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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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
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(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 and Ryder Truck Rental I LP)
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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
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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. [ ]
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CALCULATION OF REGISTRATION FEE
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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)
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<S> <C> <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-A1 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 "Series 1999-A SUBI") will not
be offered to investors hereunder. A 99% Special Unit of Beneficial
Interest Certificate will be issued for each Series 1999-A SUBI (the
"SUBI Certificates") representing a 99% undivided interest in each
Series 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.
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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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Subject to Completion, Preliminary
Prospectus dated June 24, 1999
$__________
(RYDER LOGO)
RYDER VEHICLE LEASE TRUST 1999-A
ASSET BACKED SENIOR NOTES
RYDER FUNDING LP
Transferor
RYDER TRUCK RENTAL, INC.
Administrative Agent
GENERAL--
BEFORE YOU DECIDE TO o The trust's main sources for payment of the
INVEST, READ THIS senior notes will be lease payments generated by
PROSPECTUS, ESPECIALLY a portfolio of full service truck, tractor and
THE RISK FACTORS trailer lease contracts and proceeds from the
BEGINNING ON PAGE __ sale of the related leased vehicles.
IN THE PROSPECTUS
o Interest and principal will be payable quarterly,
The senior notes are on the 15th day of February, May, August and
obligations of the trust November. The first scheduled payment date
only. The senior notes ____________ 15, 1999.
are not obligations of
Ryder Funding LP, o The class of senior notes with the earliest
Ryder Truck Rental, Inc. maturity date will receive all principal payable
or any of their to the senior notes until it is paid in full.
affiliates. This sequential payment will continue until all
the classes of senior notes are paid in full.
This prospectus
relates only to the CREDIT ENHANCEMENT--
senior notes. Neither
the asset backed o The trust will issue $____________ of asset
certificates nor the backed subordinated notes which are subordinated
subordinated notes are to the senior notes.
offered under this
prospectus. o The trust will also issue $____________ of asset
backed certificates which are subordinated to the
senior notes.
o The reserve fund will be funded with an initial
deposit of $____________ by the transferor.
THE TRUST WILL ISSUE THE FOLLOWING CLASSES OF ASSET BACKED SENIOR NOTES--
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Original Interest Proceeds to
Principal Rate Price to Underwriting the
Amount (per annum) Final Payment Date Public(1) Discount Transferor(1)(2)
-------------- ----------- ------------------ --------- ------------ ----------------
<S> <C> <C> <C> <C>
Per Class A-1 Note $_____________ _____% ___________ _____ __________% _____% __________%
Per Class A-2 Note $_____________ _____% ___________ _____ __________% _____% __________%
Per Class A-3 Note $_____________ _____% ___________ _____ __________% _____% __________%
Per Class A-4 Note $_____________ _____% ___________ _____ __________% _____% __________%
Total ............ $_____________ __________% _____% __________%
</TABLE>
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(1) Plus accrued interest, if any, from the date the senior notes are issued.
(2) Before deducting expenses payable by the transferor estimated to be
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, Pierce, Fenner & Smith Incorporated is acting as underwriter
for the issuance of the senior notes. Delivery of the senior notes is expected
to be made in book entry form on or about _______, 1999. The certificates will
be offered in the United States and Europe.
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Merrill Lynch & Co.
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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.
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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. You should
not assume that the information in this prospectus is accurate as of any date
other than the date at the bottom of the front page.
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 ____ of this prospectus.
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 such offer or solicitation is not
authorized;
o if the person making such offer or solicitation is not qualified
to do so; or
o if such offer or solicitation is made to anyone to whom it is
unlawful to make such offer or solicitation.
TRANSACTIONS THAT MAY AFFECT THE PRICE OF THE SENIOR NOTES
Certain participants in this offering may engage in transactions that
stabilize, maintain or otherwise affect the price of any class of senior notes.
Engaging in or discontinuing such transactions could affect the prices of the
senior notes. For a description of these activities, see "Underwriting".
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TABLE OF CONTENTS
PAGE
OVERVIEW OF TRANSACTION.............................4
SUMMARY.............................................5
RISK FACTORS.......................................10
THE TRUST..........................................15
Formation..........................................15
Capitalization.....................................15
The Owner Trustee..................................16
Property of the Trust..............................16
USE OF PROCEEDS....................................17
THE ORIGINATION TRUST..............................17
General............................................17
The UTI Beneficiaries..............................18
The Origination Trustee............................18
Property of the Origination Trust..................18
THE SUBI...........................................19
General............................................19
Transfers of the SUBI Certificates.................20
THE TRANSFEROR.....................................20
RYDER..............................................20
General............................................20
Shared Services Center.............................21
The Leases.........................................22
Lease Underwriting Procedures......................25
Insurance..........................................25
Collection, Repossession and Disposition
Procedures.......................................26
Servicing..........................................27
Lease Payments.....................................27
Historical Data....................................29
Delinquency Experience.............................29
Write-off Experience...............................29
Residual Value Performance.........................29
Year 2000 Preparation..............................30
THE SPECIFIED LEASES...............................31
General............................................31
Characteristics of the Specified Leases............32
Representations, Warranties and Covenants..........36
MATURITY, PAYMENT AND YIELD CONSIDERATIONS.........37
NOTE FACTORS AND TRADING INFORMATION...............41
DESCRIPTION OF THE SENIOR NOTES....................41
General............................................41
Interest...........................................42
Principal..........................................42
Optional Purchase..................................44
The Indenture Trustee..............................44
Book-Entry Registration............................44
CERTAIN INFORMATION REGARDING THE SECURITIES.......47
Payments on the Securities.........................47
Definitive Notes...................................50
SECURITY FOR THE SECURITIES........................51
General............................................51
The Program Operating Lease........................51
The Contingent and Excess Liability Insurance......55
ADDITIONAL DOCUMENT PROVISIONS.....................56
The Indenture......................................56
The Trust Agreement................................59
The SUBI Trust Agreement...........................60
The Administration Agreement.......................63
Removal or Replacement of the Administrative
Agent............................................70
Miscellaneous Provisions...........................71
CERTAIN LEGAL ASPECTS OF THE
ORIGINATION TRUST AND THE
SUBI.............................................75
The Origination Trust..............................75
The SUBI...........................................76
Insolvency-Related Matters.........................76
CERTAIN LEGAL ASPECTS OF THE
SPECIFIED LEASES AND THE
SPECIFIED VEHICLES...............................78
Back-up Security Interests.........................78
Vicarious Tort Liability...........................79
Repossession of Specified Vehicles.................80
Deficiency Judgments...............................80
Other Limitations..................................80
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES.....................................80
General............................................80
Senior Notes.......................................81
CERTAIN STATE TAX CONSEQUENCES.....................85
General............................................85
Delaware...........................................85
Florida............................................86
Miscellaneous......................................86
ERISA CONSIDERATIONS...............................86
General............................................86
Prohibited Transactions............................86
RATINGS OF THE SECURITIES..........................87
UNDERWRITING.......................................87
AVAILABLE INFORMATION..............................89
INDEX OF PRINCIPAL TERMS...........................90
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OVERVIEW OF TRANSACTION
(graphic omitted)
THE SUBI CONTAINS THE SPECIFIED VEHICLES AND THE SPECIFIED LEASES AND IS SPLIT
INTO TWO PARTS:
o The Vehicle SUBI represents the Specified Vehicles only.
o The Lease SUBI represents the Specified Leases only.
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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 certain 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.
PRINCIPAL PARTIES
THE TRUST
o Ryder Vehicle Lease Trust 1999-A
THE TRANSFEROR
o Ryder Funding LP
THE OWNER TRUSTEE
o Chase Manhattan Bank Delaware
THE INDENTURE TRUSTEE
o U.S. Bank National Association
THE ORIGINATION TRUST
o Ryder Truck Rental LT
THE ORIGINATION TRUSTEE
o RTRT, Inc.
THE ADMINISTRATIVE AGENT
o Ryder Truck Rental, Inc.
THE MAINTENANCE PROVIDER
o Ryder Truck Rental, Inc.
THE SENIOR NOTES
GENERAL
This prospectus relates only to the offering by the trust of the following
classes of asset backed senior notes:
o Class A-1 Notes in the aggregate principal amount of $__________;
o Class A-2 Notes in the aggregate principal amount of $__________;
o Class A-3 Notes in the aggregate principal amount of $__________; and
o Class A-4 Notes in the aggregate principal amount of $__________.
The trust is also issuing $__________ aggregate principal amount of asset backed
subordinated notes and $__________ aggregate principal amount of asset backed
certificates. The trust is not offering the subordinated notes or the asset
backed certificates under this prospectus.
PAYMENT DATES
Payments on the senior notes will be made to you on the fifteenth day of each
February, May, August and November. If the fifteenth is not a business day,
payments will be made to you on the next business day. The first payment date is
__________ __, 1999.
INTEREST PAYMENTS
The interest rate for each class of senior notes is specified on the cover page
of this prospectus. 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 of twelve 30-day months.
PRINCIPAL PAYMENTS
The timing of payments of principal on the senior notes, and asset backed
securities in general, 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 portfolio of motor
vehicle lease contracts and proceeds from the sale of the related 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.
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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 then to the subordinated notes until they have been paid
in full, and then to the asset backed certificates.
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 SUCH LOSSES.
FINAL SCHEDULED PAYMENT DATES
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.
OPTIONAL PURCHASE
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.
TRUST PROPERTY
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 right to receive 99% of the amounts realized from sales of
specified vehicles; and
o monies 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 SUBI certificate
for the vehicle SUBI to the transferor, subject to the lien of the indenture.
Pursuant to the program operating lease and a pledge of the SUBI certificate for
the lease SUBI, the transferor will be obligated to make payments during the
period that each underlying specified vehicle is represented by the vehicle SUBI
and subject to 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 on the program operating lease 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 the annual termination
option generally included in each specified lease.
The trust will apply these collected payments, together with certain proceeds
received for the related
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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 asset backed certificates in accordance with their terms.
THE SPECIFIED LEASES AND THE SPECIFIED VEHICLES
The specified vehicles are trucks, highway tractors and trailers titled in the
name of the origination trust. The specified leases are full-service leases of
specified vehicles. Ryder Truck Rental, Inc. originated the specified leases in
[29] 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 residual value proceeds of the specified vehicles 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 certain special units of beneficial interest,
which are also called SUBIs, including:
o a lease SUBI that will constitute a beneficial interest in a specified
portfolio of lease contracts, and
o a vehicle SUBI that will constitute a beneficial interest in certain vehicles
that are titled in the name of the origination trust and leased under those
lease contracts.
The SUBI relating to the trust thus consists of the lease SUBI and the vehicle
SUBI. The SUBI relating to the trust 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 for the SUBI assets. Payments made on or
for 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 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 SUBI" 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 asset backed certificates;
o the reserve fund; and
o the residual value surplus account.
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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 ASSET BACKED
CERTIFICATES
The asset backed 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 of
$__________ (__% of the aggregate initial securitization value of
the specified leases and specified vehicles) into the reserve fund.
o On each payment date, any excess interest collections remaining
after interest on the senior notes and asset backed certificates and
certain other obligations and expenses of the trust have been paid
will be deposited into the reserve fund. However, this deposit will
be made 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 asset backed 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 asset backed
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 aggregate net proceeds
from the sale of specified vehicles during a collection period are less than the
aggregate securitization values of those specified vehicles and their specified
leases.
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 three-month
collection period exceeded its securitization value.
After all the 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, special federal income tax counsel to the transferor,
is of the opinion that the senior notes will be characterized as indebtedness
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 REGARDING FEDERAL INCOME TAX ISSUES THAT ARE IMPORTANT TO
OWNERS OF THE SENIOR NOTES, 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
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contemplating a purchase of senior notes should consult their counsel before
making a purchase.
FOR MORE INFORMATION SEE "ERISA CONSIDERATIONS".
DENOMINATIONS, REGISTRATION AND SETTLEMENT
The senior notes will be issued in book-entry form in minimum denominations of
$1,000 and in whole-dollar denominations. Your senior notes will be registered
in the name of Cede & Co., as the nominee of The Depository Trust Company. You
will not receive a definitive certificate representing your interest, except in
limited circumstances.
You may elect to hold your senior notes through DTC, in the United States, or
Cedelbank, societe anonyme or the Euroclear System, in Europe. Transfers within
DTC, Cedelbank or Euroclear, as the case may be, will be made in accordance with
the usual rules and operating procedures of those systems. Cross-market
transfers between persons holding directly or indirectly through DTC and
counterparties holding directly or indirectly through Cedelbank or Euroclear
will be made in DTC through the relevant depositaries of Cedelbank or Euroclear.
We expect that the senior notes will be delivered in book-entry through the
facilities of DTC, Cedelbank and Euroclear on or about the closing date of the
offering.
SEE "DESCRIPTION OF THE SENIOR NOTES--GENERAL" AND "--BOOK-ENTRY REGISTRATION".
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.
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RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the senior notes:
YOU MAY HAVE DIFFICULTY
SELLING YOUR
SENIOR NOTES. 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 (i.e.,
there has been a lack of liquidity), and there
may be such 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.
THE TRUST HAS LIMITED
ASSETS TO MAKE
PAYMENTS ON YOUR NOTES. o The trust does not have, nor is it permitted
or 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 certain 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 asset backed 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 such delinquencies and losses exceeds
the available credit enhancement, you may
experience delays in payments due to you and
you could 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 such
class divided by the unpaid principal amount
of all classes. As a result, each class of
senior notes with a later maturity may be
allocated more losses than each class of
senior notes with an earlier maturity as a
relative percentage of their initial principal
amounts.
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
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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.
THE GEOGRAPHIC
CONCENTRATION OF THE
LEASES AND ECONOMIC FACTORS
COULD NEGATIVELY AFFECT THE
TRUST'S ASSETS. o The specified leases were originated in [29]
states, with the largest percentage of
specified leases originated in
[_____________]. Less than [___]% of the total
number of specified leases were originated in
any state other than ________, ________ and
________. Adverse economic conditions in one
of more of these states 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 specified vehicles relating to
terminated specified leases for an amount at
least equal to their residual values.
THE ADMINISTRATIVE AGENT
AND MAINTENANCE PROVIDER
MAY HAVE CONFLICTS OF
INTEREST. o Ryder Truck Rental, Inc., in addition to
serving as administrative agent and
maintenance provider, also is and will be
engaged in leasing and providing maintenance
services in connection with its own vehicles.
It therefore may from time to time have
conflicts of interest in performing its
obligations with respect to the specified
vehicles and specified leases. Ryder has
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.
THE DEFAULT, REPLACEMENT OR
DECLINE IN QUALITY OF
SERVICE OF THE ADMINISTRATIVE
AGENT OR THE MAINTENANCE
PROVIDER COULD DELAY
OR LIMIT PAYMENTS ON
THE SENIOR NOTES. o Because the specified leases and specified
vehicles will be serviced and maintained by
the administrative agent and the maintenance
provider, a default by or the replacement of
either or both of them could reduce or delay
payments made under the specified leases. 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 either
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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<PAGE> 13
LIENS MAY BE IMPOSED ON THE
TRUST'S ASSETS DUE TO ERISA
LIABILITIES. o The specified leases and specified vehicles
could become subject to liens in favor of the
Pension Benefit Guaranty Corporation to
satisfy the unpaid ERISA obligations of any
member of an "affiliated group" that includes
the administrative agent, the transferor and
any of their affiliates. These liens would
have priority over the interest of senior note
holders in SUBI assets like the specified
vehicles that are not subject to a prior
perfected security interest in favor of the
indenture trustee.
VICARIOUS TORT LIABILITY
MAY RESULT IN
A LOSS OF 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. In any case, 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.
A BANKRUPTCY OF THE
TRANSFEROR OR THE
ADMINISTRATIVE AGENT
COULD DELAY OR LIMIT
PAYMENTS ON THE SENIOR
NOTES. o Following a bankruptcy or insolvency of the
administrative agent or 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.
YEAR 2000 COMPUTER PROBLEMS
COULD DELAY OR LIMIT
PAYMENTS ON THE SENIOR
NOTES. 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 (the year '00 to the computer),
those computers will not know whether the '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
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<PAGE> 14
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.
A CHANGE OR WITHDRAWAL
OF THEIR INITIAL RATINGS WILL
AFFECT THE PRICES FOR THE
SENIOR NOTES. o A security rating is not a recommendation by a
rating agency that you 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. Any
subsequent change in rating is likely to
affect 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, 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 then
distribute any remaining proceeds to the
subordinated note holders until they are paid
in full, and then distribute any remaining
proceeds to the asset backed certificate
holders. If these proceeds and amounts are not
sufficient to pay the senior notes in full,
you would incur a loss on your investment.
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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<PAGE> 15
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,
certain full-service 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") undivided trust interests respectively
representing 99% and 1% undivided beneficial interests in all assets of the
Origination Trust that have not otherwise been allocated to a securitization
like the one described in this prospectus (collectively, the "UTI"). The trustee
of the Origination Trust will be directed by the UTI Beneficiaries:
o to establish two special units of beneficial interest (each a
"Series 1999-A SUBI," and collectively, the "SUBI");
o to allocate a separate portfolio of leases and certain related
assets of the Origination Trust (the "Specified Leases") to one
Series 1999-A SUBI (the "Lease SUBI"); and
o to allocate the vehicles that are leased under the Specified Leases
and certain other related assets of the Origination Trust (the
"Specified Vehicles") to the other Series 1999-A SUBI (the "Vehicle
SUBI").
The SUBI 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 Series 1999-A SUBI.
Upon creation of the SUBI, the 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. The
SUBI will evidence an indirect beneficial interest, rather than a direct legal
interest, in the SUBI Assets. The SUBI will not represent a beneficial interest
in any Origination Trust Assets other than the 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 SUBI
(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 SUBI" and "The Origination Trust".
RTR I LP will sell, transfer and assign its 99% interest in both of the
Series 1999-A SUBIs (the "SUBI Interest") to Ryder Funding LP (the "Transferor")
and the Transferor will in turn (a) transfer and assign the certificate
representing the Vehicle SUBI (the "Vehicle SUBI Certificate") to Ryder Vehicle
Lease Trust 1999-A (the "Trust"), and (b) pledge the certificate representing
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 such Securities are referred to as "Securityholders". Each
Note will represent an obligation of, and for certain 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 subject to the Program Operating
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<PAGE> 16
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 created through a supplement dated ________, 1999 to an amended and
restated trust agreement, dated May 1, 1998 (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
_____________, 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:
o issuing the Securities;
o acquiring the SUBI Certificates and the other property of the Trust
Estate with the proceeds from the sale of the Senior Notes and the
Certificates to third party investors and from the issuance of the
Subordinated Notes and the Transferor Certificate to the Transferor;
o making payments on the Securities;
o assigning and pledging the Trust Estate to the Indenture Trustee;
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.
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 such date:
Senior Notes................................... $
Subordinated Notes.............................
Certificates...................................
Transferor Certificate.........................
-----------------
Total....................................... $
=================
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<PAGE> 17
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware will be 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 Trust SUBI Certificate Transfer
Agreement and will pledge the Lease SUBI Certificate to the Trust. The Trust
will then pledge its interest in each SUBI Certificate to the Indenture Trustee
under the Indenture and then, subject to such pledge, will lease the Vehicle
SUBI Certificate to the Transferor pursuant to the Program Operating Lease. See
"The SUBI--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 consist of:
o the Vehicle SUBI Certificate, evidencing a 99% beneficial interest
in the assets allocated to 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 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 Trust 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 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 be subject to 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
SUBI", "Certain Legal Aspects of the Origination Trust and the SUBI--The SUBI"
and "Certain Legal Aspects of the Specified Leases and the Specified
Vehicles--Back-up Security Interests".
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<PAGE> 18
USE OF PROCEEDS
The net proceeds from the sale of the Senior Notes (I.E., 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 to acquire the Vehicle SUBI Certificate.
THE ORIGINATION TRUST
GENERAL
The Origination Trust is a Delaware business trust and was formed
pursuant to 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 such 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 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 such capacity, the "Administrative Agent"), Ryder will
service the Leases, including the Specified Leases, and, as maintenance provider
(in such 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 therein or securities thereof 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 (other
than 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.
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".
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<PAGE> 19
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 certain 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
such 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 thereof;
o all of Ryder's rights with respect to such 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 such
Vehicle's certificate of title. Liens will not be placed on such 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 to the Trust, the Administrative
Agent will be obligated to repurchase any Vehicles subject to Leases not meeting
certain representations and warranties of the Administrative Agent by making
Reallocation Payments in respect thereof. Such representations and warranties
relate primarily to the origination of the Leases, and do not typically relate
to the creditworthiness of the related Obligors or the collectibility of such
Leases.
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All of the Specified Vehicles are titled in the name of the Origination
Trust or the Origination Trustee on behalf of the Origination Trust. Certain
other Leases and Vehicles originated after the date of this prospectus will be
assigned to the Origination Trust on or before the delivery date of each
Vehicle, 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. Such interests will be evidenced with respect to (a) Leases
and Vehicles not allocated to the Series 1999-A SUBIs or an Other SUBI, by the
UTI, (b) the Specified Leases and the Specified Vehicles, by the Series 1999-A
SUBIs or (c) certain 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 SUBI
GENERAL
Each Series 1999-A SUBI will be issued by the Origination Trust under a
supplement to be dated as of _______, 1999 (the "SUBI Supplement" and, together
with the Origination Trust Agreement, the "SUBI Trust Agreement") to the
Origination Trust Agreement. The SUBI will not represent a direct interest in
the SUBI Assets or an interest in any Origination Trust Assets other than the
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 SUBI 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 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 thereof or payments thereon
received or due on or after ___________, 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 will evidence a beneficial interest in the Vehicle
SUBI Assets, which will generally consist of the Specified Vehicles and all
proceeds thereof or payments thereon 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
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.
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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 ____________, 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 _____________,1999 (the "Trust SUBI
Certificate Transfer Agreement");
o deliver the Vehicle SUBI Certificate to the Trust;
o pledge to the Trust the Lease SUBI Certificate and the SUBI Interest it
represents under a pledge agreement dated as of ___________, 1999 (the "Lease
SUBI Pledge Agreement") 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 SUBI and Other SUBIs, causing securities
such as the Senior Notes to be issued, and engaging in related transactions. The
limited partnership agreement of the Transferor and the limited liability
company agreement of RTR III LLC limit their respective activities to such
purposes and to any activities incidental or necessary thereto.
RYDER
GENERAL
Ryder is a Florida corporation that was incorporated in 1953 and is a
wholly owned subsidiary of Ryder System, Inc. ("Ryder System"). Ryder System is
a publicly held Florida corporation that was incorporated in 1955. Ryder
System's common stock, which is listed and traded on the New York Stock Exchange
under the symbol "R",
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is a component of both the Dow Jones Transportation Average and the Standard &
Poor's 500 Index. 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;
o integrated logistics, including dedicated contract carriage, the
management of carriers and inventory deployment; and
o public transportation management, operations and maintenance
services and student transportation services.
At December 31, 1998, Ryder System and its subsidiaries had a fleet of
173,116 vehicles and 45,373 employees. Ryder provides full service truck leasing
to nearly 13,000 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 and 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.
Through Ryder Integrated Logistics, Inc. ("Ryder Integrated
Logistics"), Ryder System provides global integrated logistics services and
custom-tailored commercial and consumer product distribution, including
dedicated contract carriage, carrier management and inventory deployment,
utilizing information technology, from 735 locations in the United States and
Canada. "Integrated logistics services" means a system-wide management view of a
customer's entire supply chain, from raw materials supply through finished goods
distribution. Services include varying combinations of logistics system design,
the provision of vehicles, equipment, maintenance and drivers, warehouse
management (including cross docking and flow-through distribution),
transportation management, vehicle dispatch and inbound and outbound
just-in-time and merge-in-transit delivery. Logistics systems include
procurement and management of all modes of transportation, shuttles, interstate
long-haul operations, just-in-time service to assembly plants, and
factory-to-warehouse-to-retail facility service. These services are used in a
variety of industry sectors, including the automotive, telecommunications,
utilities, health care, paper and paper packaging, chemical, electronic and
office equipment, news, food and beverage, housing and general retail
industries, along with other industries and the federal sector.
In international markets outside the United States and Canada, Ryder
System subsidiaries also provide a wide variety of logistics and transportation
services, including full service leasing of trucks, tractors and trailers,
commercial truck rental, contract truck maintenance and a broad range of
integrated logistics, warehousing and supply chain management services. At
December 31, 1998, Ryder System subsidiaries providing service through 140
locations in the United Kingdom, Germany, Mexico, Poland, Argentina, The
Netherlands and Brazil, had 13,209 lease and rental vehicles and 5,310 employees
at those locations.
Through the Ryder Public Transportation Services group of companies
("Ryder Public Transportation Services"), Ryder System provides public
transportation management, operations and maintenance services, student
transportation services and manages and maintains vehicles and equipment
primarily for municipalities and utilities. As of December 31, 1998, Ryder
Public Transportation Services managed or operated 5,000 vehicles under
long-term contracts with 86 public transportation agencies in 28 states and the
District of Columbia, operated 10,200 school buses under long-term contracts
with 477 school systems in 26 states, maintained more than 30,000 pieces of
equipment for public transit agencies, cities, counties, colleges and utilities.
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:
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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. 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 over 13,500 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
such Vehicle to its original condition, if any structural alterations have been
made by such 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
such Vehicle, as well as payments for certain 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,
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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 such Lease. Such a termination may occur either (a) as part
of the termination of a master lease, thus effecting the termination of all
Vehicles leased under such a 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 such 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 such 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
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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.
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 such Vehicles in a reckless or abusive manner;
o operate such 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 such
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 such 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 such 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 such Vehicles, 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 Vehicles 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.
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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 such Insured
Vehicle in defending any claim. Within 30 days after such 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 the Insured
Vehicle, including any proceeds owed under any physical damage insurance policy
obtained by such 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
such notice, the related Lease will terminate as to such Insured Vehicle once
the related Obligor pays Ryder all amounts owed to Ryder for such Insured
Vehicle under such Lease, including any proceeds received by such 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 such 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 certain 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 such Vehicle (the "Termination
Value"). Additionally, the Obligor must pay all sales and use taxes relating to
such 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 such 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 such Obligor may have
the right to reject some or all of the Leases relating to such Obligor, in which
case such Obligor would not be required to perform its obligations under such
Leases, and although Ryder could treat such 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. Such liability insurance must cover both parties,
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either as an insured or additional insured, for the ownership, maintenance, use
and operation of such 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 such 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 of such 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, such 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 such repair is defective, then Ryder
may re-repair such 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 such salvage value from the amount owed to Ryder by the related
Obligor for such 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 such 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, such 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 such 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.
26
<PAGE> 28
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.
SERVICING
LEASE PAYMENTS. 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. Such 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"). On a daily basis, invoices that
include securitized Vehicles will be compared with payments received for such
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 such Advances.
RESIDUALS. Ryder will begin the disposal process for Specified Vehicles
upon the related Maturity Date or date of early termination of the related
Specified Lease. 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 such Specified Vehicle comes off-lease, Ryder will
advance the Securitization Value to the SUBI Collection Account for such
Specified Vehicle. See "Additional Document Provisions--The Administration
Agreement--Advances" for a discussion of the calculation of Sales Proceeds
Advances and the repayment of such 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 such 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: (a) 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; (b) a variable charge, which changes from
month to month depending on Vehicle usage; (c) a variable charge for fuel
provided by Ryder during the preceding month; and (d) 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".
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 such 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 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
27
<PAGE> 29
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.
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:
Calculation Date Securitization Value Formula
---------------- ----------------------------
as of the Cutoff Date -- the value of such 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 such
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 such Specified Lease and (b)
the Residual Value of such Specified
Vehicle.
For each Specified Lease, the Financial Component will equal the
constant payment required to amortize the Net Book Value of such Specified Lease
and the related Specified Vehicle to the Residual Value of such 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
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 such Specified Vehicle over the remaining Lease Term, plus the
Residual Value of such 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) [0.50%].
28
<PAGE> 30
HISTORICAL DATA
The following tables set forth certain 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 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.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, AT DECEMBER 31,
------------------------- --------------------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994 1993
---------- ------------- ------------- ------------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Customers n/a 10,965 11,217 11,287 11,393 10,923 10,208 9,312
Number of Vehicles... n/a 79,976 83,639 78,441 73,596 74,296 69,147 68,505
Ending Net Book
Value of Vehicles(1). $ n/a 2,405,114,469 2,534,963,106 2,361,689,419 2,446,857,356 2,414,791,790 2,011,432,118 1,672,581,428
Dollar Amount of
Leases Delinquent(2).
61-90 Days....... $ n/a 6,068,691 7,794,902 7,579,897 2,219,323 1,624,538 1,449,054 1,197,368
91 Days or More $ n/a 3,170,869 3,028,988 4,780,667 1,784,904 1,568,546 1,486,811 1,071,602
Percentage
Delinquent as a
Percentage of Net
Book Value(3)
61-90 Days....... n/a 0.25% 0.31% 0.32% 0.09% 0.07% 0.07% 0.07%
91 Days or More.. n/a 0.13% 0.12% 0.20% 0.07% 0.06% 0.07% 0.06%
</TABLE>
- ----------------------
(1) Based on the sum of the Net Book Value of all Vehicles under the Leases.
(2) The period of delinquency is based on the number of days any portion of a
payment is contractually past due.
(3) 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 1993
--------- -------------- ------------- ------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Customers n/a 10,965 11,217 11,287 11,393 10,923 10,208 9,312
Number of Vehicles n/a 79,976 83,639 78,441 73,596 74,296 69,147 68,505
Ending Net Book
Value of Vehicles.... $ n/a 2,405,114,469 2,534,963,106 2,361,689,419 2,446,857,356 2,414,791,790 2,011,432,118 1,672,581,428
Dollar Amount of
Write-offs(1)(2).... $ n/a 3,495,406 5,339,570 6,157,679 4,076,039 3,560,213 1,915,465 1,802,345
Write-offs as a
Percentage of Net
Book Value(3)....... (4)n/a (4)0.29% 0.21% 0.26% 0.17% 0.15% 0.10% 0.11%
</TABLE>
- ----------------------
(1) Occurs at the time Ryder formally determines a Lease receivable to be
uncollectible and removes the Lease receivable from its books.
(2) Net of recoveries.
(3) As a percentage of the aggregate Net Book Value of Vehicles at period end.
(4) Annualized.
RESIDUAL VALUE PERFORMANCE
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, AT DECEMBER 31,
------------------------ ------------------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994 1993
--------- ------------- ------------- ------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Vehicles
Sold(1)............. n/a 7,289 11,044 13,991 10,995 9.103 5,366 3,098
Aggregate Residual
Values of Vehicles
Sold................ $ n/a 102,419,468 160,944,969 216,021,947 148,034,758 121,634,954 61,878,942 34,999,071
Aggregate Sales
Proceeds............. $ n/a 119,710,370 185,875,097 249,742,543 178,802,578 151,322,305 79,750,999 42,596,676
Aggregate Gain (Loss) $ n/a 17,290,902 24,930,129 33,720,597 30,767,820 29,687,351 17,872,057 7,597,605
Average Gain (Loss)
Per Vehicle......... $ n/a 2,372 2,257 2,410 2,798 3,261 3,331 2,452
</TABLE>
- ----------------
(1) Only includes Vehicles that were under full service lease contracts. These
full service lease contracts were all originated after [December 31, 1989].
29
<PAGE> 31
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 projects are at
different phases of completion; overall, approximately [75]% of the effort in
this area has been performed as of [April 30, 1999]. Remediation and testing
activities are underway on most core business applications. 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
30
<PAGE> 32
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
it's 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.
The foregoing description 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. The Senior Noteholders are
cautioned 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
31
<PAGE> 33
warrant that it used no adverse selection procedures in selecting the Specified
Leases for inclusion in the 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 such
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 such insurance), failure
to make required repairs on the related Specified Vehicle or failure to comply
with any other term or condition of such 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 such 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 such
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 the Reserve Fund (and, in the case of the Senior Notes, 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 has a Maturity Date on or after the [August 2000] Payment Date and
no later than the [August 2009] Payment Date; and
o payments in respect of which were not more than 60 days past due as
of the Cutoff Date.
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
$__________.
32
<PAGE> 34
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 (1)
- -------------------------------- -------- -------------------- ------------------------
<S> <C> <C> <C>
$ 0.01-- $10,000.00
$10,000.01 -- $20,000.00
$20,000.01 -- $30,000.00
$30,000.01 -- $40,000.00
$40,000.01 -- $50,000.00
$50,000.01 -- $60,000.00
$60,000.01 -- $70,000.00
$70,000.01 and above
Total: 100.00
======
</TABLE>
- -------------------------
(1) May not add to 100.00% due to rounding.
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(1)
- ---------------- -------- -------------------- ---------------------
<S> <C> <C> <C>
24--35 months
36--47 months
48--59 months
60--71 months
72--83 months
84--95 months
96--107 months
108--131 months
Total: 100.00
======
</TABLE>
- -------------------------
(1) 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(1)
- -------------- -------- -------------------- ------------------------
<S> <C> <C> <C>
12--23 months
24--35 months
36--47 months
48--59 months
60--71 months
72--83 months
84--95 months
96--107 months
108--119 months
Total: 100.00
======
</TABLE>
- -------------------------
(1) May not add to 100.00% due to rounding.
33
<PAGE> 35
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(1)
- ----- -------- -------------------- ------------------------
<S> <C> <C> <C>
Alabama
Arizona
California
Colorado
Delaware
Florida
Idaho
Illinois
Indiana
Kansas
Maine
Maryland
Massachusetts
Minnesota
Mississippi
Nebraska
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
Tennessee
Utah
Virginia
Washington
Wisconsin
Total: 100.00
======
</TABLE>
- ----------------
(1) May not add to 100.00% due to rounding.
34
<PAGE> 36
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(1)
- ----------- -------- -------------------- ------------------------
<S> <C> <C> <C>
Big Bore Diesel Truck
Dry Trailer
Diesel Truck (less than or equal to
16,000 pounds)
Diesel Truck (less than or equal to
26,000 pounds/less than or equal to 20
feet)
Diesel Truck (less than or equal to
26,000 pounds/greater than 20 feet)
Diesel Truck (greater than 26,000
pounds/less than or equal to
20 feet)
Diesel Truck (greater than 26,000
pounds/greater than 20 feet)
Flatbed Trailer
Gas Straight Truck
Other Truck
Panel Van and Pickup
Parcel Van
Refrigeration Trailer
Refrigeration Truck (greater than or
equal to 26,000 pounds)
Refrigeration Truck (less than or equal
to 26,000 pounds)
Single Axle Sleeper Tractor
Single Axle Tractor
Stake and Flatbed Truck
Tandem Axle Cab-Over Engine Sleeper
Tandem Axle Conventional Sleeper
Tractor
Tandem Axle Tractor
Total: 100.00
======
</TABLE>
- -----------------------------------------
(1) May not add to 100.00% due to rounding.
35
<PAGE> 37
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(1)
- ------------ -------- -------------------- -----------------------
<S> <C> <C> <C>
International (Navistar)
Freightliner
Ford
General Motors Corp.
Mack Trucks
Isuzu
Kenworth
Utility Trailers
Peterbilt
White
Great Dane Trailers
Stoughton Trailers
Hino
Ottawa
Volvo
Trailermobile Trailers
Wabash Trailers
Fruehauf Trailers
Chevrolet
Oshkosh
Transcraft Trailers
Viking Trailers
Total: 100.00
======
</TABLE>
- ----------------------------
(1) 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 such Specified Lease or Specified Vehicle, as the case may
be, among other things, the (a) date of origination, (b) Net Book Value, (c)
Residual Value, (d) Financial Component, (e) Fixed Charge and (f) 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 "--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;
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 SUBI or any Other SUBI;
o was created in compliance in all material respects with all
applicable federal and state laws, including disclosure laws;
36
<PAGE> 38
o as of the date assigned to the Origination Trust, (a) is a legal,
valid and binding payment obligation of the Obligor, enforceable
against such 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 such Lease;
o the Obligor or Ryder has obtained liability insurance covering the
related Specified Vehicle as required under such Lease;
o does not have any Total Monthly 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 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 certain circumstances, the
Administrative Agent will be required to make Reallocation Payments in respect
of certain Specified Leases as to which certain servicing procedures have not
been followed that materially and adversely affect the interests of the Trust in
such Specified Lease.
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 such
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
37
<PAGE> 39
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 (I.E., 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
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 such 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;
38
<PAGE> 40
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.
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>
_______ 1999 100% 100% 100% 100% 100%
_______ 2000
_______ 2000
_______ 2001
_______ 2001
_______ 2002
_______ 2002
_______ 2003
_______ 2003
_______ 2004
_______ 2004
_______ 2005
_______ 2005
Weighted Average Life (years)(1)
</TABLE>
-----------------------------------------
(1) 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).
39
<PAGE> 41
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>
_______ 1999 100% 100% 100% 100% 100%
_______ 2000
_______ 2000
_______ 2001
_______ 2001
_______ 2002
_______ 2002
_______ 2003
_______ 2003
_______ 2004
_______ 2004
_______ 2005
_______ 2005
Weighted Average Life (years)(1)
</TABLE>
-----------------------------------------
(1) 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).
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
</TABLE>
Weighted Average Life (years)(1)
-----------------------------------------
(1) 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).
40
<PAGE> 42
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>
_______ 1999 100% 100% 100% 100% 100%
_______ 2000
_______ 2000
_______ 2001
_______ 2001
_______ 2002
_______ 2002
_______ 2003
_______ 2003
_______ 2004
_______ 2004
_______ 2005
_______ 2005
Weighted Average Life (years)(1)
</TABLE>
-----------------------------------------
(1) 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).
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
such Payment Date (after giving effect to payments made on such 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 such
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 (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 Trust SUBI Certificate Transfer
Agreement, the "Basic Documents"). The following summaries of all material
provisions of the foregoing documents and the summaries of all material
provisions included under "The SUBI", "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
41
<PAGE> 43
incorporated by reference as part of such 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 such 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".
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 such 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 such 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.
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 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 such 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 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, such 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 Distribution Amount").
42
<PAGE> 44
"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 and any outstanding
Principal Carryover Shortfall for one or more preceding Payment Dates, over the
actual amount distributed as principal in respect thereof.
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 (for example, 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). 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 allocated to the subordinated notes until they
have been paid in full, and then to the asset backed 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 such 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 such 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".
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 such Collection Period, the difference between
the Securitization Value of such Specified Lease at the beginning
and at the end of such Collection Period;
o for each Specified Vehicle for which the related Specified Lease
reached its Maturity Date during such Collection Period, the
Securitization Value of such Specified Lease as of such Maturity
Date;
o for each Specified Lease terminated by the Obligor or the
Administrative Agent during such 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 such purchase;
o for each Specified Vehicle relating to a Specified Lease that became
a Casualty Termination Lease during such Collection Period, the
Securitization Value of such Specified Lease as of the date such
Specified Lease became a Casualty Termination Lease; and
o for each Specified Lease that became a Default Termination Lease
during such Collection Period, the Securitization Value of such
Specified Lease as of the date such 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
43
<PAGE> 45
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 will be subject to redemption in whole, but not in
part, on any Payment Date relating to an Optional Purchase. 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 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 such 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 is (a) a limited-purpose trust company organized under the laws of
the State of New York, (b) a "banking organization" within the meaning of the
New York Banking Law, (c) a member of the Federal Reserve System, (d) a
"clearing corporation" within the meaning of the Uniform Commercial Code (the
"UCC") in effect in the State of New York and (e) a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. 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. 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.
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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.
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 such 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
such 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
such 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 such
payments to Participants will be the responsibility of DTC and disbursement of
such 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
such 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.
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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 such 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 have Notes credited to their accounts with the
Participants on such 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 Brusells, 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
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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 such procedures may be discontinued at
any time.
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 (i.e., 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 (I.E., Specified Leases having an
aggregate Cutoff Date Securitization Value of $________) 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.
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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 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 such 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 such 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 such 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 such Payment Date (and, to the
extent permitted under applicable law, interest on any overdue
interest at the Interest Rate);
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(b) to the Reserve Fund, an amount equal to any remaining interest due
on the outstanding Subordinated Notes on such 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 such
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 such 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 such Collection Period for at least
270 days and (b) Financial 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 such 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) of the
third preceding paragraph will be deemed to have been distributed to the
Subordinated Noteholder as payments in respect of interest (and 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 such Senior Notes Security, 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 such 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 such 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 such 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 such 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 such Payment Date.
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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 herein)
and each Rating Agency, a statement, setting forth with respect to such 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 such 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 such 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
such Collection Period and the Residual Value Surplus Draw Amount,
if any, included in Available Funds (after giving effect to the
Retained Certificate Distribution Amount);
(g) the Reserve Fund Draw Amount, if any, the balance on deposit in the
Reserve Fund on such Payment Date after giving effect to
withdrawals therefrom and deposits thereto in respect of such
Payment Date and the change in such 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 such 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 such 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 such calendar
year was a Senior Noteholder a statement containing such 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
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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 such Payment Date. Payments will be made by check mailed to
the address of such holders as they appear on the Note Register. 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),
however, 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 such 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.
SECURITY FOR THE SECURITIES
GENERAL
The property of the Trust (I.E., the Trust Estate) will primarily
consist of the Vehicle SUBI Certificate and the SUBI Interest evidenced thereby,
which is more fully described under "The SUBI--General", the right to receive
payments under the Program Operating Lease, the pledge by the Transferor of the
Lease SUBI Certificate as security for such payments, and certain rights to
payment from 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 SUBI--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: (a) the related Maturity Date, (b) the effective
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date of exercise by the Administrative Agent or the related Obligor of the
Annual Termination Option, (c) the date of the Administrative Agent's
termination of such Specified Lease for other commercial reasons as described
under "Additional Document Provisions--The Administration Agreement--Purchase of
Specified Vehicles Before their Maturity Dates", (d) the date such Specified
Lease becomes a Default Termination Lease, (e) the date such Specified Lease
becomes a Casualty Termination Lease or (f) the date the Administrative Agent is
required to purchase such 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 such termination,
the Trust will directly receive all distributions with respect to, or will have
the right to sell, 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
certain 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 such 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 such
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.
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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 such 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 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 such 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".
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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 such 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 such 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 such 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 such Payment Date, exceeds the Reserve Fund Requirement, any such excess (a)
up to the amounts deposited into the Reserve Fund on or before such Payment Date
in respect of the Subordinated Notes, will be released to the Transferor as the
holder of the Subordinated Notes (in such 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)
[3.5%] 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 SUBI, 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 such 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
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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 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 such 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 such 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 such event, investors in the Senior Notes could incur a loss on their
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investment. See "Risk Factors--Vicarious tort liability may result in a loss of
your investment", "Certain Legal Aspects of the Origination Trust and the
SUBI--The SUBI" 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 such 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.
ADDITIONAL DOCUMENT PROVISIONS
THE INDENTURE
INDENTURE DEFAULTS. The following events (each, an "Indenture Default")
will be events of default under the Indenture: (a) a default for 30 days or more
in the payment of interest on the Senior Notes; (b) 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; (c) the occurrence of a Program
Operating Lease Default; (d) 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
such 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 (e) 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 such 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 by such 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 such 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
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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 will be distributed first, to the Indenture Trustee for amounts due
as compensation 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, to the Subordinated Noteholder for amounts
due and unpaid in accordance with the terms of the Subordinated Notes; ninth, to
the Certificateholders for amounts due and unpaid in accordance with the terms
of the Certificates; tenth, 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
eleventh, 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 such request. Subject to such provisions for
indemnification and certain 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
certain 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 (a) such Senior Noteholder previously has
given the Indenture Trustee written notice of a continuing Indenture Default,
(b) 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 such proceeding in its own name as Indenture Trustee, (c) the
Senior Noteholder has offered the Indenture Trustee reasonable indemnity, (d)
the Indenture Trustee has for 60 days failed to institute such proceeding and
(e) no direction inconsistent with such written request has been given to the
Indenture Trustee during such 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.
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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 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 such 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
such 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.
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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 such 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.
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 certain 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 (a)
initiate or settle any claim or lawsuit involving the Trust (unless brought by
the Administrative Agent to collect amounts owed under a Specified Lease), (b)
amend the Indenture by a supplemental indenture where Senior Noteholder consent
is required, (c) amend the Indenture by supplemental indenture where Senior
Noteholder consent is not required if such amendment materially adversely
affects the Certificateholders or (d) 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 such notice.
ACTIONS BY CERTIFICATEHOLDERS 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 2/3% 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 such purchaser.
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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 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 (a) be
able to exercise corporate trust powers, (b) be subject to supervision or
examination by federal or state authorities, (c) have a combined capital and
surplus of at least $50,000,000 and (d) 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 such 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 such 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
(a) any error in judgment of an officer of the Owner Trustee, (b) 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, (c) the interest on or principal of the Securities or (d) 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.
THE SUBI TRUST AGREEMENT
THE SUBI, 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
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Other SUBIs ("Other SUBI Assets") and (b) the SUBI Assets (such 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 such other Origination Trust Assets in the event that such 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 such claims to the
Origination Trust Assets or any other SUBI in the event such waiver is not given
effect. Except under the limited circumstances described under "Certain Legal
Aspects of the Origination Trust and the SUBI--The SUBI" and "--The SUBI, 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 SUBI, 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 SUBI and no Other SUBI Supplement will amend the Origination
Trust Agreement as it relates to the SUBI.
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 such 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 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 SUBI, 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
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Assets or the investment of any of such monies before such monies are deposited
into the accounts relating to the SUBI, 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 SUBI, 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 SUBI, 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 such Loss (a) for which Ryder shall be liable
under the Administration Agreement, (b) incurred by reason of the Origination
Trustee's or such Trust Agent's willful misfeasance, bad faith or negligence or
(c) incurred by reason of the Origination Trustee's or such 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
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 SUBI. However, during the term of
the Indenture, any action with respect to the SUBI must be approved by the
Senior Noteholders in such percentage as required by the Indenture. See
"--Miscellaneous Provisions--Amendment Provisions".
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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
that the Specified Leases and Specified Vehicles are allocated to the SUBI, 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 such Collection Period that are allocable to
the 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;
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(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 such 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 such 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 such 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 such
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 over 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.
"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
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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 such Collection Period are less than
the aggregate Securitization Values of the related Specified Leases.
"RESIDUAL VALUE SURPLUS" with respect to any Expired Vehicle will mean
the amount, if any, by which its Sales Proceeds (excluding any Insurance
Proceeds and any amounts paid by an Obligor) exceed the Securitization Value of
the related Specified Lease as of the effective date of termination of such
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
such 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 such Specified Lease as of the effective date of
termination if:
o such Specified Lease becomes a Casualty Termination Lease and,
pursuant to such Specified Lease, the Administrative Agent is
responsible for paying for the loss or theft of or damage to such
Specified Vehicle;
o the Administrative Agent (1) agrees with the Obligor to a change in
the lease rates applicable to such Specified Vehicle and such 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 such
Specified Lease for such Specified Vehicle;
o at the request of the Obligor, the Administrative Agent permits such
Obligor to (1) terminate such 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 such Specified
Lease;
o such Obligor exercises the Annual Termination Option or such
Specified Lease becomes a Default Termination Lease and the
Administrative Agent (1) releases the Obligor from its obligation to
purchase such Specified Vehicle for its Termination Value or (2)
either does not demand that the Obligor so purchase such Specified
Vehicle or does not offer a termination or default settlement to the
Obligor for such Specified Vehicle; or
o such Obligor exercises the Annual Termination Option or such
Specified Lease becomes a Default Termination Lease and such
Specified Lease has been amended to eliminate the Obligor's
obligation to thereupon purchase such 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 such
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
such 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 such 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
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service margins or (b) the Administrative Agent elects to purchase such
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),
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 such 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 such 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 such Specified Vehicle (the "Insurance
Casualty Proceeds") and (b) any proceeds received from the sale of such
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 such 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 such 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, the Origination Trust or
any SUBI Assets (with respect to any Specified Lease or Specified Vehicle). When
the Administrative Agent becomes aware of any such lien or claim with respect to
any Specified Vehicle, it will take whatever action it deems reasonably
necessary to cause such 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 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.
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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 such default occurred or such 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 such 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 such
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 such
Sales Proceeds Advance from the SUBI Collection Account. Within six months of
receiving such reimbursement, if the related Specified Vehicle has not been
sold, the Administrative Agent shall cause such Specified Vehicle to be sold at
auction and shall remit the proceeds associated with the disposition of such
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 such event, it
is the practice of the Administrative Agent to repossess the related Specified
Vehicle.
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
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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 such Defaulted Vehicles and the disposition thereof
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 such 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 such 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 certain 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 such 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 SUBI 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 SUBI 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 such 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 such 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 SUBI 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 the SUBI will be an
Administrative Agent Default only with respect to the SUBI 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 such 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 SUBI 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 such 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 SUBI, the UTI
and any Other SUBI (excluding Ryder, the UTI Beneficiaries or any other
affiliate of the Administrative Agent), terminate all of the rights and
obligations of the Administrative Agent under the
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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 2/3% 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 such 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 such Administrative
Agent Default).
Upon the termination or resignation of the Administrative Agent, the
Administrative Agent subject to such 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
such successor Administrative Agent, and such 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 SUBI 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,
such trustee or official may have the power to prevent the Indenture Trustee,
the Owner Trustee, the Senior Noteholders or the Certificateholders from
effecting such 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 of the parties thereto, materially and adversely affect the interest of
any of such holders, or upon the delivery of an
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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 the 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.
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
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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 (a) 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, (b) impair any right to institute suit for the enforcement of certain
provisions of the Indenture regarding payment, (c) 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, (d) 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, (e) 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 such
sale would be insufficient to pay the aggregate principal balance and accrued
but unpaid interest on the Senior Notes, (f) 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 (g) 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) such action
will not, (1) as evidenced by an opinion of counsel, materially adversely affect
the interests of any Senior 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) such 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, such 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.
TRUST SUBI CERTIFICATE TRANSFER AGREEMENT. The Trust SUBI Certificate
Transfer Agreement may be amended from time to time by the parties thereto.
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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 SUBI 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 SUBI 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
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.
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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 Trust 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 SUBI
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 certain 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 SUBI 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 SUBI 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 Trust Assets. The Origination Trustee and the beneficiaries of
the Origination Trust (including the Trust) will be bound by such 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 SUBI, 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
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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 SUBI
The SUBI will evidence a beneficial interest in the SUBI Assets. The
SUBI will represent neither a direct legal interest in the SUBI Assets, nor an
interest in any Origination Trust Assets other than the SUBI Assets. Under the
allocation of Origination Trust liabilities described under "Additional Document
Provisions--The SUBI Trust Agreement--The SUBI, 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 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 SUBI, Other SUBI and UTI" and "--The SUBI", 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 such disclaimer is not given effect.
Although no assurances can be given, in the unlikely
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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, counsel 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, such
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, such 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), 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
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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 such 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 such 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 such position) reductions in
the amount of such payments could result. On the Closing Date, counsel will
deliver an opinion to the effect that, subject to certain facts, assumptions and
qualifications specified therein, 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 Vehicle SUBI Certificate 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. 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 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, certain payments made within one year of the
commencement of such case (including Advances and Reallocation Payments) 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 SUBI", 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
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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
certain 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 such 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 Administrative 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 such 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 SUBI--The SUBI".
As noted under "Certain Legal Aspects of the Origination Trust and the
SUBI--The SUBI", 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 certain 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 certain liens more fully
described under "Risk Factors--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".
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 such vehicle merely by virtue of such
ownership.
As more fully described under "Risk Factors--Vicarious tort liability
may result in a loss of your investment", 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 such 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 liability.
However, the laws of many states either do not permit such suits, or the
lessor's liability is capped at the amount of any liability insurance that the
lessee was required but failed to maintain. 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.
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REPOSSESSION OF SPECIFIED VEHICLES
In the event that a default by an Obligor has not been cured within a
certain period of time after notice thereof, 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 such 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 such 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 such period, such
default has not been cured, the Administrative Agent will attempt to sell such
Specified Vehicle. The Termination Proceeds therefrom may be less than the
remaining amounts due under such 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 such Specified Lease into the SUBI
Collection Account. See "Additional Document Provisions--The SUBI Trust
Agreement--The SUBI, 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 such Obligor's payments due under the related 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 such Specified Lease prohibits assignment.
CERTAIN 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. 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
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Notes in the initial distribution thereof and who will hold the Senior Notes as
"capital assets" (generally, property held for investment) within the meaning of
Section 1221 of the Code.
Investors should consult their own tax advisors to determine the
federal, state, local and other tax consequences of the purchase, ownership and
disposition of the Senior Notes.
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, and no ruling from the IRS has been or will be sought on any of the
issues discussed below. 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. Prospective investors are urged to consult
their own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of the
Senior Notes.
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 certain limited discussions of
particular topics, to certain types of Senior Noteholders subject to special
treatment under the federal income tax laws (E.G., 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 such 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 certain 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, transfer and
assignment," and the Transferor will treat the SUBI Certificate Transfer
Agreement, for certain 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. Certain 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, counsel has advised that, in a
properly presented
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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 counsel to the
Transferor, subject to the assumptions and qualifications contained in such
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 such 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 such 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 such 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 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 such 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
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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 such Senior Note (a "Short-Term Note") may
be subject to special rules. An accrual basis holder of a Short-Term Note (and
certain 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. Certain 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) such 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 such Senior
Note and the denominator of which is the number of days from the date the Senior
Note Owner acquired such 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 such 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 such election applies. The adjusted basis of
a Senior Note subject to such election will be increased to reflect market
discount included in gross income, thereby reducing any gain or increasing any
loss on a sale or taxable disposition.
[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 certain 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.
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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 the maturity thereof), such Senior Note Owner will be considered to have
purchased such Senior Note with "amortizable bond premium" equal to the amount
of such excess. Such Senior Note Owner may elect to amortize such 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. Such 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
certain 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) will be required to provide, under
penalty of perjury, a certificate containing the Senior Noteholder's name,
address, correct federal taxpayer identification number (which includes 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, (b) a corporation, partnership or other entity for federal
income tax purposes organized in or under the laws of the United States or any
state thereof or the District of Columbia, (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 U.S. Person under Section 7701(a) of the Code.
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
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"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 such change. The
statement generally must be provided in the year a payment occurs or
in either of the two preceding years. If such 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 certain 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 new regulations (the "Withholding Regulations") which make
certain 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 certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the Withholding Regulations.
CERTAIN STATE TAX CONSEQUENCES
GENERAL
Set forth below is a summary of certain 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.
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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 such 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, such 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 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 ARE INCLUDED FOR
GENERAL INFORMATION ONLY, 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 certain 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. Certain 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.
86
<PAGE> 88
PROHIBITED TRANSACTIONS
Certain 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 Section 4975 of 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. 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 such Plan. In such
case, certain exemptions from the prohibited transaction rules could be
applicable, depending on the type and circumstances of the Plan fiduciary making
the decision to acquire a Senior Note. Included among these exemptions are:
Prohibited Transaction Class Exemption ("PTCE") 90-1, which exempts certain
transactions involving insurance company pooled separate accounts, PTCE 95-60,
which exempts certain transactions involving insurance company general accounts,
PTCE 91-38, which exempts certain transactions involving bank collective
investment funds, PTCE 96-23, which exempts certain transactions effected on
behalf of a Plan by an "in-house asset manager", and PTCE 84-14, which exempts
certain 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.
Each purchaser or transferee of a Senior Note, by its acceptance of
such 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 such
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.
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"), and the Underwriters have agreed to purchase, severally but not
jointly, the following principal amounts of the Senior Notes.
87
<PAGE> 89
<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 Transferor has been advised 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 has 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.
Until the distribution of the Senior Notes is completed, the rules of
the SEC may limit the ability of the Underwriters 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.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the 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.
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 certain matters not related to the
Senior Notes offered by this prospectus.
88
<PAGE> 90
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
SUBI, 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, certain 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.
89
<PAGE> 91
INDEX OF PRINCIPAL TERMS
Set forth below is a list of certain of the more important capitalized terms
used in this Offering Circular and the pages on which the definitions of such
terms may be found.
Term Page
- ---- ----
Accrual Period.....................................42
Administration Agreement...........................17
Administration Fee.................................69
Administrative Agent...............................17
Administrative Agent Defaults......................70
Administrator......................................15
Advance............................................67
Aggregate Cutoff Date Securitization Value.........32
Annual Termination Option..........................25
Available Funds....................................48
Available Funds Shortfall Amount...................48
Available Principal Distribution Amount............42
Bankruptcy Code....................................75
Basic Documents....................................41
Business Day.......................................42
Casualty Proceeds..................................66
Casualty Termination Lease.........................43
Cede...............................................41
Cedelbank..........................................44
Cedelbank Participants.............................44
Certificate Balance................................43
Certificate Distribution Account...................55
Certificate Rate...................................53
Certificates.......................................14
Closing Date.......................................15
Code...............................................81
Collection Period..................................47
Collections........................................64
Conditional Prepayment Rate........................38
Contingent and Excess Liability Insurance..........56
CPR................................................38
Cutoff Date........................................19
Cutoff Date Securitization Value...................28
Default Termination Lease..........................43
Defaulted Vehicle..................................65
Definitive Notes...................................42
Deposit Date.......................................54
Depositaries.......................................44
Determination Date.................................47
Disposition Expenses...............................65
Distribution Accounts..............................55
DTC................................................41
ERISA..............................................87
Euroclear..........................................44
Euroclear Participants.............................44
Excess Amounts.....................................48
Excess Casualty Proceeds...........................66
Exchange Act.......................................31
Expired Vehicle....................................65
Final Payment Date.................................38
Financial Component................................27
Financial Component Advances.......................67
Fixed Charge.......................................27
Foreign Person.....................................85
Full Financial Component Advance...................67
Indenture Default..................................56
Indenture Trustee..................................15
Indirect Participants..............................44
Initial Certificate Balance........................14
Initial Deposit....................................54
Initial Securities Balance.........................49
Initial Senior Note Balance........................14
Initial Subordinated Note Balance..................14
Insolvency Laws....................................75
Insurance Casualty Proceeds........................66
Insurance Proceeds.................................66
Insured Vehicles...................................23
Interest Rate......................................42
IRS................................................81
Lease..............................................22
Lease Default......................................32
Lease SUBI.........................................14
Lease SUBI Assets..................................19
Lease SUBI Certificate.............................14
Lease SUBI Pledge Agreement........................20
Lease Term.........................................23
Leases.............................................17
Loan Rule..........................................86
Loss...............................................62
Maintenance Provider...............................17
Maturity Date......................................22
Monthly Period.....................................69
Monthly Remittance Condition.......................64
Net Book Value.....................................28
Non-Petition Parties...............................74
Note Distribution Account..........................55
Note Factor........................................41
Notes..............................................14
Obligor............................................17
Obligor Vehicles...................................64
OID................................................82
Optimal Principal Distributable Amount.............43
Optional Purchase..................................49
Optional Purchase Price............................49
Origination Trust..................................14
Origination Trust Agreement........................17
Origination Trust Assets...........................17
Origination Trustee................................17
90
<PAGE> 92
Other SUBI.........................................14
Other SUBI Assets..................................61
Other SUBI Certificates............................17
Other SUBI Supplement..............................61
Partial Financial Component Advance................67
Partial Financial Component Payment................64
Participants.......................................44
Parties in Interest................................87
Payment Date.......................................42
Payment Date Advance Reimbursement.................49
Permitted Investments..............................55
Plan Assets Regulation.............................87
Plans..............................................87
Principal Carryover Shortfall......................43
Principal Distribution Amount......................42
Program Operating Lease............................15
Program Operating Lease Default....................52
Program Operating Lease Payments...................52
Program Operating Lease Termination Date...........52
PTCE...............................................87
Quarterly Principal Distribution Amount............43
Rating Agency......................................15
Reallocation Payment...............................37
Record Date........................................42
Redemption Price...................................49
Registration Statement.............................89
Required Deposit Rating............................55
Reserve Fund.......................................54
Reserve Fund Draw Amount...........................54
Reserve Fund Requirement...........................54
Residual Value.....................................28
Residual Value Losses..............................65
Residual Value Surplus.............................65
Residual Value Surplus Account.....................54
Residual Value Surplus Draw Amount.................54
Retained Administration Payment....................53
Retained Certificate Distribution Amount...........48
Retained SUBI Certificate..........................20
Retained SUBI Interest.............................14
RTR I LLC..........................................18
RTR I LP...........................................14
RTR II LLC.........................................18
RTR II LP..........................................14
RTR III LLC........................................20
Ryder..............................................14
Ryder Integrated Logistics.........................21
Ryder Public Transportation Services...............22
Ryder System.......................................21
Sales Proceeds.....................................65
Sales Proceeds Advance.............................67
Salvage Casualty Proceeds..........................66
Schedule A.........................................22
Securities.........................................14
Securities Balance.................................42
Securitization Rate................................28
Securityholders....................................14
Senior Note Balance................................43
Senior Note Distribution Amount....................50
Senior Note Owner..................................44
Senior Noteholders.................................42
Senior Notes.......................................14
Series 1999-A SUBI.................................14
Short-Term Note....................................83
Special Event Purchase.............................66
Specified Leases...................................14
Specified Vehicles.................................14
SUBI...............................................14
SUBI Assets........................................14
SUBI Certificate Transfer Agreement................20
SUBI Certificates..................................14
SUBI Collection Account............................53
SUBI Interest......................................14
SUBI Supplement....................................19
SUBI Trust Agreement...............................19
Subordinated Note Balance..........................43
Subordinated Note Rate.............................52
Subordinated Noteholder............................54
Subordinated Notes.................................14
Substitute Vehicle.................................23
Taxes..............................................25
Termination Proceeds...............................65
Termination Value..................................25
Termination Value Payment..........................25
TLSA...............................................22
Total Monthly Payment..............................27
Transferor.........................................14
Transferor Certificate.............................16
Treasury Regulations...............................81
Trust..............................................14
Trust Administration Agreement.....................15
Trust Agent........................................17
Trust Agreement....................................15
Trust Estate.......................................16
Trust SUBI Certificate Transfer Agreement..........20
U.S. Bank..........................................17
UCC................................................44
Underwriters.......................................88
Underwriting Agreement.............................88
UTI................................................14
UTI Assets.........................................61
UTI Beneficiaries..................................14
UTI Certificates...................................17
Vehicle SUBI.......................................14
Vehicle SUBI Assets................................16
Vehicle SUBI Certificate...........................14
Vehicles...........................................17
Withholding Regulations............................85
91
<PAGE> 93
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain 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 (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between 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 such
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.
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
A-1
<PAGE> 94
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) 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;
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<PAGE> 95
(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 such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps 'to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-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 Form W-8 (Certificate of Foreign Status). 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 such
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 Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U S. PERSONS RESIDENT IN TREATY
COUNTRIES (FORM 1001). Non-U.S. Persons that are beneficial owners of 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 Form 100 1 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at that
rate unless the filer alternatively files Form W-8. Form 1001 may be filed by
the 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 Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The beneficial owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, 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, certain 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.
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-3
<PAGE> 96
$-------------
(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> 97
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................................ *
Blue sky fees and expenses.................................. *
Rating agency fees.......................................... *
Trustee's fees and expenses................................. *
Printing.................................................... *
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 omitted fraudulently or in bad faith or constituted willful
misconduct or gross negligence by such RTR II LP Indemnified Party.
II-1
<PAGE> 98
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 _____________________ with respect to legality*
8.1 Opinion of Steel Hector & Davis LLP with respect to federal 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.*
24.1 Power of Attorney (included on page II-8)
25.1 Statement of Eligibility and Qualification of the Indenture Trustee
on Form T-1*
- -----------------------
* To be filed by amendment.
b. Financial Statement Schedules:
Not applicable.
II-2
<PAGE> 99
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) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effect amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
PROVIDED, HOWEVER, that the paragraphs (d)(i) and (d)(ii) do
not apply if the registration statement is on Form S-3, Form S-8, or
form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by any registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration
statement;
(e) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(f) 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> 100
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this 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 22nd day of June 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: /s/ James B. Griffin
-------------------------------------
President
II-4
<PAGE> 101
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this 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 22nd day of June 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: /s/ James B. Griffin
---------------------------------------------
President
II-5
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this 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 22nd day of June 1999.
RYDER TRUCK RENTAL LT, a Delaware business trust
By: RYDER TRUCK RENTAL, INC., a Florida
corporation, its administrative agent
By: /s/ James B. Griffin
----------------------------------------------
President
II-6
<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this 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 22nd day of June 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: /s/ James B. Griffin
-----------------------------------------
President
II-7
<PAGE> 104
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints W. Daniel Susik, David M. Beilin and Serge G. Martin, and each of them,
his true and lawful attorney-in-fact and agent, with full power of substitution,
for him and in his name, place and stead, in any and all capacities, to sign and
file any and all amendments, including post-effective amendments to this
Registration Statement, or any filing under Rule 462 related thereto, with the
Securities and Exchange Commission, granting the power to perform any other act
on behalf of the undersigned required to be done in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ James B. Griffin Director and President June 22, 1999
------------------------- of the Manager of the General Partner of
James B. Griffin RYDER TRUCK RENTAL I LP, RYDER
TRUCK RENTAL II LP and RYDER
FUNDING LP (Principal Executive Officer)
/s/ George P. Scanlon Vice President & Controller June 22, 1999
------------------------- of the Manager of the General Partner of
George P. Scanlon RYDER TRUCK RENTAL I LP, RYDER
TRUCK RENTAL II LP and RYDER
FUNDING LP (Principal Financial and
Accounting Officer)
/s/ M. Anthony Burns Director of the Manager of the General Partner June 22, 1999
------------------------- of RYDER TRUCK RENTAL I LP, RYDER
M. Anthony Burns TRUCK RENTAL II LP and RYDER
FUNDING LP
/s/ Edwin A. Huston Director of the Manager of the General Partner June 22, 1999
------------------------- of RYDER TRUCK RENTAL I LP, RYDER
Edwin A. Huston TRUCK RENTAL II LP and RYDER
FUNDING LP
/s/ John M. Beeson, Jr. Director of the Manager of the General Partner June 22, 1999
------------------------- of RYDER TRUCK RENTAL I LP, RYDER
John M. Beeson, Jr. TRUCK RENTAL II LP and RYDER
FUNDING LP
/s/ Michael J. Blake Director of the Manager of the General Partner June 22, 1999
------------------------- of RYDER TRUCK RENTAL I LP, RYDER
Michael J. Blake TRUCK RENTAL II LP and RYDER
FUNDING LP
</TABLE>
II-8
<PAGE> 105
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 _____________________ with respect to legality*
8.1 Opinion of Steel Hector & Davis LLP with respect to federal 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.*
24.1 Power of Attorney (included on page II-8)
25.1 Statement of Eligibility and Qualification of the Indenture Trustee
on Form T-1*
- ---------------------------------
* To be filed by amendment.
II-9
