUBI Interest it
represents, to the Trust under the Program Operating Lease as
security for the obligations of the Transferor under the Program
Operating Lease; and
o deliver the Lease SUBI Certificate to the Trust to perfect the
pledge.
In exchange, the Trust will pay to the Transferor the net proceeds from the sale
of the Senior Notes and Certificates to third party investors, and will issue to
the Transferor the Subordinated Notes and the Transferor Certificate.
Immediately following the transfer of the Vehicle SUBI Certificate and
the pledge of the Lease SUBI Certificate to the Trust, the Trust will pledge its
interest in the Trust Estate, which includes the Vehicle SUBI Certificate and
the pledge of the Lease SUBI Certificate, to the Indenture Trustee as security
for the Senior Notes. The Trust and the Transferor will then enter into the
Program Operating Lease, under which the Trust will lease the Vehicle SUBI
Certificate to the Transferor, subject to the pledge thereof to the Indenture
Trustee. During the term of the Program Operating Lease, the Transferor, as
lessee of the Vehicle SUBI Certificate, will be required to make Program
Operating Lease Payments to the Trust and will be entitled to receive proceeds
from the Vehicle SUBI Certificate - as well as from the Lease SUBI Certificate -
in respect of the Specified Vehicles to the extent described under "Security for
the Securities--The Program Operating Lease".
THE TRANSFEROR
The Transferor is a limited partnership that was formed under the laws
of Delaware in May 1998. The sole general partner of the Transferor is Ryder
Truck Rental III LLC ("RTR III LLC"), a Delaware limited liability company. RTR
III LLC may not transfer its general partnership interest in the Transferor so
long as any financings involving interests held by the Transferor at any time in
the Origination Trust, including the transaction described in this prospectus,
are outstanding. Ryder is the sole limited partner of the Transferor. The
principal office of the Transferor is located at 3600 N.W. 82nd Avenue, Miami,
Florida 33166 and its telephone number is (305) 500-3726.
The Transferor and RTR III LLC were organized solely for the purpose of
acquiring interests in the UTI, the SUBIs and Other SUBIs, causing securities
like as the Senior Notes to be issued, and engaging in related
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transactions. The limited partnership agreement of the Transferor and the
limited liability company agreement of RTR III LLC limit their respective
activities to those purposes and to any activities incidental or necessary
thereto.
RYDER
GENERAL
All of the Leases, including the Specified Leases, have been originated
by Ryder in the ordinary course of its leasing business using the underwriting
criteria described under "Ryder--Lease Underwriting Procedures". Additionally,
Ryder, as the Administrative Agent, will service the Leases, including the
Specified Leases, and, as and Maintenance Provider, will provide specified
services and maintenance in respect of the Vehicles, including the Specified
Vehicles.
Ryder is a Florida corporation that was incorporated in 1953. Ryder
provides full service truck leasing to about 13,000 commercial customers ranging
from large national enterprises to small companies. As of December 31, 1998,
Ryder had a fleet of 109,124 vehicles - including 14,751 vehicles leased to
affiliates - leased or rented through 894 locations in 48 states, Puerto Rico,
and 8 Canadian provinces. Under a full service lease, Ryder provides its
customers with vehicles, maintenance, supplies and related equipment necessary
for operation, while its customers furnish and supervise their own drivers, and
dispatch and exercise control over the related vehicles. Additionally, as of
December 31, 1998, Ryder provided contract maintenance services to more than
1,500 customers, serviced 44,856 vehicles - including approximately 9,560
vehicles owned by affiliates - under maintenance contracts. Ryder also provided
short-term truck rental, which tends to be seasonal, to commercial customers to
supplement their fleets during peak business periods. As of December 31, 1998,
Ryder had a fleet of 37,517 vehicles, ranging from heavy-duty tractors and
trailers to light-duty trucks, available for commercial short-term rental.
Ryder is a wholly owned subsidiary of Ryder System, Inc. ("Ryder
System"). Ryder System is a publicly held Florida corporation that was
incorporated in 1955. Through its subsidiaries, Ryder System engages primarily
in the following businesses:
o full service leasing, maintenance and short-term commercial rental
of trucks, tractors and trailers; and
o integrated logistics, including dedicated contract carriage, the
management of carriers and inventory deployment.
Ryder System's common stock, which is listed and traded on the New York
Stock Exchange under the symbol "R", is a component of both the Dow Jones
Transportation Average and the Standard & Poor's 500 Index. At December 31,
1998, Ryder System and its subsidiaries had a fleet of 173,116 vehicles and
45,373 employees.
Further information regarding Ryder System and its subsidiaries, including
Ryder, is available in the periodic reports Ryder System files with the
Commission. For the location of the Commission's reference locations and
internet address at which such information is available see "Available
Information".
SHARED SERVICES CENTER
Ryder has consolidated most financial administrative functions,
including collections and underwriting, into its Shared Services Center, a
centralized processing center located in Alpharetta, Georgia. This change is
intended to result in more efficient and consistent centralized processing of
selected administrative operations. The Shared Service Center was developed to:
o reduce on-going annual administrative costs;
o enhance customer service through process standardization;
o create an organizational structure that will improve market
flexibility; and
o allow future reengineering efforts to be more easily attained at
lower implementation costs.
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The transfer of functions to the Shared Service Center was completed
in December 1997.
THE LEASES
USE AND NATURE OF THE VEHICLES
Ryder furnishes commercial trucks, highway-tractors and trailers to a
wide range of customers under full service operating leases with terms running
typically five or six years. Full service leasing is Ryder's and Ryder System's
largest product line, with about 13,000 customers and approximately 109,000
vehicles on lease in the United States and Canada. The leased vehicles may be
generically configured or they may be specialized units with refrigeration
systems or other application-specific equipment.
Ryder purchases trucks and highway-tractors from manufacturers such as
Navistar/International, Freightliner, Mack, Volvo and Isuzu, and trailers from
manufacturers such as Utility and Stoughton. Ryder also specifies many of the
components used by those vehicle vendors. Ryder purchases such components from
various manufacturers, including Cummins engines, Bridgestone tires, Meritor
Automotive clutches, transmissions, axles, brakes and drivelines, ASF Castloc
fifth wheels, Kysor fan clutches, Bendix valves and Accuride wheels.
Full-service truck leases are designed for customers who wish to manage
their own transportation systems without investing the capital and human
resources necessary to purchase and maintain a fleet. Ryder offers its customers
a flexible range of full-service truck leasing products and virtually all of the
support services needed to operate them, including safety and regulatory
compliance programs, vehicle specification and acquisition support, preventive
maintenance, licensing and permitting, emergency road service, fuel and fuel tax
reporting, vehicle painting and washing and vehicle liability and protection
programs. Companies in a variety of industries, such as the beverage, baking and
snack, newspaper, grocery, chemicals, retail and automotive aftermarket parts
industries, lease their trucks from Ryder.
TRUCK LEASE AND SERVICE AGREEMENT
Ryder's Truck Lease and Service Agreement (each, a "TLSA") is a
contract between Ryder, and an Obligor, that, when taken together with the lease
schedule for a Vehicle (each, a "Schedule A" and, together with a TLSA, a
"Lease"), requires the Obligor to make Total Monthly Payments for a
predetermined number of months in exchange for the use of one or more Vehicles.
In addition to use of the Vehicle, to the extent set forth in the related Lease,
the Obligor will also be entitled to receive other services related to that
Vehicle. Maintenance and mechanical repair of the Vehicle by Ryder, however, is
almost always included. The terms of a Lease do not separate the payment for
Vehicle use from the payment for maintenance and other goods and services within
the Total Monthly Payment. See "--Lease Payments". At the scheduled maturity or
other termination of a Lease (the "Maturity Date"), the Obligor must return the
related Vehicle to Ryder at a specified maintenance facility and must restore
the Vehicle to its original condition, if any structural alterations have been
made by the Obligor.
The TLSA is a form of master lease that describes the general terms of
the Lease and the respective rights and obligations of Ryder and the Obligor.
These terms, unless amended, apply to all Vehicles leased under a TLSA. Every
Schedule A describes each particular Vehicle being leased, its Fixed Charge, the
term of its lease (the "Lease Term") and the depreciation schedule and other
specific terms of the Lease, including the party responsible for maintaining
liability insurance on the Vehicle and the party responsible for physical risk
of loss or damage to the Vehicle. The Schedule A also specifies each Vehicle's
domicile and the location of the maintenance facility where the Vehicle will be
routinely maintained and repaired.
A typical full-service operating Lease will provide for payments based
on, among other things, the original value of the Vehicle leased thereunder, the
amount of total depreciation over the Lease Term and the prorated cost of all
unexpired license fees, applicable taxes and other expenses prepaid by Ryder for
the Vehicle, as well as payments for various other goods and services Ryder
provides in connection with the Vehicle. Both the financial and service
commitments of the parties are covered by the Lease and, accordingly, both Ryder
and the Obligor have continuing performance obligations during the term of the
Lease. In connection with the origination of a Lease, Ryder modifies its
standard Lease in the ordinary course of its business to meet the requirements
of the related Obligor and all descriptions of a Lease contained in this
prospectus are of a typical or illustrative Lease. Modifications may affect,
among other things, the services provided, the payment terms, the allocation of
risk and the parties' respective rights and obligations upon termination or
breach. A breach of or default under a Lease may result in the termination of
the Lease. The termination may occur either (a) as part of the termination of a
master
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lease, thus effecting the termination of all Vehicles leased under the master
lease arrangement, or (b) only with respect to the specific Vehicle directly
affected by the breach or default.
MAINTENANCE AND SERVICES PROVIDED
A typical Lease may cover:
o maintenance and repair of the related Vehicles by Ryder at a
specified maintenance facility, including all labor and parts;
o exterior washing of the Vehicles;
o specification assistance, whereby Ryder will assist the Obligor in
formulating appropriate specifications based on the Obligor's
intended use of the Vehicles;
o supplying the Obligor with one or more substitute Vehicles (each, a
"Substitute Vehicle"), at no extra cost to the Obligor, if a
mechanical failure renders a Vehicle temporarily inoperable;
o emergency road service in the event that a Vehicle suffers
mechanical or tire failure;
o initial exterior painting and lettering, up to a specified
allowance, at the time the Vehicles are placed into service;
o licensing and payment of certain specified taxes, up to a specified
annual amount;
o enrollment of the Obligor in a Vehicle-related safety program;
o the provision of fuel, whether by Ryder or the Obligor;
o whether Ryder will extend its liability insurance to cover the
Obligor for the Vehicles and any Substitute Vehicles (the "Insured
Vehicles"); and
o whether Ryder or the Obligor assumes the risk of physical damage to
and theft and loss of the Vehicles or any Substitute Vehicles. See
"--Insurance".
A Lease may provide that Ryder will supply the Obligor with a
substitute vehicle at no extra cost if a mechanical failure renders a Vehicle
temporarily inoperable. The Fixed Charge on a Vehicle, more fully described
under "--Lease Payments", will continue to accrue on a Vehicle if the Vehicle is
out of service due to a temporary mechanical failure unless Ryder fails to
provide a Substitute Vehicle, in which event the Fixed Charge will not continue
to accrue until the Vehicle is repaired. Ryder will not provide a Substitute
Vehicle when:
o a Vehicle is out of service for the performance of scheduled
preventative maintenance;
o a Vehicle is out of service for the repair of physical damage, such
as that caused by collision, fire, vandalism or Act of God;
o a Vehicle is out of service because the Obligor has violated the
related Lease;
o a Vehicle has been stolen;
o a Vehicle has been outfitted with special equipment or has otherwise
been customized for use by the Obligor; or
o special equipment, which Ryder is not contracted to maintain, is
being repaired.
If a Vehicle is out of service for the repair of physical damage,
Ryder will rent the related Obligor a replacement vehicle at a rental rate equal
to the lease rate on the related Lease; however, the Fixed Charge on the out of
service Vehicle will continue to accrue. Ryder may also rent Obligors additional
Vehicles for short-term use so that the Obligor can manage fluctuations in its
needs, and the rates therefor may be set forth in the related Lease.
Although Ryder may be responsible for providing fuel to the related
Vehicles under a Lease, the Lease will not include charges for any fuel so
provided. All fuel charges are separately billed to the Obligor on a monthly
basis. If Ryder is responsible for providing fuel, it obtains all applicable
fuel tax permits, prepares and files fuel tax returns and pays the taxes imposed
on the consumption of fuel, which amounts are billed to the Obligor. If the
Obligor provides fuel, then it performs those fuel tax permitting and reporting
functions and indemnifies Ryder for any liability for the failure to pay all
applicable fuel taxes.
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VEHICLE OPERATING RULES
Under the terms and conditions applicable to each Lease of a Vehicle,
an Obligor must:
o operate the related Vehicles in the normal and ordinary course of
its business;
o comply with all federal, state and local laws and regulations;
o not use the Vehicles in a reckless or abusive manner;
o operate the Vehicles only within the United States or, occasionally,
Canada, and pay for all charges that accrue if a Vehicle is detained
outside of these countries;
o if the Obligor operates a Vehicle, such as a trailer, while it is
connected to a vehicle that Ryder does not maintain, maintain the
connected vehicle in good operating condition; and
o pay for all physical damage, repairs, maintenance and expenses
resulting from operation of a Vehicle in violation of any of the
Lease restrictions.
DRIVERS
Under a Lease, only properly licensed and qualified drivers under the
Obligor's exclusive direction and control are permitted to operate the Vehicles.
Ryder reserves the right to request in writing that the Obligor remove unsafe or
incompetent drivers based on their safety record, accident experience or
driver's license status. If Ryder asks an Obligor to remove a driver and the
Obligor fails to comply with that request, then any or all of the following may
apply: (a)(1) the Obligor must reimburse Ryder for any damages occurring while
the driver asked to be removed operates the Vehicle, even if Ryder assumed
responsibility for paying for physical damage to the Vehicle and (2) even if
Ryder extended liability insurance to the Obligor, the Obligor must defend,
release, indemnify and hold harmless Ryder for all damages and defense costs
resulting from the driver's operation of the Vehicle; (b) Ryder may cancel any
liability insurance it extended to the Obligor by providing the Obligor with 30
days' prior written notice; or (c) Ryder may terminate any physical damage
coverage it extended to the Obligor by providing the Obligor with 30 days' prior
written notice. If Ryder terminates the physical damage coverage, the Obligor
will become responsible for all physical damage to the Vehicles, and must
provide Ryder with proof of satisfactory physical damage insurance.
OBLIGOR EXPENSES
With respect to each Vehicle an Obligor leases pursuant to a Lease, the
Obligor is responsible for the following expenses:
o taxes, licenses, fees and tolls (collectively, "Taxes") arising from
the use or operation of the Vehicle, other than those items Ryder
has contracted to pay for or provide, including sales, use, excise,
gross receipts or any similar tax, and any special license fees or
taxes resulting from the operation and use of the Vehicle by the
Obligor;
o any excess over the annual allowances that may be stated in the
Lease for state motor vehicle license fees, registration fees,
vehicle inspection fees, personal property taxes, federal vehicle
use taxes and fuel tax permits;
o any increased costs resulting from a change in the assessment method
for any of the preceding items;
o reimbursement of Ryder for settlement of a claim or lien resulting
from the Obligor's failure to pay any taxes, fees or tolls on the
Leased Vehicles; and
o all damages, repairs, maintenance and related expenses resulting
from the operation of the Vehicles in violation of the Lease terms.
The foregoing items comprise part of the Maintenance Component of Total Monthly
Payments and will not be available to make payments in respect of the Senior
Notes.
ACCIDENTS, VEHICLE THEFT OR VEHICLE DESTRUCTION
The Leases require the Obligors to notify Ryder immediately of any
accident involving an Insured Vehicle, to provide Ryder with a detailed report
of the accident and to cooperate with Ryder and the insurer of the Insured
Vehicle in defending any claim. Within 30 days after that notice, Ryder will
determine if the Insured Vehicle is damaged beyond economic repair. If so, once
the related Obligor pays Ryder all amounts owed under the Lease for
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the Insured Vehicle, including any proceeds owed under any physical damage
insurance policy obtained by the Obligor, the Lease will terminate as to the
Insured Vehicle.
The Obligors must also notify Ryder immediately if an Insured Vehicle
is lost or stolen. If an Insured Vehicle is not located within 30 days after
that notice, the related Lease will terminate as to the Insured Vehicle once the
related Obligor pays Ryder all amounts owed to Ryder for the Insured Vehicle
under the Lease, including any proceeds received by the Obligor under any
physical damage insurance policy.
CARGO LOSS
Ryder is not responsible for the loss of or damage to cargo carried in
or on any Insured Vehicle, even if the loss or damage is caused by Ryder's
negligence.
ANNUAL TERMINATION OPTION
The Leases generally contain an annual termination option (the "Annual
Termination Option") which permits either Ryder or the Obligor to terminate a
Lease on the annual anniversary of the date the related Vehicle was delivered to
the Obligor, or with respect to some Leases, more frequently, by giving the
other party at least 60 days' written notice of its election to exercise the
Annual Termination Option. If Ryder exercises the Annual Termination Option on a
Lease, the related Obligor will have the right, but not the obligation, to
purchase the related Vehicle. If an Obligor exercises the Annual Termination
Option on a Lease, Ryder has the option to require the Obligor to purchase the
related Vehicle on the effective date of the termination.
If an Obligor elects or is required to purchase a Vehicle in connection
with the exercise of the Annual Termination Option, the Obligor must remit a
payment to Ryder (the "Termination Value Payment") in the amount specified in
the Schedule A as the termination value of the Vehicle (the "Termination
Value"). Additionally, the Obligor must pay all sales and use taxes relating to
the purchase. The Termination Value of a Vehicle ordinarily will exceed its
Residual Value. If an Obligor fails to purchase a Vehicle when required to do
so, Ryder may solicit wholesale cash bids for the Vehicle and require the
Obligor to pay the difference between the highest bid and the Termination Value
of the Vehicle.
Obligors have neither the right nor the obligation to purchase a
Vehicle at the Maturity Date of the related Lease.
If an Obligor becomes bankrupt or insolvent, then the Obligor may have
the right to reject some or all of the Leases relating to the Obligor, in which
case the Obligor would not be required to perform its obligations under the
Leases, and although Ryder could treat the Leases as having been terminated,
Ryder could not enforce any requirement that the Obligor purchase the related
Obligor Vehicles.
LEASE UNDERWRITING PROCEDURES
The underwriting or credit review and approval area is responsible for
all credit requests for potential and existing lease customers of Ryder. The
credit decision for a potential customer is based on an analysis of financial
information obtained from third party sources, bank and trade references, as
well as Ryder's experience with respect to the customer's payment performance.
The tools available to Ryder's underwriting staff include numerous automated
tools provided by the Dun & Bradstreet Corporation. Ryder's credit policy has
been centralized at the Shared Service Center with extensive oversight by
Ryder's corporate headquarters. For example, credit personnel are not able to
extend credit or increase credit limits beyond certain predetermined guidelines,
which are enforced by corporate headquarters. Any requests beyond the
predetermined limits require corporate approval.
INSURANCE
LIABILITY INSURANCE AND INDEMNITY
Each Lease specifies whether Ryder or the Obligor is responsible for
procuring and maintaining liability insurance on the related Vehicles and any
Substitute Vehicles. The liability insurance must cover both parties, either as
an insured or additional insured, for the ownership, maintenance, use and
operation of the Vehicles, up to certain specified per-occurrence dollar limits.
If the Obligor fails to obtain required liability insurance, then it must
indemnify Ryder for all damages arising out of the ownership, maintenance, use
or operation of the Vehicles. The insurer must be acceptable to Ryder, and the
liability insurance must provide primary coverage, rather than additional or
excess coverage. If Ryder extends its liability insurance to the Obligor, it may
terminate the extension
27
<PAGE> 29
of the insurance by providing the Obligor with 30 days' prior written notice.
The Obligor must then obtain the required liability insurance from a third party
insurer.
Each Lease requires the Obligor to indemnify Ryder for all damages in
excess of the liability insurance arising out of the ownership, maintenance, use
or operation of the Insured Vehicles and injuries or death to the Obligor or the
Obligor's employees, drivers or agents arising out of the ownership,
maintenance, use or operation of the Insured Vehicles.
PHYSICAL DAMAGE
OBLIGOR RISK OF LOSS. If an Obligor is required by a Lease to be
responsible for physical damage, the Obligor must pay for all physical damage,
including theft and loss, to the related Vehicles, even if the damage occurs as
a result of Ryder's negligence or on Ryder's premises. If a Vehicle is repaired
by a garage that Ryder has not approved and the repair is defective, then Ryder
may re-repair the Vehicle at the Obligor's expense. The Obligor must furnish
Ryder with evidence of reasonably acceptable physical damage insurance coverage
on the Vehicles, listing Ryder as the named insured or endorsed as the loss
payee. Ryder reserves the right to retain the salvage value of any Vehicle that
is damaged beyond economic repair. If Ryder elects to retain the salvage value,
it will deduct the salvage value from the amount owed to Ryder by the related
Obligor for the Vehicle.
RYDER RISK OF LOSS. If a Lease requires Ryder to be responsible
for physical damage to the related Vehicles, then Ryder assumes the risk of all
physical damage to and loss and theft of the Insured Vehicles, except that:
o the Obligor remains responsible for the deductible amount per
occurrence as specified in the Schedule A;
o Ryder will not pay, and the Obligor is responsible, for physical
damage caused by the Obligor's violation of the Lease terms and for
any willful damage to an Insured Vehicle, including (1) damage
caused in a labor dispute involving the Obligor or (2) any theft or
conversion of an Insured Vehicle by the Obligor's employees or
agents; Ryder will be entitled to retain the salvage value of any
Insured Vehicle that is damaged beyond economic repair through an
excluded peril, in which case the salvage value of the Insured
Vehicle will be deducted from the amount owed by the Obligor; and
o Ryder may terminate its responsibility for physical damage to and
loss and theft of the Insured Vehicles by giving the Obligor 30
days' prior written notice, after which time the Obligor then
assumes all risk of loss with respect to, and must procure physical
damage insurance covering, those Vehicles.
COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES
COLLECTIONS. Ryder's collections activities have been centralized into
one administrative center at the Shared Service Center with more than [50]
professionals devoted to collections. Ryder uses numerous automated tools to
assist it in the identification, tracking and resolution of collections
disputes. In addition to various Dun & Bradstreet Corporation performance
indices, Ryder also uses a number of proprietary performance measurements. When
a delinquency is identified, Ryder makes calls and/or sends demand letters to
the delinquent Obligor. The tone of a phone call or the level of aggressiveness
placed on each collection effort is determined by the length and amount of the
delinquency, credit history and quality of the Obligor and customer relationship
considerations.
DEFAULTS. When an Obligor fails to bring its account back into accord
with contractual or otherwise acceptable payment terms, Ryder may issue a
default notice to the Obligor. Receipt of a default notification typically
requires the Obligor to remit payment within seven days and achieve either
contractual or otherwise acceptable payment terms. Failure to remit payment can
result in the termination of the related Lease, in which case Ryder will (a)
demand the immediate return of all Obligor Vehicles, (b) initiate repossession
actions if the Obligor fails to return the Obligor Vehicles or (c) require the
Obligor to purchase the Obligor Vehicles for their Termination Values.
REPOSSESSIONS. Once a Specified Vehicle is repossessed, depending on
its condition and specifications, if it is determined to still have useful life
remaining, it will either be leased to another customer of Ryder that has a need
for the same type of vehicle or placed into Ryder's commercial rental fleet, or
it will be sold into the marketplace through Ryder's used vehicle sales
marketing group.
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<PAGE> 30
SERVICING
LEASE COLLECTIONS. Billing transactions for both securitized and
unsecuritized vehicles will continue to be generated by Ryder's existing billing
system and appear on one invoice. A portion of the payments received with
respect to invoices that include securitized Vehicles will be paid to the
Origination Trust. The payments will be available for either partial or full
payment of the financial component (the "Financial Component") of the fixed
charge portion (the "Fixed Charge") of the total monthly payment payable under
the Leases (the "Total Monthly Payment"). See "Lease Payments--Calculation of
the Financial Component".
On a daily basis, invoices that include securitized Vehicles will be
compared with payments received for the invoices. The appropriate amounts to be
paid to the Origination Trust and advanced by Ryder will be calculated
accordingly. See "Additional Document Provisions--The Administration
Agreement--Advances" for a discussion of the calculation of Financial Component
Advances and the repayment of the Advances.
RESIDUALS. Ryder will begin the disposal process for a Specified
Vehicle upon its return when the related Specified Lease has reached its
Maturity Date or date of early termination. Specified Vehicles will be prepared
for sale and placed on Ryder's used vehicle sales lots for retail/commercial
sales or they may be traded to manufacturers' groups through local or national
"trade packages".
If a Specified Vehicle is sold during the Collection Period in which
its lease terminates, Ryder will remit the Sales Proceeds to the SUBI Collection
Account within two days of processing. If the Specified Vehicle is not sold
during the Collection Period in which the Specified Vehicle comes off-lease,
Ryder will advance the Securitization Value to the SUBI Collection Account for
that Specified Vehicle. See "Additional Document Provisions--The Administration
Agreement--Advances" for a discussion of the calculation of Sales Proceeds
Advances and the repayment of those Advances.
LEASE PAYMENTS
Over the Lease Term, the Obligor is required to make Total Monthly
Payments intended to cover (a) the cost of financing the related Vehicles, (b)
scheduled depreciation of the Vehicles and (c) certain specified services and
maintenance to be performed and supplies to be furnished by Ryder.
Invoices are sent to each Obligor setting forth the Total Monthly
Payment due with respect to the Obligor Vehicles. Total Monthly Payments are
generally comprised of four components:
o the Fixed Charge, which is a fixed dollar amount due every month
during the Lease Term regardless of the actual usage of the Vehicle
by the Obligor;
o a variable charge, which changes from month to month depending on
Vehicle usage;
o a variable charge for fuel provided by Ryder during the preceding
month; and
o a variable charge for other services, including without limitation
accident charges, repairs, accessory charges, customer vehicle fuel
for non-Ryder vehicles, miscellaneous charges, credits and
interstate fuel taxes.
The Leases require the related Obligors to pay the invoiced Total Monthly
Payment within ten days of the date of the invoice. See "--Collection,
Repossession and Disposition Procedures". However, with regard to the Trust and
Specified Leases and as discussed in more detail below under "--Calculation of
the Financial Component," only the rights to the Financial Component of the
Fixed Charge, which represents the financing cost and depreciation of the
related Specified Vehicle, will be available to the Transferor and the Trust to
make payments in respect of the Program Operating Lease and the Senior Notes.
Total Monthly Payments made by Obligors under the Specified Leases
normally will be paid by mail, deposited into a lock box maintained by a bank
and controlled by the Administrative Agent and then deposited into the SUBI
Collection Account within two Business Days of processing, unless the Monthly
Remittance Condition has been met, which would then permit the Administrative
Agent to make the deposits on a monthly basis. See "Additional Document
Provisions--The Administration Agreement--Collections".
CALCULATION OF THE FINANCIAL COMPONENT
In the case of the Specified Leases, only the rights to the Financial
Component of the Fixed Charge, which represents the financing cost and
depreciation of the related Specified Vehicle, will be available to the
Transferor
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<PAGE> 31
and the Trust to make payments in respect of the Program Operating
Lease and the Senior Notes. Because the Financial Component and the Maintenance
Component are not billed separately to the Obligor or tracked separately by
Ryder, a predetermined dollar amount of the Fixed Charge component of Total
Monthly Payments will be identified as the Financial Component. The remainder of
the Fixed Charge, in addition to the other components of the Total Monthly
Payment, will comprise the Maintenance Component. The Maintenance Component will
be allocated to and retained by Ryder, as Maintenance Provider, pro rata with
the Financial Component. Although each Lease provides that Ryder may change the
Fixed Charge on specified dates twice yearly based on changes in the Consumer
Price Index, the Financial Component of each Specified Lease will be established
as of the Cutoff Date and will not change over the Lease Term.
Under the Administration Agreement, the portion of each Total Monthly
Payment allocated to the Maintenance Component of the Specified Leases will be
retained by the Maintenance Provider, will not be available to make Program
Operating Lease Payments and, therefore, will not be available to make payments
on the Senior Notes.
The following example is included to depict, with respect to a
hypothetical lease, the nature of its Financial Component and the relationship
of the Financial Component to the Securitization Rate in the amortization of the
Cutoff Date Securitization Value of the related leased vehicle. It is set forth
for illustrative purposes only.
<TABLE>
<CAPTION>
Amortization of a vehicle lease contract:
<S> <C>
Cutoff Date Securitization Value (Book Value) $30,000.00
Residual Value $26,000.00
Securitization Rate 8.00%
Remaining Lease Term (Months) 30
Fixed Charge Per Month $600.00
(Calculated) Financial Component $320.89
Securitization Value
32,000.00
Cut-off Date
31,000.00 Securitization Value
30,000.00
29,000.00
(GRAPHIC OMITTED) Residual Value
28,000.00
27,000.00
Amortization of the Lease
26,000.00 (Decrease of Securitization Value)
25,000.00
0 5 10 15 20 25 30
Months Since Cut-off Date
</TABLE>
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<PAGE> 32
Depiction of the components of the Financial Component
Total 350.00
Financial
Component 300.00
250.00 (GRAPHIC OMITTED)
200.00
150.00
100.00
[X] Interest
50.00
[ ] Depreciation
0.00
1 5 9 13 17 21 25 29
Months Since Cutoff Date
CALCULATION OF THE SECURITIZATION VALUE OF THE SPECIFIED LEASES
Under the Administration Agreement, the Administrative Agent will
calculate a Securitization Value for each Specified Lease equal to the
following:
<TABLE>
<CAPTION>
Calculation Date Securitization Value Formula
- ---------------- ----------------------------
<S> <C>
as of the Cutoff Date - the value of the Specified Lease and the related Specified Vehicle on Ryder's
books (the "Net Book Value") as of the Cutoff Date (the "Cutoff Date
Securitization Value");
as of its Maturity Date - the estimated sales proceeds of the Specified Vehicle as determined on or before
the Cutoff Date (the "Residual Value"); and
as of any other date - the present value, calculated using the Securitization Rate, of the sum of (a)
the aggregate Financial Component payments remaining on the Specified Lease
and (b) the Residual Value of the Specified Vehicle.
</TABLE>
For each Specified Lease, the Financial Component will equal the
constant payment required to amortize the Net Book Value of the Specified Lease
and the related Specified Vehicle to the Residual Value of that Specified
Vehicle over the Lease Term, at a rate equal to the Securitization Rate. The
Securitization Value, which represents the amount of financing that will be
raised against each Specified Vehicle and related Specified Lease, will at any
given time during the term of the Specified Lease represent the principal amount
of Securities that can be amortized by the sum of the Financial Component
payments due in respect of the Specified Vehicle over the remaining Lease Term,
plus the Residual Value of the Specified Vehicle, in each case discounted at an
annualized rate equal to the Securitization Rate. The "Securitization Rate" will
equal the sum of (a) the weighted average interest rate on the Securities on the
Closing Date, (b) the Administration Fee and (c) [0.___%].
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<PAGE> 33
HISTORICAL DATA
The following tables set forth selected delinquency, write-off and
residual value performance data for Ryder's portfolio of leased trucks, tractors
and trailers located throughout the United States as of and for the years ended
December 31, 1993 through December 31, 1998, and the six months ended June 30,
1998 and 1999. The tables are followed by a discussion of Ryder's views as to
trends, anomalies and reasons for changes in the tables.
The data presented in the following tables are for illustrative
purposes only. Delinquency, write-off and residual value performance experience
may be influenced by a variety of economic, social, geographic and other
factors. Neither Ryder nor the Trust can assure that Ryder's delinquency,
write-off and residual value experience with respect to its portfolio of leased
trucks, tractors and trailers in the future, or the Trust's experience with
respect to the Specified Vehicles, will be similar to that set forth below.
Ryder writes off a receivable automatically when it is six months past
due. Prior to that time a write-off may be taken, on an account-by-account
basis, if Ryder's credit and collections personnel determine that circumstances
so warrant, such as in the case of a court-approved reorganization plan or a
liquidating obligor with poor pay-out prospects.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, AT DECEMBER 31,
--------------------------- --------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Customers 11,979 10,965 11,217 11,287 11,393 10,923 10,208
Number of Vehicles... 92,276 84,258 88,249 83,091 79,750 78,561 72,313
Ending Net Book
Value of Vehicles.... $ 2,857,591,050 2,486,163,560 2,615,245,281 2,443,976,045 2,453,850,570 2,414,791,790 2,011,432,118
Dollar Amount of
Leases Delinquent....
61-90 Days..... $5,990,596 6,068,691 7,794,902 7,579,897 3,885,370 1,624,538 1,449,054
91 Days or More $3,135,128 3,170,869 3,028,988 4,780,667 2,621,514 1,568,546 1,486,811
Percentage
Delinquent as a
Percentage of Net
Book Value
61-90 Days.... 0.21% 0.24% 0.30% 0.31% 0.16% 0.07% 0.07%
91 Days or
More.......... 0.11% 0.13% 0.12% 0.20% 0.11% 0.06% 0.07%
</TABLE>
----------------------
o The Ending Net Book Value of Vehicles is based on the sum of the Net
Book Value of all Vehicles under the Leases.
o In presenting the Dollar Amount of Leases Delinquent the period of
delinquency is based on the number of days any portion of a payment
is contractually past due.
o The Percentage Delinquent as a Percentage of Net Book Value is
shown as a percentage of the aggregate Net Book Value of Vehicles at
period end.
WRITE-OFF EXPERIENCE
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, AT DECEMBER 31,
----------------------------- ----------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Customers 11,979 10,965 11,217 11,287 11,393 10,923 10,208
Number of Vehicles 92,276 84,258 88,249 79,750 78,561 78,561 72,313
Ending Net Book
Value of Vehicles....$2,857,591,050 2,486,163,560 2,615,245,281 2,443,976,045 2,453,850,570 2,414,791,790 2,011,432,118
Dollar Amount of
Write-offs........... $2,330,114 3,495,406 5,339,570 6,157,679 4,076,041 3,560,212 1,915,465
Write-offs as a
Percentage of Net
Book Value........... 0.16% 0.28% 0.20% 0.25% 0.17% 0.15% 0.10%
----------------------
</TABLE>
o The Dollar Amount of Write-offs is based on the time at which Ryder
formally determines a Lease receivable to be uncollectible and removes
the Lease receivable from its books.
o The Dollar Amount of Write-offs is net of recoveries.
o Write-offs as a Percentage of Net Book Value are listed as a
percentage of the aggregate Net Book Value of Vehicles at period end
and six-month data is annualized.
RESIDUAL VALUE PERFORMANCE
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, AT DECEMBER 31,
--------------------------- -----------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Vehicles
Sold................. 7,799 6,308 12,868 10,431 8,391 9,103 5,061
Aggregate Residual
Values of Vehicles
Sold................. $120,626,799 89,906,055 190,271,739 180,266,234 123,949,475 120,433,482 59,083,279
Aggregate Sales
Proceeds............. $140,258,967 107,941,002 225,322,796 211,878,187 147,923,019 149,847,757 76,789,821
Aggregate Gain (Loss) $19,632,167 18,034,947 35,051,056 31,611,953 23,973,544 29,414,274 17,706,542
Average Gain (Loss)
Per Vehicle.......... $2,517 2,859 2,724 3,031 2,857 3,264 3,499
</TABLE>
o The Number of Vehicles Sold only includes Vehicles that were under
full service lease contracts. These full service lease contracts were
all originated after [December 31, 1989].
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<PAGE> 34
Ryder believes the increase in the number of vehicles under lease over
the periods presented by the tables above primarily reflects increased market
demand for leased vehicles, and the increasing trend in delinquency experience
through 1998 reflects relatively low levels of delinquency in earlier years and
start-up related inefficiencies associated with Ryder's strategic move to
centralizing its lease collection and administration activities in a national
shared service center. Ryder believes decreases in delinquency since this period
are the result of the improved collection effectiveness of the shared service
center.
Ryder believes the increasing trend in net write-off experience
reflected in the above table is due to general growth in the size of the lease
portfolio. The significant level of net write-off experience in 1997 as compared
to other periods presented by the tables above reflects the implementation of
the national shared service center. As part of its effort to uniformly apply
write-off policies across the Company, the shared service center wrote-off a
number of accounts in 1997 for which an allowance for loss was previously
provided, but the write-off had not yet occurred.
Ryder believes the increasing trend in the number of vehicles sold is
due to overall growth in the size of its portfolio, combined with the conscious
effort by Ryder, particularly in 1997, to control the size of its portfolio by
actively selling certain used equipment. Ryder believes competitive pressures on
selling prices, more accurate forecasting of the residual value of vehicles sold
and the sales efforts discussed previously are responsible for the decreasing
trend in average gain per vehicle since 1994 shown in the table above.
YEAR 2000 PREPARATION
The YEAR 2000 issue is the result of computer systems, software
products and embedded technology using two digits rather than four to indicate
the applicable year. If not addressed, such computer systems, software products
and embedded technology may be unable to properly interpret dates beyond the
year 1999, which could cause system failures or miscalculations and lead to
disruptions in the activities and operations of Ryder System and its
subsidiaries, including Ryder.
During 1997, after consideration of the potential impact to operations,
including customer and supplier relationships, an enterprise-wide program was
initiated to modify computer information systems to be Year 2000 compliant or to
replace non-compliant systems at Ryder System and its subsidiaries. A Year 2000
Steering Committee comprised of senior executives was established to address
compliance issues and alternatives. A program office dedicated to implementing
the Year 2000 compliance plan was also established, and it has engaged external
consultants to provide day-to-day management oversight and contractors to
remediate and test non-compliant source code. Ryder System has stated that it
believes adequate resources have been allocated to the Year 2000 effort and that
it expects the Year 2000 compliance program to be completed on a timely basis.
Ryder System and its subsidiaries have identified three major areas
determined to be critical for successful Year 2000 compliance:
o information systems, such as mainframes, PCs, networks and similar
type systems maintained at customer sites, and legacy applications
relating to operations such as financial reporting, human resources,
purchasing, treasury, marketing and sales;
o third-party relationships, including customers, suppliers, vendors and
government agencies; and
o facilities and equipment which may contain microprocessors with
embedded technology.
Ryder System and its subsidiaries' Year 2000 compliance program for
each major area can be segregated into three broad phases. Phase I of the
program is the assessment of information systems, facilities and equipment, and
services and products provided by third parties in order to identify exposures
to Year 2000 issues and to develop a master plan of action including
remediation, retirement or replacement of non-compliant systems. Phase II of the
program is the implementation of action plans. Phase III of the program is the
final testing of each major area of exposure to ensure compliance, the placement
of remediated items into production and contingency planning to assess
reasonably likely worst case scenarios.
Ryder System and its subsidiaries have completed the assessment of the
legacy application and system software. Their remediation plan for this area is
segregated into 15 major partitions worldwide. The remediation
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<PAGE> 35
projects are at different phases of completion; overall, approximately [95]% of
the effort in this area had been performed as of [July 31, 1999]. Remediation
and testing activities were [virtually complete] on most core business
applications as of [July 31, 1999]. Final testing of remediated code is
scheduled to be substantially completed during [the third quarter] of 1999. In
addition, due to the uncertainties inherent in this undertaking, contingency
planning has been initiated to evaluate a course of action to minimize the
impact of any unforeseen disruption resulting from non-compliance.
Ryder System and its subsidiaries rely on suppliers, vendors and
government agencies to timely provide a wide range of goods and services,
including equipment, supplies, telecommunications, utilities, transportation
services and banking services. Their management believes that third-party
relationships represent the greatest risk with respect to the Year 2000 issue
because of their limited ability to influence actions of third parties and to
estimate the impact of non-compliance of third parties throughout their
operations. They are making concerted efforts to understand the Year 2000 status
of third parties whose Year 2000 non-compliance could either have a material
adverse effect on their business, financial condition or results of operations
or involve a safety risk to their employees or customers. They continue to
survey and communicate with customers, suppliers and vendors with whom they have
important financial and operational relationships to assess the status of their
Year 2000 compliance program and to develop a joint contingency plan.
The vendor compliance program of Ryder System and its subsidiaries
includes the following: assessing vendor compliance status; tracking vendor
compliance progress; developing contingency plans, including identifying
alternate vendors, as needed; addressing contract language; replacing,
remediating or upgrading equipment; requesting certification from vendors or
making on-site assessments, as required; and sending questionnaires and
conducting phone interviews. Some significant suppliers and vendors have not
responded to inquiries, have declined to respond because of liability concerns
or have not responded with sufficient detail for Ryder System and its
subsidiaries to ensure (a) timely Year 2000 compliance, or (b) the impact to the
company in the event of non-compliance. Ryder System is continuing to pursue
adequate responses from mission critical business partners under the new "Year
2000 Readiness Disclosure" legislation. However, Ryder System and its
subsidiaries can provide no assurance that Year 2000 compliance plans will be
successfully completed by third parties in a timely manner.
In the facilities and equipment area, Ryder's exposure relates to
embedded technology in, among other things, vehicles, vehicle-related devices,
and fuel storage and other facilities. Based upon preliminary testing and
discussions with major truck manufacturers, it appears that the microprocessors
installed by the truck manufacturers are Year 2000 compliant. Remediation of
leak detection devices on underground fuel storage tanks will be completed by
mid-1999. Ryder is continuing to assess its exposure and to develop action and
contingency plans for other critical facilities and equipment, including
on-board vehicle computers acquired from manufacturers other than major truck
manufacturers.
Ryder System and its subsidiaries have developed a Year 2000
contingency plan development process to mitigate potential disruptions in their
activities and operations that may be created by failures of critical business
partners, facilities and equipment, and internal systems. Management currently
believes that the most likely worst case scenario will consist of some localized
disruptions of systems that may affect individual business processes, facilities
or suppliers for a short time rather than systemic or long-term problems
affecting business operations as a whole. Through visits to key operating sites,
departments, customers, and vendors, potential disruption scenarios are being
identified and contingency plans are being developed. These plans address
preparation, assessment of failure, and resumption of critical business
functions. Detailed contingency plans for each business unit and for critical
business processes are expected to be developed by the third quarter of 1999.
However, Ryder System and its subsidiaries can provide no assurance that they
will correctly anticipate the level, impact or duration of non-compliance by
critical business partners, facilities and equipment or internal systems, or
that contingency plans will be sufficient to mitigate the impact of
non-compliance.
The inability of Ryder to address the necessary Year 2000 modifications
of computerized information systems could result in a significant adverse effect
on its performance as Administrative Agent and Maintenance Provider, including
the potential inability to collect receivables, pay obligations, and operate
service facilities. Any such inability could have a material adverse effect on
Senior Noteholders and you could suffer a loss on your investment.
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<PAGE> 36
The foregoing description under the heading "Year 2000 Preparation"
contains various "forward looking statements" within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"), which represent expectations or beliefs expressed by Ryder
System management concerning future events, including that the assessment and
remediation efforts associated with Year 2000 issues will be completed by Ryder
System and its subsidiaries on a timely basis and that completion of the
contingency plan relating to year 2000 issues is expected by the end of fiscal
year 1999. Ryder System cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward looking statements, including the failure of Ryder System
and its subsidiaries to resolve year 2000 issues on a timely basis due to
non-performance by outside contractors, the failure of third parties to
remediate their year 2000 issues or other factors, or the failure of Ryder
System and its subsidiaries to develop an adequate contingency plan relating to
year 2000 issues. Results actually achieved thus may differ materially from the
expected results included in these statements.
THE SPECIFIED LEASES
GENERAL
The Specified Leases selected from the Origination Trust's portfolio of
Leases will consist of a pool of ______ Vehicles for which the related Leases
had an Aggregate Cutoff Date Securitization Value of $____________. The
Specified Leases were assigned to the Origination Trust by Ryder on or prior to
the Closing Date. The Specified Leases are operating leases under generally
accepted accounting principles and have been selected based upon the criteria
specified in the SUBI Trust Agreement and described under "--Characteristics of
the Specified Leases--General" and "--Representations, Warranties and
Covenants". Ryder will represent and warrant that it used no adverse selection
procedures in selecting the Specified Leases for allocation to the Lease SUBI as
SUBI Assets and that it is not aware of any bias in the selection of the
Specified Leases that would cause delinquencies or losses on the Specified
Leases to be worse than any other Leases held by the Origination Trust. However,
there can be no assurance as to delinquencies or losses on the Specified Leases.
Each Specified Lease will provide that Ryder may terminate the
Specified Lease and repossess the related Specified Vehicle following an event
of default by the related Obligor (each, a "Lease Default"). Typical Lease
Defaults include, but may not be limited to, failure of the Obligor to make
payments when due, certain events of bankruptcy or insolvency of the Obligor,
failure of the Obligor to maintain the insurance required by the related
Specified Lease (if the Obligor is required to maintain the insurance), failure
to make required repairs on the related Specified Vehicle or failure to comply
with any other term or condition of the Specified Lease. Ryder regularly tracks
Obligors' compliance with their payment and insurance obligations and monitors
Obligors for noncompliance as more fully described under "Ryder--Insurance" and
"--Collection, Repossession and Disposition Procedures".
In the event of termination of a Specified Lease where the related
Obligor is in default following a casualty of the related Specified Vehicle,
amounts collected with respect to the Specified Lease and Specified Vehicle,
after deducting costs and other sums retained by the Administrative Agent in
connection therewith, may be less than the Securitization Value of the Specified
Lease. In the event that any of the foregoing shortfalls are not covered from
available monies on deposit in the Residual Value Surplus Account and Reserve
Fund and the subordination of payments otherwise payable to the holders of the
Subordinated Notes and the Certificates to the extent described in this
prospectus, investors in the Senior Notes could suffer a loss on their
investment.
CHARACTERISTICS OF THE SPECIFIED LEASES
GENERAL. The Specified Leases were selected by reference to several
criteria, including, that as of the Cutoff Date, each Specified Lease applied to
a Specified Vehicle that:
o is a truck, tractor or trailer;
o has a model year of [1997] or later;
o is subject to a Lease with a Maturity Date on or after the [August
2000] Payment Date and no later than the [August 2009] Payment Date;
and
o Fixed Charge payments in respect of which were not more than 60 days
past due as of the Cutoff Date.
35
<PAGE> 37
For a listing of other applicable selection critetia see "--Representations,
Warranties and Covenants".
As of the Cutoff Date, the Specified Leases had:
o an average Cutoff Date Securitization Value of $__________;
o a weighted average original term of ______ months;
o a weighted average term to maturity of _____ months; and
o an aggregate Securitization Value (the "Aggregate Cutoff Date
Securitization Value") of $__________.
As of the Cutoff Date, no single Obligor accounted for more than ______%
of the total Net Book Value of the Specified Vehicles. As of the Cutoff Date,
the top five and ten Obligors accounted for approximately ____% and ____% of the
Specified Vehicles by Aggregate Cutoff Date Securitization Value, respectively,
and the Specified Vehicles had an aggregate Residual Value of $__________.
DISTRIBUTION OF THE SPECIFIED VEHICLES BY CUTOFF DATE SECURITIZATION
VALUE
As of the Cutoff Date, the composition of the Specified Vehicles by
Cutoff Date Securitization Value was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
NUMBER OF AGGREGATE CUTOFF DATE CUTOFF DATE
CUTOFF DATE SECURITIZATION VALUE ($) VEHICLES SECURITIZATION VALUE ($) SECURITIZATION VALUE
- ------------------------------------ -------- ------------------------ --------------------
<S> <C> <C> <C> <C>
6,711.00 to 10,000.00 1 6,711.00 0.00
10,000.01 to 20,000.00 318 5,919,426.00 1.97
20,000.01 to 30,000.00 571 14,707,224.00 4.90
30,000.01 to 40,000.00 897 32,063,620.00 10.69
40,000.01 to 50,000.00 1,133 51,094,641.00 17.04
50,000.01 to 60,000.00 1,594 88,063,177.00 29.37
60,000.01 to 70,000.00 1,210 77,977,999.00 26.00
70,000.01 to 80,000.00 339 24,898,695.00 8.30
80,000.01 to 90,000.00 55 4,516,370.00 1.51
90,000.01 to 100,000.00 3 284,819.00 0.09
100,000.01 to 110,000.00 2 202,684.00 0.07
120,000.01 to 125,195.00 1 125,195.00 0.04
----- -------------- ------
Total: 6,124 299,860,561.00 100.00
- -------------------------------------- ===== ============== ======
</TABLE>
o The percentage column may not add to 100.00% due to rounding.
36
<PAGE> 38
DISTRIBUTION OF THE SPECIFIED VEHICLES BY ORIGINAL MATURITY
As of the Cutoff Date, the distribution of the Specified Vehicles by
the term of original maturity was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
NUMBER OF AGGREGATE CUTOFF DATE CUTOFF DATE
TERM OF MATURITY VEHICLES SECURITIZATION VALUE ($) SECURITIZATION VALUE
- ---------------- -------- ------------------------ --------------------
<S> <C> <C> <C>
24--35 months 13 621,375.00 0.21
36--47 months 302 14,523,601.00 4.84
48--59 months 442 19,256,604.00 6.42
60--71 months 1,312 60,526,877.00 20.19
72--83 months 2,811 144,078,353.00 48.05
84--95 months 937 47,335,644.00 15.79
96--107 months 284 12,758,439.00 4.25
108--120 months 23 759,668.00 0.25
----- --------------- ------
Total: 6,124 299,860,561.00 100.00
===== =============== ======
</TABLE>
- -------------------------------
o The percentage column may not add to 100.00% due to rounding.
DISTRIBUTION OF THE SPECIFIED VEHICLES BY REMAINING TERM
As of the Cutoff Date, the composition of the Specified Vehicles by
number of months until Maturity Date was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
NUMBER OF AGGREGATE CUTOFF DATE CUTOFF DATE
REMAINING TERM VEHICLES SECURITIZATION VALUE ($) SECURITIZATION VALUE
- -------------- -------- ------------------------ -----------------------
<S> <C> <C> <C>
12--23 months 17 583,234.00 0.19
24--35 months 202 9,227,432.00 3.08
36--47 months 447 19,975,438.00 6.66
48--59 months 1,124 50,416,554.00 16.81
60--71 months 2,040 104,589,229.00 34.88
72--83 months 1,872 95,087,989.00 31.71
84--95 months 379 18,408,244.00 6.14
96--107 months 24 945,464.00 0.32
108--120 months 19 626,977.00 0.21
----- -------------- ------
Total: 6,124 299,860,561.00 100.00
===== ============== ======
</TABLE>
- -----------------------------------------
o The percentage column may not add to 100.00% due to rounding.
37
<PAGE> 39
DISTRIBUTION OF THE SPECIFIED VEHICLES BY STATE
As of the Cutoff Date, the distribution of the Specified Vehicles by
state of origination, based on the state in which the related Specified Vehicle
is titled, was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE CUTOFF DATE AGGREGATE CUTOFF DATE
STATE VEHICLES SECURITIZATION VALUE ($) SECURITIZATION VALUE
- ----- -------- ------------------------ ---------------------
<S> <C> <C> <C>
Alabama 398 20,671,642.00 6.89
Arizona 139 5,749,199.00 1.92
California 409 20,050,941.00 6.69
Colorado 198 9,377,550.00 3.13
Delaware 12 634,280.00 0.21
Florida 1 65,766.00 0.02
Idaho 9 481,928.00 0.16
Illinois 55 2,667,049.00 0.89
Indiana 561 23,988,615.00 8.00
Kansas 108 5,543,690.00 1.85
Maryland 11 541,909.00 0.18
Massachusetts 340 14,903,692.00 4.97
Minnesota 92 4,096,412.00 1.37
Mississippi 243 13,516,872.00 4.51
New Mexico 35 1,819,000.00 0.61
North Carolina 645 35,263,637.00 11.76
Ohio 501 24,436,682.00 8.15
Oklahoma 173 7,233,149.00 2.41
Oregon 33 1,547,503.00 0.52
Pennsylvania 648 30,595,027.00 10.20
South Carolina 315 16,626,151.00 5.54
Tennessee 542 29,769,022.00 9.93
Utah 31 1,345,720.00 0.45
Virginia 230 9,351,329.00 3.12
Washington 135 7,259,174.00 2.42
Wisconsin 260 12,324,622.00 4.11
----- -------------- ------
Total: 6,124 299,860,561.00 100.00
===== ============== ======
</TABLE>
- --------------------------
o The percentage column may not add to 100.00% due to rounding.
38
<PAGE> 40
DISTRIBUTION OF THE SPECIFIED VEHICLES BY ASSET CLASS
As of the Cutoff Date, the distribution of the Specified Vehicles by
asset class was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE CUTOFF DATE AGGREGATE CUTOFF DATE
ASSET CLASS VEHICLES SECURITIZATION VALUE ($) SECURITIZATION VALUE
----------- -------- ------------------------ ---------------------
<S> <C> <C> <C>
Dry Trailer 285 5,989,630.00 2.00
Diesel Truck (less than or equal to
16,000 pounds) 326 8,884,786.00 2.96
Diesel Truck (less than or equal to
26,000 pounds/less than or equal to 20
feet) 260 10,343,356.00 3.45
Diesel Truck (less than or equal to
26,000 pounds/greater than 20 feet) 513 19,770,066.00 6.59
Diesel Truck (greater than 26,000
pounds/less than or equal to
20 feet) 55 2,489,477.00 0.83
Diesel Truck (greater than 26,000
pounds/greater than 20 feet) 356 15,801,745.00 5.27
Flatbed Trailer 7 123,093.00 0.04
Gas Straight Truck 18 434,563.00 0.14
Other Tractor 13 831,539.00 0.28
Other Trailer 2 91,583.00 0.03
Other Truck 267 11,722,737.00 3.91
Panel Van and Pickup 123 2,390,687.00 0.80
Parcel Van 65 1,580,372.00 0.53
Refrigeration Trailer 43 2,492,258.00 0.83
Refrigeration Truck (greater than or
equal to 26,000 pounds) 189 9,017,340.00 3.01
Refrigeration Truck (less than or equal
to 26,000 pounds) 126 7,479,114.00 2.49
Single Axle Sleeper Tractor 56 3,260,507.00 1.09
Single Axle Tractor 866 42,629,874.00 14.22
Stake and Flatbed Truck 168 6,968,764.00 2.32
Tandem Axle Cab-Over Engine Sleeper 1 56,913.00 0.02
Tandem Axle Conventional Sleeper
Tractor 1,426 92,621,140.00 30.89
Tandem Axle Tractor 959 54,881,017.00 18.30
----- -------------- ------
Total 6,124 299,860,561.00 100.00
===== ============== ======
</TABLE>
o The percentage column may not add to 100.00% due to rounding.
39
<PAGE> 41
DISTRIBUTION OF THE SPECIFIED VEHICLES BY MANUFACTURER
As of the Cutoff Date, the distribution of the Specified Vehicles by
manufacturer was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE CUTOFF DATE AGGREGATE CUTOFF DATE
MANUFACTURER VEHICLES SECURITIZATION VALUE ($) SECURITIZATION VALUE
- ------------ -------- ------------------------ ---------------------
<S> <C> <C> <C>
Freightliner 2,413 141,100,402.00 47.06
International (Navistar) 1,842 83,705,778.00 27.91
Mack Trucks 555 29,017,035.00 9.68
Isuzu 422 12,205,878.00 4.07
Volvo 101 6,835,305.00 2.28
General Motors Corp 228 6,273,515.00 2.09
Kenworth 64 5,098,590.00 1.70
Great Dane Trailers 207 4,327,056.00 1.44
Utility Trailers 79 3,041,046.00 1.01
Peterbilt 27 2,017,732.00 0.67
Ford 70 1,722,979.00 0.57
Ottawa 28 1,416,525.00 0.47
Sterling Ford 24 1,340,011.00 0.45
Trailmobile Trailers 28 743,680.00 0.25
Stoughton Trailers 16 287,248.00 0.10
Other 5 180,667.00 0.06
Dorsey Trailers 3 137,380.00 0.05
Freightliner Custom Chassis Corp 3 133,337.00 0.04
Cheverolet 4 91,397.00 0.03
Clements Trailer 2 78,440.00 0.03
Budd Trailer 1 43,460.00 0.01
Fruehauf Trailers 1 38,254.00 0.01
Dodge 1 24,846.00 0.01
----- -------------- ------
- -----------------------------------------
Total 6,124 299,860,561.00 100.00
===== ============== ======
</TABLE>
- -----------------------
o The percentage column may not add to 100.00% due to rounding.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Specified Leases and the related Specified Vehicles will be
described in a schedule appearing as an exhibit to the SUBI Trust Agreement,
which will identify each Specified Vehicle by vehicle identification number and
set forth as to each Specified Lease or Specified Vehicle, as the case may be,
among other things:
o the date of origination,
o the Net Book Value,
o the Residual Value,
o the Financial Component,
o the Fixed Charge, and
o the number of months remaining from the Cutoff Date to the month in
which the Maturity Date occurs.
Under the Administration Agreement, the Administrative Agent will
represent and warrant as to certain characteristics of each Specified Lease and
Specified Vehicle as described in the first paragraph under
40
<PAGE> 42
"--Characteristics of the Specified Leases--General". The Administrative Agent
will also represent and warrant that each Specified Lease or, to the extent
applicable, the related Specified Vehicle or Obligor:
o was originated by Ryder in the United States for an Obligor with a
U.S. address in the ordinary course of Ryder's business;
o is a U.S. dollar-denominated obligation;
o has been validly assigned to the Origination Trust by Ryder, except
that if a Specified Vehicle is a Titling Grace Period Vehicle, it
will be retitled in the name of the Origination Trust or the
Origination Trustee on behalf of the Origination Trust during the
Titling Grace Period, and Ryder will provide each Rating Agency with
a report on the status of such retitling on or before the end of the
Titling Grace Period;
o provides for constant or increasing Fixed Charge payments to be made
by the Obligor over the Lease Term;
o is a Lease as to which no selection procedure was used that was
believed to be adverse to the holders of interests in the
Origination Trust, the SUBIs or any Other SUBI;
o was created in compliance in all material respects with all
applicable federal and state laws, including disclosure laws;
o as of the date assigned to the Origination Trust, (a) is a legal,
valid and binding payment obligation of the Obligor, enforceable
against the Obligor in accordance with its terms, as amended, (b)
has not been satisfied, subordinated, rescinded, canceled or
terminated, (c) no right of rescission, setoff, counterclaim or
defense has been asserted or threatened in writing and (d) no
written default notice has been transmitted to Ryder;
o had an original term of not less than 12 months and has a remaining
term of not greater than 120 months;
o an executed copy of the documentation associated therewith is
located at one of Ryder's offices;
o the Obligor or Ryder has obtained physical damage insurance covering
the related Specified Vehicle as required under the Lease;
o the Obligor or Ryder has obtained liability insurance covering the
related Specified Vehicle as required under the Lease;
o does not have any Fixed Charge payment that is in whole or in part
more than 60 days past due as of the Cutoff Date;
o has not had any liens or claims filed on or against it for work,
labor or materials; and
o the monthly Fixed Charge due is equal to or greater than the monthly
Financial Component due in respect thereof.
The Administrative Agent will be required to deposit or cause to be
deposited into the SUBI Collection Account an amount equal to the Securitization
Value of a Specified Lease (the "Reallocation Payment") if:
o the Origination Trustee, the Administrative Agent, the Trust or the
Transferor discovers a breach of any representation, warranty or
covenant referred to in the preceding paragraph that materially and
adversely affects the Trust's interests in a Specified Lease or
Specified Vehicle, and
o the breach is not cured in all material respects within 60 days
after the Administrative Agent discovers the breach or is given
notice of it.
The Reallocation Payment must be made by the Administrative Agent as of
the day on which the related cure period ended. Upon such payment, the related
Specified Lease and Specified Vehicle shall no longer constitute SUBI Assets.
The foregoing payment obligation will survive any termination of Ryder as
Administrative Agent under the Administration Agreement. Under some
circumstances, the Administrative Agent will be required to make Reallocation
Payments in respect of some Specified Leases as to which certain servicing
procedures have not been followed that materially and adversely affect the
interests of the Trust in the Specified Lease. Additionally, if the
Administrative Agent fails to properly retitle any Titling Grace Period Vehicle
during the Titling Grace Period, it
41
<PAGE> 43
will be required to make a deposit in the SUBI Collection Account equal to the
Securitization Value of the related Specified Lease as of the last day of the
Titling Grace Period and such Specified Lease and the related Specified Vehicle
will be transferred to the Administrative Agent.
MATURITY, PAYMENT AND YIELD CONSIDERATIONS
In general, the rate of payment of principal and the yield to maturity
of the Senior Notes will be directly related to the rate at which payments on or
in respect of the Specified Leases and the Specified Vehicles are made. A
prepayment of a Specified Lease in full may be in the form of:
o proceeds resulting from a voluntary early termination of the
Specified Lease;
o proceeds resulting from the exercise of the Annual Termination
Option and receipt of the related Termination Value Payment;
o Termination Proceeds following a default by or bankruptcy of the
related Obligor;
o Insurance Proceeds resulting from Casualty Termination Leases; or
o Reallocation Payments made by the Administrative Agent.
The rate of prepayments on the Specified Leases may be influenced by a
variety of economic, social and other factors, including competing truck,
tractor and trailer lessors and the conditions in the used truck, tractor and
trailer market.
Ryder does not maintain records of the historical prepayment experience
of its truck, tractor and trailer lease portfolio. Ryder is not aware of any
publicly available industry statistics setting forth termination rates for
truck, tractor and trailer leases similar to the Leases. Neither Ryder nor the
Trust can assure that prepayments on the Specified Leases will conform to any
historical experience, nor can they predict the actual prepayment rates that may
be experienced on the Specified Leases.
In general, prepayments of Specified Leases will shorten the weighted
average life of the Senior Notes, which is the average amount of time during
which each dollar of the principal balance of a Senior Note is outstanding. As
the rate of payment of principal on the Senior Notes will depend primarily on
the rate of payment - including prepayments - of the Specified Leases, the final
payment of principal of the Senior Notes could occur significantly earlier than
the final payment dates specified on the front cover of this prospectus for each
class of Senior Notes (each, a "Final Payment Date"). If prepayments on
Specified Leases cause the principal of the Senior Notes to be paid earlier than
anticipated, the Senior Noteholders will bear the risk of being able to reinvest
principal payments at interest rates at least equal to the Interest Rate on the
Senior Notes.
The effective yield on, and average life of, the Senior Notes will
depend on, among other things, the amount of scheduled payments on or in respect
of the Specified Leases and the Specified Vehicles and the rate at which such
payments are made to the Senior Noteholders. The timing of changes in the rate
of payments in respect of the Specified Vehicles also may affect significantly
an investor's actual yield to maturity and the average life of the Senior Notes.
A substantial increase in the rate of payments on or in respect of the Specified
Leases and Specified Vehicles - including liquidations of the Specified Leases -
may shorten the final maturity of, and may significantly affect the yield on,
the Senior Notes.
An investor's expected yield will be affected by (a) the price paid for
the Senior Notes, (b) the rate of prepayments of the Specified Leases and (c)
the investor's assumed reinvestment rate. These factors do not operate
independently, but are interrelated. For example, if prepayments on the
Specified Leases are slower than anticipated, an investor's yield will be lower
if interest rates are higher than anticipated and higher if interest rates are
lower than anticipated. Conversely, if prepayments on the Specified Leases are
faster than anticipated, an investor's yield will be higher if interest rates
are higher than anticipated and lower if interest rates are lower than
anticipated.
The following information is provided solely to illustrate the effect
of prepayments of the Specified Leases on the unpaid principal amounts of the
Senior Notes and the weighted average life of the Senior Notes under the
42
<PAGE> 44
assumptions stated below, and is not a prediction of the prepayment rates that
might actually be experienced with respect to the Specified Leases.
Prepayments on truck, tractor and trailer leases may be measured by a
prepayment standard or model. The prepayment model used in this prospectus is
based on a Conditional Prepayment Rate. A "Conditional Prepayment Rate" or "CPR"
represents a constant annual rate of prepayment relative to the then outstanding
Securitization Value of a pool of Specified Leases applied monthly during the
indicated portion of the life of a Specified Lease. A 100% Prepayment Assumption
assumes a 0% CPR for the first month of the life of a Specified Lease and an
additional 12/11% CPR per annum each month thereafter during the life of the
Specified Lease until month 12. Beginning in the 12th month and in each month
thereafter until the 30th month during the life of a Specified Lease, a 100%
Prepayment Assumption assumes a 12% CPR per annum. Beginning in the 30th month
during the life of a Specified Lease, a 100% Prepayment Assumption assumes a 12%
CPR and an additional 1/3% CPR per annum each month thereafter until month 60
and each month thereafter during the life of a Specified Lease, a 100%
Prepayment Assumption assumes a 22% CPR.
The tables below were prepared on the basis of certain assumptions,
including that:
o all Total Monthly Payments are timely received and no Specified
Lease is ever delinquent;
o no Reallocation Payment is made in respect of any Specified Lease;
o there are no losses in respect of the Specified Leases;
o an Optional Purchase does not occur;
o distributions of principal of and interest on the Senior Notes are
made on February 15, May 15, August 15 and November 15 of each year
whether or not the day is a Business Day;
o all payments in respect of the Subordinated Notes are deposited to
the Reserve Fund;
o the Administration Fee is 1.00% per annum;
o all prepayments on the Specified Leases are prepayments in full;
o all Program Operating Lease Payments are timely made;
o no Residual Value Surplus is deposited into the Residual Value
Surplus Account; and
o the Reserve Fund is funded with an amount equal to the Initial
Deposit.
No representation is made as to what the actual levels of losses and
delinquencies on the Specified Leases will be. Because payments on the Specified
Leases will differ from those used in preparing the following tables,
distributions of principal of the Senior Notes may be made earlier or later than
as set forth in the tables. Investors are urged to make their investment
decisions on a basis that includes their determination as to anticipated
prepayment rates under a variety of the assumptions discussed herein.
43
<PAGE> 45
The following tables set forth the percentages of the unpaid principal
balance of the Senior Notes that would be outstanding after each of the dates
shown, based on a rate equal to 0%, 50%, 100%, 150% and 200% of the Prepayment
Assumption. As used in the table, "0% Prepayment Assumption" assumes no
prepayments on a Specified Lease, "50% Prepayment Assumption" assumes that a
Specified Lease will prepay at 50% of the Prepayment Assumption, and so forth.
PERCENTAGE OF CLASS A-1 SENIOR NOTE BALANCE OUTSTANDING
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-------------------------------------------------------------
PAYMENT DATE 0% 50% 100% 150% 200%
-- --- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
_______ 1999 100% 100% 100% 100% 100%
_______ 2000
_______ 2000
_______ 2001
_______ 2001
_______ 2002
_______ 2002
_______ 2003
_______ 2003
_______ 2004
_______ 2004
_______ 2005
_______ 2005
Weighted Average Life (years)
</TABLE>
-----------------------------------------
o The weighted average life of the Class A-1 Senior Notes is
determined by (a) multiplying the amount of each distribution in
reduction of principal balance by the number of years from the
Closing Date to the related Payment Date, (b) adding the results
and (c) dividing the sum by the aggregate distributions in
reduction of principal balance referred to in clause (a).
PERCENTAGE OF CLASS A-2 SENIOR NOTE BALANCE OUTSTANDING
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-------------------------------------------------------------
PAYMENT DATE 0% 50% 100% 150% 200%
-- --- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
_______ 1999 100% 100% 100% 100% 100%
_______ 2000
_______ 2000
_______ 2001
_______ 2001
_______ 2002
_______ 2002
_______ 2003
_______ 2003
_______ 2004
_______ 2004
_______ 2005
_______ 2005
Weighted Average Life (years)
</TABLE>
-----------------------------------------
o The weighted average life of the Class A-2 Senior Notes is
determined by (a) multiplying the amount of each distribution in
reduction of principal balance by the number of years from the
Closing Date to the related Payment Date, (b) adding the results
and (c) dividing the sum by the aggregate distributions in
reduction of principal balance referred to in clause (a).
44
<PAGE> 46
PERCENTAGE OF CLASS A-3 SENIOR NOTE BALANCE OUTSTANDING
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-------------------------------------------------------------
PAYMENT DATE 0% 50% 100% 150% 200%
-- --- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
_______ 1999 100% 100% 100% 100% 100%
_______ 2000
_______ 2000
_______ 2001
_______ 2001
_______ 2002
_______ 2002
_______ 2003
_______ 2003
_______ 2004
_______ 2004
_______ 2005
_______ 2005
Weighted Average Life (years)
</TABLE>
-----------------------------------------
o The weighted average life of the Class A-3 Senior Notes is
determined by (a) multiplying the amount of each distribution in
reduction of principal balance by the number of years from the
Closing Date to the related Payment Date, (b) adding the results
and (c) dividing the sum by the aggregate distributions in
reduction of principal balance referred to in clause (a).
PERCENTAGE OF CLASS A-4 SENIOR NOTE BALANCE OUTSTANDING
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-------------------------------------------------------------
PAYMENT DATE 0% 50% 100% 150% 200%
-- --- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
_______ 1999 100% 100% 100% 100% 100%
_______ 2000
_______ 2000
_______ 2001
_______ 2001
_______ 2002
_______ 2002
_______ 2003
_______ 2003
_______ 2004
_______ 2004
_______ 2005
_______ 2005
Weighted Average Life (years)
</TABLE>
-----------------------------------------
o The weighted average life of the Class A-4 Senior Notes is
determined by (a) multiplying the amount of each distribution in
reduction of principal balance by the number of years from the
Closing Date to the related Payment Date, (b) adding the results
and (c) dividing the sum by the aggregate distributions in
reduction of principal balance referred to in clause (a).
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<PAGE> 47
NOTE FACTORS AND TRADING INFORMATION
The "Note Factor" for the Senior Notes will be a seven-digit decimal
that the Administrative Agent will compute for each Payment Date, which will
represent the remaining outstanding principal balance of the Senior Notes as of
that Payment Date, after giving effect to payments made on the Payment Date,
expressed as a fraction of the initial outstanding principal balance of the
Senior Notes. The Note Factor will initially be 1.0000000, and will thereafter
decline to reflect reductions in the Senior Note Balance. A Senior Noteholder's
portion of the principal balance of the Senior Notes, will be the product of (a)
the original denomination of the Senior Notes and (b) the applicable Note
Factor.
On each Payment Date, the Indenture Trustee will provide to Cede & Co.
("Cede") as the nominee of The Depository Trust Company ("DTC") (unless
Definitive Notes are issued under the limited circumstances described herein),
unaudited reports concerning payments received on or in respect of the Specified
Leases and the Specified Vehicles, the Note Factor for the Senior Notes, and
various other items of information. Senior Note Owners may obtain copies of the
reports upon a request in writing to the Indenture Trustee at its Corporate
Trust Office. In addition, Senior Noteholders will be furnished information for
tax reporting purposes during each calendar year, not later than the latest date
permitted by law. For further details concerning information furnished to Senior
Noteholders and Senior Note Owners, see "Certain Information Regarding the
Securities--Statements to Senior Noteholders" and "Description of the Senior
Notes-- Book-Entry Registration".
DESCRIPTION OF THE SENIOR NOTES
GENERAL
The Senior Notes will be issued under the Indenture. The Indenture,
together with the SUBI Trust Agreement, the Administration Agreement, the Trust
Administration Agreement, the Trust Agreement, the Program Operating Lease, the
SUBI Certificate Transfer Agreement, and the Issuer SUBI Certificate Transfer
Agreement, are called the "Basic Documents". The following summaries of the
material provisions of the Basic Documents and the summaries of material
provisions included under "The SUBIs", "The Origination Trust", "The Specified
Leases--Characteristics of the Specified Leases", "--General" and
"--Representations, Warranties and Covenants", "Security for the Securities" and
"Additional Document Provisions" do not purport to be complete and are subject
to, and qualified in their entirety by reference to, the provisions of those
documents. Where particular provisions of or terms used in a Basic Document are
referred to, the actual provisions, including definitions of terms, are
incorporated by reference as part of those summaries. Copies of the Basic
Documents may be obtained by request to the Transferor at the address set forth
under "The Transferor".
The Senior Notes will be issued in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof in book-entry form. The Senior
Notes initially will be represented by certificates registered in the name of
Cede, the nominee of DTC. No Senior Note Owner will be entitled to receive a
certificate representing that owner's Senior Note, except as set forth below.
Unless and until Senior Notes are issued in fully registered certificated form
(the "Definitive Notes") under the limited circumstances described below, all
references herein to distributions, notices, reports and statements to Senior
Noteholders will refer to the same actions made with respect to DTC or Cede, as
the case may be, for the benefit of Senior Note Owners in accordance with DTC
procedures. See "--Book-Entry Registration" and "Certain Information Regarding
the Securities--Definitive Notes".
Distributions in respect of the Subordinated Notes and the Certificates
will be subordinated to distributions in respect of the Senior Notes to the
extent described under "Certain Information Regarding the Securities--Payments
on the Securities".
INTEREST
Interest on the unpaid principal balance of the Senior Notes will be
paid in quarterly installments on February 15, May 15, August 15 and November 15
of each year, or if the day is not a Business Day, on the immediately succeeding
Business Day, beginning __________, 1999 (each, a "Payment Date") to holders of
record of the Senior Notes (the "Senior Noteholders") as of the day immediately
preceding the Payment Date (each such date, a "Record Date"), with the final
interest payment due on the earlier of (a) the Payment Date on which the
principal balance of the Senior Notes is reduced to zero or (b) the Final
Payment Date. A "Business Day" will be any day other than a Saturday, a Sunday
or a day on which banking institutions in the states of Delaware, Florida,
Illinois or New York are authorized or obligated by law, executive order or
government decree to be closed.
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<PAGE> 48
Interest will accrue on each class of Senior Notes at the interest rate
specified for each class on the front cover of this prospectus (each, an
"Interest Rate"), from and including the Closing Date, or from and including the
15th day of the month in which the preceding Payment Date occurred to and
including the 14th day of the month in which the Payment Date occurs (each, an
"Accrual Period") at the applicable Interest Rate until the principal amount of
the Senior Notes has been paid in full. Interest on the Class A-1 Senior Notes
will be calculated on the basis of the actual number of days elapsed, but
assuming a 360-day year. Interest on the other classes of Senior Notes will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
As more fully described under "Certain Information Regarding the
Securities--Payments on the Securities", interest payments on the Senior Notes
on a Payment Date generally will be made from the sum of (i) Available Funds
remaining after the Administrative Agent has been paid the Payment Date Advance
Reimbursement and the Administration Fee and (ii) the Reserve Fund Draw Amount,
if any.
PRINCIPAL
Securityholders are entitled to receive on each Payment Date an amount
(the "Principal Distribution Amount") equal to the greater of (a) the sum of (1)
the Optimal Principal Distribution Amount and (2) any Principal Carryover
Shortfall as of the preceding Payment Date, and (b) if the amount on deposit in
the Reserve Fund after giving effect to all deposits and withdrawals referenced
in clause (a) of the definition of the Reserve Fund Draw Amount as more fully
described under "Security for the Securities--The Accounts--The Reserve Fund",
exceeds the unpaid principal amount of the Securities, the unpaid principal
amount of the Securities (the "Securities Balance"). Notwithstanding the
foregoing, the Principal Distribution Amount shall not exceed the Securities
Balance.
The funds available to make principal distributions on a Payment Date
(the "Available Principal Distribution Amount") will equal the sum of (a) the
amount of Available Funds remaining after the Administrative Agent has been paid
the Payment Date Advance Reimbursement and the Administration Fee, and after
accrued interest has been paid on the Securities and (b) the Reserve Fund Draw
Amount remaining after accrued interest has been paid on the Securities.
Principal payments will be made to Securityholders in the priority set forth
below on each Payment Date in an amount equal to the lesser of (a) the Principal
Distribution Amount and (b) the Available Principal Distribution Amount (the
"Quarterly Principal Distributable Amount").
"Principal Carryover Shortfall" will mean, as of the close of any
Payment Date, the sum of the excess, if any, of the then Principal Distribution
Amount over the Quarterly Principal Distributable Amount.
On each Payment Date, unless the maturity of the Senior Notes has been
accelerated following an Indenture Default, principal payments shall be made
sequentially so that no principal will be paid on any class of Senior Notes
until each class of Senior Notes with a lower numerical designation shall have
been paid in full. Thus no principal will be paid on the Class A-2 Senior Notes
until the principal on the Class A-1 Senior Notes shall have been paid in full.
No principal will be paid on the Class A-3 Senior Notes until the principal on
the Class A-2 Senior Notes shall have been paid in full. No principal will be
paid on the Class A-4 Senior Notes until the principal on the Class A-3 Senior
Notes shall have been paid in full. Until all principal due to the Senior Notes
is paid, no principal will be paid to the Subordinated Notes and the
Certificates. Any remaining principal payment will then be paid first to the
subordinated notes until they have been paid in full which amounts will be
deposited into the Reserve Fund until the Reserve Fund is fully funded - and
then to the certificates.
On any Payment Date, (a) the "Senior Note Balance" and the "Certificate
Balance" will equal the Initial Senior Note Balance or the Initial Certificate
Balance, as the case may be, reduced by all payments of principal made on or
prior to the Payment Date on the Senior Notes or the Certificates, as the case
may be, and (b) the "Subordinated Note Balance" will equal the Initial
Subordinated Note Balance, reduced by all payments of principal made on or prior
to the Payment Date, whether paid to the Subordinated Noteholder or deposited in
the Reserve Fund.
On each Payment Date after the maturity of the Senior Notes has been
accelerated following an Indenture Default, principal will be allocated, first,
pro rata among all outstanding classes of Senior Notes, second, to the
Subordinated Notes, and third, to the Certificates. See "Certain Information
Regarding the Securities--Payments on the Securities" and "Additional Document
Provisions--The Indenture--Indenture Defaults".
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<PAGE> 49
The "Optimal Principal Distributable Amount" for any Payment Date and
the related Collection Period will equal the sum of the following amounts:
o for each Specified Vehicle for which the related Specified Lease did
not terminate during that Collection Period, the difference between
the Securitization Value of the Specified Lease at the beginning and
at the end of that Collection Period;
o for each Specified Vehicle for which the related Specified Lease
reached its Maturity Date during that Collection Period, the
Securitization Value of the Specified Lease as of the Maturity Date;
o for each Specified Lease terminated by the Obligor or the
Administrative Agent during that Collection Period pursuant to
exercise of the Annual Termination Option, the Securitization Value
of such Specified Lease as of the effective date of termination;
o for each Specified Vehicle purchased by the Administrative Agent
before its Maturity Date, the Securitization Value of the related
Specified Lease as of the date of the purchase;
o for each Specified Vehicle relating to a Specified Lease that became
a Casualty Termination Lease during that Collection Period, the
Securitization Value of the Specified Lease as of the date the
Specified Lease became a Casualty Termination Lease; and
o for each Specified Lease that became a Default Termination Lease
during that Collection Period, the Securitization Value of the
Specified Lease as of the date the Specified Lease became a Default
Termination Lease.
A "Casualty Termination Lease" will mean a Specified Lease that
terminated because the related Specified Vehicle has been lost, stolen or
damaged beyond economic repair.
A "Default Termination Lease" will mean a Specified Lease terminated by
(a) the Administrative Agent following a default by or bankruptcy of the related
Obligor; or (b) the Obligor - other than by exercising the Annual Termination
Option - based on an alleged breach by the Maintenance Provider under the
Specified Lease, which Specified Lease and the related Specified Vehicle shall
no longer be a SUBI Asset, but shall be reallocated to the UTI.
The principal amount of the Senior Notes, to the extent not paid, will
be due on the Final Payment Date. The actual date on which the Senior Note
Balance is paid may be earlier than the Final Payment Date based on a variety of
factors, including the factors described under "Risk Factors-- The timing of
principal payments is uncertain" and "Maturity, Payment and Yield
Considerations".
OPTIONAL PURCHASE
The Senior Notes may be redeemed in whole, but not in part, on any
Payment Date when an Optional Purchase can be exercised. The redemption price
will equal the Senior Note Balance plus accrued interest thereon at the Interest
Rate. See "Certain Information Regarding the Securities--Optional Purchase".
THE INDENTURE TRUSTEE
U.S. Bank will be the Indenture Trustee under the Indenture. The
Indenture Trustee is a national banking association and its Corporate Trust
Office is located at One Illinois Center, 111 East Wacker Drive, Suite 3000,
Chicago, Illinois 60601. The fees and expenses of the Indenture Trustee will be
paid by the Administrative Agent or the Administrator. See "Additional Document
Provisions--Miscellaneous Provisions--Fees and Expenses". The Transferor, the
Administrative Agent and their respective affiliates may maintain normal
commercial banking relationships with the Indenture Trustee and its affiliates.
BOOK-ENTRY REGISTRATION
The Senior Notes will be issued in book-entry form. DTC will act as
securities depository for the Senior Notes. The Senior Notes will be issued as
fully registered securities registered in the name of Cede, the nominee of DTC.
An investor acquiring an interest in the Senior Notes (each, a "Senior Note
Owner") may hold its interest through DTC in the United States, or Cedelbank
("Cedelbank") or the Euroclear system ("Euroclear") in Europe, which in turn
hold through DTC. One fully registered Senior Note will be issued with respect
to each $200 million in principal amount of Senior
48
<PAGE> 50
Notes or such smaller amount as necessary. It is anticipated that the only
Senior Noteholder will be Cede, the nominee of DTC. Senior Note Owners will not
be recognized by the Indenture Trustee as "Senior Noteholders", as that term
will be used in the Indenture, and Senior Note Owners will only be permitted to
exercise the rights of Senior Noteholders indirectly through DTC and its
Participants, as further described below.
DTC was created to hold securities for its participating members (the
"Participants") and to facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. DTC is:
o a limited-purpose trust company organized under the laws of the
State of New York,
o a "banking organization" within the meaning of the New York Banking
Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the Uniform
Commercial Code (the "UCC") in effect in the State of New York, and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
Participants include securities brokers and dealers, including the Initial
Purchaser, banks, trust companies and clearing corporations. Indirect access to
the DTC system also is available to banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (the "Indirect Participants"). Transfers between
Participants in DTC will occur in accordance with DTC rules. The rules
applicable to DTC and its Participants are on file with the SEC.
Cedelbank and the Euroclear will hold omnibus positions on behalf of
their Participants through customers' securities accounts in the Depositaries
which will in turn will hold such positions in customers' securities accounts in
DTC through Citibank, N.A. or Morgan Guaranty Trust Company of New York, the
relevant depositaries (collectively, the "Depositaries") of Cedelbank or
Euroclear, respectively, and each a participating member of DTC. Transfers
between Participants in Cedelbank ("Cedelbank Participants") and Participants in
Euroclear ("Euroclear Participants") will occur in accordance with their
respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of Cedelbank or Euroclear by its Depositary.
However, each such cross-market transaction will require delivery of
instructions to Cedelbank or Euroclear by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). Cedelbank or Euroclear will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf of delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedelbank Participants and
Euroclear Participants may not deliver instructions directly to the related
Depositaries.
Because of time-zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a DTC Participant will
be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Cedelbank Participants or Euroclear Participants on such business day.
Cash received in Cedelbank or Euroclear as a result of sales of Senior Notes by
or through a Cedelbank Participant or Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available in
the relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Senior Note Owners that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or an interest
in, Senior Notes may do so only through Participants and Indirect Participants.
Participants will receive a credit for the Senior Notes on DTC's records. The
ownership interest of each Senior Note Owner will in turn be recorded on the
respective records of Participants and Indirect Participants. Senior Note Owners
will not receive written confirmation from DTC of their purchase of Senior
Notes, but Senior Note Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Participant or Indirect Participant through which the Senior
Note Owner entered into the transaction. Transfers of ownership interests in the
Senior Notes will be accomplished by entries made on the books of Participants
acting on behalf of Senior Note Owners.
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<PAGE> 51
To facilitate subsequent transfers, all Senior Notes deposited by
Participants with DTC will be registered in the name of Cede, the nominee of
DTC. The deposit of Senior Notes with DTC and their registration in the name of
Cede will not change the beneficial ownership of the Senior Notes. DTC will have
no knowledge of the actual Senior Note Owners and its records will reflect only
the Participants to whose accounts those Senior Notes are credited, which may or
may not be the Senior Note Owners. Participants and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Participants,
by Participants to Indirect Participants and by Participants and Indirect
Participants to Senior Note Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
DTC's practice is to credit Participants' accounts on each Payment Date
in accordance with their respective holdings of Senior Notes shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
that Payment Date. Payments by Participants and Indirect Participants to Senior
Note Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form
or registered in "street name". These payments will be the responsibility of the
Participants and not of DTC, the Indenture Trustee or the Transferor, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal of and interest on the Senior Notes to DTC will be the
responsibility of the Indenture Trustee, disbursement of the payments to
Participants will be the responsibility of DTC and disbursement of the payments
to Senior Note Owners will be the responsibility of Participants and Indirect
Participants. As a result, under the book-entry format, Senior Note Owners may
experience some delay in their receipt of payments. DTC will forward the
payments to its Participants, which will then forward them to Indirect
Participants or Senior Note Owners.
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 Senior Note
Owner to pledge Senior Notes to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to the Senior Notes, may
be limited due to the lack of a physical certificate for the Senior Notes.
DTC management is aware that some computer applications and systems
used for processing data were written using two digits rather than four to
define the applicable year, and therefore may not recognize a date using "00" as
the year 2000. This could result in "Year 2000" problems, such as the inability
of these systems to properly process transactions with dates in the year 2000
and thereafter. DTC has developed and is implementing a program to address this
issue so that its applications and systems relating to the payment of
distributions - including principal and income payments - to securityholders,
book-entry deliveries and settlement of trades within DTC continue to function
properly. This program includes a technical assessment and a remediation plan,
each of which is complete. DTC plans to implement a testing phase of this
program which is expected to be completed within appropriate time frames.
In addition, DTC is contacting and will continue to contact third party
vendors that provide services to DTC to determine the extent of their Year 2000
compliance, and DTC will develop contingency plans as it deems appropriate to
address failures in Year 2000 compliance on the part of third party vendors.
However, there can be no assurance that the systems of third party vendors will
be timely converted and will not adversely affect the proper functioning of
DTC's services.
The information set forth in the preceding two paragraphs has been
provided by DTC for informational purposes only and is not intended to serve as
a representation, warranty or contract modification of any kind. The Trust makes
no representations as to the accuracy or completeness of this information.
If the DTC Systems are not made year 2000 compliant on a timely basis,
DTC's ability to provide DTC services, including payments on the Notes may be
materially and adversely affected. If this were to occur, Senior Note Owners
could experience delays in payments due or may not ultimately receive all
interest and principal due to the Senior Note Owners.
Neither DTC nor Cede will consent or vote with respect to the Senior
Notes. Under its usual procedures, DTC will mail an omnibus proxy to the
Indenture Trustee as soon as possible after each applicable record date for such
a consent or vote. The omnibus proxy will assign Cede's consenting or voting
rights to those Participants who
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<PAGE> 52
have Notes credited to their accounts with the Participants on that record date.
These Participants will be identified in a listing attached to the omnibus
proxy.
Cedelbank is incorporated under the laws of Luxembourg as a
professional depository. Cedelbank holds securities for Cedelbank Participants
and facilitates the clearance and settlement of securities transactions between
Cedelbank Participants through electronic book-entry changes in accounts of
Cedelbank Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedelbank in any of 34 currencies,
including United States dollars. Cedelbank provides to Cedelbank Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedelbank interfaces with domestic markets in several countries. As a
professional depositary, Cedelbank is subject to regulation by the Luxembourg
Monetary Institute. Cedelbank Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers, banks,
trust companies, clearing corporation and certain other organizations. Indirect
access to Cedelbank is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Cedelbank Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for Euroclear
Participants and to clear and settle transactions between Euroclear Participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 34 currencies, including United States dollars. The Euroclear
System includes various other services, including securities lending and
borrowing, and interfaces with domestic markets in more than 25 countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance 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 Board
establishes policy for the Euroclear System. Euroclear Participants include
banks, including central banks, securities brokers and dealers and other
professional financial intermediaries. 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 Governers 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 Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Senior Notes held through Cedelbank or
Euroclear will be credited to the cash accounts of Cedelbank Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting and withholding in accordance with relevant United
States tax laws and regulations. For further information in this regard, see
"Certain Federal Income Tax Consequences--Senior Notes--Tax Consequences to
Foreign Investors" herein and "Global Clearance, Settlement and Tax
Documentation Procedures--Certain U.S. Federal Income Tax Documentation
Requirements" in Annex I hereto. Cedelbank or the Euroclear Operator, as the
case may be, will take any other action permitted to be taken by a Senior
Noteholder on behalf of a Cedelbank Participant or Euroclear Participant only in
accordance with its relevant rules and procedures and subject to the related
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Senior Notes among Participants
of DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and the procedures may be discontinued at
any time.
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None of the Administrative Agent, the Transferor, the Administrator or
the Indenture Trustee will have any liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of the
Senior Notes held by Cede, DTC, Cedelbank or Euroclear, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
CERTAIN INFORMATION REGARDING THE SECURITIES
PAYMENTS ON THE SECURITIES
GENERAL
As more fully described under "Summary--Credit Enhancement--The SUBI
Certificates", the SUBI Interest evidenced by the SUBI Certificates will
evidence a 99% beneficial interest in the SUBI Assets, which comprise Specified
Vehicles and Specified Leases having an aggregate Cutoff Date Securitization
Value of $___________. The Retained SUBI Interest evidenced by the Retained SUBI
Certificates will evidence a 1% beneficial interest in the SUBI Assets and will
be permanently retained by Ryder II LP. Accordingly, Ryder II LP will be
entitled to receive 1% of all payments made on or in respect of the SUBI Assets
and will share in 1% of all losses and liabilities incurred with respect to the
SUBI Assets. Any payments made in respect of the Retained SUBI Interest will not
be available to make Program Operating Lease Payments or payments on the Senior
Notes.
On the tenth calendar day of each month in which a Payment Date occurs
or, if such day is not a Business Day, the immediately succeeding Business Day
(each, a "Determination Date"), the Administrative Agent will inform the
Indenture Trustee and the Owner Trustee of, among other things, the amount of
(a) Collections, (b) Advances to be made by the Administrative Agent and (c) the
Administration Fee payable to the Administrative Agent, in each case with
respect to the three-month period immediately preceding the month in which the
Payment Date occurs (the "Collection Period"). On or before each Determination
Date, the Administrative Agent will also determine the Optimal Principal
Distributable Amount and, based on Available Funds and other amounts available
for distribution on the related Payment Date as described below, the amount to
be distributed to the Securityholders.
The Indenture Trustee and the Owner Trustee will make distributions to
the Securityholders out of amounts on deposit in the related Distribution
Accounts. The amount to be distributed to the Administrative Agent and the
Securityholders will be determined in the manner described below.
DETERMINATION OF AVAILABLE FUNDS
The amount of funds available for distribution on a Payment Date will
generally equal the sum of Available Funds and the Reserve Fund Draw Amount.
On each Payment Date, the sum of (a) 1% of Collections for the related
Collection Period and (b) 1% of the Residual Value Surplus Draw Amount for the
related Collection Period (the "Retained Certificate Distribution Amount") will
be due the Retained Certificateholder representing amounts owed in respect of
the Retained SUBI Certificates and will not be available to make Program
Operating Lease Payments or payments on the Senior Notes.
"Available Funds" for a Payment Date and the related Collection Period
will equal the sum of the following amounts: (a) 99% of Collections, (b)
Advances required to be made by the Administrative Agent, (c) 99% of the
Residual Value Surplus Draw Amount and (d) in the case of an Optional Purchase,
the Optional Purchase Price.
The "Available Funds Shortfall Amount" for a Payment Date and the
related Collection Period will equal the amount by which Available Funds is less
than the amount necessary to make the distributions in clauses (c) through (f)
of the first paragraph under "--Deposits to the Distribution Accounts; Priority
of Payments", except that the Optimal Principal Distributable Amount rather than
the Quarterly Principal Distributable Amount will be used for purposes of clause
(f).
DEPOSITS TO THE DISTRIBUTION ACCOUNTS; PRIORITY OF PAYMENTS
SUBI COLLECTION ACCOUNT. On each Payment Date, after taking into
account the distribution of amounts to be paid to the Retained SUBI
Certificateholder on the related Payment Date, the Administrative Agent will
allocate amounts on deposit in the SUBI Collection Account with respect to the
related Collection Period as described below
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and will instruct the Origination Trustee, acting through the Trust Agent, to
cause the following deposits and distributions to be made in the following
amounts and order of priority:
(a) to the Administrative Agent, the Payment Date Advance
Reimbursement;
(b) to the Administrative Agent, the Administration Fee;
(c) to the Note Distribution Account, to pay interest due on the
outstanding Senior Notes on that Payment Date, and, to the extent
permitted under applicable law, interest on any overdue interest at
the Interest Rate;
(d) to the Reserve Fund, an amount equal to the interest due on the
outstanding Subordinated Notes on that Payment Date, and, to the
extent permitted under applicable law, interest on any overdue
interest at the Subordinated Note Rate;
(e) to the Certificate Distribution Account, an amount equal to the
interest accrued on the Certificates with respect to that Payment
Date, and, to the extent permitted under applicable law, interest
on any overdue interest at the Certificate Rate;
(f) to the related Distribution Account or, in the case of the
Subordinated Notes, to the Reserve Fund, the Quarterly Principal
Distributable Amount, which will be allocated to pay principal on
the Senior Notes, the Subordinated Notes and the Certificates in
the amounts and order of priority described under "Description of
the Senior Notes--Principal"; and
(g) to the Reserve Fund, all remaining amounts (the "Excess Amounts").
RESERVE FUND. On each Payment Date, after taking into account amounts
available to be distributed to Securityholders from the SUBI Collection Account,
the Administrative Agent will allocate the Reserve Fund Draw Amount on deposit
in the Reserve Fund with respect to the related Collection Period and will
instruct the Indenture Trustee to make the following deposits and distributions
in the following amounts and order of priority:
(a) to the Note Distribution Account, to pay any remaining interest due
on the outstanding Senior Notes on that Payment Date, and, to the
extent permitted under applicable law, interest on any overdue
interest at the Interest Rate;
(b) to the Reserve Fund, an amount equal to any remaining interest due
on the outstanding Subordinated Notes on that Payment Date, and, to
the extent permitted under applicable law, interest on any overdue
interest at the Subordinated Note Rate;
(c) to the Certificate Distribution Account, an amount equal to any
remaining interest accrued on the Certificates with respect to that
Payment Date, and, to the extent permitted under applicable law,
interest on any overdue interest at the Certificate Rate; and
(d) to the related Distribution Account - or, in the case of the
Subordinated Notes, to the Reserve Fund, and thereafter, in the
event of any remaining shortfall in amounts required to pay the
Quarterly Principal Distributable Amount with respect to the
Certificates, to the Certificate Distribution Account - the
remaining Quarterly Principal Distributable Amount, which will be
allocated to pay principal on the Securities in the amounts and
order of priority described under "Description of the Senior
Notes--Principal".
On each Payment Date, if, after the giving effect to the distributions
set forth above, the amount on deposit in the Reserve Fund exceeds the Reserve
Fund Requirement, any such excess (a) up to the amounts deposited into the
Reserve Fund on or before that Payment Date in respect of the Subordinated Notes
will be released to the Transferor as the Subordinated Noteholder and (b) any
additional excess shall be released to the Transferor.
The "Payment Date Advance Reimbursement" for a Payment Date will equal
the sum of all outstanding (a) Sales Proceeds Advances (1) in respect of
Specified Vehicles that were sold during the related Collection Period and (2)
that have been outstanding as of the end of that Collection Period for at least
270 days and (b) Financial
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Component Advances as to which the related Obligor has made all or a portion of
the advanced Total Monthly Payment or that have been outstanding as of the end
of the Collection Period for at least 180 days.
Amounts deposited in the Reserve Fund in accordance with clause (d) in
the first paragraph under "--SUBI Collection Account" and clause (b) under
"--Reserve Fund" will be deemed to have been distributed to the Subordinated
Noteholder as payments in respect of interest, including overdue interest, and
the Subordinated Noteholder will not be entitled to any further interest on such
amounts after the related Payment Date.
The final distribution to any Senior Noteholder will be made only upon
surrender and cancellation of the certificate representing its Senior Notes at
an office or agency of the Trust specified in the notice of termination. Any
funds remaining in the Trust, after the related Trustee has taken certain
measures to locate the related Senior Noteholders and those measures have
failed, will be distributed to the Administrative Agent.
OPTIONAL PURCHASE
In order to avoid excessive administrative expenses, the Transferor
will be permitted at its option to purchase from the Trust the Vehicle SUBI
Certificate and SUBI Interest evidenced thereby, and to terminate the pledge of
the Lease SUBI Certificate and the SUBI Interest evidenced thereby, on any
Payment Date if, either before or after giving effect to any payment of
principal required to be made on that Payment Date, the Securities Balance is
less than or equal to 10% of the sum of the Initial Senior Note Balance, the
Initial Certificate Balance and the Initial Subordinated Note Balance
(collectively, the "Initial Securities Balance"). The exercise of that option by
the Transferor is referred to in this prospectus as an "Optional Purchase". The
purchase price for the Vehicle SUBI Certificate and the termination of the
pledge of the Lease SUBI Certificate will equal the Securities Balance, together
with accrued interest thereon to the date fixed for redemption (the "Optional
Purchase Price"), which will be deposited by the Transferor into the SUBI
Collection Account on the Deposit Date related to the Payment Date fixed for
redemption. In connection with an Optional Purchase, the Senior Notes will be
redeemed on that Payment Date in whole, but not in part, for the Redemption
Price. The "Redemption Price" for the Senior Notes will equal the Senior Note
Balance, plus accrued and unpaid interest thereon at the related Interest Rates,
to but not including the Payment Date fixed for redemption. The Administrator or
the Trust will provide at least 45 days' prior notice of the redemption of the
Senior Notes to the Indenture Trustee, which will provide at least 30 days'
notice to the Senior Noteholders. On the Payment Date fixed for redemption, the
Senior Notes will be due and payable at the Redemption Price, and no interest
will accrue on the Senior Notes after the Payment Date.
STATEMENTS TO SENIOR NOTEHOLDERS
On each Payment Date, the Indenture Trustee or the Owner Trustee, as
the case may be, will include with each distribution to each Senior Noteholder
of record, or as of the close of business on the related Record Date - which, in
the case of the Senior Notes, shall be Cede as the nominee of DTC unless
Definitive Notes are issued under the limited circumstances described in this
prospectus - and each Rating Agency, a statement, setting forth with respect to
that Payment Date or the related Deposit Date or Collection Period, as the case
may be, among other things, the following:
(a) the amount of Collections allocable to each of the SUBI
Certificates and the Retained SUBI Certificates for that Collection
Period;
(b) the amount being distributed to the Senior Noteholders (the "Senior
Note Distribution Amount");
(c) the amount of the Senior Note Distribution Amount allocable to
interest on and principal of the Senior Notes, and any Principal
Carryover Shortfall for the Senior Notes, the Subordinated Notes
and the Certificates, respectively;
(d) the amount of Available Funds for that Collection Period;
(e) the amount of Sales Proceeds Advances and Financial Component
Advances included in Available Funds;
(f) the amount of Residual Value Losses and Residual Value Surplus for
that Collection Period and the Residual Value Surplus Draw Amount,
if any, included in Available Funds, after giving effect to the
Retained Certificate Distribution Amount;
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(g) the Reserve Fund Draw Amount, if any, the balance on deposit in the
Reserve Fund on that Payment Date after giving effect to
withdrawals therefrom and deposits thereto in respect of that
Payment Date and the change in that balance from the immediately
preceding Payment Date;
(h) the aggregate outstanding principal balance of the Senior Notes,
the Subordinated Notes and the Certificates;
(i) the Note Factor for the Senior Notes after giving effect to the
distribution of the Senior Note Distribution Amount;
(j) the amount of Special Event Purchases made during that Collection
Period and the aggregate Cutoff Date Securitization Value of all
Specified Leases relating to Special Event Purchases made (a)
during the related calendar year or (b) since the Closing Date;
(k) the Payment Date Advance Reimbursement; and
(l) the Administration Fee.
Each amount set forth pursuant to clauses (b), (c), (h) and (k) above
will be expressed in the aggregate and as a dollar amount per $1,000 of original
principal balance of a Senior Note, Subordinated Note or Certificate, as
applicable. Copies of the statements may be obtained by Senior Noteholders or
Senior Note Owners by a request in writing addressed to the Indenture Trustee.
In addition, within the prescribed period of time for tax reporting purposes
after the end of each calendar year, the Indenture Trustee - during the term of
the Indenture - will mail to each person who at any time during that calendar
year was a Senior Noteholder a statement containing that information as is
reasonably necessary to permit the Noteholder to prepare its state and federal
income taxes.
DEFINITIVE NOTES
Definitive Notes will be issued in fully registered,
certificated form to Senior Note Owners rather than to DTC only if (a) DTC is no
longer willing or able to discharge its responsibilities as depository with
respect to the Senior Notes, and neither the Indenture Trustee nor the
Transferor is able to locate a qualified successor, (b) the Transferor, at its
option, elects to terminate the book-entry system through DTC or (c) after an
Indenture Default, Senior Note Owners representing in the aggregate not less
than 51% of the aggregate principal amount of the Senior Notes advise the
Indenture Trustee through DTC and its Participants in writing that the
continuation of a book-entry system through DTC or its successor is no longer in
the best interest of Senior Note Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee will be required to notify all Senior
Note Owners, through Participants, of the availability through DTC of Definitive
Notes. Upon surrender by DTC of the certificates representing all Senior Notes
and the receipt of instructions for re-registration, the Indenture Trustee will
issue Definitive Notes to Senior Note Owners, who thereupon will become Senior
Noteholders for all purposes of the Indenture.
Payments on the Definitive Notes will be made by the Indenture Trustee
or the Owner Trustee, as the case may be, directly to the holders of the
Definitive Notes in accordance with the procedures set forth in this prospectus
and to be set forth in the Indenture. Interest and principal payments on the
Securities on each Payment Date will be made to the holders in whose names the
related Definitive Notes were registered at the close of business on the Record
Date with respect to that Payment Date. Payments will be made by check mailed to
the address of such holders as they appear on the Note Register. However, the
final payment on any Definitive Notes, or if Definitive Notes have not been
issued, certificates registered in the name of Cede representing the Senior
Notes, will be made only upon presentation and surrender of the Definitive Notes
at the office or agency specified in the notice of final payment to Senior
Noteholders. The Indenture Trustee or the Owner Trustee, as the case may be, or
a paying agent will provide that notice to the registered Senior Noteholders not
more than 30 days or less than 15 days prior to the date on which the final
payment is expected to occur.
Definitive Notes will be transferable and exchangeable at the offices
of the Indenture Trustee or the Owner Trustee or the Note Registrar to be set
forth in the Indenture. No service charge will be imposed for any registration
of transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
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SECURITY FOR THE SECURITIES
GENERAL
The property of the Trust - the Trust Estate - will primarily consist
of:
o the right to receive payments under the Program Operating Lease
under which the Trust will lease to the Transferor the Vehicle SUBI
Certificate and the SUBI Interest evidenced thereby, which is more
fully described under "The SUBIs--General";
o the pledge by the Transferor of the Lease SUBI Certificate as
security for such payments;
o the right to receive 99% of the amounts realized from sales of
Specified Vehicles; and
o certain rights to payment from the Reserve Fund and the Residual
Value Surplus Account. The Trust Estate will also include the other
property and assets described under "The Trust--Property of the
Trust", including available amounts on deposit in the Reserve Fund
and the Trust's rights as a third-party beneficiary of the SUBI
Trust Agreement and the Administration Agreement.
THE PROGRAM OPERATING LEASE
GENERAL
Immediately following the sale, transfer and assignment of the Vehicle
SUBI Certificate to the Trust and the pledge to the Indenture Trustee of the
Trust's interest therein as described in "The SUBIs--Transfers of the SUBI
Certificates", the Trust and the Transferor will enter into the Program
Operating Lease pursuant to which the Trust will lease the Vehicle SUBI
Certificate to the Transferor during the term of the Program Operating Lease. As
lessee, the Transferor will be entitled to receive all proceeds from the Vehicle
SUBI Certificate in respect of the Specified Vehicles during the term of the
Program Operating Lease and will be required to make Program Operating Lease
Payments to the Trust.
PROGRAM OPERATING LEASE TERMS
Under the Program Operating Lease, the Transferor will make payments to
the Trust in the amount of (a) the Financial Component of the Fixed Charge paid
by the Obligors during the related Collection Period and (b) all Termination
Value Payments made by Obligors following the exercise of the Annual Termination
Option during the related Collection Period (the "Program Operating Lease
Payments").
The termination date of the Program Operating Lease (the "Program
Operating Lease Termination Date") will be 60 days after the latest Maturity
Date of any Specified Lease as of the Cutoff Date. Notwithstanding the Program
Operating Lease Termination Date, the Program Operating Lease will expire with
respect to each Specified Lease and the related Specified Vehicle on the
earliest to occur of:
o the related Maturity Date;
o the effective date of exercise by the Administrative Agent or the
related Obligor of the Annual Termination Option;
o the date of the Administrative Agent's termination of that
Specified Lease for other commercial reasons as described under
"Additional Document Provisions--The Administration
Agreement--Purchase of Specified Vehicles Before their Maturity
Dates";
o the date that Specified Lease becomes a Default Termination Lease;
o the date that Specified Lease becomes a Casualty Termination Lease;
or
o the date the Administrative Agent is required to purchase that
Specified Vehicle pursuant to certain provisions of the
Administration Agreement.
PROGRAM OPERATING LEASE DEFAULTS; REMEDIES
Defaults under the Program Operating Lease (each, a "Program Operating
Lease Default") will include, among other things, the failure by the Transferor
to make timely Program Operating Lease Payments to the Trust, breach of a
material representation or warranty, failure to observe or perform certain
covenants and the occurrence of an Indenture Default. Upon the occurrence of a
Program Operating Lease Default, (a) the Indenture Trustee, as assignee of the
Trust's rights under the Program Operating Lease pursuant to the pledge of the
Trust Estate, will be entitled to terminate the Program Operating Lease and to
foreclose on the pledge of the Lease SUBI Certificate. Upon that termination,
the Trust will directly receive all distributions with respect to, or will have
the right to sell,
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the SUBI Certificates and to apply the funds on deposit in the Accounts to pay
interest on and principal of the Senior Notes. Each Program Operating Lease
Default will constitute an Indenture Default, which will permit the Senior
Noteholders to accelerate the maturity of the Senior Notes and, in some
circumstances, cause the sale of the Trust Estate. See "Additional Document
Provisions--The Indenture--Indenture Defaults". If the maturity of the Senior
Notes has been accelerated following a Program Operating Lease Default, the
Indenture Trustee, as assignee of the Trust, will be entitled to demand that the
Transferor pay all previously due but as yet unpaid Program Operating Lease
Payments plus, as liquidated damages, an amount equal to the sum of (a) any
interest due and unpaid on the Securities, (b) the unpaid principal balance of
the Securities and (c) any other amounts payable by the Transferor under the
Basic Documents. Upon payment of such amounts, the Transferor will be entitled
to receive the SUBI Certificates.
THE SUBORDINATED NOTES
Interest will accrue on the unpaid principal amount of the Subordinated
Notes during each Accrual Period at a rate per annum (the "Subordinated Note
Rate") equal to ____%. Interest on the Subordinated Notes will be calculated on
the basis of a 360-day year consisting of twelve 30-day months. Payments of
interest on and principal of the Subordinated Notes will be subordinated to
payments on the Senior Notes to the extent described herein.
To secure payments of principal and interest on the other Securities,
the Transferor will pledge all of its right, title and interest in the
Subordinated Notes to the Trust and deliver them to the Indenture Trustee as a
portion of the Trust Estate. On each Payment Date, payments in respect of the
Subordinated Notes will be deposited into the Reserve Fund. If, on any Payment
Date, after the application of amounts required to be paid on that Payment Date,
the amount on deposit therein exceeds the Reserve Fund Requirement, (a) any such
excess up to the amounts deposited into the Reserve Fund on or before that
Payment Date in respect of the Subordinated Notes will be released to the
Transferor as the Subordinated Noteholder and (b) any additional excess shall be
released to the Transferor.
THE CERTIFICATES
Payments on the Certificates will be subordinated to payments on the
Senior Notes and the Subordinated Notes to the extent described in this
prospectus. The right of the holder of the Transferor Certificate to receive
distributions of principal and interest will rank pari passu with the rights of
the holders of the other Certificates.
Interest on the Certificates will accrue during each Accrual Period at
a rate per annum (the "Certificate Rate") equal to ___% until the principal
amount of the Certificates has been paid in full. Interest on the Certificates
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest payments on the Certificates on a Payment Date generally will
be made from the sum of (i) Available Funds remaining after the Administrative
Agent has been paid the Payment Date Advance Reimbursement and the
Administration Fee and all amounts allocated to payment of interest on the
Senior Notes have been paid and (ii) the Reserve Fund Draw Amount, if any,
remaining after all amounts allocated to payment of interest on the Senior Notes
have been paid.
Principal payments will be made to Certificateholders as described
under "Description of the Senior Notes - Principal". If not paid in full prior
to the Final Payment Date, the remaining Certificate Balance, if any, will be
payable on that Payment Date.
The Certificates will be subject to prepayment in whole, but not in
part, on any Payment Date relating to an Optional Purchase. In the event of an
Optional Purchase, the Certificateholders will receive an amount in respect of
the Certificates equal to the Certificate Balance, together with accrued
interest thereon at the Certificate Rate.
THE ACCOUNTS
THE SUBI COLLECTION ACCOUNT
On or prior to the Closing Date, the Origination Trustee will establish
a trust account for the benefit of the holders of interests in the SUBI, into
which collections on or in respect of the Specified Leases and the Specified
Vehicles will generally be deposited (the "SUBI Collection Account").
DEPOSITS INTO THE SUBI COLLECTION ACCOUNT. As more fully
described under "Additional Document Provisions--The Administration
Agreement--Collections" and "--Monthly Remittance Condition",
Collections and other amounts received on or in respect of the SUBI
Assets generally will be deposited by
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the Administrative Agent into the SUBI Collection Account within two
days after processing, unless the Monthly Remittance Condition is
satisfied. If the Monthly Remittance Condition is satisfied, such
amounts received in respect of a Monthly Period will be deposited into
the SUBI Collection Account on the second Business Day following the
end of the related Monthly Period, or, in the case of the Monthly
Period immediately preceding the related Payment Date, the related
Deposit Date. In addition, on each Deposit Date, the following
additional amounts, if any, in respect of the related Collection Period
and Payment Date will be deposited into the SUBI Collection Account:
(a) Advances made by the Administrative Agent, (b) the Residual Value
Surplus Draw Amount and (c) in the case of an Optional Purchase, the
Optional Purchase Price. Payments received in respect of the
Maintenance Component either will not be deposited into the SUBI
Collection Account or will be withdrawn from the SUBI Collection
Account on a daily basis and, in either event, will be paid to or
retained by the Maintenance Provider. See "Additional Document
Provisions--The Administration Agreement--Collections" and "--Monthly
Remittance Condition".
WITHDRAWALS FROM THE SUBI COLLECTION ACCOUNT. On each Deposit
Date, the Administrative Agent shall cause the Origination Trustee to
withdraw from the SUBI Collection Account and deposit in the Residual
Surplus Value Account, the amount of Residual Value Surplus for each
Specified Vehicle sold during the related Collection Period. On each
Payment Date, the Origination Trustee shall transmit or shall cause to
be transmitted (a) the sum of (i) all Available Funds for the related
Collection Period and (b) the Retained Administration Payment in the
amounts and in the priority, and to such accounts as set forth under
"Certain Information Regarding the Securities--Payments on the
Securities--Deposits to the Distribution Accounts; Priority of
Payments" and (b) the excess of (i) the Retained Certificate
Distribution Amount - representing amounts payable in respect of the
Retained SUBI Interest - for the related Collection Period over (ii) 1%
of the Administration Fee for the related Collection Period (the
"Retained Administration Payment"), to an account specified by the
holder of the Retained SUBI Certificates.
In the event that on any date the Administrative Agent supplies the
Origination Trustee and the Indenture Trustee with an officer's certificate
setting forth the basis for such withdrawal, the Origination Trustee shall remit
to the Administrative Agent or the Maintenance Provider, as the case may be,
without interest and before to any other distribution from the SUBI Collection
Account on that date, monies from the SUBI Collection Account representing (a)
payments in respect of the Maintenance Component and (b) unreimbursed
Disposition Expenses.
THE RESERVE FUND
On or before the Closing Date, the Owner Trustee will establish a trust
account in the name of the Indenture Trustee for the benefit of the
Securityholders (the "Reserve Fund"). The Reserve Fund will be established to
provide additional security for payments on the Senior Notes. On each Payment
Date, amounts on deposit in the Reserve Fund, together with Available Funds will
be available to make, the distributions described under "Certain Information
Regarding the Securities--Payments on the Securities--Deposits to the
Distribution Accounts; Priority of Payments".
The Reserve Fund initially will be funded by the Transferor with a
deposit of $__________ (the "Initial Deposit"), and the amounts on deposit in
the Reserve Fund will be pledged to the Trust. As described under "--The
Subordinated Notes", all payments made on the Subordinated Notes will be
deposited in the Reserve Fund. On each Payment Date, monies on deposit in the
Reserve Fund will be supplemented by the deposit of (a) payments of interest on
and principal of the Subordinated Notes, (b) any Excess Amounts and (c) income
received on the investment of funds on deposit in the SUBI Collection Account,
the Residual Value Surplus Account and the Reserve Fund.
On each Payment Date, a withdrawal will be made from the Reserve Fund
in an amount (the "Reserve Fund Draw Amount") equal to the sum of (a) the lesser
of (1) the Available Funds Shortfall Amount, calculated as described under
"Certain Information Regarding the Securities--Payments on the
Securities--Determination of Available Funds" for that Payment Date, and (2) the
amount on deposit in the Reserve Fund after giving effect to all deposits
thereto on the related Deposit Date or that Payment Date; and (b) in the event
the amount on deposit in the Reserve Fund, after giving effect to all
withdrawals therefrom and deposits thereto made on or in respect of that Payment
Date exceeds the unpaid principal balance of the Securities, the Securities
Balance.
On any Payment Date on which the amount on deposit in the Reserve Fund,
after giving effect to all withdrawals therefrom and deposits thereto in respect
of that Payment Date, exceeds the Reserve Fund Requirement, any such excess (a)
up to the amounts deposited into the Reserve Fund on or before that Payment Date
in respect of
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the Subordinated Notes, will be released to the Transferor as the holder of the
Subordinated Notes (in that capacity, the "Subordinated Noteholder") and (b) any
additional excess shall be released to the Transferor.
On any Payment Date, the "Reserve Fund Requirement" will equal (a)
[____%] of the Initial Securities Balance, (b) on any Payment Date occurring on
or after the earlier to occur of the date on which the last remaining Specified
Lease terminated or the date on which the Program Operating Lease is terminated
following a Program Operating Lease Default, zero, or (c) on any Payment Date
when the Senior Note Balance shall be zero, the Securities Balance.
THE RESIDUAL VALUE SURPLUS ACCOUNT
On or before the Closing Date, the Origination Trustee will cause a
trust account to be established in the name of the Origination Trustee for the
benefit of the holders of interests in the SUBIs, into which all Residual Value
Surplus with respect to a Collection Period will be deposited on the related
Deposit Date (the "Residual Value Surplus Account").
The Residual Value Surplus Account will not be funded with any money on
the Closing Date. On the Business Day immediately preceding each Payment Date
(each, a "Deposit Date"), the Administrative Agent will cause the Origination
Trustee to transfer to the Residual Value Surplus Account from the SUBI
Collection Account the amount, if any, of Residual Value Surplus for each
Expired Vehicle sold during that Collection Period.
On each Deposit Date, a withdrawal of an amount equal to the lesser of
(a) the sum of all Residual Value Losses and any unreimbursed Disposition
Expenses relating to Specified Vehicles that were sold by the Administrative
Agent during the related Collection Period and (b) the amount on deposit in the
Residual Value Surplus Account (the "Residual Value Surplus Draw Amount") will
be made from the Residual Value Surplus Account for deposit into the SUBI
Collection Account. On each Payment Date, after giving effect to the withdrawal
of the Residual Value Surplus Draw Amount, if any, from the Residual Value
Surplus Account described in the immediately preceding paragraph on the related
Deposit Date, any amounts remaining on deposit in the Residual Value Surplus
Account will be paid to the Transferor.
THE DISTRIBUTION ACCOUNTS
On or before the Closing Date, (a) the Indenture Trustee will establish
a trust account in the name of the Indenture Trustee on behalf of the Senior
Noteholders, into which amounts released from the SUBI Collection Account and,
when necessary, from the Reserve Fund, for distribution to the Senior
Noteholders will be deposited and from which all distributions to the Senior
Noteholders will be made (the "Note Distribution Account") and (b) the Owner
Trustee will establish a trust account in the name of the Owner Trustee on
behalf of the Certificateholders, into which amounts released from the SUBI
Collection Account and, when necessary, from the Reserve Fund, for distribution
to the Certificateholders will be deposited and from which all distributions to
the Certificateholders will be made (the "Certificate Distribution Account" and,
together with the Note Distribution Account, the "Distribution Accounts"). For
further information regarding these deposits and payments, see "--The SUBI
Collection Account" and "--The Reserve Fund".
On or before each Payment Date, (a) the Origination Trustee shall
deposit or cause to be deposited from the SUBI Collection Account and (b) the
Indenture Trustee shall deposit from the Reserve Fund, if necessary,
respectively, the amounts allocable to the Senior Noteholders and the
Certificateholders, as set forth in "Certain Information Regarding the
Securities--Payments on the Securities--Deposits to the Distribution Accounts;
Priority of Payments" for the related Payment Date in the Note Distribution
Account and the Certificate Distribution Account, respectively. On each Payment
Date, the Indenture Trustee and the Owner Trustee will distribute to the Senior
Noteholders and the Certificateholders the allocated amounts for the related
Collection Period to the Senior Noteholders and the Certificateholders,
respectively.
MAINTENANCE OF THE ACCOUNTS
The Note Distribution Account and the Reserve Fund, and the SUBI
Collection Account and the Residual Value Surplus Account will be maintained
with the Indenture Trustee and the Trust Agent, respectively, so long as either
(a) the short-term unsecured debt obligations of the Indenture Trustee or the
Trust Agent, as the case may be, are rated in the highest short-term rating
category by each Rating Agency or (b) the Indenture Trustee or the Trust Agent,
as the case may be, is a depository institution or trust company having a
long-term unsecured debt rating acceptable to each Rating Agency and corporate
trust powers and the related Account is maintained in the corporate
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trust department of the Indenture Trustee or the Trust Agent, as the case may be
(the "Required Deposit Rating"). Each of the foregoing accounts will be
segregated trust accounts. If either of the Indenture Trustee or the Trust Agent
at any time does not have the Required Deposit Rating, the Administrative Agent
shall, with the assistance of the Indenture Trustee or the Trust Agent, as the
case may be, as necessary, cause the related Account to be moved to a depository
institution or trust company organized under the laws of the United States or
any State that has the Required Deposit Rating.
On the Payment Date on which all Securities have been paid in full and
following payment of any remaining obligations of the Transferor under the Basic
Documents, any amounts remaining on deposit in the Accounts - after giving
effect to all withdrawals therefrom and deposits thereto in respect of that
Payment Date - will be paid to the Transferor.
PERMITTED INVESTMENTS
When funds are deposited in (a) the SUBI Collection Account and the
Residual Value Surplus Account and (b) the Reserve Fund, they will be invested
at the direction of the Administrative Agent and the Administrator,
respectively, in one or more Permitted Investments maturing no later than the
Deposit Date immediately succeeding the date of that investment. Notwithstanding
the foregoing, investments on which the entity at which the related Account is
located is the obligor may mature on the related Deposit Date.
On each Payment Date, all net income or other gain from the investment
of funds on deposit in the Residual Value Surplus Account, the Reserve Fund and
the SUBI Collection Account in respect of the related Collection Period will be
deposited in the Reserve Fund. "Permitted Investments" will be specified in the
SUBI Trust Agreement and will be limited to investments that meet the criteria
of each Rating Agency from time to time as being consistent with its
then-current rating of the Senior Notes and the Certificates.
THE CONTINGENT AND EXCESS LIABILITY INSURANCE
In addition to the personal property and liability insurance coverage
required to be obtained and maintained by the Obligor or Ryder pursuant to the
Specified Leases, and as additional protection in the event the Obligor fails to
maintain the required insurance, Ryder maintains contingent liability insurance
for the benefit of, among others, Ryder, the Origination Trust, the UTI
Beneficiaries, the Transferor and the Trust, which provides coverage, with no
annual or aggregate cap on the number of claims thereunder, for liability caused
by any Specified Vehicle owned by the Origination Trust. Ryder also maintains
substantial amounts of excess insurance coverage as to which the Origination
Trustee is an additional named insured (together with the aforementioned primary
contingent liability insurance policy, the "Contingent and Excess Liability
Insurance"). These insurance policies collectively provide insurance coverage in
excess of $10 million per accident and permit multiple claims in any policy
period. Claims could be imposed against the assets of the Origination Trust if
such coverage were exhausted and damages were assessed against the Origination
Trust. In that event, investors in the Senior Notes could incur a loss on their
investment. See "Risk Factors--Vicarious tort liability may result in a loss of
your investment", "Certain Legal Aspects of the Origination Trust and the
SUBIs--The SUBIs" and "Certain Legal Aspects of the Specified Leases and the
Specified Vehicles--Vicarious Tort Liability" for a discussion of related risks.
With respect to damage to the Specified Vehicles, an Obligor may be
required by the related Specified Lease to maintain comprehensive and collision
insurance. As more fully described under "Additional Document Provisions--The
Administration Agreement--Insurance on Specified Vehicles", the Administrative
Agent will be required to monitor the maintenance of required Obligor insurance.
In the event that the foregoing insurance coverage was exhausted and no
third-party reimbursement for that damage was available, investors in the Senior
Notes could incur a loss on their investment.
The Administration Agreement will provide that for so long as any
Senior Notes or Certificates are outstanding, neither the Origination Trustee
nor Ryder may terminate or cause the termination of any Contingent and Excess
Liability Insurance policy unless each Rating Agency has delivered a letter to
the effect that such termination or any replacement insurance would not cause
its then-current ratings of the Senior Notes or the Certificates to be
qualified, reduced or withdrawn. These obligations of Ryder will survive any
termination of Ryder as Administrative Agent under the Administration Agreement.
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ADDITIONAL DOCUMENT PROVISIONS
THE INDENTURE
INDENTURE DEFAULTS. The following events (each an "Indenture Default")
will be events of default under the Indenture:
o a default for 30 days or more in the payment of interest on the
Senior Notes;
o a default in the payment of principal of the Senior Notes on the
Final Payment Date or on a Payment Date fixed for redemption of the
Senior Notes;
o the occurrence of a Program Operating Lease Default;
o a default in the observance or performance of any covenant or
agreement, or any representation or warranty made in the Indenture
or in any certificate or writing delivered under the Indenture
proves to have been incorrect in any material respect at the time
made, and the continuation of that default for a period of 30 days
after notice thereof is given to the Trust by the Indenture Trustee
or to the Trust and the Indenture Trustee by the holders of not
less than 25% of the aggregate principal balance of the Senior
Notes; or
o certain events of bankruptcy, insolvency, receivership or
liquidation of the Trust.
Senior Noteholders holding at least a majority of the aggregate
principal balance of the Senior Notes may waive any past default or Indenture
Default prior to the declaration of the acceleration of the maturity of the
Senior Notes, except a default (a) in payment of principal of or interest on any
of the Senior Notes or (b) in respect of any covenant or provision in the
Indenture that cannot be modified or amended without unanimous consent of the
Senior Noteholders.
REMEDIES. If an Indenture Default occurs and is continuing, the
Indenture Trustee or the holders of a majority of the aggregate principal
balance of the Senior Notes may declare the principal of the Senior Notes to be
immediately due and payable. This declaration may be rescinded by the holders of
a majority of the aggregate principal balance of the Senior Notes before a
judgment or decree for payment of the amount due has been obtained by the
Indenture Trustee if (a) the Trust has deposited with the Indenture Trustee an
amount sufficient to pay (1) all interest on and principal of the Senior Notes
as if the Indenture Default giving rise to that declaration had not occurred and
(2) all amounts advanced by the Indenture Trustee and its costs and expenses,
and (b) all Indenture Defaults - other than the nonpayment of principal of the
Senior Notes that has become due solely due to that acceleration - have been
cured or waived.
If the Senior Notes have been declared due and payable following an
Indenture Default, the Indenture Trustee may institute proceedings to collect
amounts due, exercise remedies as a secured party, including foreclosure or sale
of the Trust Estate, or elect to maintain the Trust Estate and continue to apply
proceeds from the Trust Estate as if there had been no declaration of
acceleration. The Indenture Trustee may not, however, unless it is required to
sell the Trust Estate under the Trust Agreement as a result of the bankruptcy or
insolvency of the Transferor, sell the Trust Estate following an Indenture
Default - other than the occurrence of an Indenture Default described in clauses
(a) or (b) of the definition thereof - unless (a) 100% of the Senior Noteholders
consent thereto, (b) the proceeds of that sale are sufficient to pay in full the
principal of and the accrued interest on all outstanding Securities or (c) the
Indenture Trustee determines that the Trust Estate would not be sufficient on an
ongoing basis to make all payments on the Senior Notes as such payments would
have become due if such obligations had not been declared due and payable, and
the Indenture Trustee obtains the consent of holders of 66 2/3% of the aggregate
principal balance of the Senior Notes. The Indenture Trustee may, but is not
required to, obtain and rely upon an opinion of an independent accountant or
investment banking firm as to the sufficiency of the Trust Estate to pay
interest on and principal of the Senior Notes on an ongoing basis. Any sale of
the Trust Estate, other than a sale resulting from the bankruptcy, insolvency or
termination of the Transferor, is subject to the requirement that an opinion of
counsel be delivered to the effect that such sale will not cause the Origination
Trust or the Trust to be classified as an association, or a publicly traded
partnership, taxable as a corporation for federal income tax purposes.
In the event of a sale of the Trust Estate, either as a result of the
bankruptcy or insolvency of the Transferor or following the occurrence of an
Indenture Default under the circumstances described in the prior paragraph, at
the direction of the Indenture Trustee or the Senior Noteholders, the proceeds
of such sale, including available monies on deposit in the Reserve Fund, will be
distributed first, to the Indenture Trustee for amounts due as compensation
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or indemnity payments pursuant to the terms of the Indenture; second, to the
Administrative Agent for reimbursement of all outstanding Advances; third, to
the Administrative Agent for amounts due in respect of unpaid Administration
Fees; fourth, to the Senior Noteholders to pay due and unpaid interest -
including any overdue interest and, to the extent permitted under applicable
law, interest on any overdue interest at the Interest Rate; fifth, to the
Reserve Fund for the payment of due and unpaid interest including any overdue
interest and, to the extent permitted under applicable law, interest on any
overdue interest at the Subordinated Note Rate - on the Subordinated Notes;
sixth, to the Certificate Distribution Account for the payment of due and unpaid
interest - including any overdue interest and, to the extent permitted under
applicable law, interest on any overdue interest at the Certificate Rate - on
the Certificates; seventh, to the Senior Noteholders to pay due and unpaid
principal on the Senior Notes, which shall be allocated to the classes of Senior
Notes on a pro rata basis; eighth, ratably to the Subordinated Noteholder for
amounts due and unpaid in accordance with the terms of the Subordinated Notes,
which amounts shall be deposited into the Reserve Fund, and the
Certificateholders for amounts due and unpaid in accordance with the terms of
the Certificates; ninth, to the Transferor, in its capacity as Subordinated
Noteholder, up to the amount deposited into the Reserve Fund in respect of the
Subordinated Notes on or before the date of the preceding distributions; and
tenth, any remaining amounts shall be paid to the Transferor.
Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee, if an Indenture Default occurs and is continuing, the
Indenture 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 Senior
Noteholders if the Indenture Trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities that might be
incurred by it in complying with that request. Subject to such provisions for
indemnification and some limitations contained in the Indenture, the holders of
at least a majority of the aggregate principal balance of the Senior Notes will
have the right to direct the time, method and place of conducting any proceeding
or any remedy available to the Indenture Trustee or exercising any trust power
conferred on the Indenture Trustee. In addition, the holders of at least a
majority of the aggregate principal balance of the Senior Notes may, in some
cases, waive any default with respect to the Indenture, 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 holders of outstanding Senior Notes.
No Senior Noteholder will have the right to institute any proceeding
with respect to the Indenture unless:
o that Senior Noteholder previously has given the Indenture Trustee
written notice of a continuing Indenture Default,
o Senior Noteholders holding not less than 25% of the aggregate
principal balance of the Senior Notes have made written request of
the Indenture Trustee to institute that proceeding in its own name
as Indenture Trustee,
o the Senior Noteholder has offered the Indenture Trustee reasonable
indemnity,
o the Indenture Trustee has for 60 days failed to institute that
proceeding, and
o no direction inconsistent with that written request has been given
to the Indenture Trustee during that 60 day period by Senior
Noteholders holding a majority of the aggregate principal balance
of the Senior Notes.
Neither the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, nor any holder of a Subordinated Note or a Certificate,
nor any of their respective owners, beneficiaries, agents, officers, directors,
employees, successors or assigns will, in the absence of an express agreement to
the contrary, be personally liable for the payment of interest on or principal
of the Senior Notes or for the agreements of the Trust or the Trustee, in its
capacity as trustee, contained in the Indenture.
CERTAIN COVENANTS. Under the Indenture, the Trust will covenant that it
will not (a) sell, transfer, exchange or otherwise dispose of any of its assets,
except as expressly permitted by the Indenture, the Program Operating Lease and
the other Basic Documents, (b) claim any credit on or make any deduction from
the principal and interest payable in respect of the Senior Notes - other than
amounts withheld under the Code or applicable state law - or assert any claim
against any present or former Senior Noteholder because of the payment of taxes
levied or assessed upon the Trust or (c) permit (1) the validity or
effectiveness of the Indenture to be impaired, (2) any person to be released
from any covenants or obligations with respect to the Senior Notes under the
Indenture except as may be expressly permitted thereby or (3) any lien, charge,
excise, claim, security interest, mortgage or other encumbrance
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to be created on or extend to or otherwise arise upon or burden the Trust's
assets or any part thereof, or any interest therein or the proceeds therefrom.
The Trust may not engage in any activities other than financing,
acquiring, owning, leasing - subject to the lien of the Indenture, pledging and
managing the SUBI Certificates as contemplated by the Indenture and the other
Basic Documents. The Trust will not incur, assume or guarantee any indebtedness
other than indebtedness incurred pursuant to the Securities or otherwise in
accordance with the Basic Documents.
REPLACEMENT OF THE INDENTURE TRUSTEE. Senior Noteholders holding at
least a majority of the aggregate principal balance of the Senior Notes may
remove the Indenture Trustee without cause by so notifying the Indenture Trustee
and the Trust, and following that removal may appoint a successor Indenture
Trustee. Any successor Indenture Trustee must at all times satisfy all
applicable requirements of the Trust Indenture Act of 1939, and in addition,
have a combined capital and surplus of at least $50,000,000 and a long-term debt
rating of "A" or better by each Rating Agency or be otherwise acceptable to each
Rating Agency. Each Rating Agency must confirm that the appointment of the
successor Indenture Trustee would not cause the then-current ratings on the
Senior Notes and the Certificates to be qualified, reduced or withdrawn.
The Indenture Trustee may resign at any time by so notifying the Trust,
the Administrative Agent and each Rating Agency. The Trust will be required to
remove the Indenture Trustee if the Indenture Trustee (a) ceases to be eligible
to continue as the Indenture Trustee, (b) is adjudged to be bankrupt or
insolvent or (c) otherwise becomes incapable of acting. Upon the resignation or
removal of the Indenture Trustee, or the failure of the Senior Noteholders to
appoint a successor Indenture Trustee following the removal without cause of the
Indenture Trustee, the Trust will be required promptly to appoint a successor
Indenture Trustee.
DUTIES OF INDENTURE TRUSTEE. Except during the continuance of an
Indenture Default, the Indenture Trustee will (a) perform such duties and only
such duties as are specifically set forth in the Indenture, (b) rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
on certificates or opinions furnished to the Indenture Trustee that conform to
the requirements of the Indenture and (c) examine any such certificates and
opinions that are specifically required to be furnished to the Indenture Trustee
by the Indenture to determine whether or not they conform to the requirements of
the Indenture. Upon the continuance of an Indenture Default, the Indenture
Trustee will be required to exercise the rights and powers vested in it by the
Indenture and use the same degree of care and skill in the exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
that person's own affairs.
COMPENSATION AND INDEMNITY. The Administrative Agent or the
Administrator will (a) pay the Indenture Trustee from time to time reasonable
compensation for its services, (b) reimburse the Indenture Trustee for all
reasonable expenses, advances and disbursements reasonably incurred by it in
connection with the performance of its duties as Indenture Trustee and (c)
indemnify the Indenture Trustee for, and hold it harmless against, any loss,
liability or expense, including reasonable attorneys' fees and expenses,
incurred by it in connection with the performance of its duties as Indenture
Trustee. The Indenture Trustee will not be indemnified by the Administrator
against any loss, liability or expense incurred by it through its own willful
misconduct, negligence or bad faith, except that the Indenture Trustee will not
be liable (a) for any error of judgment made by it in good faith, unless it is
proved that the Indenture Trustee was negligent in ascertaining the pertinent
facts, (b) with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it from the Senior Noteholders in
accordance with the terms of the Indenture and (c) for interest on any money
received by it except as the Indenture Trustee and the Trust may agree in
writing. The Indenture Trustee will not be deemed to have knowledge of any event
unless an officer of the Indenture Trustee has actual knowledge of the event or
has received written notice of the event in accordance with the provisions of
the Indenture.
ACCESS TO SENIOR NOTEHOLDER LISTS. If Definitive Notes are issued in
the limited circumstances set forth in "Certain Information Regarding the
Securities--Definitive Notes", or the Indenture Trustee is not the Senior Note
Registrar, the Trust will furnish or cause to be furnished to the Indenture
Trustee a list of the names and addresses of the Senior Noteholders (a) as of
each Record Date, within five days thereafter and (b) as of not more than ten
days before the time that list is furnished, within 30 days after receipt by the
Trust of a written request for the list.
ANNUAL COMPLIANCE STATEMENT. The Trust will be required to file an
annual written statement with the Indenture Trustee certifying the fulfillment
of its obligations under the Indenture.
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SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture will be
discharged with respect to the collateral securing the Senior Notes upon the
delivery to the Indenture Trustee for cancellation of all of the Senior Notes
or, with some limitations - including receipt of certain opinions with respect
to tax matters - upon deposit with the Indenture Trustee of funds sufficient for
the payment in full of all of the Senior Notes, including interest, and any fees
due and payable to the Owner Trustee or the Indenture Trustee.
THE TRUST AGREEMENT
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE. The Owner Trustee will
administer the Trust in the interest of the Certificateholders, subject to the
lien of the Indenture and the obligations of the Trust with respect to the
Subordinated Notes, in accordance with the Trust Agreement and the other Basic
Documents.
Subject to the rights of the Indenture Trustee under the Indenture, the
Transferor, as holder of the Transferor Certificate, may, by written
instruction, direct the Owner Trustee in the administration of the Trust;
provided that such instruction shall not, as evidenced by an opinion of counsel,
materially adversely affect any Senior Noteholder or Certificateholder. The
Owner Trustee will not be required to follow any such instruction if it
reasonably determines or is advised by counsel that so doing is (a) likely to
result in liability to the Owner Trustee, (b) contrary to the terms of the Trust
Agreement or any other Basic Document or any obligation of the Owner Trustee or
the Trust or (c) unlawful.
The Owner Trustee will not be required to perform any of the
obligations of the Trust under the Trust Agreement or the other Basic Documents
that are required to be performed by (a) the Administrative Agent under the
Administration Agreement or the SUBI Trust Agreement, (b) the Administrator
under the Trust Agreement, the Trust Administration Agreement or the Indenture;
(c) the Transferor under the SUBI Certificate Transfer Agreement or the Program
Operating Lease or (d) the Indenture Trustee under the Indenture.
RESTRICTIONS ON ACTIONS BY OWNER TRUSTEE. The Owner Trustee may not:
o initiate or settle any claim or lawsuit involving the Trust, unless
brought by the Administrative Agent to collect amounts owed under a
Specified Lease;
o amend the Indenture by a supplemental indenture where Senior
Noteholder consent is required;
o amend the Indenture by supplemental indenture where Senior
Noteholder consent is not required if such amendment materially
adversely affects the Certificateholders; or
o amend any Basic Document other than the Trust Agreement if such
amendment materially adversely affects the Certificateholders;
unless (1) the Owner Trustee provides 30 days' written notice thereof to the
Certificateholders and each Rating Agency and (2) Certificateholders holding at
least 25% of the aggregate principal balance of the Certificates do not object
in writing to any such proposed amendment within 30 days of that notice.
ACTIONS BY CERTIFICATEHOLDERS AND OWNER TRUSTEE WITH RESPECT TO CERTAIN
MATTERS. The Owner Trustee may not, except upon the occurrence of an
Administrative Agent Default subsequent to the payment in full of the Senior
Notes and in accordance with the written directions of Certificateholders
holding 66?% of the aggregate principal balance of the Certificates, remove the
Administrative Agent with respect to the SUBI Assets or appoint a successor
Administrative Agent with respect thereto. However, the Owner Trustee will not
be required to follow any directions of the Certificateholders if doing so would
be contrary to any obligation of the Owner Trustee or the Trust. The Owner
Trustee may not sell the Vehicle SUBI Certificate or assign its interest in the
Lease SUBI Certificate except in the event of the bankruptcy or dissolution of
the Trust or the Transferor, or upon an Indenture Default - and in any event
unless the Owner Trustee has properly foreclosed on the Lease SUBI. Upon any
such sale of the Vehicle SUBI Certificate or the assignment of the Lease SUBI
Certificate, the applicable Vehicle SUBI Assets and Lease SUBI Assets will be
distributed to the purchaser thereof and will no longer constitute Origination
Trust Assets, and the Specified Vehicles may be retitled as directed by that
purchaser.
The right of the Transferor or the Certificateholders to take any
action affecting the Trust Estate will be subject to the rights of the Indenture
Trustee under the Indenture.
RESIGNATION AND REMOVAL OF THE OWNER TRUSTEE. The Owner Trustee may
resign at any time upon written notice to the Administrator, the Administrative
Agent, the Transferor, the Indenture Trustee and the
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Certificateholders, whereupon the Transferor will be obligated to appoint a
successor Owner Trustee. The Transferor or Certificateholders holding at least a
majority of the aggregate principal balance of the Certificates may remove the
Owner Trustee if the Owner Trustee becomes insolvent, ceases to be eligible or
becomes legally unable to act. Upon removal of the Owner Trustee, the Transferor
will appoint a successor Owner Trustee. The Transferor will be required to
deliver written notice to each Rating Agency of any resignation or removal of
the Owner Trustee.
The Owner Trustee and any successor thereto must at all times:
o be able to exercise corporate trust powers;
o be subject to supervision or examination by federal or state
authorities;
o have a combined capital and surplus of at least $50 million; and
o have a long-term debt rating of "A" or better by each Rating Agency
or be otherwise acceptable to each Rating Agency.
Each Rating Agency must also confirm that the appointment of the successor Owner
Trustee would not cause the then-current ratings of the Senior Notes or the
Certificates to be qualified, reduced or withdrawn. Any co-trustee or separate
trustee appointed for the purpose of meeting applicable state requirements will
not be required to meet these eligibility requirements.
TERMINATION. The Trust Agreement will terminate upon (a) the final
distribution of all funds or other property or proceeds of the Trust Estate in
accordance with the terms of the Indenture and the final distribution on the
Subordinated Notes and the Certificates pursuant to the Trust Agreement, (b) the
occurrence of certain events of bankruptcy, insolvency, receivership or
liquidation with respect to the Transferor or (c) an Optional Purchase by the
Transferor. Upon termination of the Trust Agreement pursuant to clause (b)
above, the Owner Trustee will direct the Indenture Trustee to sell the Trust
Estate, other than amounts on deposit in the Distribution Accounts, in a
commercially reasonable manner and on commercially reasonable terms. The
Indenture Trustee will apply the proceeds of that sale to pay amounts owed to
the Indenture Trustee and interest on and principal of the Securities in
accordance with the terms of the Indenture. See "--The Indenture--Remedies".
LIABILITIES AND INDEMNIFICATION. The Transferor, as holder of the
Transferor Certificate and the Subordinated Notes, will be directly liable for
any claims against the Trust - other than payment of principal of and interest
on the Securities - as if the Trust were a partnership and the Transferor were a
general partner thereof. The Transferor, in that capacity, will indemnify the
Owner Trustee for any expenses incurred by the Owner Trustee in the performance
of its duties under the Trust Agreement. The Transferor will not be entitled to
make any claim upon the Trust Estate for the payment of any such liabilities or
indemnified expenses. The Transferor will not indemnify the Owner Trustee for
expenses resulting from the willful misconduct, bad faith or negligence of the
Owner Trustee, or for the inaccuracy of any representation or warranty of the
Owner Trustee in the Trust Agreement. The Owner Trustee will not be liable for:
o any error in judgment of an officer of the Owner Trustee,
o any action taken or omitted to be taken in accordance with the
instructions of any Certificateholder, the Indenture Trustee, the
Transferor or the Administrative Agent,
o the interest on or principal of the Securities, or
o the default or misconduct of the Administrator, the Administrative
Agent, the Transferor or the Indenture Trustee.
THE SUBORDINATED NOTES. The Subordinated Notes will be issued to the
Transferor pursuant to the Trust Agreement, pledged by the Transferor to the
Trust and held by the Indenture Trustee during the term of the Indenture as part
of the Trust Estate pledged to the Indenture Trustee. The Subordinated Notes
will be subordinated in right of payment to the Senior Notes to the extent
described herein. See "Certain Information Regarding the Securities--Payments on
the Securities" and "Security for the Securities--The Subordinated Notes". If a
default occurs with respect to the Trust's obligations under the Subordinated
Notes while the Senior Notes are outstanding, the Subordinated Noteholder will
not be permitted to declare the principal balance of the Subordinated Notes to
be immediately due and payable.
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THE SUBI TRUST AGREEMENT
THE SUBIs, OTHER SUBIs AND THE UTI.
The UTI Beneficiaries are the initial beneficiaries of the Origination
Trust. The UTI Beneficiaries may from time to time assign, transfer, grant and
convey, or cause to be assigned, transferred, granted and conveyed, to the
Origination Trustee, in trust, Origination Trust Assets. The UTI Beneficiaries
will hold the UTI, which represents a beneficial interest in all Origination
Trust Assets except for (a) any Origination Trust Assets allocated to Other
SUBIs ("Other SUBI Assets") and (b) the SUBI Assets (those Origination Trust
Assets to be referred to as the "UTI Assets"). The UTI Beneficiaries may in the
future pledge the UTI as security for obligations to third-party lenders and may
in the future create and sell or pledge Other SUBIs in connection with
financings similar to the transaction described in this prospectus. Each holder
or pledgee of the UTI will be required to expressly waive any claim to the
Origination Trust Assets other than the UTI Assets and to fully subordinate any
such claims to those other Origination Trust Assets in the event that the waiver
is not given full effect. Each holder or pledgee of any Other SUBI will be
required to expressly waive any claim to the Origination Trust Assets, except
for the related Other SUBI Assets, and to fully subordinate those claims to the
Origination Trust Assets or any other SUBI in the event that waiver is not given
effect. Except under the limited circumstances described under "Certain Legal
Aspects of the Origination Trust and the SUBIs--The SUBIs" and "--The SUBIs,
Other SUBIs and the UTI", the SUBI Assets will not be available to make payments
in respect of, or pay expenses relating to, the UTI or any Other SUBI. Any Other
SUBI Assets evidenced by any Other SUBIs will not be available to make payments
in respect of, or pay expenses relating to, the SUBIs, the UTI or any Other
SUBI.
Each Other SUBI will be created pursuant to a supplement to the
Origination Trust Agreement (each, an "Other SUBI Supplement"), which will amend
the Origination Trust Agreement only with respect to the Other SUBI to which it
relates. The SUBI Supplement will amend the Origination Trust Agreement only as
it relates to the SUBIs and no Other SUBI Supplement will amend the Origination
Trust Agreement as it relates to the SUBIs.
All Origination Trust Assets, including the SUBI Assets, will be owned
by the Origination Trustee on behalf of the beneficiaries of the Origination
Trust. The SUBI Assets will be segregated from the rest of the Origination Trust
Assets on the books and records of the Origination Trustee and the
Administrative Agent, and the holders of other beneficial interests in the
Origination Trust - including the UTI and any Other SUBIs -- will have no rights
in or to the SUBI Assets. Liabilities of the Origination Trust will be
respectively allocated to the SUBI Assets, the UTI Assets and Other SUBI Assets
if incurred in each case with respect thereto, or will be allocated pro rata
among all Origination Trust Assets if incurred with respect to the Origination
Trust Assets generally.
SPECIAL OBLIGATIONS OF THE UTI BENEFICIARIES
The UTI Beneficiaries will be jointly and severally liable for all
debts and obligations arising with respect to the Origination Trust Assets or
the operation of the Origination Trust, except that their liability with respect
to any pledge of the UTI and any assignee or pledgee of a SUBI or a SUBI
Certificate or any Other SUBI or Other SUBI Certificate shall be as set forth in
the financing documents relating thereto. To the extent the UTI Beneficiaries
pay or suffer any liability or expense with respect to the Origination Trust
Assets or the operation of the Origination Trust, the UTI Beneficiaries will be
indemnified, defended and held harmless out of the assets of the Origination
Trust against any such liability or expense, including reasonable attorneys'
fees and expenses.
ORIGINATION TRUSTEE DUTIES AND POWERS; FEES AND EXPENSES
Under the SUBI Trust Agreement, the Origination Trustee will be
required to (a) apply for and maintain, or cause to be applied for and
maintained, all licenses, permits and authorizations necessary or appropriate to
accept assignments of the Specified Leases and the Specified Vehicles and to
carry out its duties as Origination Trustee and (b) when required by applicable
state law or administrative practice, file, or cause to be filed, applications
for certificates of title as are necessary or appropriate so as to cause the
Origination Trust or the Origination Trustee on behalf of the Origination Trust
to be recorded as the owner or holder of legal title of record to the Specified
Vehicles. In carrying out these duties, the Origination Trustee will be required
to exercise the same degree of care and skill as a prudent person would exercise
or use under the circumstances in the conduct of that person's own affairs.
The Origination Trustee may be replaced by the UTI Beneficiaries,
acting together, if it ceases to be qualified in accordance with the terms of
the SUBI Trust Agreement, or if certain representations and warranties
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made by the Origination Trustee therein prove to have been materially incorrect
when made or in the event of certain events of bankruptcy or insolvency of the
Origination Trustee.
The Origination Trustee will make no representations as to the validity
or sufficiency of the SUBIs, the SUBI Certificates, or the Retained SUBI
Certificates - other than the execution and authentication of the SUBI
Certificates and the Retained SUBI Certificates - or of any Specified Lease,
Specified Vehicle or related document, will not be responsible for performing
any of the duties of the UTI Beneficiaries or the Administrative Agent and will
not be accountable for the use or application by any owners of beneficial
interests in the Origination Trust Assets of any funds paid in respect of the
Origination Trust Assets or the investment of any of such monies before such
monies are deposited into the accounts relating to the SUBIs, any Other SUBI and
the UTI. The Origination Trustee will not independently verify the Specified
Leases or the Specified Vehicles. The duties of the Origination Trustee will
generally be limited to the acceptance of assignments of Leases, the titling of
Vehicles in the name of the Origination Trust or the Origination Trustee on
behalf of the Origination Trust, the creation of the SUBIs, Other SUBIs and the
UTI, the creation of the SUBI Collection Account and the Residual Value Surplus
Account and the receipt of the various certificates, reports or other
instruments required to be furnished to the Origination Trustee under the SUBI
Trust Agreement, in which case the Origination Trustee will only be required to
examine them to determine whether they conform to the requirements of the SUBI
Trust Agreement.
The Origination Trustee will be under no obligation to exercise any of
the rights or powers vested in it by the SUBI Trust Agreement, to make any
investigation of any matters arising thereunder or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order or
direction of the UTI Beneficiaries, the Administrative Agent or the holders of a
majority in interest in the SUBIs, unless such party or parties have offered to
the Origination Trustee reasonable security or indemnity against any costs,
expenses or liabilities that may be incurred therein or thereby. The reasonable
expenses of every such exercise of rights or powers or examination will be paid
by the party or parties requesting such exercise or examination or, if paid by
the Origination Trustee, will be a reimbursable expense of the Origination
Trustee.
The Origination Trustee may enter into one or more agreements with such
person or persons, including without limitation any affiliate of the Origination
Trustee, as are by experience and expertise qualified to act in a trustee
capacity and otherwise acceptable to the UTI Beneficiaries. The Origination
Trustee has engaged U.S. Bank as Trust Agent. Under the SUBI Trust Agreement,
the Trust Agent shall perform each and every obligation of the Origination
Trustee under the SUBI Trust Agreement.
INDEMNITY OF TRUSTEE AND TRUST AGENTS
The Origination Trustee and each Trust Agent will be indemnified and
held harmless out of and to the extent of the Origination Trust Assets with
respect to any loss, liability, claim, damage or reasonable expense, including
reasonable fees and expenses of counsel and reasonable expenses of litigation
(collectively, a "Loss"), arising out of or incurred in connection with (a) any
of the Origination Trust Assets, including without limitation any Loss relating
to Leases or Vehicles, any personal injury or property damage claims arising
with respect to any such Vehicle or any Loss relating to any tax arising with
respect to any Origination Trust Asset, or (b) the Origination Trustee's or the
Trust Agent's acceptance or performance of the trusts and duties contained in
the SUBI Trust Agreement. Notwithstanding the foregoing, neither the Origination
Trustee nor any Trust Agent will be indemnified or held harmless out of the
Origination Trust Assets as to that Loss (a) for which Ryder shall be liable
under the Administration Agreement, (b) incurred by reason of the Origination
Trustee's or that Trust Agent's willful misfeasance, bad faith or negligence or
(c) incurred by reason of the Origination Trustee's or that Trust Agent's breach
of its respective representations and warranties made in the SUBI Trust
Agreement or the Administration Agreement.
TERMINATION
The Origination Trust will dissolve and the obligations and
responsibilities of the UTI Beneficiaries and the Origination Trustee will
terminate upon the later to occur of the full payment of all amounts owed under
the Origination Trust Agreement, the Trust Agreement and the Indenture or any
financing in connection with an Other SUBI.
TRUST AS THIRD-PARTY BENEFICIARY
As the holder of the Vehicle SUBI Certificate and the SUBI Interest
evidenced thereby and a pledgee of the Lease SUBI Certificate and the SUBI
Interest evidenced thereby, the Trust will be a third-party beneficiary of the
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SUBI Trust Agreement. Therefore, the Trust may, and, upon the direction of
holders of Senior Notes and Certificates holding at least 51% of the aggregate
unpaid principal balance of the Senior Notes and Certificates, unless a higher
percentage is required by either the Trust Agreement or the Indenture, voting
together as a single class, will, exercise any right conferred by the SUBI Trust
Agreement upon a holder of any interest in the SUBIs. However, during the term
of the Indenture, any action with respect to the SUBIs must be approved by the
Senior Noteholders in such percentage as required by the Indenture. See
"--Miscellaneous Provisions--Amendment Provisions".
THE ADMINISTRATION AGREEMENT
GENERAL
Under the Administration Agreement, the Administrative Agent will
perform on behalf of the Origination Trust all of the obligations of the lessor
under the Specified Leases, including, but not limited to, collecting and
processing payments, responding to inquiries of Obligors, investigating
delinquencies, sending payment statements, paying costs of the sale or other
disposition of Expired Vehicles or Default Vehicles, overseeing the Specified
Leases, commencing legal proceedings to enforce Specified Leases and servicing
the Specified Leases, including accounting for collections, furnishing monthly
and annual statements to the Origination Trustee with respect to distributions
and generating federal income tax information. In this regard, the
Administrative Agent will make reasonable efforts to collect all amounts due on
or in respect of the Specified Leases and, in a manner consistent with the
Administration Agreement, will be obligated to service the Specified Leases
generally in accordance with the customary and usual procedures of institutions
that service truck, tractor and trailer leases and, to the extent more exacting,
the procedures used by the Administrative Agent in respect of truck, tractor and
trailer leases serviced by it for its own account. Payments made in respect of
the Maintenance Component will be retained by or remitted to the Maintenance
Provider as compensation for providing maintenance and other specified services
to the Specified Vehicles, and will not be available to make Program Operating
Lease Payments or to make payments on the Senior Notes. See "Ryder--Lease
Payments--Calculation of the Financial Component". The Trust will be a
third-party beneficiary of the Administration Agreement.
The Administration Agreement will require the Administrative Agent to
obtain all licenses and make all filings required to be held or filed by the
Origination Trust in connection with the ownership of the Specified Leases and
the Specified Vehicles and take all necessary steps to maintain evidence of the
Origination Trust's ownership on the certificates of title to the Specified
Vehicles.
The Administrative Agent will be responsible for filing all periodic
sales and use tax or property, real or personal, tax reports, periodic renewals
of licenses and permits, periodic renewals of qualifications to act as a
business trust and other periodic regulatory filings, registrations or approvals
arising with respect to or required of the Origination Trustee or the
Origination Trust.
CUSTODY OF LEASE DOCUMENTS AND CERTIFICATES OF TITLE
To reduce administrative costs and ensure uniform quality in the
servicing of the Specified Leases and Ryder's own portfolio of leases, the
Origination Trustee will appoint the Administrative Agent as its agent, bailee
and custodian of the Specified Leases, the certificates of title relating to the
Specified Vehicles, the insurance policies and insurance records and other
documents related to the Specified Leases and the related Obligors and Specified
Vehicles. Such documents will not be physically segregated from other leases,
certificates of title, insurance policies and insurance records or other
documents related to other leases and vehicles owned or serviced by the
Administrative Agent, including Leases and Vehicles which are not part of the
SUBI Assets. The accounting records and computer systems of Ryder will reflect
the allocation of the Specified Leases and Specified Vehicles to the SUBIs, and
the interest of the holders of the SUBI Certificates therein. UCC financing
statements reflecting certain interests in the Specified Leases will be filed as
described under "Certain Legal Aspects of the Specified Leases and Specified
Vehicles--Back-up Security Interests".
COLLECTIONS
GENERAL. Under the Administration Agreement, except as otherwise
permitted under the Monthly Remittance Condition and described under "--Monthly
Remittance Condition", the Administrative Agent will deposit Collections
received into the SUBI Collection Account within two Business Days of
processing. "Collections" with respect to any Collection Period will include all
net collections collected or received in respect of the SUBI Assets during the
three Monthly Periods comprising that Collection Period that are allocable to
the
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Program Operating Lease or the Securities, including: (i) Financial Component
payments and Partial Financial Component Payments made by Obligors; (ii)
Reallocation Payments made by the Administrative Agent; (iii) Sales Proceeds
other than Residual Value Surplus, Termination Proceeds, Casualty Proceeds and
Insurance Proceeds; (iv) Termination Value Payments; and (v) payments by the
Administrative Agent of the Securitization Value of certain Specified Leases
before the Maturity Dates of such Specified Leases and certain Expired Vehicles,
as described in this prospectus under "--Purchase of Specified Vehicles Before
their Maturity Dates" and "--Purchase of Expired Vehicles".
MONTHLY REMITTANCE CONDITION. The Administration Agreement will require
the Administrative Agent to make all deposits of Collections received on or in
respect of the Specified Leases and the Specified Vehicles to be deposited into
the SUBI Collection Account on the second Business Day following processing
thereof. However, so long as the Monthly Remittance Condition is satisfied, the
Administrative Agent may retain such amounts received during a Monthly Period
until the second day following that Monthly Period. The "Monthly Remittance
Condition" will be satisfied if (a)(1) Ryder is the Administrative Agent, (2)
Ryder's short-term debt is rated in the highest rating category, or is otherwise
acceptable to, each Rating Agency and (3) no Administrative Agent Default has
occurred or (b)(1) the Administrative Agent obtains a letter of credit, surety
bond or insurance policy under which demands for payment may be made to secure
timely remittance of monthly collections to the SUBI Collection Account and (2)
the Trustees are provided with confirmation from each Rating Agency to the
effect that the use of such alternative remittance schedule will not result in
the qualification, reduction or withdrawal of its then-current rating on the
Senior Notes or the Certificates. Pending deposit into the SUBI Collection
Account, Collections may be used by the Administrative Agent at its own risk and
for its own benefit and will not be segregated from its own funds.
NET DEPOSITS. For so long as Ryder is the Administrative Agent, the
Administrative Agent will be permitted to deposit into the SUBI Collection
Account only the net amount distributable to the Trust, as holder of the Vehicle
SUBI Certificate, on the related Deposit Date. The Administrative Agent will,
however, account to the Trust, the Trustees and the Senior Noteholders and
Certificateholders as if all of the deposits and distributions described herein
were made individually. This provision has been established for the
administrative convenience of the parties involved and will not affect amounts
required to be deposited into the Accounts for the benefit of the
Securityholders.
PAYMENT OF THE MAINTENANCE COMPONENT TO THE MAINTENANCE PROVIDER.
During each Collection Period, the Maintenance Component payment, to the extent
available, will be allocated and retained by or paid to the Maintenance
Provider. Payments on the Specified Leases will be allocated pro rata using the
Financial Component and the Maintenance Component thereof.
FINANCIAL COMPONENT PAYMENTS. If an Obligor makes a monthly payment
equal to the Total Monthly Payment billed with respect to all Vehicles leased by
that Obligor for the related Monthly Period, which may include one or more
Specified Vehicles as well as one or more Vehicles allocated to the UTI or one
or more Other SUBIs (collectively, "Obligor Vehicles"), the Administrative Agent
will deposit into the SUBI Collection Account the entire Financial Component
relating to the Specified Vehicles leased by that Obligor. If an Obligor makes a
monthly payment of less than the Total Monthly Payment billed in respect of a
Specified Vehicle or in respect of all Obligor Vehicles for that Monthly Period,
the Administrative Agent will deposit into the SUBI Collection Account a pro
rata share of the total amount paid (the "Partial Financial Component Payment")
determined by multiplying the total amount paid by a percentage equal to the
Financial Component due divided by the Total Monthly Payment due.
SALES PROCEEDS AND TERMINATION PROCEEDS
Under the Administration Agreement, the Administrative Agent, on behalf
of the Trust, will sell or otherwise dispose of Specified Vehicles (a) related
to Specified Leases that have reached their respective Maturity Dates, or as to
which the Annual Termination Option was exercised but an amount equal to the
related Termination Value Payment was not paid (each, an "Expired Vehicle"), (b)
related to Default Termination Leases (each, a "Defaulted Vehicle") and (c)
under the circumstances described under "--Purchase of Specified Vehicles Before
their Maturity Dates". In connection with the sale or other disposition of an
Expired Vehicle or a Defaulted Vehicle, within two Business Days of processing,
the Administrative Agent will deposit into the SUBI Collection Account all Sales
Proceeds from Specified Vehicles received during the related Collection Period.
On each Deposit Date, the Administrative Agent will cause the Origination
Trustee, acting through the Trust Agent, to transfer any Residual Value Surplus
to the Residual Value Surplus Account. Any payment received from the related
Obligor in respect of the Termination Value of the related Specified Vehicle
will be deposited into the SUBI Collection Account.
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"Disposition Expenses" will mean expenses and other amounts reasonably
incurred by the Administrative Agent in connection with the sale or other
disposition of an Expired Vehicle or a Defaulted Vehicle, including but not
limited to sales commissions, and expenses incurred in connection with making
claims under any Contingent and Excess Liability Insurance or other applicable
insurance policies. Disposition Expenses will be reimbursable to the
Administrative Agent (a) as a deduction from (1) Sales Proceeds, (2) Termination
Proceeds and (3) Casualty Proceeds and (b) in the case of Disposition Expenses
relating to the sale of Vehicles, from amounts on deposit in the Residual Value
Surplus Account.
"Residual Value Losses" in respect of a Collection Period will mean the
amount by which the Sales Proceeds from the sale of Specified Vehicles,
excluding any Insurance Proceeds, during that Collection Period are less than
the aggregate Securitization Values of the related Specified Leases.
"Residual Value Surplus" will mean the amount, if any, by which the
Sales Proceeds of any Expired Vehicle, excluding any amounts paid by an Obligor
or any Casualty Proceeds, exceed the Securitization Value of the related
Specified Lease as of the effective date of termination of that Specified Lease.
"Sales Proceeds" with respect to any Expired Vehicle or Defaulted
Vehicle will mean all proceeds received from the sale or other disposition of
that Vehicle, including any applicable Insurance Proceeds, less all applicable
Disposition Expenses and, in the case of an Expired Vehicle, any outstanding
Sales Proceeds Advances.
"Termination Proceeds" with respect to any Defaulted Vehicle will mean
an amount equal to the sum of (i) any payment received from the related Obligor
in respect of the Termination Value of Vehicle and (ii) the Sales Proceeds.
PURCHASE OF SPECIFIED VEHICLES BEFORE THEIR MATURITY DATES
The Administrative Agent will be required to purchase or cause to be
purchased a Specified Vehicle before the Maturity Date of the related Specified
Lease and remit to the SUBI Collection Account an amount equal to the
Securitization Value of that Specified Lease as of the effective date of
termination if:
o that Specified Lease becomes a Casualty Termination Lease and,
pursuant to that Specified Lease, the Administrative Agent is
responsible for paying for the loss or theft of or damage to that
Specified Vehicle;
o the Administrative Agent (1) agrees with the Obligor to a change in
the lease rates applicable to that Specified Vehicle and that
change results in a change in the Residual Value and/or the Lease
Term or (2) invoices the Obligor for a material mileage surcharge
under that Specified Lease for that Specified Vehicle;
o at the request of the Obligor, the Administrative Agent permits
that Obligor to (1) terminate that Specified Lease other than
through the exercise of the Annual Termination Option or (2) reduce
or delay payments due in respect of the Financial Component of that
Specified Lease;
o that Obligor exercises the Annual Termination Option or that
Specified Lease becomes a Default Termination Lease and the
Administrative Agent (1) releases the Obligor from its obligation
to purchase that Specified Vehicle for its Termination Value or (2)
either does not demand that the Obligor so purchase that Specified
Vehicle or does not offer a termination or default settlement to
the Obligor for that Specified Vehicle; or
o that Obligor exercises the Annual Termination Option or that
Specified Lease becomes a Default Termination Lease and that
Specified Lease has been amended to eliminate the Obligor's
obligation to thereupon purchase that Specified Vehicle for its
Termination Value.
The Administrative Agent will be required to purchase a Specified
Vehicle before the Maturity Date of the related Specified Lease and remit to the
SUBI Collection Account an amount equal to the Securitization Value of that
Specified Lease as of the effective date of termination if the related Obligor
desires to change the domicile of or title to a Vehicle subject to a Lease and
that change would result in (a) the Origination Trust doing business in a
jurisdiction in which it is not then qualified and licensed or (b) significant
transfer expenses not paid by the Obligor, including without limitation the
imposition of any transfer tax. In addition, the Administrative Agent may, but
will not be required to, purchase or cause to be purchased a Specified Vehicle
before the Maturity Date of the related Specified Lease and remit to the SUBI
Collection Account an amount equal to the Securitization Value of that
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Specified Lease as of the effective date of termination if (a) the
Administrative Agent exercises the Annual Termination Option, including, without
limitation, if the related Obligor rejects an increase in the Maintenance
Component when the current Maintenance Component provides the Maintenance
Provider with below average service margins or (b) the Administrative Agent
elects to purchase that Specified Vehicle for any other administrative or
commercial reason (each, a "Special Event Purchase"). Notwithstanding the
foregoing, Special Event Purchases may only be made with respect to Specified
Vehicles having an aggregate initial Securitization Value of no more than 10% of
the Initial Securities Balance in the aggregate over the term of the Securities,
and with respect to no more than 5% of the Initial Securities Balance in any
calendar year.
"Insurance Proceeds" will include recoveries under any insurance policy
or rights thereunder or proceeds therefrom, including any self-insurance and
also including the Contingent and Excess Liability Insurance, and any vehicle
liability insurance policy required to be obtained and maintained by the
Administrative Agent or the related Obligors pursuant to the Specified Leases,
and amounts paid by any insurer under any other insurance policy relating to the
Specified Leases or the related Obligors or Specified Vehicles.
PURCHASE OF EXPIRED VEHICLES. The Administrative Agent may purchase an
Expired Vehicle at any time. With respect to the related Specified Lease, in the
event that (a) no Sales Proceeds Advance has been made, the purchase price will
equal the Securitization Value of that Specified Lease as of the date of
expiration and (b) a Sales Proceeds Advance has been made, no additional amounts
need be remitted by the Administrative Agent; however, the Administrative Agent
will relinquish all rights to reimbursement of that Sales Proceeds Advance.
CASUALTY PROCEEDS. If an Obligor is responsible for paying for damage
to a Specified Vehicle relating to a Casualty Termination Lease, the
Administrative Agent will remit to the SUBI Collection Account, within two
Business Days of processing, an amount equal to the sum of (a) all Insurance
Proceeds received in respect of damage to that Specified Vehicle (the "Insurance
Casualty Proceeds") and (b) any proceeds received from the sale of that
Specified Vehicle at salvage, net of any applicable Disposition Expenses (the
"Salvage Casualty Proceeds", and together with the Insurance Casualty Proceeds,
the "Casualty Proceeds"). All Casualty Proceeds will be deposited in the SUBI
Collection Account.
In the event that a Specified Lease becomes a Casualty Termination
Lease and that Specified Lease requires the Administrative Agent to be
responsible for all loss or theft of or damage to the related Specified Vehicle,
the Administrative Agent will remit to the SUBI Collection Account an amount
equal to the Securitization Value of that Casualty Termination Lease as of the
effective date of casualty.
EXTENSIONS
The Administration Agreement will provide that no extensions of a
Specified Lease may be granted, except that for operational and administrative
purposes, the Administrative Agent may, on behalf of the Trust, delay or
accelerate the Maturity Date of a Specified Lease by as much as 45 days.
NOTIFICATION OF LIENS AND CLAIMS
The Administrative Agent will be required to notify as soon as
practicable the Transferor - in the event that Ryder is not acting as the
Administrative Agent, the Indenture Trustee and the Origination Trustee of all
liens or claims of any kind of a third party that would materially and adversely
affect the interests of, among others, the Transferor or the Origination Trust
in any Specified Lease or Specified Vehicle. When the Administrative Agent
becomes aware of any such lien or claim with respect to any Specified Lease or
Specified Vehicle, it will take whatever action it deems reasonably necessary to
cause that lien or claim to be removed.
ADVANCES
On each Deposit Date, the Administrative Agent will be obligated to
make, by deposit into the SUBI Collection Account, a Financial Component Advance
in respect of the unpaid Financial Component of certain Specified Vehicles, and
a Sales Proceeds Advance in respect of the Securitization Value of Specified
Leases relating to certain Expired Vehicles. An "Advance" refers to either a
Financial Component Advance or a Sales Proceeds Advance. The Administrative
Agent will be required to make an Advance only to the extent that it determines
that such Advance will be recoverable from future payments or collections on the
related Specified Lease or Specified Vehicle or otherwise. In making Advances,
the Administrative Agent will assist in maintaining a regular flow of scheduled
payments on the Specified Leases and, accordingly, in respect of the Program
Operating Lease and the
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Senior Notes, rather than guarantee or insure against losses. Accordingly, all
Advances will be reimbursable to the Administrative Agent, without interest, as
described in this prospectus.
FINANCIAL COMPONENT ADVANCES. If an Obligor makes a monthly payment
that is less than the Total Monthly Payment billed with respect to all Obligor
Vehicles for the related Monthly Period, but the payment made is greater than or
equal to the Fixed Charge for all Obligor Vehicles, the Administrative Agent
will advance the entire difference between (a) the amount of the Financial
Component due and (b) the Partial Financial Component Payment (each, a "Full
Financial Component Advance").
If an Obligor makes a monthly payment that is less than the Total
Monthly Payment billed with respect to all Obligor Vehicles for the related
Monthly Period, and the payment made is less than the Fixed Charge for all
Obligor Vehicles, the Administrative Agent will advance an amount equal to
(a)(1) the actual Obligor payment, multiplied by (2) a percentage equal to (A)
the actual Obligor payment divided by (B) the Fixed Charge for all Obligor
Vehicles, less (b) the Partial Financial Component Payment (each, a "Partial
Financial Component Advance"). Notwithstanding the foregoing, the total amount
paid shall not exceed the total amount of the Financial Component due for the
related Monthly Period.
The Administrative Agent will be entitled to reimbursement of all
Partial Financial Component Advances and all Full Financial Component Advances
(collectively, "Financial Component Advances") from (a) subsequent payments made
by the related Obligor in respect of the Total Monthly Payment due or (b) if the
Obligor defaults on its obligation to make the entire Total Monthly Payment due
or fails to make the entire Total Monthly Payment due within 180 days after the
date of billing, from Available Funds as part of the Payment Date Advance
Reimbursement on the Payment Date in the Collection Period immediately
succeeding the Collection Period in which that default occurred or that 180-day
period ended.
SALES PROCEEDS ADVANCES. If, during a Collection Period, the
Administrative Agent has not sold a Specified Vehicle that became an Expired
Vehicle during that Collection Period, on the related Deposit Date the
Administrative Agent will advance the Securitization Value of the related
Specified Lease to the Trust (each, a "Sales Proceeds Advance").
After the Administrative Agent makes a Sales Proceeds Advance for an
Expired Vehicle, the Trust will have no claim against or interest in that
Expired Vehicle or any Sales Proceeds resulting from its sale or other
disposition except with respect to Residual Value Surplus. If the Administrative
Agent sells an Expired Vehicle after making a Sales Proceeds Advance, the Trust
will retain the Sales Proceeds Advance and the Administrative Agent will retain
the Sales Proceeds up to the Securitization Value of the related Specified
Lease, and will deposit the Residual Value Surplus into the SUBI Collection
Account, which will be transferred on the related Deposit Date to the Residual
Value Surplus Account.
If the Administrative Agent has not sold an Expired Vehicle within 270
days after it has made a Sales Proceeds Advance, it will be reimbursed for that
Sales Proceeds Advance from the SUBI Collection Account. Within six months of
receiving that reimbursement, if the related Specified Vehicle has not been
sold, the Administrative Agent shall cause that Specified Vehicle to be sold at
auction and shall remit the proceeds associated with the disposition of that
Specified Vehicle to the SUBI Collection Account.
INSURANCE ON THE SPECIFIED VEHICLES
Each Specified Lease will indicate whether Ryder or the related Obligor
will be required to maintain in full force and effect during the related Lease
Term a comprehensive collision and physical damage insurance policy covering the
actual cash value of the related Specified Vehicle and naming the Origination
Trustee, on behalf of the Origination Trust, as loss payee. Additionally, either
Ryder or the related Obligor will be required to maintain vehicle liability
insurance in amounts equal to the greater of the amount prescribed by applicable
state law or industry standards as set forth in the related Specified Lease,
naming the Origination Trust or Origination Trustee, on behalf of the
Origination Trust, as an additional insured. Because Obligors may choose their
own insurers to provide the required coverage, the actual terms and conditions
of their policies may vary. If an Obligor fails to obtain or maintain the
required insurance, the related Specified Lease will be in default and the
Administrative Agent may either obtain insurance on behalf of, and at the
expense of, the Lessee or deem the related Lease in default. In that event, it
is the practice of the Administrative Agent to repossess the related Specified
Vehicle.
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Ryder does not require Obligors to carry credit disability, credit life
or credit health insurance or other similar insurance coverage that provides for
payments to be made on the Specified Leases on behalf of such Obligors in the
event of disability or death. To the extent that such insurance coverage is
obtained on behalf of an Obligor, payments received in respect of such coverage
may be applied to payments on the related Specified Lease to the extent that
such Obligor's beneficiary chooses to do so.
REALIZATION UPON CHARGED-OFF SPECIFIED LEASES
The Administrative Agent will use commercially reasonable efforts to
repossess and liquidate Defaulted Vehicles. Such liquidation may be effected
through repossession of that Defaulted Vehicles and their disposition through
sale, or the Administrative Agent may take any other action permitted by
applicable law. The Administrative Agent may enforce all rights of the lessor
under the related Default Termination Lease, sell that Defaulted Vehicle in
accordance with such Default Termination Lease and commence and pursue any
proceedings in connection with such Default Termination Lease. In connection
with any such repossession, the Administrative Agent will follow such practices
and procedures as it deems necessary or advisable and as are normal and usual in
the servicing of full-service operating truck, tractor and trailer leases, and
in each case in compliance with applicable law, and to the extent more exacting,
the practices and procedure used by the Administrative Agent in respect of any
leases serviced by it for its own account. The Administrative Agent will be
responsible for all costs and expenses incurred in connection with the sale or
other disposition of Defaulted Vehicles, but will be entitled to reimbursement
to the extent such costs constitute Disposition Expenses or are expenses
recoverable under an applicable insurance policy. Proceeds from the sale or
other disposition of repossessed Specified Vehicles will constitute Termination
Proceeds and will be deposited into the SUBI Collection Account. To the extent
not otherwise covered by Sales Proceeds or Termination Proceeds, the
Administrative Agent will be entitled to reimbursement of all Disposition
Expenses from amounts on deposit in the Residual Value Surplus Account upon
presentation to the Indenture Trustee of an officer's certificate of the
Administrative Agent. Collections in respect of a Collection Period will include
all Sales Proceeds and Termination Proceeds collected during that Collection
Period.
ADMINISTRATIVE AGENT RECORDS, DETERMINATIONS AND REPORTS
The Administrative Agent will retain or cause to be retained all data
- -- including, without limitation, computerized records, operating software and
related documentation -- relating directly to or maintained in connection with
the servicing of the Specified Leases. Upon the occurrence and continuance of an
Administrative Agent Default and termination of the Administrative Agent's
obligations under the Administration Agreement, the Administrative Agent will
use commercially reasonable efforts to effect the orderly and efficient transfer
of the servicing of the Specified Leases to a successor servicer.
The Administrative Agent will perform some monitoring and reporting
functions on behalf of the Transferor, the Trust, the Trustees and the Senior
Noteholders, including the preparation and delivery to the Indenture Trustee,
the Origination Trustee and each Rating Agency, on or before each Determination
Date, of a quarterly certificate setting forth all information necessary to make
all distributions required in respect of the related Collection Period, and the
preparation and delivery of quarterly statements setting forth the information
described under "Certain Information Regarding the Securities--Statements to
Senior Noteholders", and an annual officer's certificate specifying the
occurrence and status of any Administrative Agent Default.
EVIDENCE AS TO COMPLIANCE
Under the Administration Agreement, on or before April 30 of each year,
beginning April 30, 2000, a firm of nationally recognized independent
accountants will furnish the Trust with a statement as to compliance by the
Administrative Agent during the preceding 12 months ended December 31 - or since
the Closing Date in the case of the first such statement.
The Administration Agreement will also provide for the delivery to the
Trust, on or before April 30 of each year, beginning April 30, 2000, of a
certificate, signed by an officer of the Administrative Agent, stating that
there has been no Administrative Agent Default during the preceding 12 months
ended December 31 -- or since the Closing Date in the case of the first such
certificate -- or, if there has been any Administrative Agent Default,
describing each such default.
Copies of such statements and certificates may be obtained by Senior
Noteholders or Senior Note Owners by a request in writing addressed to the
Indenture Trustee or the Owner Trustee, as the case may be, at the related
Corporate Trust Office.
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SERVICING COMPENSATION
The Administrative Agent will be entitled to compensation for the
performance of its servicing and administrative obligations with respect to the
SUBI Assets under the Administration Agreement. The Administrative Agent will be
entitled to receive a fee in respect of the SUBI Assets allocable to the SUBI
Interest and the Retained SUBI Interest equal to, for each month in the related
Collection Period (each, a "Monthly Period"), one-twelfth of the product of (a)
1.00% and (b) the aggregate Securitization Value of all Specified Leases as of
the first day of that Monthly Period (the "Administration Fee"). The
Administration Fee will be payable on each Payment Date in respect of the three
Monthly Periods comprising the related Collection Period and will be calculated
and paid based upon a 360-day year consisting of twelve 30-day months.
The Administrative Agent will also be entitled to additional
compensation in the form of expense reimbursement, administrative fees or
similar charges paid with respect to the Specified Leases including any late
payment fees now or later in effect. The Administrative Agent will pay all
expenses incurred by it in connection with its servicing and administration
activities under the Administration Agreement and will not be entitled to
reimbursement of such expenses, except to the extent such expenses constitute
Disposition Expenses.
The Administration Fee will compensate the Administrative Agent for
performing the functions of a third party servicer of the Specified Leases as an
agent for the Origination Trust under the Administration Agreement, including
collecting and processing payments, responding to inquiries of Obligors,
investigating delinquencies, sending payment statements, paying costs of the
sale or other disposition of Expired Vehicles and Defaulted Vehicles, overseeing
the SUBI Assets and administering the Specified Leases, including making
Advances, accounting for collections, furnishing monthly and annual statements
to the Origination Trustee with respect to distributions and generating federal
income tax information.
ADMINISTRATIVE AGENT RESIGNATION AND TERMINATION
The Administrative Agent may not resign from its obligations and duties
under the Administration Agreement unless it determines that its duties
thereunder are no longer permissible by reason of a change in applicable law or
regulations. No such resignation will become effective until a successor
administrative agent has assumed the Administrative Agent's obligations under
the Administration Agreement. The Administrative Agent may not assign the
Administration Agreement or any of its rights, powers, duties or obligations
thereunder except as otherwise provided therein or except in connection with a
consolidation, merger, conveyance, transfer or lease made in compliance with the
Administration Agreement.
The rights and obligations of the Administrative Agent under the
Administration Agreement may be terminated following the occurrence and
continuance of an Administrative Agent Default, as described under
"--Administrative Agent Defaults".
INDEMNIFICATION BY THE ADMINISTRATIVE AGENT
The Administrative Agent will indemnify the Trustees and their
respective agents for any loss, liability, claim, damage or expense that may be
incurred by them as a result of any act or omission by the Administrative Agent
in connection with the performance of its duties under the Administration
Agreement but only to the extent such liability arose out of the Administrative
Agent's negligence, willful misconduct, bad faith or recklessness.
ADMINISTRATIVE AGENT DEFAULTS
The following are among the events that would constitute
"Administrative Agent Defaults" under the Administration Agreement:
(a) any failure by the Administrative Agent to deliver to (1) the
Origination Trustee for distribution to holders of interests in the
UTI, the SUBIs or any Other SUBI, (2) the Indenture Trustee for
distribution to the Noteholders or (3) the Owner Trustee for
distribution to the Certificateholders, any required payment, which
failure continues unremedied for five Business Days after discovery
thereof by an officer of the Administrative Agent or receipt by the
Administrative Agent of notice thereof from the Indenture Trustee,
the Trustee or Senior Noteholders or Certificateholders evidencing
not less than 25% of the aggregate principal balance of the
Securities, voting together as a single class;
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(b) any failure by the Administrative Agent to duly observe or perform
in any material respect any other of its covenants or agreements in
the Administration Agreement, which failure materially and
adversely affects the rights of holders of interests in the UTI,
the SUBIs or any Other SUBI or the Senior Noteholders or
Certificateholders, and which continues unremedied for 90 days
after written notice thereof is given as described in clause (a)
above;
(c) any failure by the Administrative Agent to deliver to the
Origination Trustee any report required to be delivered to the
Origination Trustee or the Trust pursuant to the Administration
Agreement within 30 Business Days after the date that report is
due;
(d) any failure to deliver to the Indenture Trustee any report required
to be delivered to the Indenture Trustee or the Trust pursuant to
the Basic Documents, which failure continues for 30 Business Days
after discovery of that failure by an officer of the Administrative
Agent or receipt by the Administrative Agent of written notice
thereof from the Indenture Trustee;
(e) any representation, warranty or statement of the Administrative
Agent made in the Administration Agreement, any other Basic
Document to which the Administrative Agent is a party or by which
it is bound or any certificate, report or other writing delivered
pursuant to the Administration Agreement shall prove to be
incorrect in any material respect when made, which failure
materially and adversely affects the rights of holders of interests
in the UTI, the SUBIs or any Other SUBI or the Senior Noteholders
or the Certificateholders, and which failure continues unremedied
for 30 days after written notice thereof is given as described in
clause (a) above;
(f) any failure by the Administrative Agent to maintain or pay when due
any premium in respect of any Contingent and Excess Liability
Insurance Policy; and
(g) the occurrence of certain events of bankruptcy, insolvency,
receivership or liquidation in respect of the Administrative Agent;
provided, however, that the occurrence of any event set forth in
clauses (a) through (f) with respect to either 1999-A SUBI will be
an Administrative Agent Default only with respect to the SUBIs and
will not be an Administrative Agent Default with respect to the UTI
or any Other SUBI.
Notwithstanding the foregoing, a delay in or failure of performance referred to
under clause (b) for a period of 120 days, under clause (c) for a period of 45
Business Days or under clause (e) for a period of 60 days, will not constitute
an Administrative Agent Default if that failure or delay was caused by force
majeure or other similar occurrence. Upon the occurrence of any such event, the
Administrative Agent will not be relieved from using all commercially reasonable
efforts to perform its obligations in a timely manner in accordance with the
terms of the Administration Agreement, and the Administrative Agent will provide
to the Indenture Trustee, the Origination Trustee, the Transferor and the
Securityholders prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations.
Upon the occurrence of any Administrative Agent Default, the sole
remedy available to the holders of the UTI, the SUBIs and any Other SUBIs will
be to remove the Administrative Agent and appoint a successor Administrative
Agent. However, if the commencement of a bankruptcy or similar case or
proceeding were the only default, the Administrative Agent or its
trustee-in-bankruptcy might have the power to prevent that removal. See
"--Removal or Replacement of the Administrative Agent".
TERMINATION
The Administration Agreement will terminate upon the earlier to occur
of (a) the dissolution of the Origination Trust or (b) the discharge of the
Administrative Agent in accordance with the terms of the Administration
Agreement, which will effect a termination only with respect to the SUBI Assets
and not with respect to any other Origination Trust Assets.
REMOVAL OR REPLACEMENT OF THE ADMINISTRATIVE AGENT
Upon the occurrence of an Administrative Agent Default, the Origination
Trustee may, to the extent such Administrative Agent Default relates (a) to all
Origination Trust Assets, upon the direction of the holders of the SUBIs, the
UTI and any Other SUBI -- excluding Ryder, the UTI Beneficiaries or any other
affiliate of the
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Administrative Agent -- terminate all of the rights and obligations of the
Administrative Agent under the Administration Agreement with respect to all
Origination Trust Assets or (b) only to the SUBI Assets, upon the direction of
the holder and pledge of the SUBI Certificates, terminate all of the rights and
obligations of the Administrative Agent under the Administration Agreement with
respect to the SUBI Assets. For purposes of the immediately preceding sentence,
the holder and pledgee of the SUBI Certificates will be the Indenture Trustee
acting at the direction of Senior Noteholders holding not less than 66?% of the
aggregate principal balance of the Senior Notes, so long as any Senior Notes are
outstanding. In each case, the Origination Trustee will effect that termination
by delivering notice thereof to the Administrative Agent, with a copy to each
Rating Agency or any other securities based on any Other SUBIs affected by that
Administrative Agent Default.
Upon the termination or resignation of the Administrative Agent, the
Administrative Agent subject to that termination or removal will continue to
perform its functions as Administrative Agent, in the case of (a) termination,
until the earlier of the date specified in the termination notice or, if no such
date is specified therein, the date of the Administrative Agent's receipt of
such notice, and (b) resignation, until the later of (1) 45 days after the
delivery to the Origination Trustee of the written resignation notice or (2) the
date upon which the resigning Administrative Agent becomes unable to act as
Administrative Agent, as specified in the resignation notice and accompanying
opinion of counsel.
In the event of a termination of the Administrative Agent as a result
of an Administrative Agent Default with respect to the SUBI Assets only, the
Origination Trustee, acting at the direction of the holder and pledgee of the
SUBI Certificates -- which holder for this purpose will be the Indenture
Trustee, acting at the direction of Senior Noteholders holding not less than
66 2/3% of the aggregate principal balance of the Senior Notes -- will appoint a
successor Administrative Agent. The Origination Trustee will have the right to
approve that successor Administrative Agent, and that approval may not be
unreasonably withheld. If a successor Administrative Agent is not appointed by
the effective date of the predecessor Administrative Agent's resignation or
termination, then the Origination Trustee will act as successor Administrative
Agent. If the Origination Trustee is legally unable to act as Administrative
Agent, then the Origination Trustee will be required to appoint, or petition a
court of competent jurisdiction to appoint, any established entity the regular
business of which includes the servicing of truck, tractor and trailer leases as
the successor Administrative Agent.
Upon appointment of a successor Administrative Agent, the successor
Administrative Agent will assume all of the rights and obligations of the
Administrative Agent under the Administration Agreement; provided, however, that
no successor Administrative Agent will have any responsibilities with respect to
the purchase of additional Leases or Vehicles by the Origination Trust or with
respect to making Advances. Any compensation payable to a successor
Administrative Agent may not be in excess of that permitted the predecessor
Administrative Agent unless the holders of the UTI, the SUBIs and any Other
SUBIs, as the case may be, bear such excess costs exclusively. If a bankruptcy
trustee or similar official has been appointed for the Administrative Agent,
that trustee or official may have the power to prevent the Indenture Trustee,
the Owner Trustee, the Senior Noteholders or the Certificateholders from
effecting that transfer of servicing. The predecessor Administrative Agent will
have the right to be reimbursed for any outstanding Advances made with respect
to the SUBI Assets to the extent funds are available therefore in respect of the
Advances made.
MISCELLANEOUS PROVISIONS
AMENDMENT PROVISIONS
GENERAL. For so long as any Senior Notes are outstanding, the Trust's
rights in the SUBI Certificates will be subject to the lien of the Indenture.
The Indenture Trustee will be the holder of the SUBI Certificates for purposes
of determining whether any proposed amendment to the SUBI Trust Agreement, the
Administration Agreement or the Trust Agreement will materially adversely affect
the interests of the holders of the SUBI Certificates.
AMENDMENT OF THE SUBI TRUST AGREEMENT AND THE ADMINISTRATION AGREEMENT.
Each of the SUBI Trust Agreement and the Administration Agreement may be amended
without the consent of the holders of the Senior Notes, the Certificateholders,
the SUBI Certificates, the UTI Certificates or any Other SUBI Certificates, as
the case may be, to cure any ambiguity, correct or supplement any provision
therein that may be inconsistent with any other provision therein, add any other
provisions with respect to matters or questions arising under the related
agreement that are not inconsistent with the provisions of the respective
agreements or add or amend any provision that provides additional rights to any
of such holders; provided, that any such action will not, in the good faith
judgment
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of the parties thereto, materially and adversely affect the interest of any of
such holders, or upon the delivery of an opinion of counsel to the effect that
such amendment will not adversely and materially affect the interest of any such
holder. Each of the SUBI Trust Agreement and the Administration Agreement may
also be amended from time to time as it relates to either 1999-A SUBI, by the
parties thereto, including to change the manner in which the Residual Value
Surplus Account or the Reserve Fund is funded, including the elimination of the
Residual Value Surplus Account or the Reserve Fund, or to change the remittance
schedule for depositing Collections and other amounts into the SUBI Collection
Account, (a) upon confirmation from each Rating Agency to the effect that such
amendment would not cause its then-current rating on the Senior Notes or
Certificates to be qualified, reduced or withdrawn or (b) upon receipt of the
consent of Senior Noteholders holding at least a majority of the aggregate
principal balance of the Senior Notes and, to the extent affected thereby, the
consent of Certificateholders holding at least a majority of the aggregate
principal balance of the Certificates, for the purpose of adding any provision
to, or changing in any manner or eliminating any provision of, the agreements or
modifying in any manner the rights of the Senior Notes or Certificates;
provided, however, that (1)(A) no such amendment may increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments in respect of the SUBI Interest or the SUBI Certificates, distributions
required to be made on the Senior Notes or the Certificates or the Interest Rate
or the Certificate Rate and (B) no amendment of any type shall reduce the
percentage of the aggregate principal amount of the Senior Notes and the
Certificates required to consent to any such amendment, in each case without the
consent of all the holders or 100% of all outstanding Senior Notes or
Certificates, as the case may be, and (2) an opinion of counsel as to certain
tax matters is delivered. To the extent that any such amendment also relates to
or affects the UTI or any Other SUBI, such amendment will require the consent of
the holders affected thereby. Notwithstanding the foregoing, the SUBI Trust
Agreement and the Administration Agreement may be amended at any time by the
parties thereto to the extent reasonably necessary to assure that none of the
Origination Trust, the Trust or the Transferor will be classified as an
association, or a publicly traded partnership, taxable as a corporation for
federal income tax purposes.
AMENDMENT OF TRUST AGREEMENT. The Trust Agreement may be amended by the
Transferor and the Owner Trustee without the consent of any of the Senior
Noteholders or Certificateholders to cure any ambiguity, correct or supplement
any provision herein that may be inconsistent with any other provision in the
Trust Agreement, add any other provisions with respect to matters or questions
arising under the Trust Agreement that are not inconsistent with the provisions
of the Trust Agreement or add or amend any provision in the agreement in
connection with permitting transfers of the Subordinated Notes or the
Certificates; provided, however, that such action shall not, as evidenced by an
opinion of counsel, materially adversely affect the interests of the holders of
the SUBI Certificates or the Retained SUBI Certificates -- which, so long as any
Senior Notes are outstanding, shall include the Indenture Trustee -- or any the
Senior Notes or Certificates.
The Trust Agreement may also be amended from time to time by the
Transferor and the Owner Trustee, (a) with prior written notice to each Rating
Agency and confirmation from each Rating Agency that such amendment would not
cause the then-current ratings assigned to the Senior Notes and the Certificates
to be qualified, reduced or withdrawn, (b) with the consent of the Senior
Noteholders holding at least a majority of the aggregate principal balance of
the Senior Notes and (c) to the extent affected thereby, the consent of (a) the
holders of the Subordinated Notes holding at least a majority of the aggregate
principal balance of the Subordinated Notes and (2) Certificateholders holding
at least a majority of the aggregate principal balance of the Certificates, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Trust Agreement or of modifying in any manner the
rights of the Senior Noteholders, the Certificateholders or the holders of the
Subordinated Notes. No such amendment shall, however, (a) increase or reduce in
any manner the amount of, or accelerate or delay the timing of, distributions
that are required to be made on the Notes or the Certificates or (b) reduce the
percentage of the Senior Noteholders, holders of the Subordinated Notes or
Certificateholders required to consent to any such amendment, without the
consent of the holders of 100% of all outstanding Certificates other than the
Transferor Certificate, and provided, further that an opinion of counsel shall
be furnished to the Indenture Trustee and the Owner Trustee to the effect that
such amendment shall not (1) affect the treatment of the Senior Notes as debt
for federal income tax purposes, (2) be deemed to cause a taxable exchange of
the Senior Notes for federal income tax purposes or (3) cause the Trust or the
SUBI Certificates to be classified as an association, or a publicly traded
partnership, taxable as a corporation for federal income tax purposes.
Notwithstanding the foregoing, the Trust Agreement may be amended at any time by
the parties thereto to the extent reasonably necessary to assure that none of
the Origination Trust, the Trust or the Transferor will be classified as an
association, or a publicly traded partnership, taxable as a corporation for
federal income tax purposes.
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The Trust Agreement may also be amended from time to time to
approve additional Trust activities and purposes upon the request of holders of
at least 75% of the outstanding balance of the Certificates provided, however,
that any such amendment will also require (a) that each Rating Agency have
delivered a letter to the effect that the activities and purposes would not
cause its then-current ratings of the Senior Notes or the Certificates to be
qualified, reduced or withdrawn, and (b) approval by holders of at least 75% of
the outstanding balance of the Senior Notes, or if the Senior Notes are no
longer outstanding, by the Subordinated Noteholder. See "The Trust--Formation".
The Trust Agreement will require the Owner Trustee to give the
Certificateholders 30 days' written notice of any proposed supplement to the
Indenture which would materially adversely affect the Certificateholders if the
consent of the Senior Noteholders is not required or any other amendment or
supplement to any other Basic Document unless the Owner Trustee is furnished
with an opinion of counsel that such amendment or supplement would not
materially adversely affect the Certificateholders. The Trust Agreement provides
that the Owner Trustee will not enter into such amendment unless
Certificateholders holding 25% or more of the aggregate principal balance of the
Certificates consent in writing.
AMENDMENT OF INDENTURE. Without the consent of the Senior Noteholders
but with prior notice to each Rating Agency, the Owner Trustee, on behalf of the
Trust, and the Indenture Trustee, upon request by the Trust, may execute a
supplemental indenture for the purpose of adding to the covenants of the Trust,
curing any ambiguity, correcting or supplementing any provision that may be
inconsistent with any other provision or adding any other provision with respect
to matters or questions arising under the Indenture that will not be
inconsistent with other provisions of the Indenture.
Without the consent of the holder of each outstanding Senior Note
affected thereby, no supplemental indenture may:
o change the Final Payment Date of, or Interest Rate on, reduce the
principal amount thereof, or the Redemption Price with respect
thereto or change any place of payment where, or the coin or
currency in which, the Senior Notes or the interest thereon is
payable:
o impair any right to institute suit for the enforcement of certain
provisions of the Indenture regarding payment:
o reduce the percentage of the aggregate principal balance of the
Senior Notes the consent of the holders of which is required for
any supplemental indenture or for any waiver of compliance with
certain provisions of the Indenture or of certain defaults
thereunder and their consequences as provided for therein:
o modify or alter the provisions of the Indenture regarding the
voting of Senior Notes held by the Transferor, the Administrative
Agent or any of their respective affiliates or any obligor on the
Senior Notes:
o reduce the percentage of the aggregate principal balance of Senior
Notes the consent of the holders of which is required to direct the
Indenture Trustee to sell or liquidate the Trust Estate, if the
proceeds of that sale would be insufficient to pay the aggregate
principal balance and accrued but unpaid interest on the Senior
Notes:
o decrease the percentage of the aggregate principal balance of
Senior Notes required to amend the sections of the Indenture that
specify the applicable percentage of the aggregate principal
balance of Senior Notes necessary to amend the Indenture or the
other Basic Documents; or
o 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 Senior Notes or, except as otherwise permitted
by or contemplated in the Indenture, terminate the lien of the
Indenture on any such collateral or deprive the holder of any
Senior Note of the security afforded by the lien of the Indenture.
The Trust and the Indenture Trustee may also enter into supplemental
indentures, with the consent of holders of at least a majority of the aggregate
principal balance of the Senior Notes, and with written notice to each Rating
Agency, for the purpose of adding any provision to, changing in any manner or
eliminating any provision of the Indenture or for the purpose of modifying in
any manner the rights of the Senior Noteholders; provided, that (a) that action
will not, (1) as evidenced by an opinion of counsel, materially adversely affect
the interests of any Senior
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Noteholder and (2) as confirmed by each Rating Agency, cause the then-current
ratings assigned to the Senior Notes or the Certificates to be qualified,
reduced or withdrawn and (2) an opinion of counsel as to certain tax matters is
delivered.
AMENDMENT OF THE PROGRAM OPERATING LEASE. The Program Operating Lease
may be amended without the consent of the Senior Noteholders or the
Certificateholders; provided, however, that (a) that amendment may not, as
evidenced by an opinion of counsel, materially adversely affect the interests of
the Senior Noteholders or the Certificateholders, unless 100% of the Senior
Noteholders and Certificateholders materially adversely affected consent
thereto, (b) as confirmed by each Rating Agency, that amendment will not cause
the then-current rating assigned to any Senior Notes or the Certificates to be
qualified, withdrawn or reduced and (c) an opinion of counsel as to certain tax
matters is delivered. Notwithstanding the foregoing, the Program Operating Lease
may be amended at any time by the parties thereto to the extent reasonably
necessary to ensure that none of Origination Trust, the Trust or the Transferor
will be classified as an association, or a publicly traded partnership, taxable
as a corporation for federal income tax purposes.
SUBI CERTIFICATE TRANSFER AGREEMENT. The SUBI Certificate Transfer
Agreement may be amended from time to time by the parties thereto.
ISSUER SUBI CERTIFICATE TRANSFER AGREEMENT. The Issuer SUBI Certificate
Transfer Agreement may be amended from time to time by the parties thereto.
BANKRUPTCY PROVISIONS
THE UTI BENEFICIARIES AND THE ORIGINATION TRUST. The Trustees, the UTI
Beneficiaries, any Paying Agent, the Transferor, the Trust Agent, Ryder, the
Administrative Agent, each holder of an interest in the SUBI, an Other SUBI or
the UTI, and each Securityholder, by accepting the related Security
(collectively, the "Non-Petition Parties") will covenant that for a period of
one year and one day after payment in full of all amounts due to each holder or
pledgee of an interest in the UTI, the SUBIs or any Other SUBI, they will not
institute, or join in instituting, any bankruptcy, reorganization, insolvency or
liquidation proceeding or other similar proceeding against either UTI
Beneficiary or the Origination Trust. Notwithstanding the foregoing, each
Securityholder, the Indenture Trustee and the Owner Trustee may institute or
join any such proceeding if 100% of the holders of the SUBI and any Other SUBIs
consent, excluding the UTI Beneficiaries, the Transferor and any of their
respective affiliates. Each pledgee of the UTI, the SUBIs or any Other SUBI must
give a similar non-petition covenant.
THE TRANSFEROR AND THE TRUST. Each of the Administrative Agent, the
Transferor, the Owner Trustee, the Indenture Trustee and each Securityholder, by
accepting the related Security, will covenant not to institute or join in
instituting any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other similar proceeding against the Transferor or
the Trust for a period of one year and one day after the Senior Notes and the
Certificates have been paid in full; provided, however, that 100% of the Senior
Noteholders, or, if no Senior Notes are then outstanding, the Subordinated
Noteholder, or, if no Notes are then outstanding, 100% of the
Certificateholders, in each case excluding the Transferor and any of its
affiliates, may at any time institute or join in instituting any bankruptcy,
reorganization, insolvency or liquidation proceeding against the Transferor or
the Trust.
SENIOR NOTES OR CERTIFICATES OWNED BY THE TRUST, TRANSFEROR,
ADMINISTRATIVE AGENT OR THEIR AFFILIATES
Any Senior Notes or Certificates owned by the Trust, the Transferor,
the Administrative Agent or any of their respective affiliates will be entitled
to benefits under the Indenture or the Trust Agreement, as the case may be,
equally and proportionately to the benefits afforded other owners of the Senior
Notes or Certificates, respectively, except that such Senior Notes or
Certificates will be deemed not to be outstanding for the purpose of determining
whether the requisite percentage of Senior Noteholders or Certificateholders, as
the case may be, have given any request, demand, authorization, direction,
notice, consent or other action under the Basic Documents.
FEES AND EXPENSES
THE ORIGINATION TRUSTEE. The Origination Trustee will be entitled to
reasonable compensation for its services with respect to the SUBI Assets, which
will be paid by the Administrative Agent, the amount of which will be agreed
upon from time to time by the Origination Trustee and the Administrative Agent.
THE ADMINISTRATIVE AGENT. As more fully described under "--The
Administration Agreement--Servicing Compensation", as compensation for the
servicing of the SUBI Assets and administering the distribution of funds in
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respect thereof, the Administrative Agent will be entitled to receive the
Administration Fee on each Payment Date, together with reimbursement of fees and
expenses and any late payment fees now or later in effect or similar charges
paid with respect to the Specified Leases.
The Administrative Agent will pay all expenses incurred by it in the
performance of its duties under the Administration Agreement, including fees and
disbursements of independent accountants, taxes imposed on the Administrative
Agent and expenses incurred in connection with distributions and reports to the
Trustees. The Administrative Agent will pay the fees and expenses of the
Trustees.
THE INDENTURE TRUSTEE. As more fully described under "Additional
Document Provisions--The Indenture--Compensation and Indemnity", the
Administrative Agent or the Administrator will pay the Indenture Trustee
compensation for its services and reimburse it for its reasonable expenses
relating thereto.
THE OWNER TRUSTEE AND PAYING AGENT. The Administrator will pay the
Owner Trustee and each Paying Agent such fees as have been agreed upon among the
Transferor, the Administrator and the Owner Trustee or the Paying Agent, and
will reimburse the Owner Trustee and each Paying Agent for their reasonable
expenses. The Administrator will not be entitled to be reimbursed from the Trust
Estate for the payment of such expenses.
GOVERNING LAW. The SUBI Trust Agreement and the Trust
Agreement will be governed by the laws of the State of Delaware. The
Administration Agreement, the Indenture, the SUBI Certificate Transfer
Agreement, the Issuer SUBI Certificate Transfer Agreement and the Program
Operating Lease will be governed by the laws of the State of New York.
CERTAIN LEGAL ASPECTS OF THE ORIGINATION TRUST AND THE SUBIs
THE ORIGINATION TRUST
GENERAL
The Origination Trust is a business trust under Delaware law. In a
business trust, the trust property is managed for the profit of the
beneficiaries, as opposed to a common law "asset preservation" trust, where the
trustee is charged with the mere maintenance of trust property. The principal
requirement for the formation of a business trust in Delaware is the execution
of a trust agreement and the filing of a Certificate of Trust with the Secretary
of State of the State of Delaware. The Origination Trust has been so formed. The
Origination Trust has also made trust filings or obtained certificates of
authority to transact business in some states where, in the judgment of the
Administrative Agent, such action may be required.
Because the Origination Trust has been registered as a business trust
for Delaware and other state law purposes, it, like a corporation, may be
eligible to be a debtor in its own right under the United States Bankruptcy Code
(the "Bankruptcy Code"), as further described under "--Insolvency-Related
Matters". To the extent that the Origination Trust may be eligible for relief
under the Bankruptcy Code or similar applicable state laws (the "Insolvency
Laws"), the Origination Trustee is not authorized to commence a case or
proceeding thereunder. Each of the Origination Trustee, the UTI Beneficiaries
and the holders from time to time of the UTI, the SUBIs and any Other SUBI have
agreed not to institute a case or proceeding against the Origination Trust under
any Insolvency Law for a period of one year and one day after payment in full of
all distributions to holders of the UTI, the SUBIs and any Other SUBI under the
Origination Trust Agreement. See "Additional Document Provisions--Miscellaneous
Provisions--Bankruptcy Provisions".
ALLOCATION OF ORIGINATION TRUST LIABILITIES
The Origination Trust Assets may in the future be comprised of several
portfolios of Other SUBI Assets, together with the SUBI Assets and the UTI
Assets. The UTI Beneficiaries may in the future pledge the UTI as security for
obligations to third-party lenders, and may in the future create and sell or
pledge Other SUBIs in connection with other financings. The Origination Trust
Agreement will permit the Origination Trust, in the course of its activities, to
incur certain liabilities relating to its assets other than the SUBI Assets, or
relating to its assets generally. Pursuant to the Origination Trust Agreement,
as among the beneficiaries of the Origination Trust, an Origination Trust
liability relating to a particular portfolio of Origination Trust Assets will be
allocated to and charged against the portfolio of Origination Trust Assets to
which it belongs. Origination Trust liabilities incurred with respect to the
Origination Trust Assets generally will be borne pro rata among all portfolios
of Origination
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Trust Assets. The Origination Trustee and the beneficiaries of the Origination
Trust, including the Trust, will be bound by that allocation. In particular, the
Origination Trust Agreement will require the holders from time to time of the
UTI Certificates and any Other SUBI Certificates to waive any claim they might
otherwise have with respect to the SUBI Assets and to fully subordinate any
claims to the SUBI Assets in the event that such waiver is not given effect.
Similarly, by virtue of holding Senior Notes or a beneficial interest therein,
Senior Noteholders, and Note Owners will be deemed to have waived any claim they
might otherwise have with respect to the UTI Assets or any Other SUBI Assets.
See "Additional Document Provisions--The SUBI Trust Agreement--The SUBIs, Other
SUBIs and the UTI".
The Origination Trust Assets are located in several states, the tax
laws of which vary. Additionally, the Origination Trust may in the future own
Leases and Vehicles located in states other than the states in which it conducts
business as of the date of this prospectus. In the event any state or locality
imposes a tax on the Origination Trust at the entity level, the UTI
Beneficiaries have agreed to indemnify the holders of the SUBI Certificates, the
Retained SUBI Certificates and each Other SUBI Certificates for the full amount
of such taxes. Should the UTI Beneficiaries fail to fulfill their respective
indemnification obligations, amounts otherwise distributable to them as holders
of the UTI Certificates will be applied to satisfy such obligations. However, it
is possible that Senior Noteholders could incur a loss on their investment in
the event the UTI Beneficiaries did not have sufficient assets available,
including distributions in respect of the UTI, to satisfy such state or local
tax liabilities.
The Origination Trust Agreement provides for the UTI Beneficiaries to
be liable as if the Origination Trust were a partnership and the UTI
Beneficiaries were general partners of the partnership to the extent necessary
after giving effect to the payment of liabilities allocated severally to the
holders of the SUBI Certificates, the Retained SUBI Certificates and any Other
SUBI Certificates. However, it is possible that the Senior Noteholders and
Certificateholders could incur a loss on their investment to the extent any such
claim were allocable to the Trust as the holder of the Vehicle SUBI Certificate
or the pledgee of the Lease SUBI Certificate, either because a lien arose in
connection with the SUBI Assets or in the event the UTI Beneficiaries did not
have sufficient assets available, including distributions in respect of the UTI,
to satisfy such claimant or creditor in full.
THE SUBIs
The SUBIs will evidence a beneficial interest in the related SUBI
Assets. The SUBIs will represent neither a direct legal interest in the related
SUBI Assets, nor an interest in any Origination Trust Assets other than the
related SUBI Assets. Under the allocation of Origination Trust liabilities
described under "Additional Document Provisions--The SUBI Trust Agreement--The
SUBIs, Other SUBIs and the UTI", payments made on or in respect of such other
Origination Trust Assets will not be available to make payments on the Senior
Notes or to cover expenses of the Origination Trust allocable to the SUBI
Assets. Any liability to third parties arising from or in respect of a Specified
Lease or a Specified Vehicle will be borne by the holders of the SUBI Interest,
including the Trust, and the Retained SUBI Interest. If any such liability
arises from a Lease or Vehicle that is an Other SUBI Asset or an UTI Asset, the
SUBI Assets will not be subject to such liability.
Because the Trust's primary asset will be the Vehicle SUBI Certificate
and its rights as a pledgee of the Lease SUBI Certificate, the Trust, and,
accordingly, the Indenture Trustee, will have an indirect beneficial ownership
interest, rather than a security interest, in the SUBI Assets allocable to the
SUBI Interest. Except as otherwise described below or under "Certain Legal
Aspects of the Specified Leases and Specified Vehicles", generally the Trust
will not have a perfected security interest in the SUBI Assets, and in no
circumstances will the Trust have a direct ownership or perfected security
interest in any Specified Vehicle.
The Trust will generally be deemed to own the Vehicle SUBI Certificate
and, through such ownership, to have an indirect beneficial ownership interest
in the Specified Vehicles. If a court of competent jurisdiction were to
recharacterize the sale of the Vehicle SUBI Certificate and the SUBI Interest
evidenced thereby to the Trust, the Trust, or, during the term of the Indenture,
the Indenture Trustee, could instead be deemed to have a perfected security
interest in the Vehicle SUBI Certificate, and certain rights susceptible of
perfection under the UCC, but in no event would the Trust or the Indenture
Trustee be deemed to have a perfected security interest in the Specified
Vehicles.
Because the Trust will not directly own the SUBI Assets, and because
its interest therein will generally be an indirect beneficial ownership
interest, perfected liens of third-party creditors of the Origination Trust in
SUBI
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Assets will take priority over the interests of the Trust and the Indenture
Trustee in the SUBI Assets. Therefore, a general creditor of the Origination
Trust may obtain a lien on one or more SUBI Assets, regardless of whether its
claim would be allocated to such SUBI Assets under the terms of the Origination
Trust Agreement. Such liens could include liens arising under various federal
and state criminal statutes, certain liens in favor of the Pension Benefit
Guaranty Corporation and judgment liens resulting from successful claims against
the Origination Trust arising from the operation of the Specified Vehicles. See
"Risk Factors--Liens may be imposed on the trust's assets due to ERISA
liabilities" and "--Vicarious tort liability may result in a loss of your
investment" and "Certain Legal Aspects of the Specified Leases and the Specified
Vehicles--Vicarious Tort Liability" for a further discussion of these risks.
INSOLVENCY-RELATED MATTERS
As described under "Additional Document Provisions--The SUBI Trust
Agreement--The SUBIs, Other SUBIs and the UTI" and "--The SUBIs", each holder or
pledgee of the UTI Certificates and any Other SUBI Certificate will be required
to expressly disclaim any interest in the SUBI Assets and to fully subordinate
any claims to the SUBI Assets in the event that disclaimer is not given effect.
Although no assurances can be given, in the unlikely event of the bankruptcy of
RTR I LP, the Transferor believes that the SUBI Assets would not be treated as
part of RTR I LP's bankruptcy estate and that, even if they were so treated, the
subordination by the holders and pledgees of the UTI Certificates and any Other
SUBI Certificate would be enforceable. In addition, as described under "Risk
Factors--A bankruptcy of the transferor or administrative agent could delay or
limit payments on the senior notes", each of RTR I LP, the Origination Trust, or
the Origination Trustee when acting on its behalf, and the Transferor has taken
steps in structuring the transactions described herein and has undertaken to act
throughout the life of such transactions in a manner intended to ensure that in
the event a voluntary or involuntary case is commenced by or against Ryder under
the Insolvency Laws, the separate legal existence of each of Ryder, on the one
hand, and the Origination Trust, RTR I LP and the Transferor, on the other hand,
will be maintained such that none of the respective assets and liabilities of
the Origination Trust, RTR I LP or the Transferor should be consolidated with
those of Ryder.
With respect to RTR I LLC and RTR III LLC, these steps include their
creation as separate limited liability companies under limited liability company
agreements containing certain limitations, including, the requirement that each
must have at all times a managing member that is a corporation with at least two
independent directors, and restrictions on the nature of their businesses and
operations and on their ability to commence a voluntary case or proceeding under
any Insolvency Law without the unanimous affirmative vote of all members,
including each independent member. With respect to RTR I LP and the Transferor,
these steps include their creation as separate, special purpose limited
partnerships, pursuant to limited partnership agreements containing certain
limitations (including, restrictions on the nature of their respective
businesses and on their ability to commence a voluntary case or proceeding under
any Insolvency Law without the unanimous affirmative vote of all members of
their respective general partners, including each independent director of each
managing member).
There can be no assurance, however, that the limitations on the
activities of RTR I LP, the Origination Trust and the Transferor, as well as the
restrictions on their abilities to obtain relief under Insolvency Laws or lack
of eligibility thereunder, as described above, would prevent a court from
concluding that their assets and liabilities should be consolidated with those
of Ryder, if Ryder becomes the subject of a case or proceeding under any
Insolvency Law. On the Closing Date, Brown & Wood LLP, as special counsel to the
Transferor, will deliver an opinion based on a reasoned analysis of analogous
case law - although there is no precedent based on directly similar facts - to
the effect that, subject to certain facts, assumptions and qualifications
specified in the opinion, under present reported decisional authority and
applicable statutes to federal bankruptcy cases, if Ryder were to become a
debtor in a case under the Bankruptcy Code, it would not be a proper exercise by
a court of its equitable discretion (a) to disregard the separate legal
existence of any of the Origination Trust, RTR I LP or the Transferor from that
of Ryder and (b) to order the substantive consolidation of the assets and
liabilities of any of the Origination Trust, RTR I LP or the Transferor with the
assets and liabilities of Ryder. Among other things, that opinion will assume
that each of the Origination Trust, or the Origination Trustee when acting on
its behalf, RTR I LP and the Transferor will follow certain procedures in the
conduct of its affairs, including maintaining separate records and books of
account from those of Ryder, not commingling its respective assets with those of
Ryder, doing business in a separate office from Ryder and not holding itself out
as having agreed to pay, or being liable for, the debts of Ryder. In addition,
that opinion will assume that except as expressly provided by the Origination
Trust Agreement and the Administration Agreement -- each of which contains terms
and conditions consistent with those that would be arrived at on an arm's length
basis between unaffiliated entities in the belief of the parties thereto --
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Ryder generally will not guarantee the obligations of the Origination Trust, RTR
I LP or the Transferor to third parties, and will not conduct the day-to-day
business or activities of any thereof, other than in its capacity as
Administrative Agent acting under and in accordance with the Administration
Agreement. Each of Ryder, the Origination Trust, RTR I LP and the Transferor
intends to follow and has represented that it will follow these and other
procedures related to maintaining the separate identities and legal existences
of each of the Origination Trust, RTR I LP and the Transferor. Such a legal
opinion, however, will not be binding on any court.
If a case or proceeding under any Insolvency Law were to be commenced
by or against any of Ryder, the Origination Trust, RTR I LP or the Transferor,
if a court were to order the substantive consolidation of the assets and
liabilities of any of such entities with those of Ryder or if an attempt were
made to litigate any of the foregoing issues, delays in distributions on the
SUBI Certificates, and possible reductions in the amount of such distributions,
to the Trust -- either directly or, if the Program Operating Lease remains in
effect, indirectly to the extent resulting in delayed or reduced Program
Operating Lease Payments from the Transferor to the Trust -- and therefore to
the Senior Noteholders, could occur. In addition, the SUBI Trust Agreement
provides that if the Transferor becomes bankrupt or insolvent or the Trust is
dissolved -- which could occur as a result of the bankruptcy of the Transferor
- -- the SUBI will be terminated and the SUBI Trust Agreement will terminate with
respect to the SUBI. In each case, the Origination Trustee will be required to
distribute the SUBI Assets to the holders of the SUBI Certificates. Because the
Trust has pledged its rights in and to the SUBI Certificates to the Indenture
Trustee, such distribution would be made to the Indenture Trustee, which would
be responsible for retitling the Specified Vehicles. The cost of that retitling
would reduce amounts payable from the SUBI Assets that are available for
payments of interest on and principal of the Senior Notes, and in that event,
the Senior Noteholders could suffer a loss on their investment.
RTR I LP will treat its conveyance of the SUBI Certificates to the
Transferor as an absolute sale, transfer and assignment of all of its interest
therein for all purposes. However, if a case or proceeding under any Insolvency
Law were commenced by or against RTR I LP, and RTR I LP as debtor-in-possession
or a creditor, receiver or bankruptcy trustee of RTR I LP were to take the
position that the sale, transfer and assignment of the SUBI Certificates by RTR
I LP to the Transferor should instead be treated as a pledge of the SUBI
Certificates to secure a borrowing by RTR I LP, delays in payments of proceeds
of the SUBI Certificates to the Trust, and therefore to the Senior Noteholders,
could occur or, should the court rule in favor of that position, reductions in
the amount of such payments could result. On the Closing Date, Brown & Wood LLP,
as special counsel to the Transferor, will deliver an opinion to the effect
that, subject to certain facts, assumptions and qualifications specified
therein:
o In the event that the Transferor were to become a debtor in a case
under the Bankruptcy Code subsequent to the sale, transfer and
assignment of the Vehicle SUBI Certificate to the Trust, the sale,
transfer and assignment of the Vehicle SUBI Certificate from the
Transferor would be characterized as an absolute sale, transfer and
assignment of the SUBI Certificate from the Transferor to the
Trust, and the Vehicle SUBI Certificate and the proceeds thereof
would not be property of the Transferor's bankruptcy estate;
o In the event that RTR I LP were to become a debtor in a case under
the Bankruptcy Code subsequent to the sale, transfer and assignment
of the SUBI Certificates to the Transferor, the sale, transfer and
assignment of the SUBI Certificates from RTR I LP would be
characterized as an absolute sale, transfer and assignment of the
SUBI Certificates from RTR I LP to the Transferor, and the SUBI
Certificates and the proceeds thereof would not be property of RTR
I LP's bankruptcy estate; and
o In the event that Ryder were to become a debtor in a case under the
Bankruptcy Code subsequent to Ryder's sale, transfer and assignment
of the Specified Vehicles and Specified Leases to the Origination
Trust, the sale, transfer and assignment of the Specified Vehicles
and Specified Leases from Ryder would be characterized as an
absolute sale, transfer and assignment of the Specified Vehicles
and Specified Leases from Ryder to the Origination Trust, and the
Specified Vehicles, the Specified Leases or the proceeds thereof
would not be property of the Transferor 's bankruptcy estate.
As indicated above, however, such a legal opinion is not binding on any court.
As a precautionary measure, the Transferor will take the actions
requisite to obtaining a security interest in the SUBI Certificates as against
RTR I LP which the Transferor will assign to the Trust and the Trust will assign
to the Indenture Trustee. The Indenture Trustee will perfect its security
interest in each SUBI Certificate, which will each be a "certificated security"
under the UCC, by possession. Accordingly, if the conveyance of the SUBI
Certificates by RTR I LP to the Transferor were not respected as an absolute
sale, transfer and assignment, the Transferor, and ultimately the Trust and the
Indenture Trustee as successors in interest, should be treated as a secured
creditor of RTR I LP, although a case or proceeding under any Insolvency Law
with respect to RTR I LP
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could result in delays or reductions in distributions on the SUBI Certificates
as indicated above, notwithstanding such perfected security interest.
In the event that the Administrative Agent were to become subject to a
case under the Bankruptcy Code, some payments made within one year of the
commencement of such case, including Advances, Reallocation Payments and
payments made with respect to the Titling Grace Period Vehicles which were not
properly retitled during the Titling Grace Period, may be recoverable by the
Administrative Agent as debtor-in-possession or by a creditor or a trustee in
bankruptcy as a preferential transfer from the Administrative Agent. See "Risk
Factors--A bankruptcy of the transferor or the administrative agent could delay
or limit payments on the senior notes".
CERTAIN LEGAL ASPECTS OF THE SPECIFIED LEASES AND THE SPECIFIED VEHICLES
BACK-UP SECURITY INTERESTS
Because the Trust will own the Vehicle SUBI Certificate, the Trust will
have an indirect beneficial interest, rather than a security interest, in the
Vehicle SUBI Assets. The Trust also will be a pledgee of the Lease SUBI
Certificate held by Transferor which in turn will have an indirect beneficial
interest, rather than a security interest, in the Lease SUBI Assets. Except as
otherwise described below, the Owner Trustee generally will not have a perfected
security interest in the property of the Trust or the SUBI Assets and in no
circumstances will the Owner Trustee have a perfected security interest in any
Specified Vehicle.
As described under "Certain Legal Aspects of the Origination Trust and
the SUBIs", the Indenture Trustee will have a security interest in the SUBI
Certificates perfected by possession.
The SUBI Assets will consist principally of the Specified Leases and
the related Specified Vehicles, subject to the rights of the Obligors under the
Specified Leases. To the extent that the pledge of the Lease SUBI Certificate
were to be viewed as representing a transfer of the assets of the Origination
Trust, the Specified Leases would be "chattel paper" as defined in the UCC.
Pursuant to the UCC, a non-possessory security interest in chattel paper may be
perfected by filing a UCC-1 financing statement with the appropriate filing
office in the state where the debtor has its chief executive office.
Accordingly, as a precaution, UCC-1 financing statements relating to the
Specified Leases will be filed naming: (a) the Origination Trust as debtor and
the Indenture Trustee as assignee secured party; (b) RTR I LP as debtor and the
Indenture Trustee as assignee secured party; (c) the Transferor as debtor and
the Indenture Trustee as assignee secured party; and (d) the Trust as debtor and
the Indenture Trustee as secured party. Perfection and the effect of perfection
or non-perfection of a security interest in the Specified Vehicles are governed
by the certificate of title statutes of the states in which such Specified
Vehicles are located. Because of the administrative burden and expense of
perfecting an interest in trucks, tractors and trailers under the certificate of
title statutes in the states in which the Specified Leases were originated, the
Indenture Trustee's interest in the Specified Vehicles will be unperfected, and
if the transfer of the Vehicle SUBI Certificate were to be viewed as a transfer
of the Vehicle SUBI Assets, the Indenture Trustee would only have a perfected
security interest in the Specified Leases. The Indenture Trustee's security
interest in the Specified Leases could be subordinate to the interests of some
other parties who take possession of the Specified Leases. Specifically, the
Trust's security interest in a Specified Lease could be subordinate to the
rights of a purchaser of that Specified Lease who takes possession thereof
without knowledge or actual notice of the Trust's security interest. The
Specified Leases will not be stamped to indicate the precautionary security
arrangements. However, the Administration Agreement requires the Administrative
Agent to retain custody of the Specified Leases. To the extent that a valid lien
is imposed by a third party against a Specified Vehicle, the interest of the
lienholder will be superior to the unperfected beneficial interest of the Trust
in that Specified Vehicle. Although the Administration Agreement will require
the Administrative Agent to contest all such liens and cause the removal of any
liens that may be imposed, if any such liens are imposed against the Specified
Vehicles, investors in the Senior Notes could incur a loss on their investment.
For further information relating to potential liens on the SUBI Assets, see
"Additional Document Provisions--The Administration Agreement--Notification of
Liens and Claims", "Additional Document Provisions--The Administration
Agreement--Custody of Lease Documents and Certificates of Title" and "Certain
Legal Aspects of the Origination Trust and the SUBIs--The SUBIs".
As noted under "Certain Legal Aspects of the Origination Trust and the
SUBIs--The SUBIs", various liens could be imposed upon all or part of the SUBI
Assets that, by operation of law, would take priority over the Trust's interest
therein. Such liens would include mechanic's, repairmen's, garagemen's and motor
vehicle accident liens and some liens for personal property taxes, in each case
arising with respect to a particular Specified Vehicle, liens arising under
various state and federal criminal statutes and some liens more fully described
under "Risk Factors--
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Liens may be imposed on the trust's assets due to ERISA liabilities" in favor of
the Pension Benefit Guaranty Corporation. Additionally, any perfected security
interest of the Trust in all or part of the property of the Trust could also be
subordinate to claims of any trustee in bankruptcy or debtor-in-possession in
the event of a bankruptcy of the Transferor prior to any perfection of the
transfer of the assets sold, transferred and assigned by the Transferor to the
Trust pursuant to the Agreement, as more fully described under "Risk Factors-- A
bankruptcy of the transferor or the administrative agent could delay or limit
payments on the senior notes".
TITLING GRACE PERIOD -- LACK OF PERFECTED OWNERSHIP INTEREST
During the Titling Grace Period, some of the Specified Vehicles will be
titled in the name of Ryder rather than in the name of the Origination Trust or
the Origination Trustee on behalf of the Origination Trust (the "Titling Grace
Period Vehicles"). During the Titling Grace Period, the Administrative Agent
will title the Titling Grace Period Vehicles in the name of the Origination
Trust or the Origination Trustee on behalf of the Origination Trust but no
action will be taken to note the lien of the Transferor on the applicable
certificates of title.
An ownership interest or security interest in a motor vehicle
registered in most states may be perfected against creditors and subsequent
purchasers without notice for valuable consideration only by one or more of the
following: depositing with a state's department of motor vehicles a properly
endorsed certificate of title for the vehicle showing the transferee or secured
party as legal owner or lienholder thereon, filing a sworn notation of lien with
the state's department of motor vehicles and noticing such lien on the
certificate of title, or if the vehicle has not been previously registered,
filing an application in usual form for an original registration together with
an application for registration of the secured party as legal owner or
lienholder, as the case may be, with a state's department of motor vehicles.
Therefore, the Origination Trust and the Transferor may not have a validly
perfected ownership interest and security interest, respectively, in the Titling
Grace Period Vehicles.
As a result, the Origination Trust's and the Transferor's ownership and
security interest, as the case may be, in such a Titling Grace Period Vehicle
will not be perfected and the Transferor's interest in the Titling Grace Period
Vehicles will be inferior to other creditors or purchasers who have taken the
necessary steps described above. However, Ryder will assign its ownership
interest in the Specified Vehicles subject to the Specified Leases and will
transfer such Vehicles to the Origination Trust on or prior to the Closing Date,
and within the Titling Grace Period will retitle all of the Specified Vehicles
in the name of the Origination Trust or the Origination Trustee on behalf of the
Origination Trust. In many states, an assignment of an ownership interest is an
effective conveyance of an interest without amendment of any owner noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as owner. However, the Origination Trust's and the
Transferor's interest in these Specified Vehicles could be defeated through
fraud or negligence, and because the Origination Trust is not yet identified as
the owner on the certificate of title, Ryder's bankruptcy.
Failure to retitle a Titling Grace Period Vehicle in the name of the
Origination Trust or the Origination Trustee on behalf of the Origination Trust
by the end of the Titling Grace Period will require the Administrative Agent to
make a payment equal to the Securitization Value of the related Specified Lease
as of the last day of the Titling Grace Period. See "The Origination Trust--
Lease Originations and the Titling of Vehicles" and "The Specified
Leases--Representations, Warranties and Covenants". On or prior to the last day
of the Titling Grace Period the Administrative Agent will provide each Rating
Agency and the Indenture Trustee with an Officer's Certificate of the
Administrative Agent as to the status of the retitling of the Titling Grace
Period Vehicles. Although all of the Specified Vehicles have been or will be,
during the Titling Grace Period, titled in the name of the Origination Trust or
the Origination Trustee on behalf of the Origination Trust, no liens will be
recorded on the related certificates of title. See "Certain Legal Aspects of the
Specified Leases and Specified Vehicles--Back-up Security Interests".
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the Specified Vehicles, they
will be operated by the related Obligors and their invitees. State laws differ
as to whether anyone suffering injury to person or property involving a vehicle
may bring an action against the owner of that vehicle merely by virtue of such
ownership.
Following an accident involving a Specified Vehicle, under certain
circumstances the Origination Trust may be the subject of an action for damages
as a result of its ownership of that Specified Vehicle. To the extent that
applicable state law permits such an action, the Origination Trust and the
Origination Trust Assets may be subject to
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liability. The laws of many states either do not permit such suits or provide
that the lessor's liability is capped at the amount of any liability insurance
that the lessee was required but failed to maintain. However, in some states,
such as New York, liability is joint and several and there does not appear to be
a limit on an owner's liability.
Although the Origination Trust's insurance coverage is substantial, in
the event that all applicable insurance coverage were to be exhausted and
damages were to be assessed against the Origination Trust, claims could be
imposed against the assets of the Origination Trust, including the Specified
Vehicles. However, such claims would not take priority over any SUBI Assets to
the extent that the Trust had a prior perfected security interest therein, such
as would be the case, in certain limited circumstances, with respect to the
Specified Leases, as further described under "--Back-up Security Interests". If
any such claims were imposed against the assets of the Origination Trust,
investors in the Senior Notes could incur a loss on their investment.
REPOSSESSION OF SPECIFIED VEHICLES
In the event that a default by an Obligor has not been cured within a
certain period of time after being sent notice of that default, the
Administrative Agent will ordinarily repossess the related Specified Vehicle.
Some jurisdictions require that a lessee be notified of the default and be given
a time period within which to cure that default prior to repossession.
Generally, this right to cure may be exercised on a limited number of occasions
in any one-year period. In these jurisdictions, if a lessee objects or raises a
defense to repossession, an order must be obtained from the appropriate state
court, and the vehicle must then be repossessed in accordance with that order.
Other jurisdictions permit repossession without notice, but only if the
repossession can be accomplished peacefully. If a breach of the peace cannot be
avoided, judicial action will be required.
After the Administrative Agent has repossessed a Specified Vehicle, it
may provide the related Obligor with a period of time within which to cure the
default under the related Specified Lease. If, by the end of that period, the
default has not been cured, the Administrative Agent will attempt to sell that
Specified Vehicle. The Termination Proceeds therefrom may be less than the
remaining amounts due under that Specified Lease at the time of default.
DEFICIENCY JUDGMENTS
The proceeds of sale of a Specified Vehicle generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the amounts due under the related Specified Lease. If the proceeds from the sale
do not equal the Securitization Value of the related Specified Vehicle, the
Administrative Agent may seek a deficiency judgment for the amount of the
shortfall. However, some states impose prohibitions or limitations on a secured
party's ability to seek a deficiency judgment. In these states a deficiency
judgment may be prohibited or reduced in amount if the Obligor was not given
proper notice of the resale or if the terms of resale were not commercially
reasonable. Even if a deficiency judgment is obtained, there is no guaranty that
the full amount of the judgment could be collected. Because a deficiency
judgment is a personal judgment against a defaulting Obligor who generally has
few assets to satisfy a judgment, the practical use of a deficiency judgment is
often limited. Therefore, in many cases, it may not be useful to seek a
deficiency judgment and even if obtained, a deficiency judgment may be settled
at a significant discount.
Representations and warranties will be made in the SUBI Trust Agreement
that each Specified Lease complies with all requirements of law in all material
respects. If any such representation and warranty proves to be incorrect with
respect to a Specified Lease, and is not timely cured, the Administrative Agent
will be required under the Administration Agreement to deposit an amount equal
to the Reallocation Payment in respect of that Specified Lease into the SUBI
Collection Account. See "Additional Document Provisions--The SUBI Trust
Agreement--The SUBIs, Other SUBIs and the UTI" and "The Specified
Leases--Representations, Warranties and Covenants" for further information
regarding the foregoing representations and warranties.
OTHER LIMITATIONS
In addition to laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including applicable Insolvency Laws, may
interfere with or affect the ability of Ryder to enforce the obligation of the
Administrative Agent to enforce the rights of the Origination Trust under the
Specified Leases. For example, if an Obligor commences bankruptcy proceedings,
the receipt of that Obligor's payments due under the related
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Specified Lease is likely to be delayed. In addition, an Obligor who commences
bankruptcy proceedings might be able to assign the related Specified Lease to
another party even though that Specified Lease prohibits assignment.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of certain material federal
income tax consequences of the purchase, ownership and disposition of the Senior
Notes. Certain portions of the discussion set forth in this section -- those
that specifically refer to Steel Hector & Davis LLP -- are statements of the
opinion of Steel Hector & Davis LLP, special federal income tax counsel to the
Transferor. This discussion is based upon current provisions of the Internal
Revenue Code as of 1986, as amended (the "Code"), existing and proposed Treasury
Department regulations thereunder (the "Treasury Regulations"), and current
administrative rulings, judicial decisions and other applicable authorities in
effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. The discussion does not deal with all federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary is generally limited to
investors who purchase Senior Notes in their initial distribution and who will
hold the Senior Notes as "capital assets" -- generally, property held for
investment -- within the meaning of Section 1221 of the Code.
There are no cases or Internal Revenue Service (the "IRS") rulings with
respect to transactions similar to those described herein with respect to the
Trust involving both debt and equity interests issued by a trust with terms
similar to those of the Senior Notes and the Certificates. As a result, there
can be no assurance that the IRS will not challenge the conclusions reached
herein. Furthermore, legislative, judicial or administrative changes may occur,
perhaps with retroactive effect, which could affect the accuracy of the
statements and conclusions set forth herein as well as the tax consequences to
Senior Noteholders. The parties do not intend to seek a ruling from the IRS on
any of the issues discussed below. Moreover, there can be no assurance that if
such a ruling were sought, the IRS would rule favorably.
Taxpayers and preparers of tax returns (including those filed by any
partnership or other issuer) should be aware that under applicable Treasury
Regulations a provider of advice on specific issues of law is not considered an
income tax return preparer unless the advice is given with respect to events
that have occurred at the time the advice is rendered, is not given with respect
to the consequences of contemplated actions and is directly relevant to the
determination of an entry on a tax return. Accordingly, taxpayers should consult
their respective tax advisors and tax return preparers regarding the preparation
of any item on a tax return, even where the anticipated tax treatment has been
discussed herein. It is recommended that prospective investors consult their own
tax advisors with regard to the federal income tax consequences of the purchase,
ownership and disposition of the Senior Notes, as well as the tax consequences
arising under the laws of any state, foreign country or other taxing
jurisdiction.
This summary does not purport to deal with all aspects of federal
income taxation that may be relevant to Senior Noteholders in light of their
personal investment circumstances nor, except for some limited discussions of
particular topics, to some types of Senior Noteholders subject to special
treatment under the federal income tax laws, such as financial institutions,
broker-dealers, life insurance companies and tax-exempt organizations.
SENIOR NOTES
GENERAL
TAX CHARACTERIZATION OF THE TRUST. In the opinion of Steel Hector &
Davis LLP, special counsel to the Transferor, subject to the assumptions and
qualifications contained in that opinion, under existing law the Trust will not
be classified as an association, or publicly traded partnership, taxable as a
corporation for federal income tax purposes. This opinion will be based on the
assumption that, among other things, the Senior Notes, the Subordinated Notes
and the Certificates will be issued pursuant to the terms of the Basic
Documents, that such terms will be complied with and on counsel's conclusions
that the nature of the income of the Trust or the satisfaction of certain safe
harbors relating to the trading of the Certificates will exempt the Trust from
the rule that some publicly traded partnerships are taxable as corporations.
CHARACTERIZATION OF THE SENIOR NOTES AS INDEBTEDNESS. The Transferor
and the Owner Trustee will agree, and the Senior Noteholders will agree by their
purchase of Senior Notes, to treat the Senior Notes for federal, state and local
income and franchise tax purposes as indebtedness, secured by the assets of the
Trust. However, the SUBI Certificate Transfer Agreement generally refers to the
transfer of the Vehicle SUBI Certificate as an "absolute sale,
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transfer and assignment," and the Transferor will treat the SUBI Certificate
Transfer Agreement, for some non-tax accounting purposes, as causing a transfer
of an ownership interest in the Vehicle SUBI Certificate and not as creating a
debt obligation.
For U.S. federal income tax purposes, the economic substance of a
transaction often determines its tax consequences. The form of a transaction,
while a relevant factor, is generally not conclusive evidence of the economic
substance of the transaction. In appropriate circumstances, the courts have
allowed the IRS, as well as taxpayers, in more limited circumstances, to treat a
transaction in accordance with its economic substance, as determined under U.S.
federal income tax law, even though the participants have characterized the
transaction differently for non-tax purposes. In COMMISSIONER v. DANIELSON, 378
F.2d 771 (3d Cir. 1967) ("DANIELSON"), the Third Circuit Court of Appeals
substantially limited the circumstances in which a taxpayer for tax purposes
could ignore the form of a transaction. Some courts have followed this decision
while others have not. DANIELSON related to the treatment of a bargained-for
allocation of purchase price, which various taxpayers were characterizing in
different ways, and the application of the DANIELSON rationale to the Senior
Notes, where all of the parties have agreed on a consistent tax characterization
of the transaction, is arguably not appropriate. However, in UNITED STATES v.
SCHARRER, 229 B.R. 210 (M.D. Fla. 1999), the District Court, citing DANIELSON,
reversed a bankruptcy court's decision that a purported sale of lease payments
was a borrowing, on the grounds that the form of the transaction was a sale
rather than a borrowing. While the facts of the case differ from those involving
the Senior Notes, the case extends DANIELSON to sale/borrowing transactions.
Nevertheless, it is the opinion of Steel Hector & Davis LLP, special counsel to
the Transferor, that in a properly presented case, the DANIELSON doctrine would
not prevent a determination of the tax characterization of the Senior Notes
based on the economic substance of the transaction.
[President Clinton's Fiscal 2000 Budget Proposal includes a legislative
proposal that would codify the DANIELSON rule if tax indifferent parties are
involved. The proposal would only apply to transactions entered into on or after
the date of first committee action. As currently drafted, it is unclear whether
the proposal would apply to securities such as the Senior Notes. It is
impossible to predict whether the proposed legislation will be enacted and, if
so, in what form. Prospective investors should consult their own tax advisors
regarding the proposed legislation.]
In the opinion of Steel Hector & Davis LLP, special tax counsel to the
Transferor, subject to the assumptions and qualifications contained in that
opinion, under existing law the Senior Notes will be treated as indebtedness for
federal income tax purposes. The discussion below assumes this characterization
of the Senior Notes is correct.
STATED INTEREST. Stated interest on the Senior Notes will be taxable as
ordinary income for federal income tax purposes when received or accrued in
accordance with a Senior Note Owner's method of tax accounting.
ORIGINAL ISSUE DISCOUNT. A Senior Note will be treated as issued with
Original Issue Discount ("OID") if the excess of its "stated redemption price at
maturity" over its issue price equals or exceeds a DE MINIMIS amount equal to
1/4 of 1 percent of stated redemption price at maturity multiplied by the number
of complete years based on the anticipated weighted average life of the Senior
Note to its maturity. It is expected that the Senior Notes will be issued with
DE MINIMIS OID. Generally, the issue price of a Senior Note should be the first
price at which a substantial amount of the Senior Notes included in the issue of
which the Senior Note is a part is sold to other than bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. The stated redemption price at maturity of a
Senior Note is expected to equal the principal amount of the related Senior
Note. Any amount not treated as OID because it is DE MINIMIS OID must be
included in income -- generally as gain from the sale of that Senior Note -- as
principal payments are received on the related Senior Notes in the proportion
that each such payment bears to the original principal balance of that Senior
Note.
If the Senior Notes are issued with OID, Senior Noteholders generally
will be required to include OID in income for each accrual period in advance of
receipt of the cash representing that OID. A holder of a debt instrument issued
with OID is required to recognize as ordinary income the amount of OID on the
debt instrument as such discount accrues, in accordance with a constant yield
method. Because the payments on the Senior Notes may be accelerated by reason of
prepayments on or the sale of some of the SUBI Assets, the periodic accrual of
OID, other than DE MINIMIS OID, may have to be determined under section
1272(a)(6) of the Code by taking into account both the prepayment assumption
used in pricing the Senior Notes and the prepayment experience. The amount of
OID that will accrue on a Senior Note during an accrual period -- generally the
period between interest payments or compounding dates -- is the excess, if any,
of the sum of (a) the present value of all payments remaining to be made on the
Senior Note as of the close of the accrual period and (b) the payments during
the accrual period of amounts
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included in the stated redemption price of the Senior Note, over the "adjusted
issue price" of the Senior Note at the beginning of the accrual period. An
"accrual period" is the period over which OID accrues, and may be of any length,
provided that each accrual period is no longer than one year and each scheduled
payment of interest or principal occurs on either the last day or the first day
of an accrual period. The Trust intends to report OID on the basis of an accrual
period that corresponds to the interval between Payment Dates. The adjusted
issue price of a Senior Note is the sum of its issue price plus prior accruals
of OID, reduced by the total payments made with respect to that Senior Note in
all prior periods, other than qualified stated interest payments. The present
value of the remaining payments is determined on the basis of three factors: (a)
the original yield to maturity of the Senior Note, determined on the basis of
compounding at the end of each accrual period and properly adjusted for the
length of the accrual period, (b) events which have occurred before the end of
the accrual period, and (c) the assumption that the remaining payments will be
made in accordance with the original prepayment assumption. No regulations have
been issued under section 1272(a)(6) so it is not clear if that section of the
Code would apply to the Senior Notes if they are treated as having OID.
The effect of this method is to increase the portions of OID required
to be included in income by a Senior Noteholder to take into account prepayments
on the Specified Leases at a rate that exceeds the original prepayment
assumption, and to decrease -- but not below zero for any period -- the portions
of OID required to be included in income by a Senior Noteholder to take into
account prepayments on or the sale of some of the SUBI Assets at a rate that is
slower than the original prepayment assumption. Although OID will be reported to
Senior Noteholders based on the original prepayment assumption, no
representation is made to Senior Noteholders that Specified Leases will be
prepaid at that rate or at any other rate.
The holder of a Senior Note that has a fixed maturity date of not more
than one year from the issue date of that Senior Note (a "Short-Term Note") may
be subject to special rules. An accrual basis holder of a Short-Term Note, and
some cash method holders, including regulated investment companies, as set forth
in Section 1281 of the Code, generally would be required to report interest
income as interest accrues on a straight-line basis over the term of each
interest period. Other cash basis holders of a Short-Term Note would, in
general, be required to report interest income as interest is paid, or, if
earlier, upon the taxable disposition of the Short-Term Note. However, a cash
basis holder of a Short-Term Note reporting interest income as it is paid may be
required to defer a portion of any interest expense otherwise deductible on
indebtedness incurred to purchase or carry the Short-Term Note until the taxable
disposition of the Short-Term Note. A cash basis taxpayer may elect under
Section 1281 of the Code to accrue interest income on all nongovernment debt
obligations with a term of one year or less, in which case the taxpayer would
include interest on the Short-Term Note in income as it accrues, but would not
be subject to the interest expense deferral rule referred to in the preceding
sentence. Some special rules apply if a Short-Term Note is purchased for more or
less than its principal amount.
MARKET DISCOUNT. The Senior Notes, whether or not issued with OID, will
be subject to the "market discount rules" of Section 1276 of the Code. In
general, these rules provide that if the Senior Note Owner purchases a Senior
Note, as the case may be, at a market discount -- that is, a discount from its
stated redemption price at maturity, which is generally the stated principal
balance -- or if the related Senior Notes were issued with OID, its original
issue price, as adjusted for accrued original issue discount that exceeds a DE
MINIMIS amount specified in the Code, and thereafter (a) recognizes gain upon a
disposition, or (b) receives payments of principal, the lesser of (1) that gain
or principal payment or (2) the accrued market discount, will be taxed as
ordinary interest income. Generally, the accrued market discount will be the
total market discount on the related Senior Note multiplied by a fraction, the
numerator of which is the number of days the Senior Note Owner held that Senior
Note and the denominator of which is the number of days from the date the Senior
Note Owner acquired that Senior Note until its maturity date. The Senior Note
Owner of a Senior Note may elect, however, to determine accrued market discount
under the constant-yield method.
Limitations imposed by the Code which are intended to match deductions
with the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Senior Note with accrued market discount. A Senior Note Owner may elect to
include market discount in gross income as it accrues and, if that Senior Note
Owner makes such an election, is exempt from this rule. Any such election will
apply to all debt instruments acquired by the taxpayer on or after the first day
of the first taxable year to which that election applies. The adjusted basis of
a Senior Note subject to that election will be increased to reflect market
discount included in gross income, thereby reducing any gain or increasing any
loss on a sale or taxable disposition.
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[President Clinton's Fiscal 2000 Budget Proposal includes proposed
legislation that would require an accrual method taxpayer that acquires a Senior
Note at a market discount to include such discount in income as it accrues,
subject to some limitations. As proposed, this provision would apply to Senior
Notes acquired on or after the date of enactment. No prediction can be made
regarding whether such legislation will be enacted, or if enacted, what its
ultimate form or effective date will be.]
TOTAL ACCRUAL ELECTION. A Senior Note Owner may elect to include in
gross income all interest that accrues on a Senior Note using the constant-yield
method described above under the heading "--Original Issue Discount", with
modifications described below. For purposes of this election, interest includes
stated interest, acquisition discount, OID, DE MINIMIS OID, market discount, DE
MINIMIS market discount and unstated interest, as adjusted by any amortizable
bond premium (described below under "--Amortizable Bond Premium") or acquisition
premium.
In applying the constant-yield method to a Senior Note with respect to
which this election has been made, the issue price of the Senior Note will equal
the electing Senior Note Owner's adjusted basis in the Senior Note immediately
after its acquisition, the issue date of the Senior Note will be the date of its
acquisition by the electing Senior Note Owner, and no payments on the Senior
Note will be treated as payments of qualified stated interest. This election
will generally apply only to the Senior Note with respect to which it is made
and may not be revoked without the consent of the IRS. Senior Note Owners should
consult with their own advisers as to the effect in their circumstances of
making this election.
AMORTIZABLE BOND PREMIUM. In general, if a Senior Note Owner purchases
a Senior Note at a premium -- that is, an amount in excess of the amount payable
upon maturity -- that Senior Note Owner will be considered to have purchased
that Senior Note with "amortizable bond premium" equal to the amount of such
excess. That Senior Note Owner may elect to amortize that bond premium as an
offset to interest income and not as a separate deduction item as it accrues
under a constant-yield method over the remaining term of the Senior Note. That
Senior Note Owner's tax basis in the Senior Note will be reduced by the amount
of the amortized bond premium. Any such election shall apply to all debt
instruments, other than instruments the interest on which is excludible from
gross income, held by the Senior Note Owner at the beginning of the first
taxable year for which the election applies or thereafter acquired and is
irrevocable without the consent of the IRS. Bond premium on a Senior Note held
by a Senior Note Owner who does not elect to amortize the premium will decrease
the gain or increase the loss otherwise recognized on the disposition of the
Senior Note. The Treasury Regulations specifically exclude debt instruments that
are subject to Section 1272(a)(6) of the Code from the amortizable bond premium
rules contained in those regulations (see the discussion of Section 1272(a)(6)
in "-- Original Issue Discount" above).
DISPOSITION OF SENIOR NOTES. A Senior Note Owner's adjusted tax basis
in a Senior Note will be its cost, increased by the amount of any OID, market
discount, acquisition discount and gain previously included in income with
respect to the Senior Note, and reduced by the amount of any payments on the
Senior Note that is not qualified stated interest and the amount of bond premium
previously amortized with respect to the Senior Note. A Senior Note Owner will
generally recognize gain or loss on the sale or retirement of a Senior Note
equal to the difference between the amount realized on the sale or retirement
and the tax basis of the Senior Note. Such gain or loss will be capital gain or
loss, except to the extent attributable to accrued but unpaid interest or as
described above under "--Market Discount", and will be long-term capital gain or
loss if their Senior Note was held for more than one year.
Subject to the OID and market discount rules discussed above and to the
one-year holding period requirement for long-term capital gain treatment, any
such gain or loss generally will be long-term capital gain or loss, provided the
Senior Note was held as a capital asset. The maximum federal income tax rate
applicable to capital gains and ordinary income for corporations is 35%. The
maximum ordinary federal income tax rate for individuals, estates and trusts is
39.6%, whereas the maximum long-term capital gains rate for such taxpayers is
20%. Under the Taxpayer Relief Act of 1997, the maximum rates on long-term
capital gains will be reduced further in the year 2001 and thereafter for some
individual taxpayers that meet specified conditions. Each prospective investor
should consult its tax advisor concerning these tax law changes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Indenture Trustee will be required to report annually to the IRS,
and to each Senior Noteholder, the amount of interest paid on the Senior Notes,
and the amount withheld for federal income taxes, if any, for each calendar
year, except as to exempt recipients -- generally, corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, or nonresident aliens who provide certification as to their
status. Each Senior Noteholder, other than Senior Noteholders who are not
subject to the reporting requirements,
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will be required to provide, under penalty of perjury, a certificate containing
the Senior Noteholder's name, address, correct federal taxpayer identification
number -- which would include a social security number -- and a statement that
the Senior Noteholder is not subject to backup withholding. Should a non-exempt
Senior Noteholder fail to provide the required certification or should the IRS
notify the Indenture Trustee or the Trust that the Senior Noteholder has
provided an incorrect federal taxpayer identification number or is otherwise
subject to backup withholding, the Indenture Trustee will be required to
withhold, or cause to be withheld, 31% of the interest otherwise payable to the
Senior Noteholder, and remit the withheld amounts to the IRS as a credit against
the Senior Noteholder's federal income tax liability.
TAX CONSEQUENCES TO FOREIGN INVESTORS
The following information describes the United States federal income
tax treatment of investors that are not U.S. persons (each, a "Foreign Person").
The term "Foreign Person" means any person other than (a) a citizen or resident
of the United States that is a natural person, (b) a corporation or partnership
for federal income tax purposes organized in or under the laws of the United
States or any state thereof or the District of Columbia, other than a
partnership that is not treated as a "United States person" within the meaning
of that term as it is used in the Code or the Treasury Regulations, (c) an
estate whose income is subject to United States federal income tax regardless of
its source of income, or (d) a trust treated as a United States person.
o Interest paid or accrued to a Foreign Person that is not
effectively connected with the conduct of a trade or business
within the United States by the Foreign Person, will generally be
considered "portfolio interest" and generally will not be subject
to United States federal income tax and withholding tax, as long as
the Foreign Person (1) is not actually or constructively a "10%
percent shareholder" of the Trust or Ryder, or a "controlled
foreign corporation" with respect to which the Trust or Ryder is a
"related person" within the meaning of the Code, and (2) provides
an appropriate statement (Form W-8), signed under penalty of
perjury, certifying that the Senior Note Owner is a Foreign Person
and providing that Foreign Person's name and address. If the
information provided in this statement changes, the Foreign Person
must so inform the Indenture Trustee within 30 days of that change.
The statement generally must be provided in the year a payment
occurs or in either of the two preceding years. If the interest
were not portfolio interest, then it would be subject to United
States federal income and withholding tax at a rate of 30 percent
unless reduced or eliminated pursuant to an applicable income tax
treaty.
o Any capital gain realized on the sale or other taxable disposition
of a Senior Note by a Foreign Person will be exempt from United
States federal income and withholding tax, provided that (1) the
gain is not effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, and (2) in the
case of an individual Foreign Person, the Foreign Person is not
present in the United States for 183 days or more in the taxable
year and some other requirements are met.
o If the interest, gain or income on a Senior Note held by a Foreign
Person is effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, the Senior
Note Owner (although exempt from the withholding tax previously
discussed if a duly executed Form 4224 is furnished) generally will
be subject to United States federal income tax on the interest,
gain or income at regular federal income tax rates. In addition, if
the Foreign Person is a foreign corporation, it may be subject to a
branch profits tax equal to 30 percent of its "effectively
connected earnings and profits" within the meaning of the Code for
the taxable year, as adjusted for certain items, unless it
qualifies for a lower rate under an applicable tax treaty.
NEW WITHHOLDING REGULATIONS. On October 6, 1997, the Treasury
Department issued regulations (the "Withholding Regulations") which make some
modifications to the withholding, backup withholding and information reporting
rules described above. The Withholding Regulations attempt to unify
certification requirements and modify reliance standards. The Withholding
Regulations will generally be effective for payments made after December 31,
2000, subject to some transition rules. Prospective investors are urged to
consult their own tax advisors regarding the Withholding Regulations.
POSSIBLE ALTERNATIVE TREATMENT OF THE NOTES. Although, as described
above, it is the opinion of Steel Hector & Davis LLP that the Senior Notes will
properly be characterized as debt for federal income tax purposes, such opinion
will not be binding on the IRS and thus no assurance can be given that such a
characterization shall prevail. If the IRS were to contend successfully that the
Senior Notes did not represent debt for federal income tax purposes, certain
adverse tax consequences to the trust and the holders of Senior Notes could
result. For example, the trust
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would likely be considered a "publicly-traded partnership", and as a result
treated for U.S. tax purposes as an association taxed as a corporation. In
addition, income to certain tax-exempt entities (including pension funds)
generally would be "unrelated business taxable income", and income to foreign
U.S. holder of Senior Notes generally would be subject to U.S. withholding tax
and reporting requirements. While the Transferor strongly believes that any
challenge by the IRS, if made, would be unsuccessful, there can be no assurance
of this result. Prospective investors are advised to consult with their own tax
advisors regarding the federal income tax consequences of the purchase,
ownership and disposition of the Senior Notes.
CERTAIN STATE TAX CONSEQUENCES
GENERAL
Set forth below is a summary of some state income tax consequences of
the purchase, ownership and disposition of the Senior Notes. This discussion is
based upon current law, administrative rulings, judicial decisions and other
applicable authorities in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. There can be no assurance that
state income tax authorities will not challenge the conclusions reached herein,
and no ruling from state income tax authorities has been or will be sought on
any of the issues discussed below. Because of the variation in each state's
income tax laws, it is impossible to predict tax consequences to the holders of
the Senior Notes in all states. Holders of the Senior Notes are urged to consult
their own tax advisors with respect to state tax consequences arising out of the
purchase, ownership and disposition of the Senior Notes.
DELAWARE
The Transferor has been organized as a Delaware business trust. In the
opinion of Richards, Layton & Finger P.A., special Delaware counsel to the
Trust, assuming that the Senior Notes are treated as debt for federal income tax
purposes, the Senior Notes will be treated as debt for Delaware state income tax
purposes. Assuming further that none of the Origination Trust, the Transferor or
the Trust will be classified as an association, or a publicly traded
partnership, taxable as a corporation for federal income tax purposes, none of
the Origination Trust, the Transferor or the Trust will be subject to the
Delaware state income tax at the entity level. Further, in the opinion of
Richards, Layton & Finger P.A., Senior Note Owners not otherwise subject to
taxation in Delaware would not become subject to taxation in Delaware solely
because of a Senior Note Owner's ownership of a Senior Note.
FLORIDA
The Florida Administrative Code includes a rule (the "Loan Rule"),
promulgated under the Florida Income Tax Code, which provides that a financial
organization earning or receiving interest from loans secured by tangible
property located in Florida will be deemed to be conducting business or earning
or receiving income in Florida, and will be subject to Florida corporate income
tax irrespective of the place of receipt of that interest. A "financial
organization" is defined to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private bank, savings and loan
association, credit union, cooperative bank, small loan company, sales finance
company or investment company. If the Loan Rule were to apply to an investment
in the Senior Notes, then a financial organization investing in the Senior Notes
would be subject to Florida corporate income tax on a portion of its income at a
maximum rate of 5.5%, and would be required to file an income tax return in
Florida, even if it has no other Florida contacts. Steel Hector & Davis LLP,
special counsel to the Transferor, is of the opinion that, if the matter were
properly presented to a court having jurisdiction, and assuming interpretation
of relevant law on a basis consistent with existing authority, that court would
hold that the Loan Rule would not apply to an investment in the Senior Notes or
the receipt of interest thereon by a financial organization with no other
Florida contacts. Consequently, prospective investors are urged to consult their
own tax advisers as to the applicability of Florida taxation to their
investments in the Senior Notes and to their ability to offset any such Florida
tax against any other state tax liabilities that such investors might have.
MISCELLANEOUS
In the event that any state or locality imposes a tax on the
Origination Trust, the Transferor or the Trust at the entity level, the UTI
Beneficiaries have agreed to indemnify the holders of the SUBIs for the full
amount of such taxes. If the UTI Beneficiaries should fail to fulfill their
respective indemnification obligations, amounts otherwise
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distributable to them as holders of the UTI will be used to satisfy such
indemnification obligations. However, it is possible that the Senior Noteholders
could incur a loss on their investment in the event the UTI Beneficiaries did
not have sufficient assets available, including distributions on the UTI, to
satisfy such state or local tax liabilities.
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE DO NOT PURPORT TO ADDRESS
THE APPLICABILITY OF STATE TAX LAWS OTHER THAN THE TREATMENT OF THE TRUST AND
THE SENIOR NOTE OWNERS UNDER THE LAWS OF FLORIDA AND DELAWARE AND MAY NOT BE
APPLICABLE DEPENDING UPON A SENIOR NOTE OWNER'S PARTICULAR TAX SITUATION.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SENIOR
NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes some restrictions on employee benefit or other plans subject
to ERISA or Section 4975 of the Code ("Plans") and on persons who are parties in
interest or disqualified persons (collectively, "Parties in Interest") with
respect to such Plans that would affect purchases of the Senior Notes by or on
behalf of Plans. Some employee benefit plans, such as governmental plans and
church plans, if no election has been made under Section 410(d) of the Code, are
not subject to the requirements of ERISA or Section 4975 of the Code and assets
of such plans may be invested in Senior Notes without regard to the ERISA
considerations described below, subject to the provisions of other applicable
federal and state law, including, for any such government or church plan
qualified under Section 401(a) of the Code and exempt from taxation under
Section 501(a) of the Code, the prohibited transaction rules set forth in
Section 503 of the Code.
Investments by most Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification, requirements respecting delegation of investment authority and
the requirement that a Plan's investment be made in accordance with the
documents governing the Plan.
PROHIBITED TRANSACTIONS
Some transactions involving the Trust might be deemed to constitute or
give rise to prohibited transactions under ERISA and Section 4975 of the Code if
assets of the Trust were deemed to be assets of a Plan. Under a regulation
issued by the United States Department of Labor (the "Plan Assets Regulation"),
the assets of the Trust would be treated as plan assets of a Plan for purposes
of ERISA and the Code only if the Plan acquires an "equity interest" in the
Trust and none of the exceptions contained in the Plan Assets Regulation is
applicable. An equity interest is defined under the Plan Assets Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. Although
there is no guidance under ERISA on how this definition applies generally, or in
particular to a security like the Senior Notes, the Transferor believes that the
Senior Notes should be treated as indebtedness without substantial equity
features for purposes of the Plan Assets Regulation. However, without regard to
whether the Senior Notes are treated as an equity interest for such purposes,
the acquisition or holding of Senior Notes by or on behalf of a Plan could be
considered to give rise to a prohibited transaction if the Trust, a Trustee, any
Certificateholder, or any of their affiliates, is or becomes a Party in Interest
with respect to that Plan. In that case, some 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 Senior Note. Included
among these exemptions are: Prohibited Transaction Class Exemption ("PTCE")
90-1, which exempts some transactions involving insurance company pooled
separate accounts, PTCE 95-60, which exempts some transactions involving
insurance company general accounts, PTCE 91-38, which exempts some transactions
involving bank collective investment funds, PTCE 96-23, which exempts some
transactions effected on behalf of a Plan by an "in-house asset manager", and
PTCE 84-14, which exempts some transactions effected on behalf of a Plan by a
"qualified professional asset manager".
A Plan fiduciary considering the purchase of Senior Notes should
consult its tax and/or legal advisors regarding whether the assets of the Trust
would be considered plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other issues and their potential consequences.
Acceptance of subscriptions for Senior Notes on behalf of plans is in no respect
a representation by the Transferor, the Trust, Ryder or any other party that
this investment meets all relevant legal requirements with respect to
investments by any particular plan or that such investment is appropriate for
any particular plan. Each plan fiduciary should consult with its attorneys and
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financial advisors as to the propriety of that an investment in light of the
circumstances of the particular plan and the restrictions of ERISA and Section
4975 of the Code.
Each purchaser or transferee of a Senior Note, by its acceptance of
that Senior Note, will be deemed to have represented that (A) such transferee is
not, and will not acquire the Senior Note on behalf or with the assets of, any
"employee benefit plan" as defined in Section 3(3) of ERISA or any other "plan"
as defined in Section 4975(e)(1) of the Code, or (B) no "prohibited transaction"
under ERISA or Section 4975 of the Code that is not subject to a statutory,
regulatory or administrative exemption will occur in connection with that
transferee's acquisition of the Senior Note.
RATINGS OF THE SECURITIES
The Senior Notes will be issued only if the Class A-1 Notes are rated
in the highest short-term rating category and the other senior notes are rated
in the highest long-term category by each Rating Agency. The ratings of the
Senior Notes and the Certificates will be based primarily upon the value of the
Specified Leases, the Reserve Fund, the Residual Value Surplus Account and the
terms of the Subordinated Notes and the Certificates. There can be no assurance
that any such rating will not be lowered or withdrawn by the assigning Rating
Agency if, in its judgment, circumstances so warrant. In the event that a rating
with respect to the Senior Notes or the Certificates is qualified, reduced or
withdrawn, no person or entity will be obligated to provide any additional
credit enhancement with respect to the Senior Notes or the Certificates.
The rating of the Senior 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 Senior Notes, inasmuch as such rating does not comment
as to market price or suitability for a particular investor. The rating of the
Senior Notes address the likelihood of the payment of principal of and interest
on the Senior Notes pursuant to their terms.
There can be no assurance as to whether any agency other than the
assigning Rating Agency will rate the Senior Notes or, if one does, what rating
will be assigned by such other rating agency. A rating on the Senior Notes or
the Certificates by another rating agency, if assigned at all, may be lower than
the ratings assigned to the Senior Notes by the assigning Rating Agency.
94
<PAGE> 96
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
relating to the Senior Notes (the "Underwriting Agreement"), the Transferor has
agreed to sell to the underwriters named below (the "Underwriters"), for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as representative
(the "Representative"), and the Underwriters have agreed to purchase, severally
but not jointly, the following principal amounts of the Senior Notes.
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
UNDERWRITER SENIOR NOTES SENIOR NOTES SENIOR NOTES SENIOR NOTES
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................
Total.....................................
</TABLE>
The Underwriting Agreement provides, subject to conditions precedent,
that the Underwriters will be obligated to purchase all the Senior Notes if any
are purchased. The Underwriting Agreement provides that if there is an event of
default by an Underwriter, in some circumstances the purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated. The Underwriters have agreed to reimburse the Transferor for some
of its expenses incurred in connection with the offering of the Senior Notes.
The Transferor has been advised by the Representatives that the
Underwriters propose initially to offer the Senior Notes to the public at the
respective offering prices set forth on the cover hereof and to certain dealers
at such prices less a selling concession not to exceed the percentage of the
principal amount of the Senior Notes set forth below, and that the Underwriters
may allow and such dealers may reallow a reallowance discount not to exceed the
percentage of the principal amount of the Senior Notes set forth below.
<TABLE>
<CAPTION>
CLASS OF SENIOR NOTES SELLING CONCESSION REALLOWANCE DISCOUNT
- --------------------- ------------------ --------------------
<S> <C> <C>
Class A-1.....................................
Class A-2.....................................
Class A-3.....................................
Class A-4.....................................
</TABLE>
The Transferor and Ryder have jointly and severally agreed to indemnify
the Underwriters against certain liabilities, including civil liabilities under
the Securities Act of 1933, or contribute to payments which the Underwriters may
be required to make in respect thereof.
Upon receipt of a request by an investor who has received an electronic
Prospectus from the Transferor, its affiliates or an Underwriter, or of a
request by such investor's representative, within the period during which there
is an obligation to deliver a Prospectus, the Transferor or the Underwriters
will promptly deliver, or cause to be delivered, without charge, a paper copy of
the Prospectus.
Until the distribution of the Senior Notes is completed, the rules of
the SEC may limit the ability of the Underwriters and certain selling group
members to bid for and purchase Senior Notes. As an exception to these rules,
the Underwriters are permitted to engage in certain transactions that stabilize
the price of the Senior Notes. Such transactions may consist of bids and
purchases for the purpose of pegging, fixing or maintaining the price of such
classes of Senior Notes.
Neither the Transferor nor 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 Senior Notes. In addition, neither
the Transferor nor 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.
95
<PAGE> 97
The Transferor has been advised by the Underwriters that they presently
intend to make a market in the Senior Notes; however, they are not obligated to
do so, any market-making may be discontinued at any time, and there can be no
assurance that an active public market for the Senior Notes will develop.
LEGAL MATTERS
Certain legal matters, including federal income tax matters relating to
the Senior Notes, will be passed upon for the Transferor by Steel Hector & Davis
LLP, Miami, Florida. Richards, Layton & Finger P.A., Wilmington, Delaware, will
act as special Delaware counsel to the Transferor. Certain legal matters with
respect to insolvency issues relating to the Senior Notes will be passed upon
for the Transferor by Brown & Wood LLP, San Francisco, California. Brown & Wood
LLP will act as counsel for the Underwriters. Brown & Wood LLP has rendered
services to the Transferor and its affiliates in connection with the
establishment of the Origination Trust and in some matters not related to the
Senior Notes offered by this prospectus.
EXPERTS
The balance sheets of Ryder Truck Rental LT as of December 31, 1998 and
1997 and the related statements of operations, changes in undivided trust
interests and cash flows for the year ended December 31, 1998 and period from
July 23, 1997 (date of inception) through December 31, 1997 have been included
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
The balance sheet of Ryder Vehicle Lease Trust 1999-A as of September
9, 1999 has been included herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
AVAILABLE INFORMATION
The Transferor, as originator of the Trust, Ryder Funding LP, as
originator of the Origination Trust, the Origination Trust, as issuer of the
SUBIs, and the Trust, as issuer of the Notes, have filed with the SEC a
Registration Statement on Form S-1 (together with all amendment and exhibits
thereto, the "Registration Statement"), of which this Prospectus is a part,
under the Securities Act of 1933, with respect to the Senior Notes being offered
by this prospectus. This prospectus does not contain all of the information set
forth in the Registration Statement, some parts of which have been omitted in
accordance with the rules and regulations of the SEC. For further information,
reference is made to the Registration Statement, which is available for
inspection without charge at the public reference facilities of the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
regional offices of the SEC at Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661-2511 and Suite 1300, Seven World Trade Center,
New York, New York 10048. Copies of such information can be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The SEC maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC at http://www.sec.gov. The Administrative
Agent, on behalf of the Trust, will also file or cause to be filed with the SEC
such periodic reports as are required under the Securities Exchange Act of 1934,
and the rules and regulations of the SEC thereunder.
96
<PAGE> 98
INDEX OF PRINCIPAL TERMS
Set forth below is a list of some of the more important capitalized terms used
in this Offering Circular and the pages on which the definitions of those terms
may be found.
Term Page
- ---- ----
Accrual Period.....................................46
Administration Agreement...........................19
Administration Fee.................................73
Administrative Agent...............................19
Administrative Agent Defaults......................73
Administrator......................................17
Advance............................................70
Aggregate Cutoff Date Securitization Value.........35
Annual Termination Option..........................27
Available Funds....................................51
Available Funds Shortfall Amount...................51
Available Principal Distribution Amount............46
Bankruptcy Code....................................79
Basic Documents....................................45
Business Day.......................................45
Casualty Proceeds..................................70
Casualty Termination Lease.........................47
Cede...............................................45
Cedelbank..........................................47
Cedelbank Participants.............................48
Certificate Balance................................46
Certificate Distribution Account...................58
Certificate Rate...................................56
Certificates.......................................16
Closing Date.......................................16
Code...............................................86
Collection Period..................................51
Collections........................................67
Conditional Prepayment Rate........................41
Contingent and Excess Liability Insurance..........59
CPR................................................41
Cutoff Date........................................21
Cutoff Date Securitization Value...................30
Default Termination Lease..........................47
Defaulted Vehicle..................................68
Definitive Notes...................................45
Deposit Date.......................................58
Depositaries.......................................48
Determination Date.................................51
Disposition Expenses...............................68
Distribution Accounts..............................58
DTC................................................45
ERISA..............................................92
Euroclear..........................................47
Euroclear Participants.............................48
Excess Amounts.....................................52
Exchange Act.......................................33
Expired Vehicle....................................68
Final Payment Date.................................41
Financial Component................................29
Financial Component Advances.......................71
Fixed Charge.......................................29
Foreign Person.....................................90
Full Financial Component Advance...................71
Indenture Default..................................59
Indenture Trustee..................................17
Indirect Participants..............................48
Initial Certificate Balance........................16
Initial Deposit....................................57
Initial Securities Balance.........................53
Initial Senior Note Balance........................16
Initial Subordinated Note Balance..................16
Insolvency Laws....................................79
Insurance Casualty Proceeds........................70
Insurance Proceeds.................................70
Insured Vehicles...................................25
Interest Rate......................................46
IRS................................................86
Lease..............................................24
Lease Default......................................34
Lease SUBI.........................................16
Lease SUBI Assets..................................21
Lease SUBI Certificate.............................16
Lease Term.........................................24
Leases.............................................19
Loan Rule..........................................91
Loss...............................................66
Maintenance Provider...............................19
Maturity Date......................................24
Monthly Period.....................................73
Monthly Remittance Condition.......................68
Net Book Value.....................................30
Non-Petition Parties...............................78
Note Distribution Account..........................58
Note Factor........................................45
Notes..............................................16
Obligor............................................18
Obligor Vehicles...................................68
OID................................................87
Optimal Principal Distributable Amount.............47
Optional Purchase..................................53
Optional Purchase Price............................53
Origination Trust..................................16
Origination Trust Agreement........................19
Origination Trust Assets...........................19
Origination Trustee................................19
Other SUBI.........................................16
Other SUBI Assets..................................65
97
<PAGE> 99
Other SUBI Certificates............................19
Other SUBI Supplement..............................65
Owner Trustee......................................18
Partial Financial Component Advance................71
Partial Financial Component Payment................68
Participants.......................................48
Parties in Interest................................92
Payment Date.......................................45
Payment Date Advance Reimbursement.................52
Permitted Investments..............................59
Plan Assets Regulation.............................92
Plans..............................................92
Principal Carryover Shortfall......................46
Principal Distribution Amount......................46
Program Operating Lease............................16
Program Operating Lease Default....................55
Program Operating Lease Payments...................55
Program Operating Lease Termination Date...........55
PTCE...............................................92
Quarterly Principal Distributable Amount...........46
Rating Agency......................................17
Reallocation Payment...............................40
Record Date........................................45
Redemption Price...................................53
Registration Statement.............................95
Representative.....................................94
Required Deposit Rating............................58
Reserve Fund.......................................57
Reserve Fund Draw Amount...........................57
Reserve Fund Requirement...........................58
Residual Value.....................................30
Residual Value Losses..............................69
Residual Value Surplus.............................69
Residual Value Surplus Account.....................58
Residual Value Surplus Draw Amount.................58
Retained Administration Payment....................57
Retained Certificate Distribution Amount...........51
Retained SUBI Certificate..........................22
Retained SUBI Interest.............................16
RTR I LLC..........................................20
RTR I LP...........................................16
RTR II LLC.........................................20
RTR II LP..........................................16
RTR III LLC........................................22
Ryder..............................................16
Ryder System.......................................23
Sales Proceeds.....................................69
Sales Proceeds Advance.............................71
Salvage Casualty Proceeds..........................70
Schedule A.........................................24
Securities.........................................16
Securities Balance.................................46
Securitization Rate................................30
Securityholders....................................16
Senior Note Balance................................46
Senior Note Distribution Amount....................53
Senior Note Owner..................................47
Senior Noteholders.................................45
Senior Notes.......................................16
Series 1999-A SUBI.................................16
Short-Term Note....................................88
Special Event Purchase.............................69
Specified Leases...................................16
Specified Vehicles.................................16
SUBI...............................................16
SUBI Assets........................................16
SUBI Certificate Transfer Agreement................22
SUBI Certificates..................................16
SUBI Collection Account............................56
SUBI Interest......................................16
SUBI Supplement....................................21
SUBI Trust Agreement...............................21
Subordinated Note Balance..........................46
Subordinated Note Rate.............................56
Subordinated Noteholder............................57
Subordinated Notes.................................16
Substitute Vehicle.................................25
Taxes..............................................26
Termination Proceeds...............................69
Termination Value..................................27
Termination Value Payment..........................27
Titling Grace Period...............................21
Titling Grace Period Vehicles......................84
TLSA...............................................24
Total Monthly Payment..............................29
Transferor.........................................16
Transferor Certificate.............................17
Treasury Regulations...............................86
Trust..............................................16
Trust Administration Agreement.....................17
Trust Agent........................................19
Trust Agreement....................................17
Trust Estate.......................................18
Trust SUBI Certificate Transfer Agreement..........22
U.S. Bank..........................................19
UCC................................................48
Underwriters.......................................94
Underwriting Agreement.............................94
UTI................................................16
UTI Assets.........................................65
UTI Beneficiaries..................................16
UTI Certificates...................................19
Vehicle SUBI.......................................16
Vehicle SUBI Assets................................18
Vehicle SUBI Certificate...........................16
Vehicles...........................................19
Withholding Regulations............................90
98
<PAGE> 100
Ryder Vehicle Lease Trust 1999-A
and Ryder Truck Rental LT
INDEX TO FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report for Ryder Vehicle Lease Trust 1999-A.........F-2
Ryder Vehicle Lease Trust 1999-A Balance Sheet............................F-3
Ryder Vehicle Lease Trust 1999-A Notes to Balance Sheet...................F-4
Independent Auditors' Report for Ryder Truck Rental LT....................F-5
Ryder Truck Rental LT Balance Sheet.......................................F-6
Ryder Truck Rental LT Statement of Operations.............................F-7
Ryder Truck Rental LT Statement of Changes in Undivided Trust Interest....F-8
Ryder Truck Rental LT Statement of Cash Flows.............................F-9
Ryder Truck Rental LT Notes to Financial Statements.......................F-10
F-1
<PAGE> 101
Independent Auditors' Report
Chase Manhattan Bank Delaware,
as Owner Trustee for
Ryder Vehicle Lease Trust 1999-A:
We have audited the accompanying balance sheet of Ryder Vehicle Lease
Trust 1999-A as of September 9, 1999. This financial statement is the
responsibility of the Trust's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit of a balance sheet includes examining, on a test basis,
evidence supporting the amounts and disclosures in that balance sheet. An audit
of a balance sheet also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit of the balance sheet
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Ryder Vehicle Lease Trust
1999-A as of September 9, 1999 in conformity with generally accepted accounting
principles.
KPMG LLP
Miami, Florida
September 9, 1999
F-2
<PAGE> 102
Ryder Vehicle Lease Trust 1999-A
Balance Sheet
September 9, 1999
ASSETS
Cash..............................................................$ 1,000
---------
Total assets......................................................$ 1,000
=========
LIABILITIES & UNDIVIDED TRUST INTERESTS
Undivided trust interests.........................................$ 1,000
---------
Total liabilities and undivided trust interests...................$ 1,000
=========
See accompanying notes to balance sheet.
F-3
<PAGE> 103
Ryder Vehicle Lease Trust 1999-A
Notes to Balance Sheet
September 9, 1999
(1) ORGANIZATION
Ryder Vehicle Lease Trust 1999-A (the "Trust"), a Delaware business
trust, was formed on June 21, 1999. The purpose and responsibilities of the
Trust are described in the Amended and Restated Trust Agreement among Ryder
Funding LP and Chase Manhattan Bank Delaware, as owner trustee.
The Trust is organized under Chapter 38 of the Delaware Business Trust
Act. The purpose of the Trust is to conserve Trust assets and collect and
disburse the periodic income from such assets. In order to achieve this purpose
the Trust will a) issue securities, b) acquire special undivided beneficial
interests ("SUBI") in certain leased vehicles and security interests in the
related leases, c) collect payments on the lease of the SUBI, d) make payments
on the securities, e) enter into and perform obligations to which it is a party,
and f) engage in other transactions necessary, incidental to or connected with
any of the foregoing activities.
Ryder Truck Rental, Inc. ("Ryder") has assigned commercial lease
contracts and the related leased vehicles to Ryder Truck Rental LT. The primary
business purpose of Ryder Truck Rental LT is to take assignments of, and serve
as record holder of title to, leases and vehicles for the benefit of Ryder and
its subsidiaries in order to facilitate the titling of the vehicles in
connection with asset-backed securities issuance transactions. The leased
vehicles include trucks, highway tractors and trailers. Some of these leased
vehicles and the related lease contracts have been allocated to a separate pool
of assets, referred to as special units of beneficial interest ("SUBIs").
Beneficial interests in the vehicles in that pool ("Vehicle SUBI") and security
interests in the lease contracts in that pool ("Lease SUBI") -- but not direct
ownership -- will be transferred and pledged to the Trust.
The Trust will use the proceeds from the issuance and sale of senior
notes and other securities to purchase those interests in the pool. Payment of
the senior notes will be secured by the Vehicle SUBI and a security interest in
lease contracts through the Lease SUBI.
When the senior notes and other securities are issued, the Trust and
Ryder Funding LP (the "Transferor") will enter into a program operating lease,
under which the Transferor will make payments on the program operating lease in
an amount generally equal to certain financial component and termination value
payments made on or for the specified lease contracts and specified vehicles.
The Trust will apply these collected payments to pay interest on and
principal of the senior notes and other securities in accordance with their
terms. Payments of interest and principal on the senior notes and other
securities will be largely dependent upon receipt of payments on the program
operating lease, which is dependent upon payments on the underlying lease
contracts.
On September 9, 1999 Ryder Funding LP contributed $1,000 for the
initial undivided trust interests.
(2) INCOME TAXES
Neither the Trust nor any sub-trust constitutes a separate entity for
Federal income tax purposes or for state income or franchise purposes.
F-4
<PAGE> 104
Independent Auditors' Report
RTRT Inc.,
as Trustee of
Ryder Truck Rental LT:
We have audited the accompanying balance sheets of Ryder Truck Rental
LT as of December 31, 1998 and 1997, and the related statements of operations,
changes in undivided trust interests and cash flows for the year ended December
31, 1998 and for the period from July 23, 1997 (date of inception) through
December 31, 1997. These financial statements are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Ryder Truck Rental
LT as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for the year ended December 31, 1998 and for the period from
inception through December 31, 1997 in conformity with generally accepted
accounting principles.
KPMG LLP
Miami, Florida
September 9, 1999
F-5
<PAGE> 105
Ryder Truck Rental LT
Balance Sheets
June 30, 1999 (unaudited) and
December 31, 1998 and 1997
December 31,
June 30, --------------------------
1999 1998 1997
----------- --------- --------
(unaudited)
ASSETS
Cash $ 76,176 75,055 75,000
-------- -------- --------
Total assets $ 76,176 75,055 75,000
======== ======== ========
LIABILITIES & UNDIVIDED TRUST INTERESTS
Undivided trust interests $ 76,176 75,055 75,000
-------- -------- --------
Total liabilities and
undivided trust interests $ 76,176 75,055 75,000
======== ======== ========
See accompanying notes to financial statements.
F-6
<PAGE> 106
Ryder Truck Rental LT
Statements of Operations
Six months ended June 30, 1999 (unaudited),
Year ended December 31, 1998 and for the
period from July 23, 1997 (date of inception) through December 31, 1997
Six Months Year Ended Inception to
ended June 30, December 31, December 31,
1999 1998 1997
---- ---- ----
(unaudited)
REVENUE:
Interest income $ 1,121 55 0
-------- -------- -------
Total revenue 1,121 55 0
-------- -------- -------
EXPENSES:
Total expenses 0 0 0
-------- -------- -------
Net income $ 1,121 55 0
======== ======== =======
See accompanying notes to financial statements.
F-7
<PAGE> 107
Ryder Truck Rental LT
Statements of Changes in Undivided Trust Interests
Six Months Ended June 30, 1999 (unaudited),
Year ended December 31, 1998
and for the period from July 23, 1997 (date of inception)
through December 31, 1997
Undivided
Capital Retained Trust
Contributions Earnings Interests
------------- ------------ -------------
Inception - July 23, 1997 $ -- -- --
Capital contributions 75,000 -- 75,000
Net income -- -- --
------- ------- -------
Balance at December 31, 1997 75,000 -- 75,000
Net income -- 55 55
------- ------- -------
Balance at December 31, 1998 75,000 55 75,055
Net income (unaudited) -- 1,121 1,121
------- ------- -------
Balance at June 30, 1999
(unaudited) $75,000 1,176 76,176
======= ======= =======
See accompanying notes to financial statements.
F-8
<PAGE> 108
Ryder Truck Rental LT
Statements of Cash Flows
Six Months Ended June 30, 1999 (unaudited),
Year ended December 31, 1998 and for the
period from July 23, 1997 (date of inception) through December 31, 1997
<TABLE>
<CAPTION>
Six Months Year Ended Inception to
Ended June 30, December 31, December 31,
1999 1998 1997
---- ---- ----
(unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES --
Net income $ 1,121 55 --
------- ------- -------
Net cash provided
by operating activities 1,121 55 --
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES --
Payment of note receivable -- -- 75,000
------- ------- -------
Net cash provided
by financing activities -- -- 75,000
------- ------- -------
Net increase in cash 1,121 55 75,000
CASH AT BEGINNING OF PERIOD 75,055 75,000 0
------- ------- -------
CASH AT END OF PERIOD $76,176 75,055 75,000
======= ======= =======
</TABLE>
NON-CASH FINANCING ACTIVITIES --
During the period ended December 31, 1997, an initial capital contribution of
$75,000 was recorded in exchange for a non-interest bearing note receivable.
See accompanying notes to financial statements.
F-9
<PAGE> 109
Ryder Truck Rental LT
Notes to Financial Statements
December 31, 1998 and 1997
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Ryder Truck Rental LT (the "Trust"), a Delaware business trust, was
formed on July 24, 1997. The purpose and responsibilities of the Trust are
described in the Amended and Restated Trust and Agreement among RTR I L.P. and
RTR II L.P., each of which is a Delaware limited partnership, as the
beneficiaries, RTRT, Inc., a Delaware corporation, as trustee, and Delaware
Trust Capital Management, Inc. and U.S. Bank National Association as Trust
Agent.
The primary business purpose of the Trust is to take assignments of,
and serve as record holder of title to, leases and vehicles for the benefit of
Ryder Truck Rental, Inc. and its subsidiaries ("Ryder") in order to facilitate
the titling of the vehicles in connection with asset-backed securities issuance
transactions. As of December 31, 1998 the Trust held title to 6,530 vehicles, of
which 2,239 provided security for a special unit of beneficial interest
("SUBI").
From time to time, Ryder will assign leases to the Trust and title the
related Vehicles in the name of the Trust. In exchange for such leases and
titles, the Trust will issue undivided trust interests ("UTIs") in the leases
and titles to Ryder. From time to time SUBIs may be created out of any UTIs to
facilitate asset-backed securities issuance transactions.
(2) INCOME TAXES
Neither the Trust nor any sub-trust constitutes a separate entity for
Federal income tax purposes or for state income or franchise purposes.
Accordingly, no taxes are provided on trust income as it is passed through to
the UTI beneficiaries.
F-10
<PAGE> 110
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in some limited circumstances, the globally offered Senior 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,
Cedelbank 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 Cedelbank 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, including 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 Cedelbank or Euroclear and DTC
Participants holding Senior Notes will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedelbank and Euroclear, in that
capacity, and as 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, 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, Cedelbank 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 U.S. corporate debt obligations.
Investor 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 Cedelbank 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 payment in the
same-day funds.
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 U.S. corporate
debt obligations in same-day funds.
TRADING BETWEEN CEDELBANK AND/OR EUROCLEAR PARTICIPANTS. Secondary
market trading between Cedelbank Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
A-1
<PAGE> 111
TRADING BETWEEN DTC SELLER AND CEDELBANK OR EUROCLEAR PURCHASER. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedelbank Participant or a Euroclear Participant, the purchaser
will send instructions to Cedelbank or Euroclear through a Cedelbank Participant
or Euroclear Participant at least one business day prior to settlement.
Cedelbank or Euroclear will instruct the respective Depositary, as the case may
be, 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, on the basis of actual days
elapsed and a 360-day year. Payment will then be made by the respective
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 respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedelbank 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 Cedelbank or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedelbank 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 preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank Participants or Euroclear Participants can elect not
to pre-position funds and allow that credit line to be drawn upon to finance the
settlement. Under this procedure, Cedelbank 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, although this result will depend
on each Cedelbank 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 Cedelbank 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 CEDELBANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Cedelbank 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 the respective Depositaries, to a DTC Participant. The seller will send
instructions to Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank or Euroclear will instruct the respective Depositaries, as
appropriate, to deliver the Global Securities 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 on the basis of actual days elapsed and a 360-day year. The payment will
then be reflected in the account of the Cedelbank Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedelbank
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 Cedelbank Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt 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 Cedelbank Participant's or Euroclear
Participant's account would instead be value as of the actual settlement date.
Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank 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-2
<PAGE> 112
(a) borrowing through Cedelbank or Euroclear for one day - until
the purchase side of the day trade is reflected in their Cedelbank 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
Cedelbank 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
Cedelbank Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding through Cedelbank 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 that beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) that beneficial owner takes one of the following steps 'to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-US. PERSONS - FORM W-8. Beneficial owners of Global
Securities that are non-U..S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Certificate of Foreign Status on Form W-8. If
the information shown on Form W-8 or the Tax Certificate changes, a new Form W-8
or Tax Certificate, as the case may be, must be filed within 30 days of that
change.
EXEMPTION FOR NON-US. 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 a certificate of Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States on Form 4224.
EXEMPTION OR REDUCED RATE FOR NON-U S. PERSONS RESIDENT IN TREATY
COUNTRIES - FORM 1001. Non-U.S. Persons that are beneficial owners of Global
Securities 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 an Ownership, Exemption or Reduced Rate Certificate on Form 1001. 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 Senior Note Owner or his agent.
EXEMPTION FOR US. PERSONS - FORM W-9. U.S. Persons can obtain a
complete exemption from the withholding tax by filing a Payer's Request for
Taxpayer Identification Number and Certification on Form W-9.
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, his agent,
files by submitting the appropriate form to the person through whom it holds -
the clearing agency, in the case of persons holding directly on the books of the
clearing agency. Form W-8 and form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any state or political subdivision thereof
(other than a partnership that is not treated as a United States person under
any applicable Treasury regulations), (iii) an estate whose income is subject to
United States federal income tax, regardless of its source or (iv) a trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States persons who have authority to control
all substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in regulations, some trusts in existence on August 20,
1996 and treated as United States persons prior to such date that elect to
continue to be so treated also shall be considered U.S. Persons.
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<PAGE> 113
This summary does not deal with all aspects of U.S. Federal income tax
withholding that may be relevant to foreign holders of the Global Securities.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.
A-4
<PAGE> 114
$
-------------
(RYDER LOGO)
RYDER VEHICLE LEASE TRUST 1999-A
RYDER FUNDING L.P.
Transferor
RYDER TRUCK RENTAL, INC.
Administrative Agent
ASSET BACKED
SENIOR NOTES:
$_____________ _____% Class A-1 Notes
$_____________ _____% Class A-2 Notes
$_____________ _____% Class A-3 Notes
$_____________ _____% Class A-4 Notes
--------------
PROSPECTUS
--------------
MERRILL LYNCH & CO.
You should rely only the information contained in this prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the Senior Notes in any state where the offer is not
permitted.
For 90 days after the date of this prospectus all dealers that effect
transactions in the Senior Notes, whether or not they are participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
_____________, 1999
<PAGE> 115
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Senior Notes being
registered hereby are estimated as follows:
SEC registration fee............................... $ *
Legal fees and expenses............................ *
Accounting fees and expenses....................... 120,000
Blue sky fees and expenses......................... *
Rating agency fees................................. 200,000
Trustee's fees and expenses........................ 50,000
Printing........................................... 150,000
Miscellaneous...................................... *
---------
Total........................................... $ *
=========
- -------------------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
provides that, subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, a limited partnership may and shall have the
power to, indemnify and hold harmless any partner or other person from and
against any and all claims and demands whatsoever.
Pursuant to Section 5.08 of the Agreement of Limited Partnership of
Ryder Funding LP (the "Transferor"), the Transferor will, to the fullest extent
permitted by law, indemnify its general partner, Ryder Truck Rental III LLC, and
its directors, officers, agents and employees acting within the scope of their
authority (the "Indemnified Parties") from and against any loss, expense damage,
liability or injury suffered or sustained by them by reason of any acts,
omissions or alleged acts or omissions arising out of any of such Indemnified
Party's activities on behalf of the Transferor or in furtherance of the interest
of the Transferor, provided that the acts, omissions, or alleged acts or
omissions upon which such actual or threatened action is based were not made or
omitted fraudulently or in bad faith or constituted willful misconduct or gross
negligence by such Indemnified Party.
Pursuant to Section 5.08 of the Agreement of Limited Partnership of
Ryder Truck Rental I LP ("RTR I LP"), the Transferor will, to the fullest extent
permitted by law, indemnify its general partner, Ryder Truck Rental I LLC, and
its directors, officers, agents and employees acting within the scope of their
authority (the "RTR I LP Indemnified Parties") from and against any loss,
expense damage, liability or injury suffered or sustained by them by reason of
any acts, omissions or alleged acts or omissions arising out of any of such RTR
I LP Indemnified Party's activities on behalf of RTR I LP or in furtherance of
the interest of RTR I LP, provided that the acts, omissions, or alleged acts or
omissions upon which such actual or threatened action is based were not made or
omitted fraudulently or in bad faith or constituted willful misconduct or gross
negligence by such RTR I LP Indemnified Party.
Pursuant to Section 5.08 of the Agreement of Limited Partnership of
Ryder Truck Rental II LP ("RTR II LP"), the Transferor will, to the fullest
extent permitted by law, indemnify its general partner, Ryder Truck Rental II
LLC, and its directors, officers, agents and employees acting within the scope
of their authority (the "RTR II LP Indemnified Parties") from and against any
loss, expense damage, liability or injury suffered or sustained by them by
reason of any acts, omissions or alleged acts or omissions arising out of any of
such RTR II LP Indemnified Party's activities on behalf of RTR II LP or in
furtherance of the interest of RTR II LP, provided that the acts, omissions, or
alleged acts or omissions upon which such actual or threatened action is based
were not made or
II-1
<PAGE> 116
omitted fraudulently or in bad faith or constituted willful misconduct or gross
negligence by such RTR II LP Indemnified Party.
Reference is also made to Section __ of the Underwriting Agreement
among the Transferor, RTR, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and the other underwriters named therein (see Exhibit 1.1),
which provides for indemnification by the Transferor in certain circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. Exhibits:
1.1 Form of Underwriting Agreement**
3.1 Certificate of Formation of Ryder Truck Rental III LLC**
3.2 Limited Liability Company Agreement of Ryder Truck Rental III LLC**
3.3 Agreement of Limited Partnership of Ryder Funding LP, dated as of
April 23, 1998, between Ryder Truck Rental, Inc. and Ryder Truck
Rental III LLC**
3.4 Certificate of Formation of Ryder Truck Rental I LLC**
3.5 Limited Liability Company Agreement of Ryder Truck Rental I LLC**
3.6 Agreement of Limited Partnership of Ryder Truck Rental I LP, dated as
of June 1, 1997, between Ryder Truck Rental, Inc. and Ryder Truck
Rental I LLC**
4.1 Form of Indenture between Ryder Vehicle Lease Trust 1999-A and U.S.
Bank National Association, as Indenture Trustee (including forms of
Senior Notes)**
5.1 Opinion of Steel Hector & Davis LLP with respect to legality**
8.1 Opinion of Steel Hector & Davis LLP with respect to federal income
tax matters**
8.2 Opinion of Steel Hector & Davis LLP with respect to Florida income
tax matters**
10.1 Second Amended and Restated Trust Agreement among Ryder Truck Rental
I LP, Ryder Truck Rental II LP, Ryder Truck Rental, Inc., Delaware
Trust Capital Management, Inc., RTRT, Inc. and U.S. Bank National
Association, dated as of February 1, 1998**
10.2 Form of Supplement 1999-A to Second Amended and Restated Trust
Agreement among Ryder Truck Rental I LP, Ryder Truck Rental II LP,
Ryder Truck Rental, Inc., Delaware Trust Capital Management, Inc.,
RTRT, Inc. and U.S. Bank National Association (including form of the
SUBI Certificates)**
10.3 Administration Agreement between RTRT, Inc. and Ryder Truck Rental,
Inc., dated as of February 1, 1998**
10.4 Form of Supplement 1999-A to Administration Agreement between RTRT,
Inc. and Ryder Truck Rental, Inc.**
10.5 Form of SUBI Certificate Transfer Agreement between Ryder Truck
Rental I LP and Ryder Funding LP**
10.6 Form of Amended and Restated Trust Agreement between Ryder Funding LP
and Chase Manhattan Bank Delaware, as Owner Trustee**
10.7 Form of Program Operating Lease between Ryder Vehicle Lease Trust
1999-A and Ryder Funding LP**
23.1 Consent of Steel Hector & Davis LLP**
23.2 Consent of Brown & Wood LLP**
23.3 Consent of Richards, Layton & Finger, P.A.**
23.4 Consent of KPMG LLP***
24.1 Power of Attorney*
25.1 Statement of Eligibility and Qualification of the Indenture Trustee
on Form T-1**
- -----------------------------
* Previously filed.
** To be filed by amendment.
*** Filed herewith.
II-2
<PAGE> 117
b. Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
Each undersigned Registrant hereby undertakes as follows:
(a) To provide to the Underwriters at the closing date specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriters to provide prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of such Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act will be deemed to be part of this registration statement as of the
time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 118
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami and State of Florida, on the 17th day of
September, 1999.
RYDER FUNDING LP, a Delaware limited partnership
By: RYDER TRUCK RENTAL III LLC, a Delaware limited
liability company, its general partner
By: RTR LEASING II, INC., a Delaware corporation, its manager
By: James B. Griffin
President
II-4
<PAGE> 119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami and State of Florida, on the 17th day of
September, 1999.
RYDER TRUCK RENTAL I LP, a Delaware limited partnership
By: RYDER TRUCK RENTAL I LLC, a Delaware limited liability
company, its general partner
By: RTR LEASING I, INC., a Delaware corporation, its manager
By: James B. Griffin
President
II-5
<PAGE> 120
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami and State of Florida, on the 17th day of
September, 1999.
RYDER TRUCK RENTAL LT, a Delaware business trust
By: RYDER TRUCK RENTAL, INC., a Florida corporation, its
administrative agent
By: James B. Griffin
President
II-6
<PAGE> 121
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami and State of Florida, on the 17th day of
September, 1999.
RYDER VEHICLE LEASE TRUST 1999-A, a Delaware trust
By: RYDER FUNDING LP, a Delaware limited partnership, solely as
originator of Ryder Vehicle Lease Trust 1999-A
By: RYDER TRUCK RENTAL III LLC, a Delaware limited liability
company, its general partner
By: RTR LEASING II, INC., a Delaware corporation, its manager
By: James B. Griffin
President
II-7
<PAGE> 122
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement on Form S-1 has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Director and President September 17, 1999
of the Manager of the General
James B. Griffin Partner of RYDER TRUCK RENTAL I LP,
RYDER TRUCK RENTAL II LP and RYDER
FUNDING LP (Principal Executive
Officer)
- ------------------------------ Vice President & Controller September 17, 1999
George P. Scanlon* of the Manager of the General Partner
of RYDER TRUCK RENTAL I LP, RYDER
TRUCK RENTAL II LP and RYDER FUNDING LP
(Principal Financial and Accounting Officer)
- ------------------------------ Director of the Manager of the General Partner September 17, 1999
M. Anthony Burns* of RYDER TRUCK RENTAL I LP, RYDER TRUCK RENTAL
II LP and RYDER FUNDING LP
- ------------------------------ Director of the Manager of the General Partner September 17, 1999
Edwin A. Huston* of RYDER TRUCK RENTAL I LP, RYDER TRUCK RENTAL
II LP and RYDER FUNDING LP
- ------------------------------ Director of the Manager of the General Partner September 17, 1999
John M. Beeson Jr.* of RYDER TRUCK RENTAL I LP, RYDER TRUCK RENTAL
II LP and RYDER FUNDING LP
- ------------------------------- Director of the Manager of the General Partner September 17, 1999
Michael J. Blake* of RYDER TRUCK RENTAL I LP, RYDER TRUCK RENTAL
II LP and RYDER FUNDING LP
*By: W. Daniel Susik
Attorney-in-fact
</TABLE>
II-8
<PAGE> 123
EXHIBIT INDEX
1.1 Form of Underwriting Agreement**
3.1 Certificate of Formation of Ryder Truck Rental III LLC**
3.2 Limited Liability Company Agreement of Ryder Truck Rental III LLC**
3.3 Agreement of Limited Partnership of Ryder Funding LP, dated as of
April 23, 1998, between Ryder Truck Rental, Inc. and Ryder Truck
Rental III LLC**
3.4 Certificate of Formation of Ryder Truck Rental I LLC**
3.5 Limited Liability Company Agreement of Ryder Truck Rental I LLC**
3.6 Agreement of Limited Partnership of Ryder Truck Rental I LP, dated as
of June 1, 1997, between Ryder Truck Rental, Inc. and Ryder Truck
Rental I LLC**
4.1 Form of Indenture between Ryder Vehicle Lease Trust 1999-A and U.S.
Bank National Association, as Indenture Trustee (including forms of
Senior Notes)**
5.1 Opinion of Steel Hector & Davis LLP with respect to legality** 8.1
Opinion of Steel Hector & Davis LLP with respect to federal income
tax matters**
8.2 Opinion of Steel Hector & Davis LLP with respect to Florida income
tax matters**
10.1 Second Amended and Restated Trust Agreement among Ryder Truck Rental
I LP, Ryder Truck Rental II LP, Ryder Truck Rental, Inc., Delaware
Trust Capital Management, Inc., RTRT, Inc. and U.S. Bank National
Association, dated as of February 1, 1998**
10.2 Form of Supplement 1999-A to Second Amended and Restated Trust
Agreement among Ryder Truck Rental I LP, Ryder Truck Rental II LP,
Ryder Truck Rental, Inc., Delaware Trust Capital Management, Inc.,
RTRT, Inc. and U.S. Bank National Association (including form of the
SUBI Certificates)**
10.3 Administration Agreement between RTRT, Inc. and Ryder Truck Rental,
Inc., dated as of February 1, 1998**
10.4 Form of Supplement 1999-A to Administration Agreement between RTRT,
Inc. and Ryder Truck Rental, Inc.**
10.5 Form of SUBI Certificate Transfer Agreement between Ryder Truck
Rental I LP and Ryder Funding LP**
10.6 Form of Amended and Restated Trust Agreement between Ryder Funding LP
and Chase Manhattan Bank Delaware, as Owner Trustee**
10.7 Form of Program Operating Lease between Ryder Vehicle Lease Trust
1999-A and Ryder Funding LP**
23.1 Consent of Steel Hector & Davis LLP**
23.2 Consent of Brown & Wood LLP**
23.3 Consent of Richards, Layton & Finger, P.A.**
23.4 Consent of KPMG LLP***
24.1 Power of Attorney*
25.1 Statement of Eligibility and Qualification of the Indenture Trustee
on Form T-1**
- --------------------
* Previously filed.
** To be filed by amendment.
*** Filed herewith.
II-9
<PAGE> 1
EXHIBIT 23.4
Independent Auditors' Consent
RTRT Inc. as Trustee of Ryder Truck Rental LT
Chase Manhattan Bank Delaware, as
Owner Trustee for Ryder Vehicle Lease Trust 1999-A:
We consent to the use of our reports dated September 9, 1999 included herein
and to the reference to our firm under the heading "Experts" in the
registration statement.
KPMG LLP
Miami, Florida
September 15, 1999
